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Featured Advisor

Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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News Analysis for March 9, 2011

Financial companies pushed the stock markets higher on Tuesday gaining 2.2% due to the belief, states The Washington Post, that banks will soon increase their dividends. American Express and J.P. Morgan were the leaders. Oil prices were also down contributing to the market uptick.

Fox Business News reports that Europeans continue to deposit more into savings than borrow according to data from the European Central Bank. It predicts that Portuguese bond sales may impact the market today.

An Associated Press story cites the Investment Company Institute indicating that $24.2 billion have been invested in the U.S. stock market since the beginning of the year. In 2010, investors withdrew $96.7 billion.

The Wall Street Journal reports that the European Banking Authority (EBA) will let regulators in individual countries use their own definitions for bank "stress tests", and define their own Tier 1 capital ratios. Critics say this undermines the entire objective of strengthening the EU financial system. A similar standard existed in the past which led to the recent financial crisis. Markets are anticipated to react poorly to this announcement. The Financial Times also criticizes this announcement.

Carl Icahn has reportedly sent a letter to his outside investors asking them to take their money back. A story by the Associated Press states that Mr. Icahn's letters indicates he is feeling bearish and does not want to be responsible if another market crisis occurs. Outside investors represent $1.76 billion of Icahn's $7 billion fund. Experts believe, however, that Mr. Icahn is not bearish and the primary motive to return the assets of the outside investors is to avoid regulation and registration with the SEC which is increasing its compliance requirements for hedge funds.

The Financial Times states that demand is growing worldwide for synthetic financial instruments that allow investors to take a position in U.S. junk bonds without owning the underlying securities. These were some of the security types blamed for the economic crisis. The exact amount of demand is hard to quantify but estimated at $5.9 billion.

McDonald's had higher sales in February due to increasing sales in Europe which, according to the Associated Press, represents 40% of its business. Overall revenues grew 3.9% in the last 13 months. McDonald's expects to raise prices this year due to increasing commodity costs.

The Wall Street Journal reports that municipal bonds are at the lowest levels of sales in eleven years, since 2000. Only $31.5 billion of debt has been issued in the first quarter.

Bloomberg reports that Bank of America is segregating half of its 13.9 million mortgages into a "bad" bank and a "good" bank. The "bad" bank will hold 6.7 million loans with an outstanding balance of $1 trillion. These represent the riskiest and worst performing loans. The chairman of the "bad" bank will focus on reconciling and remediating these loans. This allows the rest of the bank to focus on the future and not be pulled into the ongoing loan challenges.

The Madoff bankruptcy Trustee hopes to recover $50 billion this year. There is currently $2.6 billion available for disbursement which represents about 4% of each investors' claim, according to the Wall Street Journal.

SEC Chairman, Mary Schapiro, is apparently under scrutiny due to the hiring of a general counsel for the SEC that has some financial ties to the Madoff case, reports the New York Times.

In a not so surprising study by the Journal of Health and Social Behavior, it was found that women who worked and received texts, emails and other office communication during time at home were 40% more likely to feel guilty than men, reports CNN. The report finds that women still hold a sub-conscious belief that women's priority should be their children and dealing with work issues at home was more stressful for them than for men.