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Featured Advisor



Asset Preservation Advisors




City:Atlanta

State: GA



BIOGRAPHY:
APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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News Analysis for March 16, 2011


The Washington Post reports that the number of individuals who have stopped looking for jobs and therefore are not counted in the monthly unemployment numbers grew by 30% in the past year to 6.4 million individuals. If these individuals were added to the unemployment rate, it would increase to 10.5%. Add in the individuals who have been forced to work part-time and unemployment increases to 16%. The Federal Reserve Bank of Chicago reports that once an individual has been unemployed for more than 6 months, the likelihood of getting a job is reduced to 19%.

This is despite the news that the Federal Reserve announced on Tuesday that the economy is on "firmer footing", according to the Associated Press. The Fed downplayed fears of inflation. The quantitative easing is anticipate to continue but to end in June without a third round.

Oil closed at $97 a barrel in the U.S. on Tuesday but is expected to increase on Wednesday due to a surge in Japanese shares of 6.4%. Associated Press reports that Japanese markets experienced an upswing and their central bank continues to pump liquidity into the markets.

The Wall Street Journal indicates that the turmoil in Japan is not as much of a threat as the markets seem to indicate. Because it is an export driven economy there may actually be other economies that benefit from its inability to fulfill suppliers. China, however, may be challenged because they are the largest importer of Japan's electronic components that go into many of the devices manufactured in China. Japan supplies 35% of the flash chips that go into Iphones and Ipads, but the plants were not near the epicenter.

Bloomberg indicates that Japan is the second largest holder of U.S. debt, behind China. Although it is anticipated that Japan will sell some of its debt, according to Ethan Harris, Developed Markets Economic Research at Bank of America/Merrill Lynch, it has actually purchased bonds in the past few days to keep the yen from strengthening. Net buying of U.S. debt has fallen in the last few months but is anticipated to grow in light of the multiple global crises.

The Financial Times indicates that Moody's has downgraded Portugal due to subdued growth prospects from an A1 to an A3 rating. Additionally, Bahrain has closed its stock market due to the political unrest in that country.

The Libor rate, which is the interest rate that banks pay for borrowing from each other, has become subject to a probe regarding the years 2006-2008, as discussed by both the Financial Times and the Wall Street Journal. Apparently the SEC and other regulators in the U.S. and abroad are investigating whether banks in the U.S., U.K. and Japan conspired to keep the rate artificially low.

The New York Times reports that 2 out of 5 student loan borrowers were delinquent at some point within the first 5 years of repaying their student loans. Only 37% of those who started repayments in 2005 were able to repay the debt on time. The default rate in 2008 was 7% up from 5.2% in 2006. The average student loan debt at the end of 2009 was $24,000 up 6% from 2008.

Consumers want ease in their banking fees, according to a study conducted by Siegel+Gale of 6000 consumers in 7 countries. The American Banker found that U.S. customers would be willing to pay up to 4% more in fees if services and fees were streamlined, had clearer rules and fewer hassles. The willingness to pay was somewhat related to income levels with those households with $150,000 plus incomes willing to pay up to 17% more compared to households with less than $20,000 annual incomes only willing to pay 5.9% more.

ATM fees are set to increase, according to the Wall Street Journal. J.P. Morgan, TD Financial, PNC are just some of the banks that are reported to be increasing fees. J.P. Morgan is reportedly charging non-customers that use its ATMs in Illinois and Texas between $4-$5 per transaction. Consumers paid $7.1 billion in ATM fees in 2010 according to Oliver Wyman, a bank consulting firm. There are 425,000 ATMs in the U.S. and banks spend $12,000 to $15,000 to maintain each one.


Additionally, the American Banker reports that TD Financial will be add $1 monthly fees for customers choosing to receive paper statements.