Sunday, May 16, 2010

Macro Themes & Political Issues

Fed might not tighten until 2011 - Economists think the Fed will stay lower for longer as a result of the recent turmoil in Europe. A new WSJ says 42% of economists think Fed will hold off on tightening until ’11 or beyond; last month, only 28% thought this. WSJ

Obama wants federal agencies to ramp up hiring - Obama plans to instruct federal agencies to radically overhaul the process now used to hire government workers. The change is expected to cut in half the time it takes to fill vacancies. Washington Post

Real estate continues to put ceiling on growth - Real estate will continue to act as a brake on economic growth rather than an accelerant. Although the economy is growing and showing rises in manufacturing and spending, the market for homes and office buildings continues to be oversupplied and burdened with foreclosures. WSJ

“Volcker Rules” increasingly looking like they will find their way into the eventual Dodd bill - Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.) have sponsored an amendment that would ban all proprietary trading by depository institutions; the proposed amendment nearly mirrors the so called “Volcker Rules”. WSJ

Volcker against proposal forcing banks to spin off their swaps desks - The former Fed chief and current WH advisor has voiced some concerns about Senator Blanche Lincoln's proposal to regulate the derivatives market much more tightly, saying that he is not in favor of forcing banks to spin off their derivatives operations. NYT

Exchanges agree to strengthen circuit breakers following SEC meeting although still no clear reason for the Thurs market decline - The heads of the major exchanges saw no evidence to confirm that a trading error caused the plunge. "As a first step, the parties agreed on a structural framework, to be refined over the next day, for strengthening circuit breakers and handling erroneous trades." SEC

The SEC is considering “radical” new trading restrictions aimed at “slowing markets down” – Trading in individual stocks could be halted if they move by a certain %; the SEC is considering whether to impose uniform trading curbs access markets for companies that have declined a certain %. London Telegraph

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