Stress Tests Show Big Banks Will Need to Raise Billions More

Some of the nation's largest banks will need to raise billions of dollars in additional capital after results of the government stress tests are released late Thursday.

The tests, which will be made public at 5 pm ET, were designed to gauge whether any of the nation's 19 largest banks would need more capital to survive a deeper recession.

Much of the results already began leaking out on Wednesday. Financial stocks initially rallied after the early results didn't appear to be as bad as investors feared. But the rally lost steam on Thursday even after Fed Chairman Ben Bernanke's comments that the stress tests should restore investor confidence in the banks.

Wells Fargo, Citigroup and Bank of America all need billions more, regulators have told them.

Citigroup will need to raise about $5 billion, according to a government official briefed on the results who spoke to the AP on the condition of anonymity because he was not authorized to discuss the matter. Earlier news reports had put that dollar figure closer to $10 billion.

Regions Financial will also need to raise more money, according to people briefed on the results, as will Bank of America and Wells Fargo.

Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to collect $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure.

Wells Fargo needs between $13 billion and $15 billion, according to Times and Journal reports Thursday.

GMAC, the lending arm of beleaguered automaker General Motors, is said to need $11.5 billion.

Morgan Stanley is looking at between a $1 billion and $2 billion shortfall, according to the Times.

In all, the Journal said at least seven of the banks will need a combined $65 billion. The entire group that is deemed to need more capital will require less than $100 billion combined, according to the Times.

Despite being included in the Journal's tally, State Street is not being required to raise more capital after completing its stress test, a person familiar with the matter said Thursday.

The public nature of the assessments and Thursday's planned announcement raised questions among some critics about whether the findings will reflect the banks' actual conditions.

The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts predict.

Stress tests have long been a part of the bank regulation system. They help regulators decide how to supervise banks and aid banks in deciding how to limit their risk. But those conversations between banks and regulators normally take place behind closed doors.

In recent weeks, the government's unprecedented decision to publicly release bank-test results has fanned speculation, with analysts predicting the findings and investors staking out trading positions.

Critics are concerned that all the attention could make the tests much less effective.

They say regulators seem so intent on maintaining public confidence in the banks that the results will have to say the banks are basically healthy. Officials have said they will not let any of the 19 institutions fold.

That makes it almost impossible for them to say anything about a bank that would threaten its survival, since a flight by investors could force the government to step in with additional bailout money—something the Treasury Department hopes to avoid.

"There is a real question as to the legitimacy of these results," said Jason O'Donnell, senior analyst at Boenning & Scattergood.

The stress tests are a key part of the Obama administration's plan to stabilize the financial industry. The tests estimated how much value the banks' loans would lose as consumers and businesses faced more trouble repaying loans.

The first test scenario envisioned unemployment reaching 8.8 percent in 2010 and housing prices dropping another 14 percent this year. The second imagined unemployment rising to 10.3 percent next year and homes losing another 22 percent of their value this year.

But economic assumptions have changed since the tests were designed in February.

Unemployment already has surpassed the 8.4 percent the test's first scenario predicts for 2009, which leaves some analysts wondering whether the tests were harsh enough.

The government is asking banks to keep their capital reserve ratios above a certain level so they can continue lending even if the economic picture darkens.

The banks that need more capital will have until June 8 to come up with a plan to raise the additional resources and have the plan approved by their regulators, officials said Wednesday.

Banks will have several options for increasing their capital. Some will be able to close the gap by converting the government's debt into common stock. Others will have six months to attempt to raise money from private investors.

If they cannot do it, the government will provide money from its $700 billion financial system bailout.

Representatives for American Express, JPMorgan Chase, Bank of New York Mellon, Citigroup and Regions Financial would not comment on the tests.

The remaining stress-tested banks are: Goldman Sachs Group, MetLife, PNC Financial Services Group, U.S. Bancorp, SunTrust Banks, Capital One Financial, BB&T, Regions Financial, Fifth Third Bancorp and Keycorp.

Fed Has Gone "All In" - RBC

Fed has gone "all in," says RBC Capital Markets senior
FX strategist David Watt; "while the FOMC left rates unchanged at de minimis
levels, they decided there was no time like the present to announce plans to
buy U.S. Treasurys, $300 billion over the next six months to be exact, focused
primarily on the two-to-ten-year part of the curve. That amounts to $50 billion
a month, but the values are not as important as the symbolism, and those values
are likely just the opening gambit." Adds "the Fed is not going to sit on its
hands; it is going to remain proactive. U.S. equities fell in love with Ben
Bernanke all over again, while the dollar was taken to the woodshed and beaten
like a dog. And after a short rest, beaten like a dog again. Market sentiment
on the Fed's maneuver was crystal clear."(RXM)

FED WATCH: Democratic, Or Just Dazed And Confused?

The Federal Reserve's dramatic decision Wednesday to
commit an additional $1 trillion-plus to steadying the economy and financial
markets gave equity and fixed-income markets a much-needed jolt.

But the one-day fix may come at the expense of the Fed's reputation for
clarity and predictability.

It might be something investors and the public just have to live with under
the Ben Bernanke era, where an apparently more democratic and consensus-driven
approach means meeting outcomes aren't always going to be foregone conclusions.

Whatever the rationale, the Fed's $300 billion Treasury purchase shocker
caught Fed watchers off guard.

The announcement came less than two weeks after the Fed's main ambassador to
Wall Street, New York Fed President William Dudley, appeared to close the door
to the idea. "At this point in time the Fed has judged buying long-term
Treasurys is not the most efficient means of easing financial market
conditions," Dudley said.

Of course, that's a bit of a noncommittal committal. With the benefit of
hindsight, Dudley seemed to be referring to what the Fed's thinking was to that
point, and it wasn't a promise of future action (or inaction). But at the time,
it appeared to be a clear signal that buying Treasurys wasn't on the immediate
horizon.

Another head-scratcher from Wednesday's statement was Richmond Fed President
Jeffrey Lacker's shift from the "nay" to "yea" camp. He had dissented at the
January FOMC meeting because he wanted the Fed to increase the monetary base
via Treasury purchases and not targeted credit programs.

The Fed took a baby step toward Lacker with the Treasury purchase plan. But
it took a giant leap away by supersizing the agency debt and agency-backed
mortgage backed securities purchase plans by a combined $850 billion to $1.45
trillion. Those programs, and others like the $1 trillion Term Asset-Backed
Securities Loan Facility, are precisely the kind of market-specific facilities
that Lacker had opposed.

One interpretation may simply be that the outcome of a meeting can't, or
shouldn't, be predetermined. The Fed now meets for two-day stretches, giving
lengthy time for discussion, and even perhaps for minds to be changed.

"What we're seeing is if there's a more democratic monetary policy,
individual participants talk about it...and small shifts in the median voter is
enough to move a program," said Vincent Reinhart, an American Enterprise
Institute economist who headed the Fed's monetary affairs division under former
Chairman Alan Greenspan and in the early months of Bernanke's term.

And there may be a good economic rationale for being so aggressive now.
Although gross domestic product likely fell again in the first quarter after
plunging 6.2%, at an annual rate, in the fourth quarter, there are some signs
of stability.

Consumer spending was fairly solid in the first two months of the year, and
housing starts appear to have stabilized, albeit at very low levels. If the
economy has indeed hit bottom, then the Fed's actions might add some wind to
the sails. At least there's less of a risk they'll be overwhelmed by a
deepening recession.

It's harder to have a charitable view about how the Fed is arriving at these
mind-boggling figures. It's unclear why the Fed decided that $750 billion, and
not $100 billion or $400 billion, was the right amount to increase the MBS
facility, or why they doubled the separate agency debt program instead of, say,
quadrupling it.

"The sizes do puzzle me," said Reinhart, as do the changes that occurred in
the intermeeting period to prompt the actions. "Why are circumstances so much
different this time?"

Fed Hold Rates Near Zero; To Buy Tsys, More MBS

The Federal Reserve said Wednesday it will buy up to
$300 billion in longer-term Treasurys and raise the size of a lending program
aimed at mortgage-backed securities by another $750 billion, a forceful
reminder that officials still have powerful tools to combat the recession.

The Fed, as universally expected, also took no action on its main policy
rate, holding it near zero.

The commitment to buy Treasury securities and additional mortgage-related
debt will almost certainly cheer Wall Street, since the combination should mean
lower rates for a variety of business and consumer loans.

The Federal Open Market Committee voted 10-0 to hold the target federal-funds
rate for interbank lending in a range between zero and 0.25% and to continue
using credit programs financed by an expansion of the Fed's balance sheet to
stabilize markets.

Richmond Fed President Jeffrey Lacker, who dissented in January, went along
with the rest of the FOMC this time. He had wanted the Fed to focus on Treasury
purchases as opposed to targeted credit programs.

The discount rate for Fed loans was unchanged at 0.5%.

"Information received since the [FOMC] met in January indicates that the
economy continues to contract," the Fed said.

Officials repeated their pledge to keep rates exceptionally low for an
extended period. With rates near zero, the Fed has financed its various credit
facilities via an increase in bank reserves - essentially printing money, as
Fed Chairman Ben Bernanke explained in a "60 Minutes" interview aired Sunday.

The Fed will buy up to $300 billion in long-term Treasurys over the next six
months, it said. The additional mortgage-backed securities purchases will push
the Fed's mortgage-related facility to as much as $1.25 trillion. The Fed also
said it would increase the size of its agency debt purchase facility by $100
billion to $200 billion.

The Fed's strategy appears to be to double down on the programs that it
thinks work. In addition to commercial paper and money market mutual fund
facilities, which appear to have stabilized those sectors, Bernanke has
repeatedly highlighted the decline in mortgage rates in response to the agency
and mortgage-backed securities facilities, calling it one of the "green shoots"
evident in some markets.

The Fed also said it would like to expand eligible collateral for the Term
Asset Backed Securities Loan Facility, or TALF. The TALF is aimed at spurring
new lending in consumer, student loan, small business and real estate markets
and could eventually total $1 trillion. The Fed is accepting applications for
some of those TALF loans and will start dispersing funds next week.

As for the economy, the Fed said, "although the near-term economic outlook is
weak, the Committee anticipates that policy actions to stabilize financial
markets and institutions...will contribute to a gradual resumption of
sustainable economic growth." Exports, meanwhile, "have slumped," the Fed said,
reflecting the global downturn.

U.S. gross domestic product is on track to decline 5% or more, at an annual
rate, in the first quarter. It plunged at a 6.2% rate in the fourth quarter of
2008, the steepest in a quarter century. The pace of employment loss has
stepped up since the January meeting, with the economy now shedding more than
650,000 jobs per month, pushing the unemployment rate to 25-year highs.

One nugget of good news is that consumer spending figures signaled some
stabilization since the start of the year. Since consumption makes up about 70%
of the economy's output, a revival in spending would signal better times ahead.
But economists are divided on how to interpret the January-February figures.

Officials made few changes to their assessment of inflation, repeating that
it should stay subdued and may even persist for a while below rates the Fed
thinks are consistent with a growing economy and price stability.

U.S. consumer prices rose for a second-straight month in February, the
government said Wednesday, easing fears somewhat over prolonged price declines
known as deflation.

However, consumer prices are up just 0.2% from a year ago, well below the 2%
rate most Fed officials think is consistent with their long-term goals.

Tsys Surge After Fed Moves To Buy Gov Bonds

2:26 (Dow Jones) Treasurys surge across the board after the Fed moves to buy
government debt. The Fed says it will buy up to $300B in Treasurys over the
next six months. Ten-year note up 3 points to 100 26/32 to yield 2.65% while
the 30-year bond is up 5 4/32 to 99 22/32 to yield 3.53%. DJIA back around
session highs, up 111.

2:24 (Dow Jones) Euro soars to eight-week high of $1.3351 after the FOMC
decision, rising more than two cents from its levels just prior, $1.3110. In
NY, EUR/USD was at 1.3302 from 1.3009 late Tuesday.

2:22 (Dow Jones) The FOMC economic outlook is largely the same, but it is
seriously pushing up its campaign to aid credit markets. It is upping it
mortgage market interventions massively, and adding to it the purchase of
Treasury securities. If the balance sheet size was something that was keeping
you up at night, you haven't seen nothing yet! Treasurys yields plummeting;
10-year yeild down to 2.66%. DJIA up 61.

2:20 (Dow Jones) In an effort to continue propping credit markets the Fed has
announced it will buy Treasurys and Agencies.

2:19 (Dow Jones) The FOMC says they will buy Treasurys, against expectations.
This is a big surprise and will have a large impact on the bond market. DJIA
shoots higher, now up 25.

2:13 (Dow Jones) The phenomenal growth of Facebook has so far likely helped
Google (GOOG) gain market share, RBC Capital Markets says. But firm warns that
could change if Facebook's rapid growth trajectory continues and it finds a
business model that sucks ad dollars away from other online media. "We think
Facebook as the 'starting point' for more and more users on the Internet could
create some multiple compression for Google over time, if the momentum
continues," firm says. GOOG down 1% to $332.12.

2:09 (Dow Jones) Investors should buy into any weakness that Hot Topic (HOTT)
may experience now that Wal-Mart (WMT) plans at week's end to roll out its own
merchandise related to the teen vampire movie "Twilight," which HOTT has been
selling for sometime, FBR said. That's because HOTT's March and April comps
will still benefit from "Twilight" sales, even if WMT does take some business
away. HOTT up 0.4% to $9.51.

2:02 (Dow Jones) The outcome of the FOMC meeting lies dead ahead and there's
really only one source of drama. While no one expects the Fed to annouce the
purchase of longer-term Treasurys, the last two statements have discussed the
ongoing study of the issue. Whether the Fed repeats that or not could offer
clues about whether in fact this will happen at some point. Another mention
keeps the idea alive, while an ommission may mean it's off the table.
Otherwise, look for the Fed to be downbeat on growth, worried inflation is too
soft and keeping interest rates pinned effectively at zero.

1:52 (Dow Jones) Nasdaq Comp and S&P 500 have turned higher, and the DJIA is
down but a fraction, as the FOMC statement nears and Congress grills AIG's
Liddy. Financials again lead rising sectors; energy, consumer staples lead
decliners. Frankly, we'll get interested in Congressional hearings when members
of Congress are sitting in the low seats, answering the questions instead of
asking them. Freddie Mac discloses apparently mandated bonuses it has to pay
its executives. Does anybody understand a bonus is supposed to be a reward for
a job well done? Apparently not. DJIA down 29, S&P 500 up 2, Nasdaq Comp up 13.

1:41 (Dow Jones) Canada has received lavish global praise for its sound
financial system, yet amid all the back-patting is the rather uncomfortable
fact that its economic indicators are now deteriorating nearly as quickly as
their US counterparts, Doug Porter, deputy chief economist at BMO Capital
Markets, says. Contributing to the decline are three particular vulnerabilities
for Canada: a heavy reliance on auto production, a heavy reliance on
commodities and the fact that the recent construction boom is starting to
correct, he says. "These three factors help explain why there will be precious
little separation between the Canadian and US economies either during this
year's deep downturn or next year's shallow recovery," Porter says.

1:33 (Dow Jones) ProLogis (PLD) up sharply, possibly on a report from The
REIT Newshound saying Stockbridge Capital Partners and Teacher Retirement
System of Texas are positioning to buy a "sizable" portfolio of US assets from
ProLogis. A ProLogis representative wasn't immediately available to comment on
the report, which cited unnamed sources. The Newshound quoted the company's
director of investor relations as declining to comment, but noted PLD has said
it was marketing assets that could generate $500M-$600M in proceeds. PLD up
9.8% to $7.03.

1:25 (Dow Jones) Sanford Bernstein cuts price target for Edison International
(EIX) to $36 from $39, based on EIX's 2009 EPS forecast filed late Monday of
$2.90-$3.20; Bernstein sees 2009 EPS at $3.11. They note EIX's projected 13%
rate-base growth at utility Southern California Edison is lower than expected;
see 2010 EPS at $3.69, 2011 at $4.14; and predicts EIX's $20.4B capex plans for
2009-2013 will likely come in 4% lower due to transmission project permitting
delays. EIX down 2.8% at $27.51.

Breaking News: The Fed Leaves Both Rates Unchanged and to Buy Treasurys!

The FOMC says they will buy Treasurys up to $ 300B over the next six months, against expectations. This is a big surprise and will have a large impact on the bond market.

Dollar Falls Versus Euro And Yen Ahead FOMC

The dollar sold off against the euro and yen Wednesday
morning, with the euro extending earlier gains above $1.3150, ahead of the
Federal Open Market Committee meeting decision.

Traders appear to be getting rid of dollars ahead of the Fed announcement,
expected at 2.15 p.m. EDT Wednesday, and after the release of U.S. data that
didn't disappoint, an encouraging factor lately.

The euro rose to a fresh 7-week high of $1.3157.

The dollar also declined to a session low of Y97.73.

"It does suggest a degree of pent up demand to get rid of the dollar," said
Stuart Bennett, a senior currency strategist at Calyon in London.

Now above the $1.30 level, the euro is also benefitting from some technical
positioning. Traders likely set up trades to sell and buy above this key level.

Wednesday morning in New York, the euro was at $1.3128 from $1.3009 late
Tuesday, and the dollar was at Y97.96 from Y98.54, according to EBS. The euro
was at Y128.55 from Y128.17. The U.K. pound was at $1.3998 from $1.4041, and
the dollar was at 1.1658 Swiss francs from CHF1.1828 Tuesday.

The euro's gains escalated on the heels of an early morning advance after the
Labor Department reported U.S. consumer prices increased for a second-straight
month in February, raising the odds that the U.S. will avoid a protracted
deflationary spiral.

"Anything that indicates deflation is not around the corner is probably a
positive for markets in general, helping risk appetite," said Vassili
Serebriakov, a currency analyst at Wells Fargo.

Traders typically sell the dollar, a major funding currency, when risk
appetite rises.

The euro was already gaining after a U.K. jobs report boosted the common
currency versus the U.K. pound, gains that had cross-currency repercussions on
the dollar.

The Office for National Statistics said the U.K. jobless claimant count
jumped 138,400 in February, the biggest monthly gain since records began in
1971 and pushing unemployment above 2 million for the first time in almost 12
years.

The U.K. pound also fell because of an International Monetary Fund report
that concludes the U.K. recession will be longer and deeper than anticipated.

The IMF is expected to report later this week that the U.K. economy is set to
continue to contract well into 2010, according to the U.K. daily newspaper The
Times.

Teresa Ter-Minassian, an adviser to IMF Managing Director Dominique
Strauss-Kahn, told reporters Tuesday that the IMF now expects the U.K. economy
to contract 0.2% in 2010 after shrinking an expected 3.8% this year.

The euro rose as high as GBP0.9416.

"The real theme of March is those currencies that have been moving toward
some form of zero interest rate, or quantitative easing, have been under
significant pressure," said Jim McCormick, global head of currency strategy at
Citigroup in London, citing the U.K. pound, Swiss franc and dollar.

In addition, the dollar appears under increasing pressure this month as risk
appetite rebounds.

"This will depend importantly on what the Federal Reserve has to say...,"
said McCormick.

Stocks Decline At Opening Bell

Dow Industrials Slide 70 Points

U.S. stocks pulled back after the previous day's rally, as investors awaited
the outcome of a two-day Federal Reserve meeting.

The Dow Jones Industrial Average was down 51 points. The S&P 500 declined
0.5% and the Nasdaq Composite Index fell 0.03%.

A surprising jump in housing starts last month helped drive stocks to the
fifth winning session in six Tuesday. The Dow industrials rallied by 178.73
points, leaving the blue-chip gauge 13% above the bear-market lows it hit on
March 9. Major indexes are at their highest levels in a month.

The Federal Reserve will conclude a two-day meeting Wednesday. The central
bank is expected to leave interest rates unchanged, but investors will be
parsing the Fed's post-meeting statement for any signals that its outlook has
changed or that it will take more measures to lubricate money markets. The Fed
had said in its last statement that it was prepared to purchase long-term
Treasurys if needed to improve credit conditions.

Most commentators expect that the Fed won't announce such steps Wednesday as
long-term interest rates remain low, which has driven down mortgage rates. Data
Wednesday from the Mortgage Bankers Association showed mortgage applications
rose 21% last week as the average 30-year fixed rate fell to 4.89%. But
economists expect the Fed will keep the possibility of such purchases open.

The Fed's statement is expected to be released around 2:15 p.m. EDT.

Treasurys were gaining in recent trading as stocks weakened; the yield on the
30-year bond was around 3.75%. In other economic news, consumer-price data were
released for February, showing a 0.4% increase and raising the odds that the
U.S. will avoid a protracted deflationary spiral.

Shares of Sun Microsystems jumped 65% after the Wall Street Journal reported
that International Business Machines is in talks to acquire the company. IBM is
likely to pay at least $6.5 billion in cash, or double Sun's closing price
Tuesday. IBM shares were down about 1.8%.

Most European stock markets fell. The pound dropped against the dollar after
a dismal report on U.K. employment. Asian indexes gained; the Nikkei 225 rose
0.7%. The Bank of Japan said that it will increase its purchases of government
debt and that it was considering providing loans to banks.

Fed sets target range for funds rate of 0 to 0.25%

The Federal Reserve cut the federal funds rate by three quarters of one percent to 0.25% but added that it will let the rate float down to zero. By setting the new target range, the Fed signaled it has exhausted the funds rate as a tool for monetary policy. The target range will also be useful because the funds rate would likely have traded below any target at such a low level. Economists stressed the central bank still has ammunition to counter the recession by "using the power of the printing press" to add money to its balance sheet.

Text of Fed statement on December 17th, 2008 meeting

For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0% to 0.25%.

Since the committee's last meeting, labor-market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open-market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.

Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were Ben S. Bernanke, chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 0.5%. In taking this action, the board approved the requests submitted by the boards of directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis and San Francisco. The board also established interest rates on required and excess reserve balances of 0.25%.

Breaking News: The Fed cut interest rate into 0% - 0.25% (range, not like usually)

The Federal Reserve voted today to lower the Federal Funds target rate 75 - 100 basis points to 0 - .25%. The move was a shock to the market which had anticipated just a 50 bps cut, and represents the lowest mark in history. The markets had climbed in morning trading on anticipation of the move.

Despite the Fed move, it’s unlikely there will be any affect on the actual rate, as banks were already lending to each other at rates close to zero last week.

The Fed Funds rate doesn’t actually set a number, rather it sets a target interest rate which fluctuates based on the availability of cash. Since the Fed has injected mounds of cash into the financial system of late, that number had already been next to zero recently, meaning this Fed move is cosmetic more than anything.

Ultimately, it signals that the Fed will continue to operate under a policy of buying up bad debt, injecting cash into the market and lending at rates a shade above zero.

Breaking News: US Nonfarm Payroll Drops Biggest Since December 1974

US Nonfarm Payroll drops biggest since December 1974 of -533,000. Much worse than expected of -320,000.

Asia Outlook on 05092008

Thu Sep 04 18:16:08 2008 EDT

2216 GMT [Dow Jones] ASIA OUTLOOK: Risk aversion hitting FX market with "safe haven" Japanese yen well higher vs EUR, USD, AUD, others on expectations that Asian shares will follow Wall Street's large fall; USD/JPY down at 106.03 vs 107.04 late in NY, EUR/JPY down at 150.79 vs 153.27. EUR/USD down at 1.4226 vs 1.4320 while GBP/USD at 1.7584 vs 1.7687. NZ share market down 0.6% so far, other bourses called sharply lower as DJIA shed 3%; Aussie market likely to do it tough on exposure to commodity prices. Data include NZ trade at 2245 GMT, Korea gross national income 2300 GMT, Aussie PCI 2330 GMT; Japan trade 2350 GMT. Philippine CPI 0100 GMT. Taiwan CPI/WPI 0800 GMT. Various figures due on FX reserves. Europe has UK Halifax house prices, German industrial output while in U.S., aside from payrolls, there's Yellen speech.(RXM)

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04-09-08 2216GMT


Copyright (c) 2008 Dow Jones & Company, Inc.


090408 22:16 -- GMT

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U.S. Summary on 04092008

Thu Sep 04 18:04:09 2008 EDT

2204 GMT [Dow Jones] U.S. SUMMARY: EUR fell to lowest level of year vs USD after ECB downgraded economic growth forecast for 2009 to as low as 0.6%; in comments after ECB left rates at 4.25%, Trichet noted a slowing in corporate and household demand, added eurozone economy is stuck in "trough." EUR/USD dropped to 1.4316, GBP/USD to 1.7629, its lowest since April 2006. EUR also fell vs JPY, as did GBP. "The overall trend is a selling of European currencies against both the dollar and the yen," says Hidetoshi Yanagihara at Mizuho Corporate Bank in NY. EUR/USD at 1.4320 late vs 1.4504 Wednesday, USD/JPY 107.04 vs 108.13, EUR/JPY 153.27 vs 156.83, GBP/USD 1.7687 vs 1.7768. Sliding commodity, oil prices also helped USD. Datawise, August ISM nonmanufacturing index 50.6 vs 49.5 in July, 49.5 tipped. Weekly jobless claims jumped 15,000 to seasonally adjusted 444,000 vs expected fall of 5,000; ADP jobs estimate showed private-sector jobs fell 33,000 in August vs 30,000 drop tipped.

Comments from Fed's Fisher, Yellen pointed overall to weaker growth, tamer inflation. Stocks slumped after Nordstrom and other retailers posted disappointing August sales, while balance sheet concerns weighed on big banks; DJIA off 344.65 points or 2.99% to 11188.23, biggest one-day drop since June 26 and 3rd-worst percentage drop this year, Nasdaq off 3.2%, Philly semicons off 3.4%. Treasurys shot higher with 2-year +3/32 yielding 2.20% after touching 2.17%, a level last reached in mid-April; 10-year +14/32 at 3.64% yield.October Nymex crude at $107.89/bbl, down $1.46 or 1.3%, on rising USD, flagging demand; Comex December gold off $5 at $803.20/oz.(RXM)

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04-09-08 2204GMT

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090408 22:04 -- GMT

I/OIL, N/BKG, N/DJGS, N/DJI, N/DJMB, N/DJMS, N/DOI, N/EWR, N/FXW, N/WED, N/WER, N/ALMT, N/DJFN, N/DJMT, N/DJWI, N/FRX, N/GENI, N/IEI, N/PET, N/SUM, 1012, 1085, FNS1760, 75025, 75112, 8764, M/ENE, M/EUR, M/JPY, M/NND, M/TPX, M/USD, P/AEQ, P/NIP, This content is for use with eSignal products by authorized persons only. Any reference; link, frame, or other use of this material without the explicit permission of eSignal is prohibited.**storysrvr-b-03(webstory-h-03)(DJF03bMY80904)

Last night forex ran tamely

It is very surprising me.

Commencing to Syaikh's special day

Alhamdulillah, finally I can meet my special day again in this year. Moreover, this time is very special due to Ramadhan month whose date is similar with this September one. It is absolutely very same. :)

Hope tomorrow I still can take a breath for enjoying Allah's fortune, my beautiful life, and especially loving my beloved girl. Allahummaa amiin...

2008.07.23 00:19:41 MARKET TALK: Asia Outlook

2219 GMT [Dow Jones] ASIA OUTLOOK

Regional stock markets have positive cue from DJIA's 1.2% rise, Nasdaq's 1.1% gain; lower oil prices also likely to help sentiment. Financial stocks should do well, in line with their U.S. peers, though that optimism could be slightly muted by $3.3 billion 2Q loss posted by Washington Mutual after the closing bell; shares down 3.1% in after hours trade. In FX markets, USD has positive tone after Philadelphia Fed's Plosser says higher rates may be needed to curb inflation, also Treasury Secretary Paulson's reiteration of the need for strong USD; gains in regional equities also likely to improve risk appetite, though there's some risk USD pullback after sharp gains overnight; USD/JPY last 107.27 vs 107.33 late NY, EUR/USD at 1.5787 vs 1.5778, EUR/JPY at 169.35 vs 169.32. On data front, there's Australia CPI at 0130 GMT, skilled vacancies index at 0100 GMT, Singapore CPI at 0500 GMT, Taiwan industrial output, export orders at 0800 GMT, Malaysia CPI at 0800 GMT. Later, there's BoE MPC minutes, EU industrial new orders, UK CBI industrial trends, U.S. MBA mortgage application, oil inventories, Fed Beige Book. (CNG)

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July 22, 2008 18:19 ET (22:19 GMT)

ECB's Trichet Warns of "Explosion" in Inflation

There is a risk inflation will "explode" if the European Central Bank does not act decisively to counter it, ECB President Jean-Claude Trichet was quoted on Wednesday as saying.

"If we are not resolute, there is a risk that inflation will explode. If we act decisively, then we can master the situation," he told German weekly Die Zeit, according to an advance copy of a feature about Trichet to appear on Thursday.

The comments were made on June 23.

Figures on Monday showed euro zone inflation hit a record 4 percent in June, and the ECB is expected to raise its main interest rate when it meets on Thursday.

USD Gains A Bit As Oil Price Decline

1440 GMT [Dow Jones] USD is reversing some of its modest losses against the euro as US oil stockpiles rise, causing global oil prices to decline. But USD ranges are holding as markets wait for the FOMC statement in the afternoon. Recently, EUR/USD was at 1.5586 from 1.5572 late Tue, while USD/JPY was at 108.02 from 107.79. (DKM)

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June 25, 2008 10:40 ET (14:40 GMT)

FOMC:Meeting Begins At 9:00 AM ET As Scheduled

2008.06.25 15:01:07 *FOMC:Meeting Begins At 9:00 AM ET As Scheduled

2008.06.25 15:02:09 FOMC Resumes 2-Day Meeting At 9:00 AM EST, As Scheduled

WASHINGTON (Dow Jones)--The Federal Open Market Committee resumed its two-day meeting at 9:00 a.m. EDT Wednesday, as scheduled, a Federal Reserve spokeswoman said.

Following the meeting's conclusion, the committee is expected to announce any decision it makes on short-term interest rates and issue an accompanying statement on the economy at about 2:15 p.m. EDT Wednesday.

With the FOMC widely-anticipated to hold the fed funds rate steady at 2.00%, the statement will be scrutinized even more than usual for any hint of the central bank's next step.

From September to April, the Fed aggressively cut the short-term interest rate target by 3.25 percentage points to just 2% in effort to prevent the economy from tipping into recession. A housing market rocked by widespread foreclosures has been weighing on the economy as well as a related credit crunch.

At the same time, central bankers around the globe have recently raised greater concern about high energy and food prices and their impact on inflation expectations. Fed watchers see policymakers trying to reflect those greater inflation concerns in the statement - without signaling that rate hikes are imminent.

-By Maya Jackson Randall; Dow Jones Newswires; 202 862 9255; maya.jackson-randall@dowjones.com

Corrected June 25, 2008 09:34 ET (13:34 GMT)

(END) Dow Jones Newswires

June 25, 2008 09:02 ET (13:02 GMT)