Unexpected Loss of Jobs Raises Risk of Recession

clipped from www.nytimes.com Unexpected Loss of Jobs Raises Risk of Recession By DAVID LEONHARDT and JEREMY W. PETERS Published: September 8, 2007 The job market took a serious and unexpected turn for the worse last month, raising the risk of a recession and putting added pressure on the Federal Reserve to move more aggressively to keep the ailing housing industry from infecting the rest of the economy. The Labor Department reported yesterday that 4,000 jobs were lost from July to August, and the deepest cuts were in industries that are connected to the housing market, like construction and manufacturing. It was the first employment decline since 2003, when the job market was still struggling to emerge from the slump after the 2001 recession.

Bloomberg.com: Commodities

Bloomberg.com: Commodities: "Sept. 6 (Bloomberg) -- Gold rose to the highest in almost four months in London on signs credit-market turmoil is spurring traders to seek a haven in the precious metal. Silver gained. Investment in StreetTracks Gold Trust, the biggest exchange- traded fund backed by the metal, climbed 2.5 percent to a record 528.36 tons yesterday, figures from the London-based World Gold Council show. The European Central Bank today lent emergency cash to banks for the fifth time in a month, a day after the Bank of England injected funds to reduce the cost of credit. ``It seems the gold market is ready to go higher,'' said Gerry Schubert, a director of metals at Fortis Bank in London. ``The whole upset in the financial markets will ultimately lead to gold strengthening its status as a safe haven.'' Gold for immediate delivery gained $6.03, or 0.9 percent, to $687.58 an ounce as of 1:48 p.m. in London, after earlier today gaining to $688.93, the highest since May 8. Prices have climbed 8 percent this year."

New Concerns in Europe About Credit Fallout - New York Times

New Concerns in Europe About Credit Fallout - New York Times: "The Organization for Economic Cooperation and Development, a Paris-based group of 30 industrial nations, issued a report warning that the credit crisis had dimmed prospects for economic growth, especially in the United States. It scaled back its growth forecasts for many leading economies and urged central banks to keep interest rates stable and low to stem further damage. And it recommended that the Federal Reserve consider trimming its benchmark interest rate by a quarter of a percentage point when it meets on Sept. 18. “You cannot rule out a recession” in the United States, said Jean-Philippe Cotis, the O.E.C.D.’s chief economist."

BCA Research - Independent Investment Research Since 1949

BCA Research - Independent Investment Research Since 1949: "About BCA Our Services Contact Info Careers Help BCA In the News Home U.S. Subprime Losses To Total /$200 Billion 11:22:00, August 30, 2007 The losses related to bad U.S. mortgage paper could end up being larger than the 1980s S&L losses in dollar terms. About 60% of subprime mortgages carry an adjustable rate, and $650 billion will reset at a higher interest rate in the next 16 months. Even without factoring in a recession, we estimate that the losses on bad subprime and alt-A paper could amount to about $200 billion over the 2007-2011 period (1.5% of today’s GDP). This compares with $153 billion (2.5% of 1990 GDP) in losses associated with the S&L meltdown in the late 1980s. Spread out over several years, such losses do not seem overwhelming on their own. However, it is the knock-on effects that are the larger risk to the economy, including a hit to consumer confidence and wealth, a curtailment of credit availability, and increased selling pressure in the housing market. Bottom Line: Fed rate cuts cannot solve the subprime mess, but can limit the negative impact on the economy."

BCA Research - Independent Investment Research Since 1949

BCA Research - Independent Investment Research Since 1949: "A Maturing Equity Bull Market 12:21:00, August 28, 2007 According to our Global Investment Strategy service, the recent shakeout in risky assets should be regarded as part of the maturing process of the equity bull market. This episode is very similar to the recession fears of 1998, which prompted Fed easing. The subsequent rally in stocks was powerful but led to increased volatility and ultimately ended in a crash two years later. We suspect that a similar pattern could play out this time around. Equities still offer reasonable value and should receive significant upside as investment capital gets funneled into fewer assets. Narrowing breadth of asset price inflation is a typical characteristic of a maturing market. In this cycle, commodities, government bonds, real estate and credit products have already largely been inflated but stocks still have room for further multiple expansion once the current turmoil in the credit market subsides. However, investors should be prepared for permanently higher volatility, which tends to accompany richer valuations. Bottom line: The bull market in equities, while in a maturing phase, should offer investors significant upside over the next two years."

Bush, Bernanke launch subprime assault: Financial News - Yahoo! Finance

Bush, Bernanke launch subprime assault: Financial News - Yahoo! Finance: "Bush, Bernanke launch subprime assault Friday August 31, 5:38 pm ET By David McMahon and Mike Peacock NEW YORK/LONDON (Reuters) - The Federal Reserve on Friday reassured investors it would take any steps needed to shelter the U.S. economy from a global credit squeeze, while President George W. Bush promised to help struggling homeowners refinance their mortgages. ADVERTISEMENT Chairman Ben Bernanke also said the central bank would not bail out investors who had made mistakes, but overall his comments reinforced the view that the Fed will cut interest rates by a quarter percentage point at its meeting on September 18. Bush urged lenders to work with homeowners to renegotiate their mortgages to prevent default and called on Congress to approve legislation that would provide mortgage insurance to borrowers through a network of private-sector lenders. 'It's very light on detail and limited in scope,' Jeff Schappe, chief investment officer at BB&T Asset Management in Raleigh, North Carolina, said of Bush's proposal. 'The important news today is that Bernanke is saying the Fed is going to do whatever it will take to limit the impact.'"

clipped from www.nytimes.com Pay at Investment Banks Eclipses All Private Jobs By DAVID CAY JOHNSTON Published: September 1, 2007 Top money managers earn such huge incomes that even when their compensation is mixed with the much lower pay of clerks, secretaries and others, the average pay in investment banking is 10 times that of all private sector jobs, new government data shows. Investment banking paid an average weekly wage of $8,367, compared with $841 for all private sector jobs, the Bureau of Labor Statistics said in a routine report issued Thursday. The report also showed how far ahead hedge fund managers are of other investment bankers in making money.