The Associated Press reports that the Dow closed on Monday above 12,000 due to a big telecom deal (AT&T to buy T-Mobile) and Schwab's acquisition of OptionsExpress. The Dow rose 178 points to close at 12,036.53 gaining over 3.6% in the last three days of trading. Japanese markets are rising on Tuesday.
The markets rose despite the disappointing home sales reports indicating that home sales fell 9.6% in the last month. The National Association of Realtors, according to the Associated Press, indicates that sales fell to 4.88 million down from 5.4 million in January. Forty percent of sales were foreclosures or short sales. One third of all sales were cash. Homes are at their lowest levels in 9 years.
The Financial Times reports that the U.S Treasury is about to sell $142 billion of mortgage backed securities it obtained at the height of the financial crisis. The sale will result in $15-20 billion of profit which will help to reduce the federal debt. While government officials claim it has nothing to do with easing the pressure of the U.S. hitting its debt ceiling, critics believe Obama is using it as a stop gap measure to avoid government default. The Federal Reserve holds an additional $1,250 billion of mortgage backed securities.
The U.S. Federal Reserve will release emergency lending data regarding amounts borrowed by banks at the peak of the 2008 economic crisis. The Supreme Court rejected a bid by major banks to keep the information secret. The Wall Street Journal reports that the Clearing House Association, a trade organization for banks, had try to block the information by saying it would allow the public to draw inferences regarding the current financial condition of the banks, regardless of the truth. It is unclear when the information will be released.
Gaddafi may be able to continue to pay his army because he is literally sitting on a pot of gold. The Financial Times states that Gaddafi has almost 144 tons of gold in the country, according to the International Monetary Fund. The gold was originally held in the bank in Tripoli but it is believed to have been moved. Some of the gold can be sold in Chad or Niger and converted into cash to continue to pay his forces. It is valued at approximately $6.5 billion. Iran is also allegedly holding significant gold reserves.
The Financial Action Task Force that sets international standards for money laundering is tightening its rules for banks to force them to identify persons who benefit from specific accounts, according to the Wall Street Journal. The banks would be forced to identify accounts that have beneficiaries that could arguably be tyrants benefitting from the country they may rule. Heather Lowe, of the Global Financial Integrity firm, states that banks should consider whether the ownership of the assets is "reasonable" given the commercial activities of the person. The banks feel the standard is too high. U.S. Banks are particularly reluctant to endorse the standards because of the number of accounts held in the form of a trust.
Crab sales, according to the Wall Street Journal, are increasing at the same time the size of the catches is increasing. Price of crab is currently $4.16/ lb up $1.60 from a year ago. At the same time, Oregon fisherman are delivering 20 million pounds of crab a year compared to only 10 million pounds ten years ago. Demand has increased due to Chinese restaurants in the U.S. and more demand in Europe. Crab cakes, anyone?