Monday, March 22, 2010

Equities lower across the board-Health Care-China-UK bank tax $SPY

· Equities lower across the board (ex-China, which was up small) due to: 1) passage of Health Care legislation in the US; 2) a grim warning on the state of public debt from the IMF; 3) European officials downplaying potential for a near-term package for Greece and 4) a surprise rate hike out of India (the India news hit during US trading on Friday but after the close of trading in Asia).

· Health Care - House passes Senate bill 219-212 Sun night. In the final roll call, no House Republican voted for the bill, and 34 Democrats voted no. The House followed up w/a 220-211 vote to pass the companion reconciliation bill. A deal was reached w/antiabortion Dems to get their support for the final legislation and will involve Obama issuing an executive order affirming the existing policy that Federal Funds couldn’t be used for abortion. The Senate this week is expected to vote on the reconciliation bill. Its not clear how a successful vote Sun night will impact trading on Mon; passage was pretty much expected as of late on Fri although certain elements of the final legislation may receive more attention this week and spook investors (inc. the tax being imposed on earned income, the overhaul of student lending that was tucked into the HC bill, etc).

· China - on the China front this weekend, the country continues to try to sooth tensions related to the yuan and an official this weekend said China will prob. have a trade deficit in the month of Mar. A Chinese representative will travel to the US this week w/the goal of allaying yuan-related jitters

· In Europe, Germany’s Merkel downplays speculation of a Greek bailout, saying officials shouldn’t allow market expectation to get ahead of themselves on the issue; Merkel said the subject of a Greek aid package was not even on the agenda at this week’s Summit meeting. The German gov’t issued a statement saying Merkel spoke to Greek Prime Minister George Papandreou on Sunday and he told her Greece does not need financial help.

· UK bank tax - A. Darling plans to move ahead w/plans to impose a tax on banks with details of the tax to come later this week when the UK budget is due out.

· the Fed’s ability to keep the identity of discount window borrowers private may be limited going forward after a Fri court ruling; an appeals court ruled on Fri that the Fed must disclose documents related to individual firm borrowing from its discount window and other “last resort” lending programs (WSJ) .

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