For the first time since 2008, Moody’s has upped its outlook of the U.S. banking system as a result of improving economic conditions that compensate for low interest rates.
Moody has changed its outlook to ‘stable’ from its former status of ‘negative’ which has lasted nearly half a decade.
According to BigPond News, Moody’s says “sustained GDP growth and improving employment conditions will help banks protect their balance sheets, and after another year of reducing credit-related costs and restoring capital, U.S. banks are now even better-positioned to face any future economic downturn.”
The agency added that low interest rates will have the most impact on financial performance over the next 12-18 months.
The United States are struggling with internal and external stressors, as critics claim that failure to implement a new plan will result in another worldwide recession.
George Osborne, U.K. Chancellor of the Exchequer, said “People are concerned.” He added that there “was quite a lot of discussion” at the annual IMF meeting this week.
The current plan lingers around the idea of the U.S. incurring $100 billion in automatic spending cuts, as well as over $5 billion in expiring tax reductions in January. This week, the IMF claimed such a deal will undoubtedly tighten fiscal policy by 4% of GDP, the most since the 40s.
“It’s a very serious situation for all of North America and for the entire world,” said Jim Flaherty, Canadian Finance Minister. “It means we’ll all go into recession. So it’s important this gets dealt with.”
According to Pacific Investment Management Co.’s Richard Clarida, Federal Reserve policy is incapable of eliminating the biggest obstacle of U.S. economic recovery.
“The main challenges facing the U.S. are not monetary, he said. “We have the headwinds from the fiscal cliff, from the slowdown in China, from the turmoil in Europe. None of those are monetary-policy issues.”
The U.S.’s GDP fell to 1.5% in the second quarter according to a recent report by the Commerce Department. Unless Congress takes action, the nation is likely to grapple with a ‘fiscal cliff’ of heightened taxes as well as spending reductions on defense and government programs.
Clarida said: “At the margin, I think the Fed believes where it can make a difference it will. But it recognizes that this is not ultimately going to be a monetary-policy solution for these challenges.”
The thought of American and European central banks joining China to boost the economy has triggered the best weekly gain for the Standard & Poor’s 500 Index since last year.
In fact, all ten of the index’s stock groups rose this week, adding almost 5%. Though Facebook continued its three-week slide, Chesapeake Energy Corp. and Home Depot were two companies who reported significant gains.
Altogether, the S&P 500 climbed 3.7% to 1,325.66, a large improvement to last week’s 3% slump. The Dow Jones Industrial Average also rose to 12,554.20.
“The optimism comes from the belief that there is going to be some kind of coordinated activity from central banks,” said Mariner Wealth Advisors’ Bill Greiner.
“The question in my mind is how close to the edge do the world of investors have to move before the central banks start to move in the direction that they need to,” he added.
Those investors who took a chance with gold in 2011 saw that overall gold’s performance was positive. There is no denying that it was a volatile year, but when compared to the international market indexes, gold proved to be a powerful commodity.
According to many analysts and those that watch the markets on a professional level, the prediction for 2012 is that gold will most likely perform well again. One way for investors to get involved in the gold market is by seeking out the services of companies that specialize in gold and other precious metals.
The overall view of gold’s potential growth for 2012 is a positive one, although it is certainly hard to know exactly how positive. The forecasts for gold prices are not always consistent. Among those venturing a guess are BNP Paribas, who reduced their prediction for 2012 by $250 to $1,775. Other investment firms, such as Barclays and UBS have higher hopes, setting their sights at $2,000, at least. What most companies can agree on however is that gold will be a good investment this coming year.
As Mitt Romney’s chances of winning the Republican nomination to become their candidate to beat Obama, it seems only fitting to take a look at his plans for the country if he should indeed become president.
More Savings and Investing
In September Romney released a 160-page document showcasing his “plan for jobs and economic growth.” There are some basically good ideas within, such as encouraging more savings and investments among Americans. One of his suggestions is to build the US’s position in the world as a major technological force.
The plan also includes increasing the tax burden on America’s poorest 125 million citizens, while cutting taxes for the richest Americans.
Tax Cuts for All, with a Twist
Romney’s intention is to make permanent the tax cuts which former President George Bush initiated, which reduced taxes for almost everyone who paid income taxes. But that is just the beginning.
Romney is also seeking to reduce benefits from the child tax credit and the earned income tax credit as well as ending the American Opportunity tax credit for college tuition, which, on average will cost the poorest fifth of taxpayers an additional $157 in 2015, as compared to the current tax policy. This means that the poorest families, who have either children at home or children in college, will pay more.
Poorest Pay More
The Tax Policy Center, whose previous analysis has been praised by both Democrats and Republicans, analyzed Romney’s tax plan to come up with the figure of $157. They also believe that the second poorest group will pay $82 more, on average.
Richest Pay Less
Americans on the higher end of the spectrum will pay fewer taxes, however. According to the Tax Policy Center the top 60 percent of America’s taxpayers will pay less, while the top tenth of one percent would save, on average $464,000.
There are several more changes in the tax policy which will affect not just America’s richest, but the middle class as well. For a thorough examination of the plan go to Romney’s tax policy statement itself.
Retail sales have posted increases for the past five months in a row according to statistics released by the Commerce Department on Tuesday.
Overall retail purchases climbed by 0.5% from September to October, with a good showing in car sales. But even not including auto purchases sales increased the most since the month of March.
According to the report, consumers bought trucks, electronics and building supplies in larger amounts than in previous months. The good news is encouraging, bringing optimism about the coming quarter which is an important period for retail results. The report, taken together with recent news that wholesale prices have reached a plateau, and that US shoppers are spending a larger percentage of their money at Wal-Mart, is a bright light in what has been seen as a long, dragged out economic recovery.
“The consumer has to come through this holiday season if we are going to get back to more decent growth rates, and the early readings are those households have hit the stores quite strongly,” said Joel Naroff, chief economist at Naroff Economic Advisors.
The comeback in consumer spending is seen as the main fuel firing the growth in the economy, which grew by the annual rate of 2.5% in the third quarter of the year, from July through September. That was the best quarterly growth rate in a year.
WASHINGTON — Rivals Rick Perry and Mitt Romney are furiously scurrying to recruit heartbroken holdouts who had hoped GOP celebrities Chris Christie or Sarah Palin would join the Republican presidential contest.
Republican presidential candidate, Texas Gov. Rick Perry reacts after taking a bite of chili during a campaign stop a the Chili Festival Saturday, Oct. 1, 2011, in Manchester, N.H. (AP Photo/Jim Cole)
Republican presidential candidate former Massachusetts Gov. Mitt Romney speaks during a campaign stop at the Derry-Salem Elks Lodge 2226, Monday, Oct. 3, 2011, in Salem, N.H. (AP Photo/Jim Cole)
Republican presidential candidate former Massachussetts Gov. Mitt Romney speaks to supporters during a lunch stop at Seminole Wind Restaurant Wednesday, Oct. 5, 2011, in Tallahassee, Fla. (AP Photo/Phil Sears)
“We’re at a point when the large group of undecided activists are going to choose their candidate,” said Jennifer Horn, a conservative activist in New Hampshire who hasn’t picked a contender. “People are starting to accept the field and accept that these are our choices. It’s time to get behind someone who is a candidate, someone who is running.” Continue reading Romney, Perry try to recruit Christie, Palin fans
NEW YORK (TheStreet) — The U.S. stock market’s climb this year back above its 2008 pre-financial crisis levels boils down to a simple equation: quantitative easing trumps unemployment.
Or in not quite linear apples-to-oranges mathematical terms, $600 billion is greater than 15.1 million.
The $600 billion figure represents the amount the Federal Reserve is pumping into the system via “QE2” — its ongoing second stimulus program to purchase long-term Treasury securities at a rate of around $75 billion per month through the second quarter of 2011.
While the market dipped initially after the details of “QE2” were announced on Nov. 3, the march of stocks off their July 1 lows of the year was mostly fueled by the expectation that the Fed would step in and do something if lackluster economic data continued to pile up. Continue reading 2010 Stock Market: ‘QE2’ Trumps Lack of Jobs
