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Enjoy~!

Treasury Secretary Tim Geithner speaks before the Senate Finance Committee House Financial Services Committee.

7:59
Thurs. Oct. 29 2009 | 10:07 AM ET

Fascinating stuff:

“New York has withstood the worst economic crisis in seven decades and remains the leading global financial center, followed by Singapore, which topped London as investors’ preferred place for doing business, according to Bloomberg Global Poll.

Twenty-nine percent of respondents in the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal say New York will be the best place for financial services two years from now. Singapore is chosen by 17 percent of respondents and London is the pick of 16 percent. Shanghai has 11 percent, while Tokyo, once considered a global hub, gets the nod from only 1 percent.

I have mixed feelings about this poll: I am thrilled the home team (and my home town) took the top spot, but I am an Anglophile who loves London, and was sorry to see them slip to 3rd.

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Source:
New York Eclipses London as Financial Center in Bloomberg Poll
Alison Fitzgerald
Bloomberg, Oct. 30 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEC0OYmvvcZM

I just noticed we ticked through our 50 millionth visitor, and 65 millionth page view — pretty astounding stuff.

Thank you to everyone who has contributed to the success of The Big Picture: The thoughtful commentors, the Think Tank Authors, the designers who made the site look good, our programmers who made it slick, the reviews that told people about the place, and FM for putting the ads here that pays for the whole thing.

And, it took just 7 years to become an overnight sensation.

I’ve been in meetings all afternoon, but BAM! The market sure liked Q3 GDP data. Stocks rallied right back to resistance at 1068-75 (se chart below).

• Stocks in U.S., Commodities Rally as GDP Signals `Waterloo of the Bears’

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S&P500 Intraday

Stocks and risky assets stumble

I concluded a post on stock markets over the weekend saying: “After equities’ seven-month climb, stock markets certainly look vulnerable for a decline. Two downside reversal days – on Wednesday and Friday – would seem to indicate that stocks could commence a pullback to work off the overbought condition, allowing fundamentals to reassert themselves.”

Global stock markets, as well as other risky assets, closed sharply lower over the past few days as concerns mounted over the sustainability of the global economic recovery and the outlook for central bank policy.

The performance of the major asset classes is summarized by the charts below, with the top one showing the period from the March 9 stock market lows until October 19 peak and the second one the subsequent period. The numbers indicate an all-change pattern in the performances as risk aversion re-entered financial markets and government bonds and the US dollar regained some favor.

Source: StockCharts.com

Source: StockCharts.com

A summary of the movements of major global stock markets since the March 19 peak, as well as various other measurement periods, is given in the table below.

Read the rest of this entry »

Governor Daniel K. Tarullo

Regulatory reform

Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C., October 29, 2009

Chairman Frank, Ranking Member Bachus, and other members of the Committee, thank you for the invitation to testify this morning on systemic regulation, prudential matters, resolution authority, and securitization. The financial crisis was the product of many factors, including the tight integration of lending activities with the issuance, trading, and financing of securities; gaps in the financial regulatory structure; widespread failures of risk management across a range of financial institutions; and, to be sure, significant shortcomings in financial supervision. More fundamentally, though, it demonstrated that the regulatory framework had not kept pace with far-reaching changes in the financial sector, and the concomitant growth of new sources of risk to both individual institutions and the financial system as a whole.

Because the roots of the crisis reached so deeply into the very nature of the financial system, a broad program of reform is required. Much can be, and needs to be, done by supervisors–under their existing statutory authorities–to contain systemic risk generally and the too-big-to-fail problem in particular. As the discussion draft released by Chairman Frank recognizes, there is also a clear need for the Congress to provide significant additional authority and direction to the regulatory agencies.

Essential elements of this legislative agenda include: ensuring that all financial institutions that may pose significant risk to the financial system are subject to robust consolidated supervision; establishing a systemic risk oversight council to identify, and coordinate responses to, emerging risks to financial stability; directing all financial supervisors to take account of risks to the broader financial system as part of their normal oversight responsibilities; establishing a new special resolution process that allows the government to wind down in an orderly way a failing financial institution that threatens the entire financial system while also creating a credible process for imposing losses on the firm’s shareholders and creditors and assuring that the financial industry, not taxpayers, ultimately bears any additional costs associated with the resolution process; providing for consistent and robust prudential supervision of key payment, clearing, and settlement arrangements; and addressing weaknesses in the securitization process that came to light during the crisis.

Chairman Frank’s discussion draft addresses each of these areas and, in the Board’s view, provides a strong framework for achieving a safer, more stable financial system. In addition to addressing these areas for legislative change, I will discuss some of the actions the Federal Reserve and our supervisory colleagues are taking under existing authorities to strengthen the supervision and regulation of financial institutions–particularly large, complex institutions–and to prevent regulatory arbitrage.

Consolidated Supervision of Systemically Important Financial Institutions
The current financial crisis has clearly demonstrated that risks to the financial system can arise not only in the banking sector, but also from the activities of other large, interconnected financial firms–such as investment banks and insurance companies–that traditionally have not been subject to the type of mandatory prudential regulation and consolidated supervision applicable to bank holding companies. Chairman Frank’s discussion draft would close this important gap in our regulatory structure by providing for all financial institutions that may pose significant risks to the financial system to be subject to the framework for consolidated prudential supervision that currently applies to bank holding companies. As I will discuss shortly, it also provides for these firms to be subject to enhanced standards, reflective of the risk they pose to the financial system. These provisions should prevent financial firms that do not own a bank–but that nonetheless pose risks to the overall financial system because of the size, risks, or interconnectedness of their financial activities–from avoiding comprehensive supervisory oversight.

Read the rest of this entry »

If you missed last nights special Bloomberg event, the full podcast is available at their site or on ITMS.

Listen/Download Subscribe:

The global financial crisis hasn’t ended, said Harvard University professors Kenneth Rogoff and Niall Ferguson, who challenged assertions made by Group of 20 leaders at their meeting in Pittsburgh last month.

“The G-20 is right that it’s over for all the banks they guaranteed,” Rogoff, 56, a former chief economist at the International Monetary Fund, said yesterday in an interview with Bloomberg Radio. Even so, as a consequence of bailouts and stimulus measures, “the financial crisis may eventually morph into a government-debt crisis.”

G-20 leaders last month adopted a framework for more durable economic growth as they sought to prevent a replay of the worst crisis since the Great Depression.

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See also:
Rogoff, Ferguson Say Global Financial Crisis Is Not Yet Over

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGbRse3KUmgU

The better than expected Q3 Real GDP report has raised the debate over whether the American Recovery and Reinvestment Act of 2009, aka the stimulus package, was a positive catalyst in helping. I will not get into the political discussion and will only specifically discuss the tax cut that was given to individuals that qualified under certain income levels and put this into perspective with the evils of inflation and the damage it can do to lower income earners specifically. In the stimulus package, a payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010 with income thresholds of $75k for individuals and $150k for joint filers was given. This equates to an $8 tax cut per week per person. According to AAA, the average gallon of gasoline yesterday hit its highest level in a year at $2.69 up $1.06 from Jan 1. That equates to an extra cost of about $12.50 per person per week on average.

Airtime: Thurs. Oct. 29 2009 | 8:56 AM ET

Getting the trader’s edge from the NYSE floor, with Art Cashin, UBS Financial Services.