Ramifications To The Financial Markets

Highlights - An acceleration in deposit withdrawals, combined with the prospect of an anti-austerity party winning the next election, has brought to the fore concerns about a potential Greek exit from the euro zone. - Our base case assumption is that under the most likely scenario, the Greek election will lead to a government that sticks to an EU/IMF program, even if the terms are renegotiated. - However, we do believe that Greece needs a further restructuring of its debt and we do think the country will ultimately exit the euro - we're just not convinced that Europe is ready for this to happen at the moment. - If an accident does occur and Greece does leave the euro in the near term, it would have global financial ramifications that could range from severe to catastrophic. ...

Wall Street's biggest banks are locked in an increasingly frantic struggle with the Federal Reserve over the right to retain the jewels of their commodity trading empires: warehouses, storage tanks and other hard assets worth billions of dollars. While the battle over proprietary trading and new derivatives regulations has taken place largely in public view since the 2008 financial crisis, the fight by JPMorgan Chase, Morgan Stanley and Goldman Sachs to retain or expand their prized physical commodity operations - most acquired in only the past six years - has remained hidden. The debate is nearing an inflection point: Within 18 months, the Fed will likely either allow banks more freedom to invest in the physical commodity world than ever; or force them to sell off the assets that many ...

The scale of money printing in the West has become so massive that the world may fall prey to "monetary anarchy," with traces of bubbles appearing everywhere. At least that's what some critics see in the latest round of cash pumping by major central banks. It is also an eerily reminiscent of 2011, when similarly generous monetary easing sparked higher oil prices, slowed the recovery and stoked speculative hot money flows into vulnerable emerging markets. The European Central Bank alone is expected to lend another half trillion euros or more of super-cheap money to banks on Wednesday, following Japan and Britain which have already injected fresh cash. The Federal Reserve has promised to keep interest rates low until 2014 and act further if needed. There is a sense of deja-vu in ...

Tired of running out of time and money? Scrimping and saving just to make ends meet? Try moving to Harlingen, Texas. The cost of living there is only about 40% of the cost of living in Manhattan. Here’s Real Time Economics with a report: Obama has spoken about having the rich pay their fair share, and $250,000 is a lot of money. But to characterize those households that earn that sum as “rich” depends very much on where they live. Thanks to regional differences on costs, $250,000 does not go so far in places like New York City and Honolulu, compared with cities in Texas or Tennessee. The Council for Community and Economic Research calculates cost of living indexes for US cities based on goods and services bought by households in the top-income quintile, which nationally covers incomes ...

Weekly Economic and Financial Commentary U.S. Review The Story of Moderate Growth Continues To Unfold Personal income figures for November indicated that personal income rose a meager 0.1 percent. Personal spending rose slightly for the month supported in part by consumers choosing to save less. Housing starts came in better than expected in November as unusually warm weather and possible seasonal adjustment factors helped to boost the headline number. The final estimate of third quarter GDP indicated that the economy grew at a 1.8 percent pace in the that quarter on news that healthcare consumption fell. Stronger Home Building Activity Supports Q4 Growth The majority of economic indicators focused on the housing market this week with the release of housing starts and ...

Data from the American housing market yesterday signaled an uptick in mortgage delinquencies from the previous month, revealing a slump in the number of households able to pay off their mortgages. Economic News USD - US Dollar Mixed as Speculators Undecided The US dollar (USD) was seen trading mildly bearish early Monday as traders viewed comments by the Fed as a sign of potentially impending hawkish moves on the policy front. The sudden jolt to risk appetite generated by such movement pushed down on the greenback, but seems to have lifted following fears of bank interventions in Japan and a string of reports out of the euro zone today which could reverse much of the markets recently acquired short-term stability. Data from the American housing market yesterday also signaled an uptick ...

Today's publications are set to be euro-heavy. Liquidity will likely be higher in today's early trading as several European events are being published in rapid succession. Most significant will be the publication of France and Germany's flash figures on services and manufacturing. Economic News USD - US Dollar Expecting Climb Ahead of Busy Week The US dollar (USD) may be seen trading mildly bullish Monday morning if traders see the global stock market persist in its decline. Although the value of US credit was downgraded, investors have little place else to move their troubled assets outside of US Treasuries. The downturn in the stock market last week has played into the strength of the US economy: its traditional store of value. Though analysts view the downgrade as overall bearish ...

Weekly Economic and Financial Commentary U.S. Review Economic Data Mixed, but Debt Deal Seems Viable Economic data released this week came in with largely mixed results and continue to point to an economy that is emerging from a soft patch but with slow momentum. The Leading Economic Index rose 0.3 percent in June with 5 of 10 components posting gains and the largest contributions coming from financial indicators. Market watchers remained focused on debt ceiling negotiations. Our baseline expectation is that Congress will likely strike a last-minute deal to raise the debt ceiling and the ramifications to the financial markets could be neutral in the short term. It will take More than Raising the Roof to Secure Solid Growth Economic data released this week came in with ...

The Week Ends with Confidence and Leading Indicators from the U.S., but Greece Dominates the Headlines The final day of a very hectic week has finally come, where a huge wave of pessimism dominated financial markets over the course of the week amid signs economic activities were slowing down in the world’s largest economy. Moreover, the European debt crisis continues to dominate headlines, as speculations continue to mount that Greece will eventually default on its debt. More data will be released from the United States on Friday, where the university of Michigan will release the preliminary estimate for consumer confidence for the month of June, where consumer confidence is expected to ease to 74.0, compared with the prior estimate of 74.3. Falling confidence probably reflects the ...