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Market News (01/11/2013)

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MADISON, Wis. (1/11/13)

  • Initial claims for U.S. unemployment benefits rose more than expected last week, an indication that labor market improvement still is uneven. However, the number of workers filing continuing claims for unemployment benefits fell to the lowest level in more than four years (Bloomberg.com, The Wall Street Journal, The New York Times and Moody's Economy.com Jan. 10). Initial claims increased 4,000--to 371,000--in the week ended Jan. 5, the Labor Department said Thursday. Economists had forecast a decline to 367,000, according to a Bloomberg survey. Continuing claims for unemployment benefits--those issued to workers for more than a week--decreased 127,000--to 3.109 million--the lowest level since July 2008. Claims have remained in a fairly stable range, with the key factor not being job cuts as much as it is hiring, Michael Hanson, a senior U.S economist at Bank of America Corp. in New York, told Bloomberg. Although hiring is slowly moving forward, it needs to pick up to engender quicker economic growth, he added. In a related matter, the number of job openings in November remained at roughly the same as October--3.7 million, according to the Job Openings and Labor Turnover Survey (JOLTS), issued by the Bureau of Labor Statistics (Moody's Economy.com Jan. 10) …
  • As more citizens prepared to lose a larger percentage of their pay to taxes, U.S. consumer confidence slid last week to the lowest level in a month, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com Jan. 10). The index dropped to -34.4 for the week ended Jan. 6 from -31.8 the prior week--the largest one-week decline since August. All three subcomponents of the gauge--personal finance, perceptions over the buying climate and views on the state of the economy--lost ground. Paychecks will be lighter after Congress agreed last week it will allow the payroll tax that finances Social Security benefits to go back to its original 6.2% of pay, from 4.2 % …  

News of the Competition (01/11/2013)

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MADISON, Wis. (1/11/13)

  • In the coming two years, decreases in accretable yield--mainly an accounting benefit that accrues from acquisitions of troubled banks--will cause net interest margins to drastically fall this year for 18 small- and mid-cap banks identified byKeefe, Bruyette & Woods, Inc., an investment banking firm headquartered in New York City (American Banker Jan. 9). Those banks' median margin is expected to drop 29 basis points in 2013, and 23 basis points in 2014. The issue is not exclusive to banks on that list--the problem will be confronted by any banks that acquired troubled financial institutions in the past few years, analysts  told the Banker. Although the yield has been a significant force propelling earnings for banks acquiring troubled institutions from the Federal Deposit Insurance  Corp. the past few years, as the loans are worked out or paid off, the benefit gradually shrinks, net interest margins get leaner, and profits decline as a consequence, the Banker said …
  • American International Group (AIG) said Wednesday it will not join a lawsuit against the U.S. government regarding its government-sponsored $182 billion financial crisis bailout (The New York Times DealBook Jan. 9). AIG's board of directors made the decision after a public hubbub occurred when it was reported Monday that the insurance company was considering whether to joins a $25 billion lawsuit--filed by former AIG CEO Maurice R. Greenberg on behalf of fellow shareholders. Greenberg had urged AIG to join the suit--a move that could push the government to enter settlement talks, the Times said (Jan. 7). Although the suit does not say that government help was unnecessary, it posits that the rescue was onerous because it took a 92% ownership stake in AIG, involved high interest rates and sent billions of dollars to AIG's Wall Street clients, the Times added ...