The Global Market Pains

Is crisis about to end? Its everybody's hopes that the global crisis will soon end. But how would one say that the crisis is over?



Supposing the crisis has come to an end, surely, the global market will suffer from a long and painful adjustments. It would surely undergo economic repair and reconstructions. Expectedly, new research will be done so that the near-recession will not happen again.

But we are talking here about the global market trend. Yes, US market is recovering as reports claimed that it is bigenning to gain from its recent fallback. But other markets are still getting worst, as evidence showed that Canada's markets has been deteriorating. How could this be reconciled?

Anyway, optimism is the right word here. If we remain positive, it ends well. Our business confidence level will soon be cleared from its 7 year low, if positivity will work within our minds. The pains will remains but it will surely heal.

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Survey: US Consumer Confidence Dropped for 3 Months Straight

Despite the effort of the US Fed Reserve to gain bvack the strngth of US economic status, still, worries have escalated to the high level. Theses fears were due to the sagging housing markets, inflation and credit crunch posed by some near-to-bankruptcy banks. As the a survey said that the consumer confidence level had already dropped for three consecutive months, including April. There are also reports claiming that some US states have appeared to be in recession. Would this mean that US is already in recession?



"More consumers reported that their personal financial situation had worsened than any time since 1982 due to high fuel and food prices as well as shrinking income gains and widespread reports of declines in home values," The Reuters/University of Michigan Surveys of Consumers said in a statement.



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Market Updates, Advisories....And Surprises

To give you the latest issues in the global markets, here are some that would give you both mixed emotions regarding the trend in the global markets.


1. Noble profit jumps 53% on strong oil drilling demand
2.Ryland loss narrows; new orders decline nearly 28%
3.Fidelity National quarterly net income falls 67%
4.Amerigroup earnings jump, but forecast lowered

on Wednesday said first-quarter net income fell to $145.3 million, or 52 cents a share, from $158.2 million, or 57 cents a share, in the year-ago period. Results in the most recent quarter include an after-tax charge of $56.5 million for the premium related to Genzyme's investment in Isis Pharmaceuticals Inc. Revenue rose to $1.1 billion from $8.8 million. Analysts, on average, expected it to earn 90 cents a share on revenue of $1.09 billion, according to FactSet Research. Genzyme expects 2008 non-GAAP earnings of about $3.90 a share, compared with prior guidance of $4 a share.

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Home Sales, Prices... no Signs of Happy Homes?

In a recent report by National Association of Realtors, home sales have dropped by a marginal 2 percent. The housing equity markets were generally negative. Due to this, both realty firms and home lenders have been tightening their belts. What more could this gloomy markets give us?

"This has been a frustration of our members," said NAR chief economist Lawrence Yun. "Lenders have been dragging their feet (in approving short sales)."

The March sales decline, which was in line with expectations, followed a 2.9 percent increase in sales in February.

The February rise, which followed six straight monthly declines, had raised hopes that the steep housing correction could be hitting bottom.

However, many private analysts said they do not expect a rebound for a number of months, given the problems weighing on housing from a severe glut of unsold homes to tighter credit standards for prospective buyers and a rising tide of mortgage foreclosures.

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Global Investors Confidence Falls Back in April

A modest decline of 4.4 points has been recorded for Global Investors Confidence in April. The deline was due to the emerging market crisis that globally happened. Some were already pessimistic regarding the declining trend, while others are still hoping it would recover the soonest.




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Is US Economy in Recession?

Is US Economy already in recession? This is the questions that until now, economic concerns are still arguing. Why? Because there are two sets of reports that have been separately tickling the curiosity of those concerns. The first report claimed that the US Economy has been recovering due to the program recently lauched by the Fed Reserve. While the other one claimed that US Economy is already in the brink of collapse. What is the really the truth?



In fiscal year 2008 alone, the Bush administration has asked for $200 billion in financing approval from Congress. The government's latest estimate has placed the cost of the Iraq War at around $600 billion. Still other financial analysts have placed the long-term cost at between $2 and $4 trillion.

The recent financial troubles of Bear Stearns prompted an emergency bail out by the Federal Reserve and JP Morgan Chase & Co. to avoid what many financial analysts predicted could have been a total economic collapse of financial markets. Another troubled lender, Countrywide Financial Corporation, was rocked by allegations of financial irresponsibility and possible impropriety leading to a downward spiral in stock prices. Well-known companies such as Morgan Stanley, Lehman Brothers, Merrill Lynch, Citigroup, UBS and Goldman Sachs are taking another look at their risky loan processes and closely monitoring their stock prices.

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FHA loans, The Best Alternative for Housing Slump?

Housing loans are among the reasons behind the credit crunch issue. Due to this fact, The Federal Housing Administration has started discussing new guidelines for possible back up to housing market industry. It won't help many people but will be the best alternative for those who are financially stressed to buy houses.




And in a time when more help to escape foreclosure is needed, lower prices are also are creating a new market for FHA and conforming loans, or loans $417,000 and under, in East Contra Costa, Solano and San Joaquin counties.

Zenet Negron, a co-branch manager and certified mortgage planning specialist with First Priority Financial in Stockton, said that while the purchase loans are doing well, refinancing hasn't taken off. "I think some of it is that maybe the value isn't there," she said. "I also think some people don't know these loans can be used to refinance."

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Credit Crisis: A Global Calamity

The phenomenal credit crisis that hit all nations worldwide is considered as global calamity. Even Fed Chairman Bernanke has already noted major weaknesses in US Financial System. How would this calamity ruin the global financial system?




The U.S. central bank's huge additions of temporary liquidity to the banking system via new auction facilities and stepped up open market operations, amounting to some $400 billion since December, make sense, Kaufman said.

"In the midst of the current financial crisis, the Fed should indeed inject a massive volume of reserves into the markets to stabilize conditions. But monetary easing is not enough, nor will it help prevent similar recurrences," he said, calling for more safeguards and deep reforms to enable investors to regain confidence in markets.
Kaufman questioned whether private credit rating agencies can offer meaningful and timely ratings. He recommended that the Fed, his proposed regulatory agency and other official supervisory organizations should be required to issue credit ratings for the financial institutions they supervise.

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Wilbur Ross Considers Buying $4bn U.S. Banks

Wilbur Ross, 70, a billionaire financier is planning to purchase US depository banks for $4billion dollars. These US banks which Ross are planning to buy are among those small US banks that directly affected with the credit crunch and are about to operationally shutdown.




Depositary banks are regulated by the Federal Deposit Insurance Corp. and can accept consumer deposits. The FDIC insures deposits at 8,534 banks and savings associations in the U.S., more than 90 percent of which are community-based banks. Thrifts can be savings and loans, credit unions or savings banks.

Each thrift acquisition would probably be valued at around $500 million, Ross said. His buyout company, WL Ross & Co., may invest about $2 billion of its own money in the acquisitions. The firm has ``relations and existing investments'' with some Gulf sovereign wealth funds, he said, without providing names.

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Global Economic Leaders Act To Counter Emerging Crisis

The emerging crisis worldwide have alarmed some of the prominent and international economic leaders. The crisis have ushered them to act on how to beat these crisis. These group of people have met for three days and discussed possible solutions of the problems.




The G7 endorsed recommendations from an international forum and set for some of them a deadline for implementation unprecedented in its brevity -- 100 days.

Recommendation is a "gentle word," said Bank of Italy governor Mario Draghi, who also chairs the Financial Stability Forum that made the proposals. "In fact some of these recommendations are actually policy decisions."

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$3bn Deal for Delta and Northwest Airlines

Delta Airlines and Northwest Airlines have recently inked an agreement that would make them the world's largest Airlines. The merger came with a $3.1 billion deal. The recent Airlines' merge could possibly be followed by another competing airlines.

The Delta-Northwest agreement came despite failed efforts to get pilots at both airlines to agree on how to combine their own ranks, an issue that could lead to labor unrest and disruptions to flight operations in the coming years. Northwest pilots immediately said they would oppose the deal.

That was not a surprise to management. The threat of rising fuel prices — and the idea that a merger would bring huge cost savings — overcame the concerns about pilots in recent weeks

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GE's Surprised "Collapse" May Damage Global Stockmarkets

The near-possible collapse of General Electric may usher to the Global stock market's fall... Or isn't it the global market has already collapsed and made the GE's fall? Yes, it maybe the other way around.

The dollar fell broadly as GE's results and profit warning, in tandem with a worse-than-expected deterioration in consumer confidence, undermined the view that a U.S. slowdown would be brief and that the worst of a credit crisis might be over.

Oil fell after the International Energy Agency cut its oil demand growth forecast for 2008, and gold drifted lower despite the dollar's decline.

GE shares slumped nearly 12 percent, their worst decline since the stock market crash of October 1987. The conglomerate, viewed as an economic bellwether because of the range of its businesses, reported an unexpected 6 percent decline in earnings and lowered its forecast for 2008.

In another sign of the bleak outlook, U.S. consumer confidence in early April fell to its lowest since 1982, diving deeper into recessionary territory on heightened worries over inflation and jobs, according to the Reuters/University of Michigan Surveys of Consumers.

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Recession...A Timely Start To Buy Stocks?

Recession can be both serious and funny thing. Serious, because it puts the world's economic stability into nothing. It means economic blackout or whatever you call it. Though no official statement has been announced, Fed Chair Bernanke had been nodding head in agreement with the financial crisis. On the other hand, funny, because some analysts claimed its time to buy stocks. But some investors might be wondering how would it be, when in fact, the recession is almost happening?


Here are two strategies to help you decide whether to buy stocks in time of recession or not.

Don't look back

John Canally, an investment strategist for LPL Financial, argues that it's the right time to watch closely for good buys now because of historically strong gains at the tail end of a recession, plus the possibility of an election-year rally. "On average you miss a 25 percent uptick by waiting for the end of a recession," he says. "There's definitely a penalty for looking in the rearview mirror. You can't wait until home prices bottom, the recession ends, and the Fed chairman sounds the all clear."

Safer bets

Others are more cautious. Chris Orndorff, a portfolio manager at Payden & Rygel in Los Angeles, says stability is still the way to go for investors, given market volatility. He recommends sticking to the recession playbook: large-cap stocks, safe earnings, and international exposure. "There are always ways to make money, even in a recession," he says. "In a down market, investors tend to place a premium on stocks with more stable earnings prospects. Companies without stable earnings, like a biotech or semiconductor company, tend not to be places where you want to be."

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Financial Reforms Might be too late to save markets, Bernanke Says

Financial companies and other financial concerned individuals might be losing hopes in waiting the implementation of the financial reforms. For Federal Reserve chairman Bernanke, financial companies can't wait anymore for markets to improve.

Bernake said that the deleveraging process, where banks are pulling back on lending and raising capital 'is understandable and perhaps desirable' for individual firms but 'has the effect of shrinking available credit' and reducing the banks' role in keeping the economy functioning.

Countering that tendency has been the goal of the Fed's interest rate cuts and the various special lending facilities it has established to maintain the flow of credit in the economy.

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IMF On US Near-Recession: Global Economy At Risk

US government cannot anymore deny the fact that it is in the quagmire of losing its worldwide identity as the world's biggest and most stable, economically. Now that it is likely in recession, due to high interest rates, mortgages, housing problems and banks are losing assets. The pain of US economy has extended and has been felt by the global economy, as the global expansion becomes slower.

US growth for 2009 will improve to 0.6 percent, a "modest" recovery expected as financial institutions clean up their balance sheets.

The risks to global growth remain "tilted to the downside," the IMF warned in the report, a key plank of its spring meetings with the World Bank in Washington on Saturday and Sunday.

The IMF underscored the potential for "deep losses" on structured credit related to the US subprime mortgage market and other sectors.

Those losses could "cause the current credit squeeze to mutate into a full-blown credit crunch," said the 185-nation institution, whose mission is to promote global financial stability.

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For sale: Citigroup's $12bn Leveraged loans and Bonds, sources say

Perhaps, the $12 billion leveraged loans and bonds are pushing the US largest bank into a quagmire of liabilities. It is maybe the reason why Citigroup planned to sell it to some private equity firms, to include Apollo Group, Blackstone Group and TPG. The sale would be possibly made final after the first quarter reports be released sometime this month.


A sale could help New York-based Citigroup dent its exposure to leveraged loans, which totaled about $43 billion at year end. Further sales are possible, one of the people said.

Like other banks, Citigroup issued the debt to help finance leveraged buyouts. Last summer's credit crunch caused investors to stop buying much of this debt, leaving lenders stuck holding the debt on its books, often at below face value.

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Merrill Lynch's CEO: Has No Plan To Raise More Capital

Merrill Lynch has already raised more capital than it has lost, according to John Thain, Merrill's CEO. He claimed in a briefing in Tokyo that the US investment bank has been shrinking, but no layoffs announced yet. While Merrill's CEO seemed to be negative about the flow of the business, Dell's CEO is seeing positive return of investment this year.



A shrinking of Merrill's balance sheet will continue, he added at a briefing in Tokyo.

Merrill, which has so far written down $24 billion worth of investments related to the troubled U.S. mortgage market, has no need to raise fresh capital, Thain said in an interview last week.

Thain also told Japan's Nikkei business daily that he has no plans to sell the company, or merge it with another bank.

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"US is sliding into recession since December," says Economic Bureau Head

The President of the National Bureau of Economic Research believed that US Economic has been falling into a recession since December. Martin Feldstein, in an interview, claimed that the current US economic downturn could live longer and deeper than previous recessions.




“And indeed it runs the risk that those checks will go to paying down credit card debts and other kinds of debts, building up liquidity as people prepare themselves for possible hard times ahead.”

Although the Fed is injecting liquidity into the markets, Feldstein said, they are not dealing with the fundamental issue: the excess of negative equity mortgages.

“They’re providing a little bit of liquidity, but they’re not dealing with the fundamental problem of this wave of potential defaults on mortgages which we’re yet to see, but which I think will become a reality as house prices continue to come down.”

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US Economic downturn makes the biggest jobs drop

If you are a simple employee in the US, you might be one of the thousands employees who lost their jobs because of the near-recession in the US. In March alone, almost, 80,000 employees have lost their jobs. The U.S Labor Department estimated the unemployment rate escalated to 5.1% from 4.8% last month. Despite reports of job cuts, US stockmarket is reportedly gain a slight.....

"Finance and accounting, IT, engineering, scientific, legal -- all have gone from very strong growth in 2007 to flat or even strong declines" in the first three months of this year, Mr. Gilliam said. He said clients of Adecco -- the third-largest U.S. employer after Wal-Mart Stores Inc. and the U.S. Postal Service -- are still hiring, but he expects the unemployment rate to rise to 5.5% by the year's end.

The labor-market weakness hit some industries that had been holding up fairly well. Employment in services rose by 13,000 jobs in March, but the gain was all in government work; private service-sector jobs declined by 5,000. Business and professional-services companies shed 35,000 jobs, while financial firms lost jobs for the eighth straight month. Retail lost 12,400 jobs.

Temporary employment, which economists consider a leading indicator of job trends, dropped by more than 21,000 last month.

Manufacturing firms, which have cut jobs every month for almost two years, shed 48,000 jobs. Automobile employment fell by 24,000, as a strike at American Axle & Manufacturing Holdings Inc., a car-parts supplier in Detroit, compounded the woes in the auto industry. Construction employment posted its ninth straight drop.

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Bear Stearns: collapsed in just one devastating day?

2008 is an unfortunate year for the Bear Stearns. Its collapsed had alarmed all financial sectors all over the world. Was it the beginning of the US recession? Investors are the most affected individuals in this issue. Though, some analysts claimed that it was a good time to invest in a stock market. Yet, some are still hesistant to adventurously invest in a not-so-sure undertakings. Because, even the chairman of the Federal Reserve has almost admitted the economic fall of US. It seemed that Bear Stearns was just instrumental to the economic collapse of America.

Fed Chairman Bernanke opened the testimony with a grim picture of the current financial situation. “Although the situation has recently improved somewhat,” he said, “financial markets remain under considerable stress. Pressures in short-term funding markets, which had abated somewhat beginning late last year, have increased once again.

“Many lenders have been reluctant to provide credit to counterparties, especially leveraged investors, and increased the amount of collateral they required to back short-term security financing agreements. To meet those demands, investors have reduced their leverage and liquidated holdings of securities, putting further downward pressure on security prices.

“Credit availability has also been restricted because some large financial institutions, including some commercial and investment banks and the government-sponsored enterprises, have reported substantial losses and write-downs, reducing their capital available to support increased lending. Some key securitization markets, including those for nonconforming mortgages, continued to function poorly, if at all.”

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Bernanke claims recession is possible.

Even the Chairman of Federal Reserve Ben Bernanke is losing hope to revive the ailing economy of United States, despite the recently argued econmic overhaul pan. He even forecast that a recession is possible as the US economy is expected to shrink in the fiest half of the year.

As a result, the Dow Jones Industrial Average fell four-tenths of a percent, ending at 12-thousand-609. The NASDAQ lost just under one-tenth of a percent, closing at two-thousand-361. And the S-and-P 500 dropped two-tenths of a percent, closing at one-thousand-368.

It's the closest the nation's central bank chief has come to proclaiming a recession.

"Overall, the near-term economic outlook has weakened relative to the projections released by the Federal Open Market Committee (FOMC) at the end of January. It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," he said.

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BAY AREA could possibly lose global competitive edge

The Bay area will continue to be the magnet of the world's largest company but it may lose its global competitive edge due to the tremendous financial crisis the global market is facing. This was the gist of the report being made and released by Mckinley & Co. and the Bay Area Council. The study found out that there has still been concentration od massive talents, capital and innovations, but there should also have improvement of educational system and infrastracture. It also said that some countries are now grabbing their shares despite global financial crisis.

"We're in a world in which talent can flow wherever it wants to go," said McKinsey director and BAC chairman Lenny Mendonca, who is visiting Singapore. "There are very attractive opportunities in India, China, the Philippines and Singapore, and we are more at risk of losing our talent advantage because of our unattractiveness and the attractiveness of other places."

Singapore is building a major biotech center, and Southeast Asia, Shanghai and the Yangtze River Delta are becoming key centers for technology and finance. Guangzhou is a growing manufacturing center and Bangalore has developed as a powerful information technology hub.

"We could be challenged in the future if we don't get our act together," said Jim Wunderman, president and CEO of the Bay Area Council.

Stephen Levy of the Center for the Continuing Study of the California Economy, who was not involved in the study, said the region needs to fix its problems.

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