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Jobless claims level off, remain at 7-year low

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WASHINGTON (4/18/14)--After initial jobless claims fell to a 7-year low last week, claims inched up by 2,000 this week to 304,000, according to numbers released by the Labor Department Thursday (Economy.com April 17).

Though, with analysts actually expecting a higher increase in claims, the data supports a pervading belief that, while still fairly weak, the job market is strengthening.

"Claims are suggesting a net pick-up in employment relative to last year's average," Jim O'Sullivan, High Frequency Economics' U.S. chief economist wrote (MarketWatch.com April 17).

Added analysts from RDQ Economics: "The jobless claims data also suggest the labor market may be making progress toward the Fed's labor market objective more quickly than many policymakers expect."

The four-week moving average fell to 312,000 from 316,750, and continuing claims for those who apply for unemployment benefits for at least a second straight week fell 11,000 to 2.74 million for the week ending April 5.

Analysts say the data also shows a downward trend in the rate of layoffs, compounding stats from the Bureau of Labor Statistics that revealed that the layoff-rate sits at an all-time low for the survey used, which dates back to 2000 (Economy.com April 17).

The number of hires continues to rise, but only at a slow pace, as they have only reached mid-2008 levels.

Moody's analysts expect the unemployment rate to bottom at 6.3% at year's end, with monthly job gains above 250,000 per month by that point and just below 300,000 per month by the middle of 2015.

Credit default rates drop across U.S. in March: Experian

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NEW YORK CITY (4/18/14)--Credit throughout the U.S. appears to be on the mend, as credit default numbers across the board dropped in March, according to the S&P/Experian Consumer Credit Default Indices (Experian.com April 15).

The composite index, which comprises all credit types, recorded its lowest post-recession rate last month at 1.2%. First mortgage default rates fell to 1.3%, the lowest since September 2006, and second-mortgage defaults fell to 0.6%.

Both auto loan and bank card credit default rates experienced historic lows in March as well, at 0.99% and 2.73% respectively.

"Along with signs that the economy is improving, consumer credit default rates continue to gradually decline," said David M. Blitzer, S&P Dow Jones Indices Index Committee chair and managing director.

The indices also track five major metropolitan statistical areas: New York, Chicago, Dallas, Los Angeles and Miami. All five saw decreases in credit default rates and have seen substantial improvements over levels in March of last year.  

Improvements in consumer confidence and the labor market, as well as a boost in retail sales, may have driven the decline. Default rates have fallen to pre-recession levels, the report said.

Rising levels of auto and student loans, meanwhile, could lead to higher levels of default in the near future, according to Experian.com.

News of the Competition (04/18/2014)

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  • WASHINGTON (4/18/14)--The U.S. Securities and Exchange Commission has posted a nine-page document meant to give Wall Street firms a blueprint for preparing to address examiners questions about how the firms detect and prevent cyber attacks (Reuters April 16). The document suggest firms should be ready to list when they detected malware, any "denial of service" attacks they've been victim to, or if they have had a network breach since January 2013. By making its examiner questionnaire public, the SEC gives up on the element of surprise that examiners sometimes like to use. The decision instead gives SEC-registered financial firms what the article calls "a rare chance" to prepare. Cybersecurity has been a hot policy topic for a dozen or more years but has come under heightened scrutiny in the wake of recent attacks on major companies, such as Target Corp. and the Neiman Marcus Group ...
  • BENTONVILLE, Ark. (4/18/14)--Wal-Mart is launching a new service that it claims will reduce the fees consumers pay for money transfers (BusinessInsider, Reuters April 17). Called Walmart-2-Walmart and expected to launch next week, Wal-Mart said Thursday that Euronet Worldwide Inc. would run the service through its Ria Money Transfer subsidiary. BusinessInsider reported that Walmart-2-Walmart cusomters will be about to make a $50 transfer for $4.50 and a transfer of up to $900 for a $9.50 fee. The publication said that a $900 transfer could cost as much as $76 elsewhere.  After Wal-Mart broke its news, the shares of Western Union shares dropped 4%,  those of MoneyGram International Inc. were down by 15.6%, and Euronet was up 4.4%, Reuters said ...

CardHub: Credit card rates, fees inch higher

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WASHINGTON (4/17/14)--Interest rates on credit cards were 2.12% higher in the first quarter of 2014 compared with the same time last year, according to the most recent Credit Card Landscape Report from CardHub.
 
For those with excellent credit, interest rates were 12.86%--a 0.55% increase compared with last year. Rates for good-credit scores were 17.35%, a gain of 1.64% over last year.
 
Rates dipped only slightly for secured credit cards--0.27%--from the fourth quarter of 2013 to the first quarter of this year. The largest relative drop was -6.73% to 21.07% for fair-credit scores during the same period.
 
At credit unions, platinum credit cards came in at 9.07% and reward cards 9.87%, according to this week's rate data from Informa Research Services.
 
CardHub, which monitors more than 1,000 credit card offers daily, noted that cash advance fees rose to $12.31--more than 10% year-over-year.
 
The average maximum late fee was $33.64--an increase of 0.54% compared with last year and well above the credit union maximum of late fees for platinum cards ($25.83) and rewards cards ($22.74).
 
CardHub surmised that the 62% year-over-year increase in complaints about identity theft and fraud could be attributed to the data security breaches at retailers such as Target and Neiman Marcus.

Nearly all 12 districts saw improvements in economy: Beige Book

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WASHINGTON (4/17/14)--Economic activity improved almost uniformly throughout the U.S. from mid-February through March, according to the Beige Book, a wide-ranging summary of economic conditions across the country published by the Federal Reserve.

Ten out of 12 districts saw improvement, the summary said, with declines in overall conditions only reported in Cleveland and St. Louis. The districts that saw gains, meanwhile, realized mostly "modest to moderate" progress.

Boston, Philadelphia, Richmond, Va., Atlanta, Minneapolis, Kansas City, Mo., Dallas and San Francisco all reported modest and moderate gains, while Chicago also said economic growth had picked up.

New York and Philadelphia each rebounded from weather-driven struggles that buried them earlier in the year.

"Loan demand strengthened since the previous Beige Book," the summary said. "Credit quality improved in the Philadelphia, Cleveland, Richmond and Kansas City Districts. New York and Dallas reported especially strong increases."

Many of the districts that stumbled through the early months of the year in terms of home sales and mortgage borrowing cited the inclement weather as the main obstacle as well.
St. Louis was the only district to report a decrease in loan growth.

New York and Dallas both indicated strong increases in credit quality, while credit standards appear to be loosening in Atlanta.

Further, the majority of districts experienced mixed or declining residential borrowing, while Dallas and San Francisco reported slight growth.

For real estate and construction, reports varied.

Home sales strengthened in Kansas City, single-family home sales stayed healthy in Dallas, and real estate appeared improved in Richmond.

Chicago reported declines in home sales, again listing weather as the main driver of the step-back, and New York housing markets continued to be mixed.

The report said auto sales, transportation, manufacturing and financial services all improved, along with improvements in labor market conditions.

News of the Competition(3)

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WASHINGTON (4/17/14)--The Federal Housing Finance Agency Office of the Inspector General released a report this week that reveals a 30% increase in lending at the 12 regional Home Loan Banks, to $492 billion between March 2013 and December 2013. The rise was driven largely by a borrowing surge by the nation's four largest banks as they raise funds to buy assets that meet new liquidity requirements, the report said (Bloomberg April 16). The advances were made to JPMorgan, Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. Basel III rules, which were adopted in the U.S. last year, set capital standards that spell out for banks how much capital they must have against investments in specific financial products.  The IG's report questioned whether such a concentration of Home Loan Bank lending could put safety and soundness at risk.  It also asked whether it is an appropriate use of resources for the HLB system--created to support housing finance--to be providing funds so banks for banks to meet Basel III standards ...

News of the Competition(2)

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  • WASHINGTON (4/16/14)--The Basel Committee on Banking Supervision has approved new rules for "systemically important" banks --those identified as having the potential to impact the global economy by their actions. The rules will dictate how much business such institutions could do with each other and also refine an existing cap on how much they can do with any single counterparty ( Bloomberg April 15). The intent is to limit the extent of the damage a single failure can cause--to the economy and to other lenders. In a statement on its website, the committee said the limits, effective Jan. 1, 2019, "can directly contribute toward the reduction of system-wide contagion risk," i.e., another global meltdown. It noted that the rule builds on one the committee issued in March 2013 ...
  • LUND, Sweden (4/16/14)--In an indication that--for better or worse--innovations in the payments system may be limited only by human imagination, an April 15 article in TechWeekEurope UK reported that a student at Lund University here invented a payment system that uses scans of the vein pattern of a user's hands to authenticate a transaction. Fredrik Leifland calls his system Quixter and said he came up with the idea two years ago when standing in a slow line waiting to pay for a purchase. The article says Quixter is currently set up in 15 businesses around the university, and that more than 1,600 people have signed on ...