Financial crisis in America still ongoing by Corina Ciubotaru

The ongoing financial crisis in America isn't looking like it's going to end soon. Lately, the Federal Reserve has been pumping billions of dollars in the system, but nothing seems to please spooked out investors. All of the indexes have been falling recently and this has caused concern even on foreign markets. The Dow is down by 2.10 percent, the Nasdaq fell 2.37 percent, while Standard & Poor's fell 2.35 percent. Indexes like Nikkei in Japan, DAX in Germany and CAC-40 have also been falling, and the BNP Paribas bank in France has closed some funds in connection to the American market. The crisis started when home loans became too big for people to pay so banks were left without any money. The Fed didn't come into action from the beginning so the crisis worsened up to the point where they had to cut in half the interest rate required for banks to take loans. Now, reports from companies analyzing the housing market give bad news to homebuilders and prices on homes have also fallen dramatically. This situation comes in a moment when unemployment rate is finally lowering and median income per family is reaching over $48,000, after rise in the economy for the last five years. Fed officials will meet in September to decide on what needs to be done to get the country out of this mess. Capitalism needs credit to function, money used in companies have to come from the people willing to invest, so the American economy will have to rely on loans to recover, and measures are being taken to ensure these loans become available once again.

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by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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Investors feeling a bit more optimistic by Delia Cruceru

Despite events happened this summer, investors start to be a little more optimistic about the financial markets, and after the calm of the last week. After the central bank has cut its discount rate on August 17, investors and businessmen can rely on the Federal Reserve as a "safety net". The Conference Board reported Monday that after the declines from June, the index of leading economic indicators rose 0.4 percent last month, led by gains in consumer expectations and vendor performance. On Tuesday stocks ended mixed up after the investors were looking for signs that the Federal Reserve may cut interest rates again soon. "I think it's encouraging that we are kind of stabilizing after last week's turmoil," said Alec Young, equity market strategist at Standard & Poor's. "In the short term, people are trading on the Fed cues. The meeting was positive in that Bernanke seemed willing to use all tools available." This Tuesday the Feds might release minutes from its last meeting changing the perspective of Wall Street amid the financial markets. The stocks ended this week with some sharply positive note as economic data are to be released this week one Tuesday from the Conference Board, and one Friday from the University of Michigan. "We saw an extreme representation of buying opportunities, and this is the snap-back rally," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. "We're powering up, we'll sit at a high point here and we'll probably see some sort of a test (to the downside) next week."

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by Delia Cruceru for PocketNews (http://pocketnews.tv)

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Wall Street awaits Fed's next move by Delia Cruceru

Friday was a good day for business after all. The United States Federal Reserves lowered the discount rate at a half percentage point, being a very welcomed move on Wall Street. But even if the stocks have grown, many investors are still in panic mode. According to the IG Index, Dow Jones Industrial Average was expected to open today with 45 points higher having settled at 13,079.10 on Friday, up 233.30. After injecting in the banking system almost 120 billion dollars, the Federal Reserve cut its discount rate to 5.75 pct from 6.25 pct, avoiding a risk to economic growth. Steve Goldman, market strategist at Weeden & Co. in Greenwich, Connecticut, said: ""Once the Fed reliquifies and calm restores, then the markets will be in a process to start to weather the storm. The expectation is the Fed will do more." Countrywide Financial Corp's had a good day too, their share rose 4.1 percent to $22.30 before the opening bell, after the Wall Street Journal reported that the mortgage lender company was laying off employees in one of its lending units. Economists from the Thomson Financial predicted that sales of new single-family homes will fall to a seasonally adjusted annual rate of 825,000 units, down from 835,000. Oil price fell because the Hurricane Dean would cripple supply by hitting installations in the Gulf of Mexico.

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by Delia Cruceru for PocketNews (http://pocketnews.tv)

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Stocks manage late rally to close mixed by Delia Cruceru

This wasn't an easy summer for the Wall Street as credit woes and the decline of well known companies astonished the stock market. The United States largest mortgage lender, Countrywide Financial Corp. might hit the ground, after they had to borrow almost $11.5 billion so they can continue to fund their operations. Stocks from Dow Jones Industrials were down with 340 points yesterday, ending the day with a lost of 15 points. The Federal Reserve continued the injections of billions dollars in the system, declaring that they will continue to do that daily "to facilitate trading at rates around the operating objective of 5.25 percent." Many economists say that this injection shouldn't take place before the September 18, when the policy-making committee will meet, only in cases of calamities. But still the investors are hoping that the Federal Reserve will cut the interest rates before the meeting. "I think there is more confidence of a lasting rally in equities if the Fed cuts rates, and that makes it easier on days like this to do bargain hunting," said John Lonski, chief economist for credit-rating agency Moody's Investors Service. But the market is still considered to be fragile, as indexes from around the world aren't what traders were hoping to get: U.K.'s FTSE 100 fell 3.05 percent, Germany's DAX index fell 1.86 percent, and France's CAC-40 fell 2.52 percent. For Asia the Nikkei stock fell with 1.99, Hong Kong's Hang Seng Index fell 3.3 percent and the Shanghai Composite Exchange fell 2.1 percent.

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by Delia Cruceru for PocketNews (http://pocketnews.tv)

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Replace this Title by Claudia Sonea

The Financial Times Stock Exchange Index, a share index of the 100 most highly capitalized companies listed on the London Stock Exchange, had the biggest decline since it was founded on 3 January 1984. It represents about 80% of the market capitalization of the whole London Stock Exchange and points out once again how the credit crunch can damage, ending below the key 6,000 level, at 5,858.9 points. Only last September there was a similar fall that brought changes making BP, Royal Dutch Shell, HSBC Holdings, the Vodafone Group, the Royal Bank of Scotland Group and GlaxoSmithKline the 6 largest constituents of the index. Despite the recent losses financial stocks have started to gain some pounding, Standard Chartered, a British bank headquartered in London, listed on the London Stock Exchange and one of the top 20 constituent members of the FTSE 100 Index, led with a tumble of 7.6 percent. Most of the listed companies have dropped on the stock market: Barclays, Royal Bank of Scotland, HSBC, and HBOS between 2.5 and 4.4 percent; INVESCO and Schroders between 6.5 and 3 percent; Man Group, the 55th company, lost 8.6 percent; Northern Rock shed 4.2 percent; only British Land's losses were limited to 0.7 percent because of a buyback. John Haynes, senior equity strategist at Rensburg Sheppards states that the subprime mortgage rate fears are reflected in the sell-off in equities and the present situation will impose a repricing of the investment risks. The announcements of Wall-Mart Inc and Home Depot Inc. created this shock by confirming the fears on the housing sluggish. Countrywide Financial Corp., the largest U.S. mortgage lender, increased worries drawing down an entire $11.5 billion credit facility due to a shortage of credit weighs. Another problem that is worsening things is the job matter, jobless benefits being in high demand. To stop the falling of shares' prices ECB injected a large amount of cash, but Fed has still not made a move. Waiting for Fed's move, stay connected and watch the stock market, but don't forget, nowadays no one is a winner!

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by Claudia Sonea for PocketNews (http://pocketnews.tv)

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Who is to blame for the American financial crisis? by Corina Ciubotaru

Whenever something goes wrong, we humans tend to blame someone or something. If a flood hits, we blame God or global warming. If a road accident occurs, we blame the reckless driver. And if huge mortgages cause a financial crisis, we blame the credit rating agencies. These companies assign credit ratings for issuers of various debt obligations, in other words they assess the ability of companies, NGOs, governments etc to pay back loans. There are over 100 of them worldwide and some think they should have warned investors that the subprime mortgage market in the U.S. is heading for trouble. A subprime sector is one that shows high risk, as was the case with this one due to cheap credits and high prices on housing. Many were attracted to it and my guess is that the ever-growing number of immigrants who want the security of their own home in America played a big role. The main cause of this crisis is that people loaned money and couldn't afford to pay them back; they became "subprime borrowers" which would not be surprising given the small wages immigrants often get. Whatever the cause, the American economy is struggling to get out of this mess. The Federal Reserve keeps pumping billions of dollars into commercial banks, while central banks in other countries try to alleviate the problems they face collaterally. Everyone is confident the United States will leave this crisis behind soon but country leaders like Nicolas Sarkozy, the president of France and John Howard, Australia's Prime Minister, took the time to address the nation and try to calm down spooked investors.

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by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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American mortgage crisis is still to be sorted out by Corina Ciubotaru

The American financial crisis is a nightmare that doesn't seem to end soon. It started with mortgages, continued with the stock market experiencing record lows and is currently affecting even far-away countries. The European Central Bank and BNP Paribas in France have taken measures against this crisis; they have closed some funds and poured some money into local economies and now wait for the Americans to solve the problem. But solutions seem to come slowly and painfully. Mortgage rates are still rising, while the Standard & Poor's index fell 1.39 percent on Tuesday, the Dow fell 1.29 percent to 12,861.47 and the NASDAQ lost 40.29 or 1.61 percent. It's becoming increasingly difficult to get a mortgage, especially if the would-be recipient has a bad credit history and in the U.S., houses aren't even being built as much as they used to. Countrywide Financial has been forced to turn to a credit line to finance operations and the Fed announced a repurchase agreement worth $12 billion, but the move wasn't strong enough to reassure investors. European indexes FTSE 100 in Britain, DAX in Germany and CAC-40 in France also fell: 3.1%, 1.9% and 2.5%, respectively. Hong Kong's Hang Seng index fell 3.3%, the Straits Times Index in Singapore was down 3.35% to 3,273.25, while Tokyo's Nikkei fell 2% and reached 16,148.49. The situation isn't looking good, but American analysts believe the economy will bounce back of this unexpected mess, even though nobody knows for sure how long we'll have to wait before this happens.

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by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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Credit pressures by Claudia Sonea

Wall Street is still under the assault of credit market problems and stocks' own volatility. After an amazing rose of Dow, now the stock prices have lost more than 200 points, ending at 4.54 percent for the year. Other companies have seen their stock prices felling too, Sentinel Management Group Inc. was forced to send a letter to the Commodity Futures Trading Commission for permission to stop investors from withdrawing their money. Also, the S&P 500 is now ahead only 0.58 percent, while Nasdaq's index fell to 2,499.12. Goldman Sachs Group Inc. stated that three funds it manages have had significant losses The funds and other big institutional investors received a big hit after the Wal-Mart Stores Inc. and Home Depot Inc. reported that their profits will be below expectations, they will even have losses. The fact that the world's biggest home improvement chain said there is weakness in the housing market increased the anxiety on Wall Street, where subprime loan and mortgage-back securities are already a concern for investors. Scott Fullman, director of investment strategy for I.A. Englander & Co, said that anymore news about financial problems might affect dramatically the trade on the stock market, therefore the stock investors will move into securities deemed less volatile. Despite the fact that the European Central Bank injected $10.5 billion into money market, normalizing conditions, Fed has not yet made any changes. Customers bowed under economic pressures such as higher oil prices and therefore they rein in spending, making stock prices to bow under credit pressures. What will happen next? Stay connected and find out where is everything heading.

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by Claudia Sonea for PocketNews (http://pocketnews.tv)

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FTSE down 1.2 pct as credit fears return by Delia Cruceru

FTSE, Britain's leader share index fell with 1.2 pct on Tuesday and today it fell with 1.3 pct. Yesterday the FTSE 100 ended down 75.5 points or 1.2 percent, at 6,143.5 after European shares oscillated between higher and lower in the global markets. Mark Priest, a trader at tradindex.com, said "The markets are down again today and it looks like this credit problem isn't about to go away." Yesterday the stocks ended lower because of the earnings from retailers Wal-Mart Stores and Home Depot were disappointing and credit woes are back again. Banks were also hit because of global fears of tightening credit conditions: the Royal Bank of Scotland dropped with 1.3 percent, Barclays lost 3.3 percent and Standard Chartered fell 2.6 percent. Miners after the gains they had last session, suffered losses because of the low metal prices: Lonmin slipped 100 pence to 3,014, Xstrata was down 81 pence at 2,644, Anglo American shed 74 pence to 2,705, and Rio Tinto was 68 pence lower at 3,107. Market speculations that Danish brewing group Carlsberg were renewed yesterday as they want to bid for the Scottish & Newcastle stocks. Carlsberg spokesman Jens Peter Skaarup said: "There are a lot of rumours in this business among traders, analysts and journalists, but on principle we never comment on this type of thing."

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by Delia Cruceru for PocketNews (http://pocketnews.tv)

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Mortgages are more than the U.S. financial sector can take by Corina Ciubotaru

America's economy is facing an unexpected crisis these days: the population has taken so many loans and mortgages on their homes that the banking system can't cope anymore. So the government began to pump money into the system, delaying the inevitable crisis, while banks increased the interests and gave clients higher rates to pay. And President Bush seems unaware of the magnitude of the problem. He will not allow Fannie Mae, the government-sponsored company that buys home loans from impoverished people, to pay $72 billion in mortgages and maybe save the financial world. Other countries already took action to prevent losses of their own due to American problems. BNP Paribas, France's biggest bank, has frozen $2.2 billion (1.6 billion euro) in three funds linked to the American subprime sector. The European Central Bank and the Bank of Canada have also injected funds into their systems, to help them deal with the high market fluctuations. Banks have now become cautious and may not decide to lend money as easily as they used to, even if they become available. The New York Fed has pumped dozens of billions of dollars in the hope of regaining stability but in the end it's a matter of waiting and seeing, as consumer spending in retail markets has slightly increased. On Monday, the Dow Jones industrial average fell 0.02 percent, to 13,236.53, while the Standard & Poor's 500 index fell 0.72, or 0.05 percent, to 1,452.92, and the Nasdaq composite index also fell 2.65, or 0.10 percent, to 2,542.24.

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by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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The global stock market is getting stronger again by Ana Maria Ciobanu

It looks like good news for global stock markets this week. Compared to last week's evolution, US markets opened up on Monday, echoing European gains after the Fed put an extra $2bn (1.5bn euros) in the banking system. The Dow Jones index was up 0.5% to 13,307.5, while the NASDAQ added 0.8% to 2,564.2 points. The sub-prime mortgage sector in USA triggered the recent financial market volatility. Trying to ease fears over available credit, many central banks have intervened by injecting money into the banking sector. It is the third time since last Thursday when the European Central Bank has injected money in the European banking system. Monday, the ECB injected 48 billion euros, after last week it had injected 156 billion euros. Japan's central bank injected one trillion yen ($8.5bn) into the financial system last week and 600bn yen on Monday. Some analysts have said all these supplementary fund injections make sense. Others fear it only made markets more nervous and it did not solve the weakness in the US mortgage sector.

by Ana Maria Ciobanu for PocketNews (http://pocketnews.tv)

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China dampens rumors about US dollars by Ioana Madalina Tantareanu

Sunday, China tried to put an end to speculations about the massive US dollar sell-off. Officials from the central bank stated that the dollar will remain in their foreign exchange reserves. US dollars and government bonds are "an important part of China's foreign reserve investments", according to an unnamed official with the People's Bank of China. The $1.3 trillion foreign exchange rezerve of China, is the largest in the world, and is comprised mainly of US dollars, potentially giving the nation big power over the dollar's value and currency markets. The Daily Telegraph quoting some Chinese officials, said China would dump its dollar holdings in the event of a trade war with Washington. Xinhua News Agency said the central banker's remarks were intended to counter unspecified reports in Western media that China "is threatening to carry out a sell-off of U.S. dollars." "China is a responsible investor in international financial markets, and our country's foreign exchange reserves are managed with the operational goals of safety, liquidity and profit," Xinhua added. The reserves have become a political issue both within China and between Beijing and Washington. As the dollar has fallen in value, the People's Bank has come under pressure to diversify its holdings to maintain the value of the reserves and improve returns. According to Wahington China undervalued it's currency to make exports cheap, and putting American manufacturers in disadvantage. In the past weeks, several US senators have renewed calls to punish Beijing if they won't let the yuan rise.

by Ioana Madalina Tantareanu for PocketNews (http://pocketnews.tv)

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Rough times for Wall Street by Claudia Sonea

The stock market is very troubled lately, although last week meeting of the Fed should have improved things by keeping the same rate and announcing that the only problem is the inflation. Investors are still anxious due to the subprime mortgage-related losses. If Fed's actions will not succeed to put an end to the issue, what will they do next? No one really knows how widespread is the problem and therefore how long it will take for the credits to become more available. If credits are unavailable then companies' growth will be stunt and mergers and acquisitions will be pruned. Moreover, debt financing is harder to come by. Since the Dow Jones industrial average hit a record, the stock market has swung up and down because the lending climate is still unsure. The Chicago Board Options Exchange's volatility index shows that stock market volatility reached its highest level in the last four years. In order to give lending a boost Wall Street together with Europe's and Japan's central banks made a large injection of cash. The chief economist of A.G. Edwards & Sons Inc, Gary Thayer, said that it is a matter depending of the investors' mentality too, so the results will be seen in the course of events and not immediately. Statistics are divided in two, some say that a rate cut would free up more cash, while others say housing market is destabilizing economy. However, a credit crunch could put an end to a lot of business all over the world. Stay connected to find out the truth and how stock will spin.

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by Claudia Sonea for PocketNews (http://pocketnews.tv)

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USA crisis affects financial groups worldwide by Ana Maria Ciobanu

The largest French bank had to temporarily suspend three of its funds (Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia), fearing it would be affected by the crisis concerning the high risk mortgage credit in USA. The evanescence of any transaction on certain markets in the USA leads to an absence of the reference price and an almost total lack of liquidity for the actives appearing in the funds' portfolios, no matter the quality or the rating it has. These three funds were valued at over two billion euros on July 27 and 1.593 billion on August 7, which means a drop of 20% The bank announced the valuing of the funds will restart immediately after the markets will find the transacting volumes which can allow it to determinate the reference prices. Information about the measures which will be taken if this will not happen, would be communicated within a month The crisis in the United States has affected till know other financial groups too, for example Oddo(which had to freeze three funds) and AXA IM "The market will be volatile. There will be up days, there will be down days. But we will not be out of the woods with news flows. It will get worse before it gets better we're just encouraging investors to stay clear." said Graham Secker, equity strategist at Morgan Stanley.

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Major central banks pump cash in to calm markets by Delia Cruceru

Thursday the calm of the money markets was reestablished by the European Central Bank in order to prevent the financial system from seizing up. The ECB pumped into the system a record of 94.8 billion euros, France's biggest listed bank, BNP Paribas, froze withdrawals from three funds citing U.S. subprime mortgage market problems. U.S. President George W. Bush at a news conference sought to calm, saying that both the global and U.S. economy are strong and there is enough liquidity in the system. In Europe, before the ECB to act, traders said that the cash markets were seizing up. "There appears to be a dash for cash both in dollars and in euros," said Nick Parsons, head of market strategy at nabCapital in London. By injecting the biggest amount of money in a single operation, the ECB aimed to calm markets by assuring "orderly conditions in the euro money market", after that the rates came to a normal level, but money traders waited to see if the U.S. Federal Reserve will pump money as well. A Zurich-based money market trader said "the market is acting like a yo-yo. It's all very psychological. The possibility of a credit crunch returning is starting to spook everyone."

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Goldman pounded by hedge fund rumours by Ioana Madalina Tantareanu

In the first quarter, Goldman's incentive fees from asset management fell 78 percent from a year earlier, to $23 million, reflecting poor performance.In the second quarter, incentive fees fell by 87 percent.Outside investors responded by pulling out. Goldman's net flows of money into alternative investments were nil in the second quarter, compared with $6 billion received a year ago. Speculation that two of its hedge funds had fallen sharply in recent weeks and were selling down positions were on offensive to Goldman Sachs Group , known for its Midas touch. Amid a third day of speculation the investment bank was selling off parts of its portfolio, Goldman insisted that it was "business as usual" at Global Alpha, its flagship $9 billion (4.4 billion pound) macro hedge fund. Speculations that a second hedge fund, North American Equity Opportunities has also been whipsawed by recent market turbulence markets and forced to sell down positions, were also faced by the WallStreet giant. The subject of talk for several days was Global Alpha that had been hammered by volatile markets and fell by 6 percent last year.Goldman on Wednesday denied talk that it was liquidating the fund and declined further comment. A source familiar with the fund said that the Global Alpha fund was down about 16 percent this year, including a 12 percent drop in the past two weeks. Moreover, North American Equity Opportunities was down more than 15 percent this year through July 27, even if it started the year with about $767 million in assets. In Goldman's results in recent quarters was put a dent by weak performance at Alpha. Poor performance was reflected by Goldman's incentive fees from asset management fell 78 percent from a year earlier, to $23 million in the first quarter and in the second quarter incentive fees fell by 87 percent, comparing with $6 billion received a year ago.

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Stock market shaken again by Claudia Sonea

After the changes occurred on Friday and Monday, before Fed's meeting, stock market is troubled again, this time by concern regarding US sub prime mortgage sector. Because the European Central Bank injected 94.8 billion euros (130.2 billion dollars) into the eurozone banking market, a record number, all the investors back off, US property crisis becoming a real risk. Chief market strategist at London-based spread-betting group City Index stated that the bank's action was meant to create panic. When French bank BNP Paribas suspended three investment funds for the US property market and German lender WestLB faced liquidity problems, ECB decided that the banks affected by the US sub prime mortgage crisis needed a wave of cash. It was higher than after September 11, 2001, after the terrorist attacks. Japanese share prices index rose 0.83-percent before BPN announcement. Chinese shares prices had a record gain, five days in a row. World oil prices had losses, only in London the barrel fell below 70 dollars and that because the debts to US economic woes, might have been weaken by the energy demand. All in all, global equity prices plunged and the actions taken by the ECB made it worst. With the fear of US property value decreasing and Wall Street in decline, European markets closed 2.0 percent lower. What will happen next is still a mystery and how it is to be expected the market will continue to be shaky. It's a period of financial instability. Stay connected, there is more to come!

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