My finance view

Call it the Case of the Missing Commission.

The bipartisan panel that President Obama has promised would tackle the nation’s long-term debt problems is nowhere in sight yet.

The delay in getting the commission up and running is due in great part to partisan jockeying from both sides of the aisle and continued uncertainty about whether current Republican lawmakers will agree to take part.

There’s no guarantee that when it does materialize it will have the respect of many in Congress, which would have the final word on the commission’s recommendations.

And the call for the commission has taken on greater urgency in light of the recent global volatility caused by the sovereign debt crisis in Greece, which threatens all of Europe.

"You need a fiscal commission. You need it now," Simon Johnson, senior fellow at the Peterson Institute for International Economics, told lawmakers this week.

The commission will be asked to figure out ways to get annual deficits down to 3% of gross domestic product by 2015 and thereafter put the country on a more sustainable fiscal track.

The panel’s timeline will be tight. The commission is supposed to issue its report soon after the mid-term elections in November so Congress can vote on them before the year is out.

So every day that goes by without a commission is valuable time wasted considering the complicated issues it is expected to address — everything from taxes and health care to all spending in the federal budget, including Medicare and Social Security.

What’s the rush?

The commission isn’t expected to make recommendations that — if passed — would go into effect right away. In fact, even many deficit hawks say that now is not the time for fiscal austerity. The time for that would be when the U.S. economy is on firmer footing.

But the swift establishment of the commission would help signal to international markets that the United States is working to get its deficits under control, said Johnson, a former chief economist for the International Monetary Fund.

"I think we should take events of the past few weeks in Europe as a wake-up call," Johnson said.

In the past two months, borrowing costs have soared for Greece, where the annual deficit has risen to 12% of the economy. That has forced the country to choose between defaulting on its debt or trying to convince investors of its creditworthiness by imposing stringent austerity measures such as budget cuts, tax hikes and pay freezes business cards.

Of course, there’s a lot that distinguishes the position of the United States from Greece. But the recent events show just how quickly the markets can turn on sovereign borrowers.

What’s the risk?

If the United States takes its time coming up with a deficit reduction plan, all bets are off.

"If you don’t have [a fiscal commission] … the financial markets are going to push you on the lack of medium-term credible fiscal framework," Johnson said.

And if the push for greater fiscal austerity comes during the second half of 2010, when economic growth is expected to slow, that would harm the U.S. economy.

"Raising taxes and cutting spending — you don’t want to do that in the second half of the year. If the markets force you to, that’s a disaster," Johnson said.

Carmen Reinhart, director of the Center for International Economics at the University of Maryland, has studied the patterns that high-debt countries follow after severe financial crises like the kind that almost felled the U.S. economy in 2008 and 2009.

Like Johnson, Reinhart doesn’t believe this year is the time for implementing austerity measures. But it is the year to come up with a plan of action to reduce the country’s debt over time.

"Market discipline can come without warning. Countries that haven’t laid the groundwork for adjustment come to regret it. This time is not different," Reinhart told lawmakers.

There is nothing magic or even necessary about a fiscal commission. But the fact is Congress is showing no signs of taking on sacred cows and addressing the fiscal problem head-on.

Still, having a commission and having it be successful are two very different things.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group of leading budget experts, has warned against anyone pinning all their hopes for fiscal restraint on a commission.

"In a politically charged environment, a commission is a great idea. However, the administration must have a ‘Plan B’ in case the commission does not succeed." 

Source

Looking for accurate and precise life insurance quotes that will help you choose the right policy? This is the site where you will find all life insuranceand senior life insurance.

Homeowners seeking relief under the Obama administration’s mortgage aid program will be required to provide proof of their incomes upfront, a significant reversal for the problem-plagued effort to stem the foreclosure crisis.

Borrowers had been able to state their income verbally and provide documentation later. Mortgage companies, however, said many borrowers didn’t return the documents.

Only about 66,500 borrowers, or 7 percent of those who signed up, had completed it as of December.

Lenders will now be required to collect two recent pay stubs at the start of the process, the Treasury Department said Thursday. Borrowers will have to give the IRS permission to provide their most recent tax returns, rather than submitting the returns themselves.

The changes become mandatory for loan modifications made starting June 1.

The change in policy came after officials concluded that mortgage companies such as GMAC Mortgage and Ocwen Financial Corp. were delivering better results. They had always required documents up front.

Under the new rules, participating mortgage companies must acknowledge receipt of a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the modification becomes permanent.

While the changes should help, the lack of penalties for companies who don’t comply disappointed some experts. "There’s no teeth to that obligation," said Andrew Jakabovics, associate director for housing at the Center for American Progress, a liberal think tank.

Many consumer groups, meanwhile, have been calling for more dramatic changes. They want to help homeowners who have lost their jobs and those who owe the bank more than their homes are worth.

Treasury officials said they are studying ways to aid unemployed homeowners but offered no details.

Source

Compare and purchase low cost car insurance rates from multiple auto insurance companies immediately online.

Mexico’s benchmark local bonds are poised for the biggest annual rally in four years after underperforming regional debt in 2009 as the economy recovers and the peso gains, Stone Harbor Investment Partners said.

The yield on Mexico’s 10 percent peso bond due in December 2024 may plunge about 40 basis points, or 0.40 percentage point, in 2010, to 7.80 percent, said Pablo Cisilino, who manages $11.5 billion in emerging-market assets at Stone Harbor in New York. That would be the biggest one-year drop since 2006.

Mexican domestic debt returned 7.7 percent last year, less than the 10 percent return posted by Latin American local bonds on average, according to JPMorgan Chase & Co.’s ELMI+ index. The region’s second-largest economy will grow 2.95 percent in 2010 after contracting 7 percent last year, the most since 1932, the median forecast of 19 economists in a Bloomberg survey shows.

“People were too pessimistic on the growth outlook for Mexico and very pessimistic about the peso,” Cisilino said. “Things are changing. They’re starting to come around.”

Daily volume in Mexican bonds traded in the secondary interbank market doubled to an average of 9.4 billion pesos in January’s first 14 days from the same period a year earlier, Citigroup Inc. said in a Jan. 19 report.

The peso is up 1.6 percent this year, the second-best performance against the dollar among 16 major currencies, behind South Korea’s Won, on prospects increased demand from the U.S., Mexico’s biggest export market, will help spur the recovery.

‘Strong Recovery’

The currency rose 0.6 percent to 12.8991 per U.S. dollar at 11:02 a.m. New York time. The yield on the 10 percent peso bond due in December 2024 fell four basis points, or 0.04 percentage point, to 8.18 percent, according to Banco Santander SA.

Miguel Messmacher, the chief economist at Mexico’s Finance Ministry, said in an interview Jan. 22 that there is a “very high” probability the country’s economy will grow more than 3 percent this year.

“Exports are showing a very strong recovery,” Messmacher said. “There are no doubts about the stability of external accounts in Mexico.”

Cisilino predicts the yield on Mexico’s 8.5 percent peso bonds maturing in 2018 may drop 50 basis points this year. The yield on the 2024 bonds slid 16 basis points in the past three months to 8.22 percent on Jan. 22, according to Banco Santander SA. The $135 million Stone Harbor Emerging Market Debt Fund that Cisilino helps manage returned 43 percent last year and is up 0.9 percent in 2010, according to data compiled by Bloomberg.

Borrowing Costs

Peso bonds may also rise because inflation is unlikely to pick up enough in the next six months for central bank Governor Agustin Carstens to raise borrowing costs, according to Alejandro Hernandez, who oversees 13.5 billion pesos ($1 billion) in fixed-income assets at Grupo Financiero Interacciones SA in Mexico City no fax payday loans.

“There could be a rally in the first half of the year” if the bank keeps its inflation forecast and the peso remains strong, Hernandez said.

Citigroup’s Mexico City-based Banamex unit, Banco Santander SA and Bank of Nova Scotia are among six banks that pushed back their forecast for interest-rate increases after Carstens, 51, said this month a stronger peso will curb inflation.

Mexican inflation has absorbed price increases “well,” Carstens said at a conference in Mexico City on Jan. 8. He said the increases are coming from the government raising taxes and state-controlled prices.

“The direct impact on prices is limited, and will be transitory and fade after a year,” Carstens said.

Rate Forecasts

Banamex revised its call for a rate rise to September from May while Santander, Spain-based Banco Santander pushed back its forecast to October from February. Toronto-based Scotiabank shifted its call to April from February. The median estimate of 21 economists in a Jan. 12 Banamex survey is for borrowing costs to start rising in July, four months later than they predicted last month.

Inflation may quicken more than the central bank forecasts, said Ricardo Aguilar, an economist at Invex Casa de Bolsa SA in Mexico City.

“I think they’ll raise forecasts,” said Aguilar, who predicts an inflation rate of 5.44 percent this year and says the bank may increase forecasts in July. “There are other goods and services that could suffer a greater impact than what the market and the bank predict.”

The central bank will probably keep its inflation forecasts unchanged in its quarterly report on Jan. 27, said Luis Flores, an economist at Ixe Grupo Financiero SA in Mexico City. Policy makers said last month the annual inflation rate may climb as high as 4.75 percent in the first three months of 2010, rising to 5 percent in the April-to-July period and 5.25 percent in the second half.

Inflation

The annual inflation rate was 4.17 percent in the first half of January.

“The idea is gaining ground little by little that the bank won’t move rates,” Flores said. “We’ll see more interest in the debt market.”

Mexico’s benchmark Bolsa stock index fell 4.4 percent to 30,830.91 last week. Cemex SAB, the largest cement maker in the Americas, declined 8.1 percent to 13.73 pesos last week. Gruma SAB, Mexico’s largest maker of corn flour for tortillas, retreated 4 percent to 27.4 pesos from 28.55.

The Mexican currency dropped 2.1 percent to 12.9744 pesos per dollar last week.

Yields on Mexico’s benchmark peso bond due 2024 rose seven basis points, or 0.07 percentage point, to 8.22 percent, according to Banco Santander SA.

Source

Carolynn Ingerson Hoffman says she knew even as a little girl that she wanted to become a nurse and help sick people get better.

She says she also gained a strong work ethic from her father, who held two or three jobs at a time to earn enough to support a family of six girls and a boy in north St. Louis County.

Hoffman didn’t let a lack of money for education and partial deafness stemming from illnesses get in her way while pursuing her goal of a nursing degree. She got a scholarship and studied hard. Compounding the difficulty was that she was a divorced mother with a young son.

Then, after working as a registered nurse for several years, she pursued a new dream: a business to provide nursing services throughout the St. Louis area.

Her business, now called MediNurse Inc., marks its 25th anniversary this year. The business, originally named CompreHealth Inc., employs more than 100 full- and part-time workers and provides a wide range of nursing services for hospitals, businesses, organizations and individuals.

I understand that you overcame great personal difficulties to get to where you are in life. What is your best advice for others who similarly face great odds?

I guess I would say that growing up in a large family when I did had its challenges, certainly monetarily. I could also take you through the ’60s and ’70s and tell you what it was like at the time being a divorced mother who had to work.

Now, that was a challenge — just getting housing and credit were challenges. I’d like to think, and I do know, that it was because of women like me who opened doors — or crashed through them — that many women today have been able to move forward and upward. We fought the battles so that they could win the war.

My best advice for anyone is to just keep going. Don’t give up, find a way around every obstacle and find the opportunity in every challenge. You have to take control and make things happen — things you want to happen.

How has your hearing loss affected the way you’ve operated your business?

It has affected my career greatly. In the beginning, I was treated with kid gloves — kind of pitied. That surprised me, because I was elated I could even hear! I didn’t consider wearing hearing aids a handicap but rather blessings.

But because everybody seemed to be so sympathetic, I decided to use it to my best advantage in business. I could always get the best seat in a conference room and could say "excuse me" when I needed to think for a moment. I never hid the fact that I was hearing impaired.

I do need the best seating possible to hear. I do have trouble distinguishing words. Now I have to take a second person on marketing calls just to make sure I’m hearing correctly.

The need for nursing services seems to be ever increasing. Did you foresee that trend when you started your business?

In this business and others you have to pay attention to the trends and stay one step ahead of them. We’ve been through shortages, we’ve been through periods of oversupply. Now we’re looking at a national shortage of nurses unlike all others.

It was perfectly predictable. The largest block of nurses, the baby boomers, are retiring. There aren’t enough qualified faculty available in order to admit more nursing students. Nurses have so many more opportunities today other than actual bedside nursing. Add it all up and it spells shortage.

Would the legislation being considered in Congress do enough to address the nation’s health care crisis and bring affordable care to more people?

I haven’t read the Senate bill. I did, however, read the House bill — every page of it — and was appalled. …

Do I think what we are doing is good for health care and this country? No, I do not.

It seems to me we could have purchased insurance for everyone who didn’t have it, pay the premiums each year and it would have been less than this, and the majority would still have their insurance.

What could we do to make health care more affordable? Let us buy the insurance that meets our needs from any state.

Tort reform also is needed. Physicians practice too much defensive litigation to the extent that it impacts every aspect of health care. Simply put, they’re concerned they will be sued.

I have great concerns about what is happening in Washington. I’ve become a political activist at 64!

Even as your business has grown and thrived, do you wish you had done anything differently along the way?

Yes. I was going to franchise and, in fact, had a check for $50,000 in my hand to take to the lawyers to get started. It was the day the stock market crashed (in 1987). I canceled the appointment, which was the right decision at the time. However, I should have done the franchising when conditions were favorable again.

I try not to look back and second-guess myself. I have always been guided by a strong work ethic and commitment to doing what is right, while maintaining a good profit margin. I got these traits from my father.

We have been number one in size, visibility and profitability. I really don’t have the need to do that again.

Don’t get me wrong — I am very committed to being successful. However, being successful means to me helping others as well as guiding my company into the future.

Source

One year since the arrest of Ponzi mastermind Bernard Madoff, most of his victims are still trying to recoup their losses.

"We’ve got nothing back," said Dana Foy, a 57-year-old computer programmer in New Mexico.

Foy, who wouldn’t identify how much money he lost, saw his dream of a comfortable retirement with his wife wiped out by Madoff’s scheme, which came crashing down when he was arrested on Dec. 11, 2008.

About $20 billion in investor funds were lost to Madoff’s scam, according to the Web site of the court-appointed trustee Irving Picard, who is tasked with recovering and allocating as much of the money as possible. Some of the victims have been reimbursed, but many are still waiting.

Of the 16,000 claims that have been filed, about 70% have been processed, according to Picard. Of those 11,563 processed claims, 1,647 have been determined to be valid. Most of the claims, some 9,916, have been denied.

Most of the denied claims are "indirect" investors who did not have an account at Madoff’s firm, according to Stephen Harbeck, chief executive of the Securities Investor Protection Corporation. Indirect investors include those in feeder funds, which are other funds that place their money with Madoff. Claimants have to try and get reimbursement from those fund managers, not through the trustee.

The SIPC has allocated $561.3 million to the 1,647 approved claims. Some of those claims have been paid out and some have not. But that still falls short of the $4.69 billion the trustee has earmarked for victim compensation - much of which would come from the sale of Madoff’s assets.

The trustee has not yet sent out money from confiscated assets, which it is still in the process of recovering.

"We don’t understand why it’s taken so long," said Ilene Kent, coordinator with Investor Action Group, which was organized for Madoff victims like herself.

In an e-mail to CNNMoney.com, Harbeck identified the various factors that can affect "the reconstruction of a claim," including "the length of time a customer had an account, coupled with multiple withdrawals in addition to deposits and the completeness of the paperwork submitted by the customer."

The SIPC covers up to $500,000 per account for victims who’ve lost money. That includes Korean War veteran Allan Goldstein, 77, who said he had invested $2 million with Madoff’s firm.

His final statement from Madoff said his investments had grown to $4.7 million. Goldstein had also drawn down about $300,000 annually to live on for a number of years.

Goldstein said the trustee subtracted the withdrawals from his $2 million investment, resulting in the $320,000 he received from SIPC. He and his wife used that money to buy a house in Great Barrington, Mass. Because of his withdrawals, Goldstein is not expecting to receive money from Madoff’s confiscated assets.

Ponzi schemers operate by masquerading as legitimate money managers. Madoff didn’t invest his clients’ money — he stole it no faxing payday loan. He kept the scam going for years by allowing some of his clients to withdraw money, while fraudulently portraying those withdrawals as legitimate returns.

Goldstein said that he and his wife currently live on Social Security and assistance from their children. That’s a stark contrast from the affluent retirement that he’d planned.

"The whole thing is a nightmare," he said. "We do the best we can, and we’re surviving. We’re very happy, at least, to be living in our own home."

Madoff’s money trail

Any losses beyond SIPC are set to be recouped through the recovery of stolen assets, such as Madoff’s yacht and his multi-million dollar properties in Manhattan, Montauk, N.Y., Palm Beach, Fla. and Cap d’Antibes on the French coast.

Maureen Ebel, 61, of West Chester, Pa., said she invested $5.3 million in Madoff’s firm through two separate accounts, and the latest statement from the firm said her investments had grown to $7.3 million. She recovered $1 million from SIPC — $500,000 for each of her two accounts — but she’s still missing millions.

"I don’t think I’ll ever see any of it, quite frankly," said Ebel. "We don’t even know where it is."

So far, investigators say they have confiscated about $1.5 billion worth of assets from Madoff’s estate, which falls far short of the approximately $20 billion in investor funds that were lost to his scheme.

The recovery process continues. Picard has filed 14 lawsuits against Madoff’s friends and family.

Investigators have no idea how long it will take to track down the stolen money and have not set a deadline for discontinuing the recovery, according to the trustee’s office.

Madoff’s trail of victims

Meanwhile, Madoff languishes in prison. He pleaded guilty in March to 11 counts related to running his Ponzi scheme and was sentenced to 150 years. Madoff, 71, is incarcerated at the Federal Correctional Institution Butner in North Carolina and faces an official release date of Nov. 14, 2139.

But this provides little comfort to some of this victims.

"He’s away, he can’t hurt anyone else, and that’s a good thing," said Mike De Vita, a computer programmer from Philadelphia who lost 40 years worth of retirement savings to Madoff’s scam. "But other than that, what happens to Bernard Madoff doesn’t really matter."

Ebel, who ditched her plans for a comfortable retirement and reentered the workforce as an office manager, resents Madoff for wiping out the savings that her late husband had left her.

"[Madoff] has ruined so many lives and caused so much pain to so many people that he will never get what he deserves until he dies," she said. "May God have mercy on him." 

Source

The Dallas real estate community lost an industry icon with the death Saturday of Henry S. Miller Jr.

Miller Jr., who was 95, greatly expanded the real estate company his father started in 1914. He joined Henry S. Miller Co. in 1946, became chairman and CEO in 1960, and is known for building the firm's expertise in brokerage, property management, as well as the development of shopping centers and office buildings.

Under Miller Jr.’s leadership, the Henry S. Miller Co. helped launch the careers of many notable real estate professionals who went on to form their own companies, including Roger Staubach, Herb Weitzman and Wayne Swearingen.

Henry S. Miller III said Sunday that his father pioneered the concept of specialization of services in different areas of commercial real estate.

“Before, it was all generalists,” Miller III said. “We were the first real estate company to break it up into divisions,” such as retail, multifamily, industrial, office and investment properties.

“We contended that that was the best way for people to really become expert in their fields,” Miller III said.

Other Henry S. Miller Co. innovations included establishing pension and profit-sharing trusts for employees and using psychological assessments for prospective employees, as well as formulizing training for new brokers, according to “The Book,” profiles of Dallas real estate pioneers published in 2008 by the North Texas Commercial Association of Realtors.

Miller III said his father’s business success began with his philosophy of treating everybody equally.

“He was so humble,” Miller III said. “He couldn’t have done all the things that he did if he had an ego that got in the way. He never claimed credit for anything, so it was easy for other people to work with him. They didn’t feel like somebody else was competing with them.”

Source

A key measure of consumer confidence gained slightly in November, snapping a two-month declining streak, a research group said Tuesday.

The Conference Board, the New York-based research group, said its Consumer Confidence Index rose to 49.5 in November from an upwardly revised 48.7 in October.

Economists were expecting the index to dip to 47.5, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation’s economic activity.

The overall index remains at historically low levels. A reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

Despite the modestly upbeat figure, Lynn Franco, director of the Conference Board, said "consumers are entering the holiday season in a very frugal mood."

The index component that evaluates consumers’ judgment of the present situation was virtually unchanged, slipping to 21 in November from 21.1 the previous month. The measure stands at the lowest level since the 17.5 measured in February 1983.

Consumers’ assessment of the job market also continued to deteriorate. The percentage of those claiming that jobs are currently hard to get reached a new high of 49.8%, while the number of consumers claiming that jobs are "plentiful" hit a new low at 3.2%.

Employers continued to cut jobs from their payrolls in October, as the unemployment rate rose to 10.2% and hit another 26-year high last month, according to a report from the Labor Department.

The percentage of consumers expecting their incomes to increase declined to 10% from 10.7%.

Despite their current outlook, however, consumers are optimistic about a recovery.

The expectation index, which measures consumers’ outlook over the next few months, climbed to 68 payday loan no fax no credit check.5 from 67 last month.

Franco said the "moderate improvement was a result of a decrease in the percent of consumers expecting business and labor market conditions to worsen, as opposed to an increase in the percent of consumers expecting conditions to improve."

While the percentage of those expecting the job market to improve edged down to 15.2% from 16.8%, the percentage of consumers expecting fewer jobs dropped to 23.1% from 26.1%.

Likewise, the percentage of consumers expecting an improvement in business conditions over the next six months dropped to 20% from 20.8%, but those expecting conditions to worsen decreased to 15.1% to 18.2%.

But even the "underlying data is abysmal," said Mark Vitner, senior economist at Wells Fargo.

"Fewer people think things will get worse, which isn’t very comforting. You’d have to be a real pessimist to think things will get worse than they already are," said Vitner, adding that the consumers’ assessment of the economy might be "overly bleak."

Given the amount of stimulus the government has pumped into the economy, Vitner said he is "disappointed that this is all we’re getting in consumer sentiment for economic recovery."

For a healthier reading, Vitner said consumers need to believe jobs will be created and incomes will rise so they will increase spending.

The data followed a government report that said GDP, the broadest measure of economic activity, rose at an annual rate of 2.8% in the third quarter of this year, less than the 3.5% it originally reported. 

Source

Federal Reserve officials on Tuesday struck a cautious note on the U.S. economy, citing high unemployment, heavy reliance on government support and commercial real estate woes as hurdles to recovery.

Speaking less than a week after the Fed left interest rates unchanged at near zero, a trio of top officials — San Francisco Federal Reserve Bank President Janet Yellen, Atlanta Fed chief Dennis Lockhart and Boston Fed President Eric Rosengren — said the economy was still vulnerable.

“The strength and durability of the expansion is in question,” Yellen said in Phoenix, Arizona. “High unemployment, weak job growth and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery.”

The Fed chopped overnight interest rates to near zero in December and it has pumped more than $1 trillion into the economy to spur a recovery from the deepest downturn since the Great Depression.

Last week, it reaffirmed its commitment to keep borrowing costs ultra-low for “an extended period,” and financial markets will be listening to Fed officials closely to try to gauge when they may finally move to withdraw their economic support.

The latest remarks eased investor’s worries about higher interest rates, helping support prices for U.S. government debt.

Yellen and Lockhart are among the voters this year on the Fed’s policy panel, while Rosengren will move into a voting slot in 2010. While Yellen and Rosengren are seen as Fed “doves” on inflation, Lockhart is considered more of a hawk.

“It’s a question of timing,” Rosengren told a seminar in London when asked how the Fed planned to exit from its extraordinarily supportive policies no credit check payday loans. “We’re not there yet.”

SELF-SUSTAINING RECOVERY QUESTIONED

Yellen said it remains to be seen whether the private sector can carry the load once supportive fiscal and monetary policies fade. Meanwhile, Lockhart said that while a recovery was under way, growth would be “relatively subdued” in the medium term.

“The situation is much improved, but there are sobering aspects of the economic picture,” he told a conference in Atlanta, adding data on bank failures, foreclosures, unemployment and personal income “continue to disappoint.”

The U.S. economy grew at a 3.5 percent annual rate in the third quarter, snapping four consecutive down quarters and likely ending the recession that began in December 2007.

But labor market conditions remain dismal. The unemployment rate surged to a 26-1/2-year high of 10.2 percent in October, and a Reuters poll on Tuesday showed economists expect it to hit 10.5 percent in mid-2010 before subsiding.

High unemployment is one factor expected to keep the Fed on the sidelines. The central bank said last week that economic slack, subdued inflation trends and stable inflation expectations argued for a prolonged period of low rates.

“At this juncture, it’s hard to be encouraged about a fast rebound in job growth,” Lockhart added. 

Read more

Citigroup Inc posted a quarterly per-share loss as credit losses shrank to a still-hefty $8 billion and its commercial and investment banking revenue weakened.

The loss per share was narrower than analysts expected but still underlined how far the bank — which is one-third owned by the U.S. government after three bailouts — has to go to catch up with stronger rivals like JPMorgan Chase & Co.

“You can see how they’re making progress, but there’s a lot more work to do, they don’t look as good as Goldman Sachs right now,” said Matt McCormick, portfolio manager, Bahl & Gaynor Investment Counsel Inc. Citigroup’s shares closed down 5 percent at $4.75.

Citigroup’s securities and banking revenue declined by a third from the same quarter last year to $4.9 billion, while JPMorgan and Goldman Sachs Group Inc both posted big gains in banking.

That decline came as JPMorgan Chase and Goldman Sachs this week posted big increases in investment banking revenue, driven by bond trading.

Goldman had a strong trading performance in areas like corporate debt and stock options. Citigroup cited those same products as sources of weakness.

On a conference call, Chief Financial Officer John Gerspach noted that many troubled fixed-income assets at Citigroup are in a special asset pool, and their rising value would not help results in the securities and banking business even if they do bolster the bottom line.

Citigroup posted a net loss to shareholders of $3.2 billion, or 27 cents a share, compared with a loss of $2.9 billion, or 61 cents a share, a year earlier.

Analysts’ average forecast was a loss to shareholders of 38 cents a share.

COMPLICATED RESULTS

Analysts have struggled to determine when Citigroup will start posting profits from its main businesses. Some have forecast a return to “core profitability” as soon as early next year.

Citigroup has posted more than $100 billion of writedowns and consumer credit losses since the credit crisis began. It posted more than $37 billion of net losses between the fourth quarter of 2007 and the fourth quarter of 2008.

In every quarter this year, the bank has reported net income, but through one-time gains and accounting items.

In the third quarter, the bank posted net income of $101 million after a $1.12 billion tax benefit. But it reported a $529 million loss from continuing operations before taxes. The bottom line for shareholders was negative, including one-time losses from converting preferred shares into common stock.

Results were further muddied by accounting losses that resulted from the bank’s bonds performing better. 

Read more

As third quarter earnings season takes off, bigger is better.

With the U.S. economy emerging from recession, large cap stocks are set to have a stronger third-quarter earnings season than their mid and small cap counterparts, which are expected to rebound at a slower pace.

This goes against the usual trend when the economy emerges from recession, analysts say. Often, smaller companies recover more rapidly as the economy expands.

This time, large caps have several factors working in their favor. The weakness of the dollar helps multinationals that export product overseas, and also provides them a favorable currency translation.

Government assistance in the credit markets also drove down borrowing costs for big financials, set to report another quarter of strong profits.

And statistical comparisons with year-ago results will be flattering for large caps devastated in the second half of 2008.

So while mid and small cap firms may prove more flexible if an economic rebound takes hold, their bigger brothers appear better equipped to weather a slow-plod recovery.

“Especially in the financials, the small cap space still seems to have its issues in terms of earnings, and so that is going to be a pretty big drag in terms of the profit numbers,” said Steve DeSanctis, small-cap strategist at Bank of America Merrill Lynch in New York. “You’re getting probably more of a recovery in the large-cap earnings.”

BIG COMEBACK

Expectations that small and mid cap companies would recover first is apparent in the performance of the shares easy pay day loans.

Since hitting 12-year lows on March 9, small and mid cap stocks have led the recovery, with the S&P MidCap 400 index .MID rising 72.4 percent and the S&P SmallCap 600 index .SML jumping 76.5 percent. In comparison, the S&P 500 index .SPX has gained 57.8 percent.

But third and fourth quarter estimates favor the large cap names. According to data from Thomson Reuters, third-quarter earnings for large cap stocks are expected to decline 25.3 percent. By contrast, Bank of America-Merrill Lynch researchers predict a decline of 26.6 percent for midcaps and almost 31 percent for small caps.

The earnings collapse in the second half of 2008 hit large cap names harder than smaller stocks. Mid caps, in particular, have a heavy exposure to the energy and materials sectors, which were stronger in the second half of 2008, Bank of America-Merrill Lynch noted.

The majority of the large cap profit recovery is expected to be provided by financial stocks, as analysts project a 56.9 percent increase in earnings from a year-ago, when profits were crippled by the near-collapse of the banking system.

Smaller financials have also been under pressure for their exposure to commercial real estate, which may hamper their quarterly profits. 

Read more