European markets up
After a dismal Thursday in which the Dow dropped 391 points to 10,733, a loss of 3.5 percent, the European markets have rallied on Friday. The positive move was spurred by the Group of 20 nations that in a joint statement indicated they would do what is necessary to restore stability and calm the financial markets. The Financial Times indicated that the joint declaration representatives from the US included Treasury Secretary Geithner and Federal Reserve Chairman Bernanke. Risk indicators high The Financial Times also indicated the the Citibank Macro Risk Indicator, that calculates market volatility and risk, is currently at .994. The numbers go from 0 to 1, with 0 indicating no risk and 1 the most risk. The current reading mirrors the record at the height of the 2008 financial crisis.
Chinese growth slows
The HSBC Market Flash PMI that measures manufacturing activity indicates that Chinese manufacturing levels slipped from 49.9 in August to 49.4 in September emphasizing a slow down in growth. Asian markets were down, according to the Associated Press, in response to this indicator. Overall Chinese growth, however, is anticipated to remain at 9 percent. China is also doing a good job of maintaing inflation. US Money Market Funds slash European bank exposure According to the Wall Street Journal, many US money market funds have recently lowered their holdings in European banks to the lowest levels since 2006. The ten largest mutual funds currently have about 42.1% of their holdings in European financial assets.
Moodys downgrades Greek banks
In a not so surprising move, Moodys downgraded 8 Greek banks by 2 notches on Thursday, according to CNBC. Pension funds troubled by market downturn The Wall Street Journal reports that a Credit Suisse model indicated that US pension funds were 77% funded in mid-August with a shortfall of $388 billion. That shortfall is now $450 billion, requiring corporations and government bodies to increase contributions. Speaking of pensions......
State Legislators Pensions Grow
A USA Today report provides an in depth analysis of how state legislators have benefitted themselves by passing laws to increase their own pensions but not those of the state workers. The detailed report concludes that 4100 legislators in 33 states have benefitted from these special laws upwards of $100,000 annually. One of the most common devices is to have their annual salary calculation include per diem expenses, stipends and other allowances. In 19 states, the pension amounts for legislators are higher than their base salaries. In some cases, the salary amount used for calculation was based on other jobs rather than the legislative job.
House passes stop gap budget
The US House of Representative passed a stop gap spending bill to allow the government to continue working past the September 30 deadline, according to Fox News. The Senate is, of course, expected to defeat the bill because it does not include enough disaster aid and it cuts back spending on clean energy spending by $1.6 trillion.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.