QuickStockAnalysis.com

GDP data show recession has ended for Germany, France

Germany and France caught economists off guard and returned to growth in the second quarter. Both economies expanded by 0.3%. “The data is very surprising,” French Economy Minister Christine Lagarde said. “After four negative quarters, France is coming out of the red.

Fed holds interest rate, emergency measures

Striving for a “smooth transition in markets,” the Federal Reserve’s Federal Open Market Committee delayed concluding its program to purchase U.S. Treasuries and kept the interest rate at close to zero. “The Fed knows its liquidity programs are essential to investor optimism, so it is not going to do anything to jeopardize the good mood,” said Christopher Low, chief economist at FTN Financial. “The Fed is always the last one to acknowledge that a recovery has begun because it cannot afford to be wrong.

U.K. joblessness to peak in 2011 at 3.25M, economist says

The number of unemployed workers in the U.K. will reach 3.25 million in the first quarter of 2011, said Vicky Redwood, an economist at Capital Economics. That would put joblessness at the same level as 1984, when the country experienced its highest unemployment rate since World War II.

Freddie Mac posts profit, says no capital injection needed

For the first time in two years, Freddie Mac reported a quarterly profit as an accounting change and gains from hedges helped the mortgage giant offset credit losses. Although the firm continues to relay on government support, Freddie Mac executives said it will not need another capital injection from the U.S. Treasury. “Our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers’ reluctance to re-enter the market,” said John Koskinen, interim CEO of Freddie Mac

Investor appetite increases for equity funds worldwide

Investors are continuing to pull money from money-market funds and pouring it back into equity funds, according to data from EPFR Global. The firm said investor appetite increased for exposure to developed markets rather than emerging markets, according to inflows for the week that ended Wednesday. About $8 billion of the $9.56 billion in equity-fund inflows went to those that invest in developed markets.

An accounting expert studied the earnings reports of financial firms and found that 45 posted higher earnings in the first quarter because of a recent change in accounting rules. Bank of New York Mellon and other large companies were able to post profits instead of losses because of the change. The Financial Accounting Standards Board (FASB) is considering another change that could force financial institutions to take paper losses, reversing the paper gains.

Accounting rulemakers are considering further changes that could drain the blood right back out of the industry, potentially forcing banks to acknowledge paper losses even larger than the new windfall of paper gains.  This is the tip for the 3Q 2009 release; stay out of the financial sector.

For more information, please contact us at info@quickstockanalysis.com

Questions arise as Wall Street profits from trading with Fed

The Federal Reserve has become one of the largest customers of Wall Street banks as it strives to stabilize markets by purchasing securities. The result has been huge profits for the banks, raising questions about how the U.S. government deals with private-sector counterparties. “You can make big money trading with the government,” said an executive at an investment-management firm. “The government is a huge buyer and seller, and Wall Street has all the pricing power”.

China broker Everbright Securities plans $1.6B IPO
China’s 10th-largest brokerage, Everbright Securities, said it expects to raise as much as $1.6 billion in an initial public offering in Shanghai. In the first half of the year, Everbright’s net profit exploded 20.2% on revenue that was up 16.5%, according to the firm’s prospectus for the offering. Some proceeds from the sale will fund an expansion into markets outside China, the company said.

Economists disagree on whether U.S. recession has ended
A slower decline of the U.S. economy was confirmed by a government report, but does that mean the recession has ended? “I’m pretty sure this was the bottom,” said Sung Won Sohn, professor of economics at California State University. “We’re right on the cusp,” said Kurt Karl, head of economic research at Swiss Re. Bob Brusca, an economist at FAO Economics, said “it’s crystal clear that there’s no recovery yet.”

Read the rest of this entry »