Archive for the ‘News Analysis’ Category
Sunday, May 10th, 2009
The price of a first-class stamp will be 44 cents this coming Monday, May 11, 2009, making it the third year in a row that rates have gone up in May. Last minute savings include stacking up on some Forever stamps, which at this moment is still 42 cents.
The Postal Service lost $2.8 billion last year and already lost $2.3 billion this year. However, even with this rate increase, it is unlikely that the losses will be covered and there is a chance that the post office could run out of money before the end of this year. So why not a bigger increase? Well, the post office have indeed asked the Postal Regulatory Commission for a larger increase but doing so could also result in a great decline in mail volume, which would lead to even greater losses. Especially with today’s technology — phone, email, instant messaging, webcamming — it is rare that we sent letters to our loved ones anymore.
Tags: forever stamps, postal regulatory commission, postal service
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Friday, May 8th, 2009
Exhale. The stress tests results of the nation’s 19 largest banks have been announced. For some, this wasn’t pleasant as some banks find out that they did not have enough capital to withstand a prolonged recession. For others, it was relieving, providing a decent amount of comfort to our investors, along with the public as whole. Overall, the results have established that those banks can withstand to lose approximately $600 billion in a bleak economic situation.
Results showed that 10 of the bank holding companies need to raise an additional $74.6 billion in new capital. Of the 10, Bank of America (NYSE: BAC) needs to raise the largest amount: $33.9 billion. Wells Fargo (NYSE: WF) comes in second place. Other banks include KeyCorp (NYSE: KEY), Citigroup Inc. (NYSE: C), Fifth Third Bancorp (NYSE: FITB), Morgan Stanley (NYSE: MS), GMAC LLC (NYSE: GJM), PNC Financial Services Group Inc. (NYSE: PNC), SunTrust Banks Inc. (NYSE: STI), and Regions Financial Corp (NYSE: RF).
These banks will have 6 months to fill their capital shortfalls but they are to submit their plans to federal regulators by June to show how they will fabricate the capital needed.
Some suggestions are:
1) selling stocks - Wells Fargo plans to sell common stocks to bolster their capital base
2) selling business units- Fifth Third Bancorp sold 51% of its processing business, which handled credit card, debit and other transactions, to Advent International. This deal increased FITB’s capital levels by $1.2 billion.
3) selling securities – Each of the banks can sell government issued-bonds and other various types of securities to generate capital.
4) TARP- The Troubled Asset Relief Program still has $110 billion in cash available for investment.
Fortunately for the 9 other banks, they do not need to raise additional capital. These banks include: US Bancorp (NYSE: USB), Bank of New York Mellon Corp. (NYSE: BK), Goldman Sachs Group Inc (NYSE: GS), Capital One Financial Corp. (NYSE: COF,) JP Morgan Chase & Co. (NYSE: JPM), BB&T Corp. (NYSE: BBT), State Street Corp. (NYSE: STT), and MetLife Inc. (NYSE: MET).
With that said, if you are still not quite sure about what the stress test entails and its purpose, please feel free to read “Stressing Out” published on May 3 on this following website. It might be able to provide you pieces and probable answers to any questions that you might have.
Tags: bank of america, bank stress tests, banks, citigroup, goldman sachs, jp morgan, morgan stanley, recession, securities, stress test, strest test results, TARP, wells fargo
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Thursday, May 7th, 2009
As you probably know, the unemployment rate in the United States has skyrocketed to 8.5%, a 25-year high. Since November, the nation has lost more than 3 million jobs. Given this recession, it seems pretty difficult to see any brightness in any of this. According to the Bureau of Labor Statistics, although 4.8 million workers were laid off or chose to leave their jobs in February, employers across the country also hired 4.3 million workers that same month. There were also 3 million job openings nationwide and there are still millions today.
Robert J. Barbera, chief economist at ITG, a research and trading firm said, “Ninety out of 100 people who know the number — 650,000 were lost in February — think that means no one was hired and 650,000 were fired.”
So who exactly is hiring? Hospitals, colleges, discount stores, restaurants and municipal public works departments are just some of the more popular ones. I.B.M is hiring more than 700 people for its new technical services center in Iowa. Construction companies, retailers, and many other industries are still hiring.
The downside? The only thing is there’s much more competition for every job that you apply for but do not neglect to realize that there are still a lot of hiring going around. Restaurants that expected only teenagers from high school to work there are now receiving applications for middle aged adults. So competition does not only affect the middle age working class, but teenagers who are looking for work to help out their family and to keep some money in their pockets, are also facing similiar challenges as well.
The recession has also encouraged people to stay at their current jobs. Only 1.5% of workers voluntarily quit their jobs in February, the lowest level since the Bureau of Labor Statistics began its data 8 years ago.
Tags: bureau of labor staistics, competition, current news, ibm, recesion, robert barbera, unemployment
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Sunday, May 3rd, 2009
As many of you probably heard, the stress test results of nation’s 19 largest banks will be announced next Thursday. So what exactly is the purpose of a stress test? Basically they are suppose to check each bank’s financial health. For example, techniques are used on a company’s asset and liability portfolios to determine their reactions to different financial situations, which are all hypothetical scenarios (changes can include interest rates, lending requirements, etc.). The test will then determine how the portfolio will fare during the situation and analyze the strengths and weaknesses of the institutions.
Results will ensure whether the company has enough cash on hand to undertake a continued economic crisis. Banks without sufficient capital could get more federal funds to meet their needs so that they can withstand this recession. The release date was actually suppose to be earlier this week but the Federal Reserve ordered banks to keep their test results a secret. Obviously, this had caused anger to investors because we all want to stay away from weak banks.
One side of the spectrum: (the bad)
William Black, a former senior bank regulator, is extremely critical of Timothy Geither, calling him a “failed regulator” who is “adding to failed policy” by not allowing “banks that really need desperately to be closed” to fail. Black also says that the stress test is viewed as part of Geithner’s toxic debt plan, which he calls “an enormous taxpayer subsidy for people who caused the problem.”
Another side of the spectrum: (the good)
“The purpose of this program is to prevent panics, not cause them,” an unnamed senior official told the Times. “And it’s becoming clearer that we and the banks are going to have to explain clearly where each bank falls in the spectrum.”
Tags: asset, current news, debt, economic crisis, federal reserve, financial, liability, obama administration, Secretary of Treasurer, stress tests, Timothy Geitner, toxic, william black
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Thursday, April 30th, 2009
Goodbye Chrysler
Today was Chrysler’s deadline and unfortunately they had to file for bankruptcy, along with an alliance with Italian carmaker, Fiat, as commanded by the Obama Administration. So now what happens next? Well, a new Chrysler will form, which will buy all the assets of the old Chrysler out of a Chapter 11 bankruptcy. United Auto Workers (UAW) union has also made attempts to save jobs and make Chrysler more competitive, forming concessions on wages, benefits, and retiree health care. Will General Motors (GM) follow in their path on June 1st, their deadline? 1 down, 2 Detriots left. We’ll just have to wait and see what happens…
Goodbye Lewis
Mr. Kenneth Lewis, who helped build Bank of America into the nation’s largest bank just a couple years ago now seems to be the center where criticisms are fired at. Shareholders have swiped his chairman position, though the vote was very close – 50.34% that had opted to remove Lewis as chairman. Investors attended the annual shareholders meeting, some even wearing shirts that expressed their feelings, with comments like “FIRE!!! KENNETH LEWIS.” In fact, 1/3 voted to remove him from the board altogether. However he remains chief executive, as its board of directors had unanimous support for him.
Why so angry? Angry investors held Mr. Lewis accountable for what was perceived as inept actions that he took, which had potentially forced the bank to accept two government bailouts. It wasn’t too long ago that Mr. Lewis was praised by many, even for his takeover of Merrill Lynch. Now, critics say that Mr. Lewis not only overpaid Merrill, but it seems like the takeover has done such detriments to the ex-largest bank. Merrill’s losses have prompted Bank of America to seek their second rescue from the government and this is where the criticisms start to roll in. Walter E. Massey, president of Morehouse College in Atlanta, will replace Lewis as chairman.
Tags: bailout funds, bank of america, bankruptcy, chapter 11 bankruptcy, Chrysler, detriot, fiat, general motors, GM, kenneth lewis, merrill lynch, uaw, united automobile workers
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Tuesday, April 28th, 2009
Recent popular stocks? Biotechnology stocks! With the news of the swine flu here in the U.S., the volume and stock price for biotech stocks have increased significantly. People are expecting a vaccine for this severe virus and have given some hope and confidence to a few of these companies listed below:
Let’s take a look at Novavax (NASDAQ:NVAX) for the last couple of days:
Date Open High Low Close Volume
28-Apr-09 3.11 3.25 2.71 3.18 30,522,230 (another 25% increase today)
27-Apr-09 3.53 3.88 2.33 2.55 53,133,435 (Yesterday, the stock more than doubled!)
24-Apr-09 0.81 1.49 0.81 1.42 1,644,561 (went up 75% last Friday)
23-Apr-09 0.84 0.87 0.80 0.81 112,207
22-Apr-09 0.87 0.88 0.84 0.85 127,287
21-Apr-09 0.84 0.87 0.84 0.87 109,338
“Novavax, Inc. is a clinical stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide using advanced proprietary virus-like particle (VLP) technology. The Company produces these VLP based potent, recombinant vaccines utilizing a new and efficient manufacturing approach.”
And another stock: BioCryst Pharmaceuticals (NASDAQ:BCRX)
Date Open High Low Close Volume
28-Apr-09 4.46 4.73 3.85 4.18 5,956,936
27-Apr-09 3.72 4.89 3.29 3.88 10,438,194
24-Apr-09 1.75 2.28 1.73 2.21 461,612
23-Apr-09 1.77 1.82 1.75 1.75 61,336
And another one: Hemispherx BioPharma (AMEX:HEB) dropped 8.53% today. Nevertheless, you could still see a significant increase in its volume.
Date Open High Low Close Volume
28-Apr-09 0.87 0.90 0.62 0.74 3,620,189
27-Apr-09 0.83 0.97 0.70 0.81 6,281,833
24-Apr-09 0.49 0.58 0.46 0.58 814,960
23-Apr-09 0.47 0.50 0.46 0.48 266,670
However, traders should still be cautious about these stocks because there could be a pullback, causing a decline in its stock price. Obviously, as the market has shown that the best time to have probably gotten in for these stocks was last week.
Tags: biotech, biotechnology, current news, novavax, nvax, swine flu
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