March 14, 2012
The current account deficit for Q4 2011 was higher than estimates, up 15% from the prior quarter to $124 billion. Import prices rose less than expected, 5.5% vs. expectations of 5.8% after food costs declined but fuel cost soared. The current account deficit was 3.2% of GDP vs. 2.8% in the third quarter. The trade deficit, which was $141 billion, up 4.7%, accounted for most of the current account deficit. The current account balance is on track to rise again this quarter.
A scathing op-ed letter in the Wall Street Journal from a former executive director of the firm has Goldman Sachs (GS) scrambling on the PR front today. The letter accuses the firm and CEO Lloyd Blankfein of losing hold of the firm’s culture. “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients.” The letter also cited managing directors referring to their clients as “Muppets.”
The Fed released the results of their “stress tests” of the financial system yesterday. The Fed used aggressive assumptions for how key financial institutions would fair under extremely negative economic conditions. Both Citi (C) and Met Life failed the test, and C was also rebuffed in their effort to return more capital to shareholders. JP Morgan (JPM) announced that they would be increasing their dividend by 20%. Overall 15 of 19 banks passed the test.
Online game maker Zynga (ZNGA) has announced plans for a secondary offering.
The Bank of Japan is beginning to jump on board the global fiscal stimulus program. After setting an official inflation target earlier this year, the BOJ is now planning to increase lending by $24 billion to stimulate the economy.
The US, EU and Japan are challenging China’s export quotas on rare-earth materials. The challenge may be too late as many global consumers of rare-earth materials have initiated steps to relocate manufacturing facilities inside China to avoid the restriction.
A suit that pits Fed secrecy vs. shareholder rights is being heard right now. The plaintiffs, which allege that BofA, the Fed, and former BofA CEO Kenneth Lewis withheld information about Merrill Lynch’s skyrocketing losses, seeks to subpoena Fed Chairman Ben Bernanke. The Fed is fighting the subpoena.
The CBO has released a new budget deficit figure for fiscal year 2012 (which ends September 30) of $1.2 trillion, a bump of $100 billion from their report estimate. The bump comes from the extension of the payroll tax cut passed last month.
The NCAA Tournament kicks off tomorrow. Get your picks in!