TOP NEWS: Economy: August 2, 2012
- Fed Hints At Fresh Action On Economy
- Electronic Trading Glitches Hit Market
- Treasury to Offer Floating-Rate Notes
- Capitalism, Not Culture, Drives Economies
- US Consumer Comfort Drops, Economic Concern Mounts
Excerpts and more top stories
Robin Harding & Michael Mackenzie, Financial Times – The US Federal Reserve raised hopes that it will act to boost the economy in September as it kept policy on hold but showed a strong bias towards further easing.
Randall W Forsyth, Barron’s, Opinion – The Federal Open Market Committee said and did as little as possible at its policy meeting for one simple reason: The stock market is well off of its lows and has been acting rather well for the past two months.
WALL STREET/TRADING GLITCH: Electronic Trading Glitches Hit Market
Jenny Strasberg, Tom Lauricella, & Scott Paterson, WSJ – An electronic-trading glitch roiled trading in nearly 150 stocks early Wednesday, sparking confusion among traders and investors and further undermining confidence in the basic machinery of financial markets.
WALL STREET/TRADING GLITCH: ‘Knight’mare on Wall Street: Trading Firm and CEO Now Face Scrutiny
Jacob Bunge, WSJ – The role of Knight Capital Group Inc. in Wednesday’s trading glitch thrust a spotlight on a lesser-known firm whose CEO has blasted Nasdaq for technology problems in its competitor’s botched Facebook Inc. offering.
TREASURY: Treasury to Offer Floating-Rate Notes
Matt Phillips & Jeffrey Sparshott, WSJ – The U.S. Treasury Department plans to offer floating-rate securities, its first new product in 15 years, as it attempts to maintain surging investor demand for government bonds.
TREASURY: Treasuries Gain on ECB Letdown
Michael Aneiro, Barron’s, Opinion – Treasury bond prices are higher Thursday morning after the European Central Bank served up a big dose of disappointment. Following some tough talk from ECB head Mario Draghi last week about how the bank was willing to take bold action to restore faith in the euro, the ECB did – well, basically nothing, announcing at today’s policy meeting that it will leave rates unchanged and is not launching any further stimulus measures.
MONETARY POLICY: Capitalism, Not Culture, Drives Economies
Fareed Zakaria, Washington Post, Opinion – “Culture makes all the difference,” Romney said at a fundraiser in Israel, comparing the country’s economic vitality to Palestinian poverty. But it was because of sound monetary policies in the 1990’s that Israel’s economy grew much faster than it had in the 1980s. The miracle Romney was praising had to do with new policies rather than deep culture.
Michelle Jamrisko, Bloomberg – Consumer confidence in the U.S. dropped last week as views on the state of the economy decreased to the lowest level in five months.
Neil Shah, WSJ – The U.S. factory sector shrank in July for the second straight month, and gauges of future activity suggest weakness will continue into the fall.
DROUGHT/ENVIRONMENT: Drought Dries Up Cattle Market
Marshall Eckblad, WSJ – The U.S. market for young beef cattle is feeling the heat of a historic drought. Faced with seared grazing pastures, ranchers across the U.S. who can’t afford to provide food and water to steers and heifers are rushing to sell them.
BANKRUPTCY: San Bernardino, CA, Files Chapter 9 Bankruptcy
Steven Church, Dawn McCarty, & Michael Bathon, Bloomberg – San Bernardino, California, filed for municipal bankruptcy after disclosing a $46 million shortfall in the city’s budget, the third California city to seek court protection from creditors since June 28.
Ian Mount, NY Times – After years of a small-business credit crisis, conditions seem to have improved. But with the economy still struggling and new regulations meant to eliminate bad lending, bank loans continue to lag.
Anjli Rival, Financial Times – The number of Americans who claimed unemployment insurance rose last week, marking the fourth week of swings in the data, reflecting volatility in the US labour market.
Simon Johnson, NY Times Economix – Global megabanks, including JP Morgan, HSBC, Barclays, and, most recently, CitiGroup, have had a tough summer. First, their critics are “populists” who do not understand banking or economics. The second myth is that a “cost-benefit analysis” would show that the Dodd-Frank financial reforms are not worth pursuing. The third myth is the assertion that financial reform will hurt our growth prospects.
COMPANY NEWS: General Motors 2Q Profit Falls 41% as European Losses Cut into North American Earnings
Associated Press via Washington Post – A big loss in Europe dragged down General Motors’ second-quarter profit. The automaker’s net income from April through June fell 41 percent to $1.5 billion, $1 billion less than the same quarter a year earlier, GM said on Thursday.
Louis Woodhill, Forbes, OP-ED - If mismanaging an economic recovery were an Olympic event, President Obama would be standing on the middle platform right now, accepting the gold medal.
MORE WALL STREET/TRADING GLITCH:
WALL STREET/TRADING GLITCH: Knight Explores Options On $440 Million Trade-Error Loss
Whitney Kisling, Bloomberg – Knight Capital Group Inc. said losses from yesterday’s trading breakdown are $440 million, almost quadruple its 2011 net income and more than some analysts had estimated, and the firm is exploring strategic and financial alternatives. Its stock has lost 66 percent in two days.
WALL STREET/TRADING GLITCH: When Will Retail Investors Call It Quits?
Jason Zweig, WSJ – If small investors needed any more reason to be disgusted with the stock market, they got it Wednesday, when trading–once again–went haywire.
WALL STREET/TRADING GLITCH: Flood of Errant Trades Is a Black Eye for Wall Street
Nathaniel Popper, NY Times – An automated stock trading program suddenly flooded the market with millions of trades Wednesday morning, spreading turmoil across Wall Street and drawing renewed attention to the fragility and instability of the nation’s stock markets.
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