The Federal Reserve Bank of New York bought the building at 33 Maiden Lane for $207.5 million from Merit US Real Estate Fund III, LP, according to a statement on the district bank
Can the market sustain its rally, or will prospects of a Greek default shatter investors’ risk appetite?
The Dow Jones Industrial Average () closed at its highest level since 2008 Friday. For the year, the Dow is up almost 6%, and the S&P 500 () is up more than 8%. The Nasdaq () has made an impressive 13% run.
Yet, the possibility of a Greek default looms large over world markets. European finance ministers will meet Monday, and are expected to sign off on Greece’s latest economic reform proposal.
Greece needs that sign off from Europe’s finance ministers to avoid defaulting on a €14.5 billion bond payment due March 20. Another delay is unlikely to rattle the markets, but if it becomes clear that Greece will default, markets strategists fear a sharp sell-off.
"Markets have priced in a positive outcome," said Joseph Tanious, global market strategist at J.P. Morgan Asset Management.
All three indexes posted solid gains for the week, as investors largely ignored concerns over Greece and focused squarely on better-than-expected economic reports in the United States. The S&P was up 1.4%.
With few key economic reports on the agenda this week, and U.S. markets closed Monday in observance of Presidents’ Day, investors will keep an eye on quarterly earnings from major retailers to assess the health of the American consumer fast payday loan no faxing.
"There will be a heightened sensitivity to retailers and their earnings to either confirm that the U.S. economy is picking up and recovering or cast a doubt on the consumer’s appetite," said Tanious.
On Tuesday, retailers Barnes & Noble (, Fortune 500), Home Depot (, Fortune 500), Macy’s (, Fortune 500), Wal-Mart (, Fortune 500) and Saks () will report quarterly results.
On Thursday, Kohl’s, Sears (, Fortune 500), Target (, Fortune 500) and Gap (, Fortune 500) will report.
On Friday, J.C. Penney (, Fortune 500) will release its earnings.
Other quarterly earnings due out next week include Dell (, Fortune 500) and Kraft (, Fortune 500) on Tuesday and Hewlett-Packard (, Fortune 500) on Wednesday
Meanwhile, investors will continue to monitor developments in Iran to determine whether concerns over the country’s nuclear program will drive up the price of oil.
U.S. crude oil rose 3% last week to close at $102.35, and economists worry that further increases in oil prices could threaten the global economy.
"I’m watching oil with trepidation," said Ram Bhagavatula, partner at the hedge fund Combinatorics Capital. "It’s the one thing that could threaten the recovery."
Federal Reserve Chairman Ben Bernanke on Friday issued a call to action to restore housing markets, saying depressed house prices and sales are a serious drag on the economic recovery.
“The state of housing has been an impediment to a faster recovery,” he told a home builders’ conference.
“We need to continue to develop and implement policies that will help the housing sector get back on its feet,” Bernanke said, laying out a few ideas from a recent Fed “white paper” on housing.
Bernanke’s recommendations for potential policy remedies fly in the face of complaints from some Republicans lawmakers that the Fed was making an unwarranted intrusion onto the turf of other policymakers.
The white paper, issued last month, was the result of several months of study by a Fed staff on a problem officials at the central bank have concluded is a key missing ingredient to a healthier economic recovery.
In his speech, Bernanke touched only on some of the less controversial ideas broached by the Fed in the paper.
He called on lenders and regulators to look at rules and practices that may hold back the origination of sound mortgages, pointing at overly tight credit as one reason the housing recovery has been slow.
An overhang of vacant homes and a glut of foreclosures is also weighing on housing activity, Bernanke added. He said it could make sense in some markets to turn some of the foreclosed homes into rental properties, a policy the Obama administration is already pursuing.
Another top Fed official - Cleveland Federal Reserve Bank President Sandra Pianalto - also pointed at housing on Friday as a key impediment to a stronger recovery, calling it “a significant headwind.”
Pianalto, who is a voter this year on the Fed’s policy-setting panel, said declines in housing wealth were keeping consumers away from stores and making harder for businesses to borrow. Bernanke said the loss of housing wealth may be chopping $200 billion to $375 billion off of consumer spending per year.
Several Fed officials have come forward since the white paper was released to push for action, although it has caused discomfort in some quarters of the central bank’s system.
Bernanke made the case that overly tight credit in mortgage markets had undercut the effectiveness of the Fed’s aggressive efforts to stimulate growth.
The Fed cut overnight interest rates to near zero in 2008 and has bought $2.3 trillion in bonds in a further effort to drive mortgage and other borrowing costs lower.
In a typical recovery, a rebound in housing fuels hiring and income gains, but that has not been the case this time, Bernanke said.
In the face of the congressional criticism of the white paper, Bernanke recently told lawmakers he was sorry if the central bank’s efforts were misunderstood as anything but a helpful effort to spell out policy options.
He defended the study again on Friday.
“One of our main objectives … was simply to make people aware how central to the recovery housing is,” Bernanke said in response to a question from the audience.
The Federal Reserve’s announcement that it is unlikely to raise its benchmark interest rate until late 2014 is simply its “best guess,” Ben Bernanke said Wednesday.
The Fed chairman made clear during a news conference Wednesday that the decision to leave interest rates unchanged for three more years was not ironclad.
The central bank’s ability to forecast that far out is limited, Bernanke says, and the Fed could adjust the time frame for when it will raise rates if economic conditions change.
Still, he said the U.S. economy remains weak and that all signs suggest the Fed won’t change its record-low rate for another three years.
“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” Bernanke said after the Fed concluded its two-day policy meeting.
The central bank has kept its key rate at a record low near zero for about three years.
Bernanke also said the Fed has not ruled out bolder steps to boost economic growth, such as a third round of bond purchases.
“If inflation is going to remain below target for an extended period and unemployment progress is very slow … there is a case for additional policy action,” he said.
“I would not say we are out of ammunition no teletrack payday loan. We still have tools.”
Prior to the news conference, the Fed downgraded its outlook for U.S. economic growth this year. It forecasts the economy to grow between 2.2 percent and 2.7 percent in 2012, according to its updated economic forecasts. That’s down from November’s forecast of between 2.5 percent and 2.9 percent.
Many economists expect Europe will suffer a recession this year, which will slow U.S. growth.
Still, the Fed said it expects unemployment to fall low as 8.2 percent. That’s an improvement from November’s bottom rate of 8.5 percent.
In December, the unemployment rate fell to 8.5 percent _ the lowest level in nearly three years _ after the sixth straight month of solid hiring.
Inflation has been relatively tame and the Fed doesn’t see that changing over the next three years.
Bernanke refused to answer a question asking whether he would resign if one of his Republican critics is elected president.
“As long as I have a job to do, I’m going to do everything to help the Federal Reserve. That’s my answer,” he said.
European Central Bank President Mario Draghi
British and Hong Kong leaders said Monday they will team up to develop London into an international trading center for China’s currency.
British Treasury chief George Osborne said in Hong Kong that his trip to Asia this week, which also includes stops in Beijing and Tokyo, furthers dialogue with Chinese authorities and Chinese and British banks “on establishing London as a new hub for the renminbi market as a complement to Hong Kong.”
Hong Kong’s leader, Chief Executive Donald Tsang said a new private sector-led group will be set up to look at strengthening ties between Hong Kong and London in terms of settlement systems, market liquidity and the development of renminbi financial products.
Beijing is promoting the international use of the renminbi, also known as the yuan. It’s also promoting Hong Kong, a semiautonomous Chinese territory with its own financial system and currency, as an offshore trading center for the yuan.
Last year, yuan-denominated bank deposits in Hong Kong doubled to 630 billion renminbi ($100 billion) as savers sought higher returns from the yuan, which has been strengthening 4-5 percent a year.
Beijing would like to see the currency become an alternative to the dollar, although tight capital controls limit its circulation overseas.
“It’s clear that there’s scope for substantial expansion of the renminbi market in coming years,” said Osborne, who was speaking at a financial conference.
He said that in June 2011, China’s share of world trade was 11 percent but the yuan’s share of global foreign exchange trading last year was only 0.9 percent.
Funds that give everyone from retirees to money managers easier access to junk bonds are fueling the biggest price swings in more than two years after their buying power surged tenfold.
Exchange-traded funds that track high-yield bond indexes exceed $22 billion, up from about $2 billion three years ago.
While that’s just 2 percent of the $1 trillion in U.S. corporate speculative-grade debt outstanding, ETFs are among the biggest holders of benchmark securities, including those of casino owner Caesars Entertainment Corp. and HCA Inc.
ETFs, which drew scrutiny last year as riskier versions emerged, are adding to volatility because of rules that promote trading. A measure of price swings for junk bonds was seven times higher in November than May, making it harder for the neediest borrowers to raise capital guaranteed high risk personal loans.
Their influence in the market for high-yield, high-risk debt is becoming similar to what ETFs, which have grown to $1.5 trillion from $109 billion in 10 years, have done in other assets.
While cash has poured into ETFs, they haven’t outperformed. Speculative-grade bonds on average returned 40 percent since April 2007, compared with 36.3 percent for investment-grade debt and 37.3 percent for U.S. Treasuries, according to Bank of America Merrill Lynch index data.
Sales (RSTAMOM) at U.S. retailers rose less than projected in December, confirming forecasts for a slowdown in consumer spending at the start of 2012.
The 0.1 percent gain in purchases last month followed a 0.4 percent increase in November, according to figures from the Commerce Department released today in Washington. The median estimate in a Bloomberg News survey called for a 0.3 percent rise. Another report showed more Americans than projected filed claims for jobless benefits last week.
Spain’s Parliament approved the new conservative government’s first austerity measures Wednesday, which aim to rein in the country’s swollen deficit with euro8.9 billion ($11.5 billion) in spending cuts.
The measures, which also include income and property tax hikes, were approved by 197 deputies in the 350-seat lower house, where the ruling Popular Party has an absolute majority of 185 seats after a landslide election win in November.
Finance Minister Cristobal Montoro said the measures were severe but necessary, owing to what he called the mismanagement of the economy by the former Socialist government.
“The economy is stopped, we’re on the verge of a recession and the accounts are unbalanced as a consequence, among other things, of the deplorable decisions taken by the former government, which only made the situation worse,” Montoro told lawmakers.
Spain is battling to avert being dragged further into a debt crisis that has already forced Greece, Ireland and Portugal to seek financial bailouts.
In 2010, Spain began to emerge from a near two-year recession triggered by the collapse of a property and construction bubble that had fueled growth for nearly a decade. The country now has a 21.5 percent unemployment rate _ the highest in the eurozone _ and Economy Minister Luis de Guindos said recently the economy would slide back into recession early this year with the last quarter of 2011 and the first of 2012 both registering negative growth.
Montoro accused the former Socialist government of deliberately hiding figures that showed that Spain’s deficit for 2011 would be 8 percent of national income, and not 6 percent as the Socialists had claimed easy to get unsecured personal loans. He said the deviation represented an estimated euro20 billion ($25.4 billion) “black hole.”
However, Prime Minister Mariano Rajoy has acknowledged that the deficit of regional governments, most of which are run by his own conservative party, was responsible for 75 percent of the deviation.
Other measures in the austerity package include a freeze on civil servants’ salaries and on practically all government hiring. Pensions, however, are to be increased by 1 percent, the only area of spending to rise. Taxes on income and property will also be raised but only for two years.
Treasury Minister Cristobal Montoro said the tax increases will be progressive, with the wealthiest paying more and that the impact on lower-income earners will be minimal.
The government projects that the tax increases will bring in euro6.2 billion ($7.9 billion) on top of the euro8.9 billion saved on the spending cuts.
The package was part of an extension of the 2011 budget because the last government did not pass one for 2012. More austerity measures are expected when the government presents its 2012 budget by the end of March.
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