banks along with financial institutions are teetering on the brink of a total failure...
The released bailout came before the bank would release out their earnings, those three departments decided to devote the Bank 20 billion dollars along with securing 118 dollars of its assets. Bank of America is known as the largest bank by assets and the second commercial bank in the United States, the deepened Credit Crisis had pushed the bank to report a total of 1 trillion dollars in losses and write downs.
The financial sector in the United Stares is still suffering, even after the bush administration used most of the first part of the TARP money just to buy stake in various banks across the Untied States, a total amount of $274.28 billion was used in order to spread tranquility. But looks like more failure will be seen and bankruptcies if the President-elect Barack Obama did not continue to support the financial sector.
The American indices inched higher yesterday before the release of the Bank of America bailout, the Dow Jones Industrial Average advanced 0.15% or 12.35 points reaching 8212.49 levels, the S&P 500 added 0.13% or 1.12 points reaching 843.74 levels and NASDAQ inclined 1.49% or 22.20 points reaching 1511.84 levels narrowing down the losses seen since the beginning of the year to -4.13%.
The US future indices were boosted by the released news, Dow Jones Industrial average inclined 49 points reaching to 8210 levels; the S&P 500 inclined 4.20 points reaching 843.50 levels and NASDAQ added 6.50 points reaching 1183.75 levels. Asian indices were also boosted by the released news, Nikkei index added 2.58% or 206.84 points reaching 8230.15 levels also Hang Seng index inched lower to 0.08% or 12.29 points reaching 13230.67 levels.
Moving to the currency markets, the continues interventions gave currencies some momentum to incline against the Japanese yen; the Euro advanced against the Japanese Yen from a low of 116.23 levels which was recorded yesterday to currently trade at 119.48 levels. The euros continue to be the highest yielding currency as they have the highest interest rates between other leading majors such as the US dollar and the British pound.
Trichet is still reluctant in taking huge rate reductions, but according to yesterday's rate decision where a total of 50 basis points were trimmed from the benchmark taking it to 2.0% we expect to see further cuts as the sixteen economies are tumbling from the endless downturn in the economic activity. Trichet speech was disappointing yesterday, we always got used to the transparency but the statement released lacked that knowing only the rate reductions will take place based on any economical changes.
The United States will seal this week with different reading, with some to elucidate to what levels inflation eased, along with another report from the Treasury department which would explain the levels of TIC flows inside and outside the United States, along with the Industrial Production and Capacity Utilization.
In the past three months consumer prices eased heavily as the economic demand in the United States and across the globe weakened massively from the endless deepening of the Credit Crisis, also the free fall of crude from the unprecedented levels had taken prices down.
Crude Prices fell from the highest which was recorded in July at $147.28 per barrel to close in December $42.61 per barrel, this unprecedented fall took prices down -0.9% with the core monthly prices rising 0.1%. The yearly consumer prices fell 0.2% and the core yearly prices rose 1.8% from the previous 2.0%.
The treasury Net Long-Term TIC flows rose in November to $15.0 billion levels from the previous $1.5 billion, the endless interventions which took place late in October and November had bolstered financial markets by diffusing back some confidence to purchase back the US stocks.
The economy is still weak and the financial system continues to struggle, a recovery will take some time to be seen, so my dear lets just see the inflationary data which will be released later on today to understand whether the United States will face Deflation or not!!