Latest indicators indicate that the world economy is on a recovery path.  The purchasing Manager’s index was at its highest level in October in more than three years clearly indicating that the economic activity has picked at a higher rate than before. Also the expansion of economic activity in October was broad based and strong in a number of advanced economies. USA The world’s big Sam is finally on recovery path with the economic activity expanding in the third quarter of 2009 after the consequent falls in the earlier two quarters. As per BEA estimates third quarter registered a growth of 3.5% in annualised terms in real GDP. This is definitely some good news given the fact that the last four quarters had negative growth. With the economy picking up momentum there has been gains in consumer spending. Private demand particularly for motor vehicle sales was helped by the government  [...]

The inevitable finally happened. After a six day rally US stock markets saw a decline on Thursday. The Dow declined by 94 points (0.9%) to end at 10,197.47 points. Other indices like the S&P and Nasdaq Composite also registered a decline. S&P declined by 11 points (1%) to close at 1,087.24, and the Nasdaq composite declined by 18 points (0.8%), to end at 2,149.02. The Dow had earlier increased by more than 500 points (5.3%) to reach 13-month high. All sectors registered a decline with the energy and financial stocks registering the maximum decline. Energy sectors declined on the background of lower oil prices which declined by 3% to settle at $76.91 per barrel. The other declining sectors include Financials (down by 1.8%), Utilities (down by 1.3%), Industrials (down by 1.0%), Consumer Discretionary (down by 1.0%), Telecom (down by 0.8%), Materials (down by 0.6%), Health Care (down  [...]

Wednesday was a day full of action with lot of economic announcements being made. Obviously it turned out to be a mixed day for super sensitive dollar with dollar initially losing ground and falling to 15 month low and then gaining. Dollar index which measures the value of dollar against a basket of currencies first fell to a 15 month low of 74.775 and later in the trading day increased to 75.130.The dollar increased by 0.2% against the Euro to $1.4961 later in the trading day after hitting a low of $1.5048. The dollar gained against yen to 89.84 Japanese yen from 89.77 yen. Against Swiss Francs dollar increased to 1.0086 Swiss francs from 1.0081 Swiss francs but declined against Canadian dollar to 1.0463 Canadian dollars. There were lot of factors responsible for dollar’s dilly dally run on Wednesday. First of all Chinese government in a report  announced that its factory output has  [...]

On Wednesday the Dow increased by 44 points (0.4%) to close at 10,291.26. Other indices like S&P and Nasdaq also showed a gain. With an increase of 6 points S&P closed at 1,098.51 while Nasdaq composite closed at 2,166.90 registering an increase of 16 points. Sector wise nine of the 10 major sectors registered a gain on Wednesday with the Utilities being the only sector to register a marginal fall of 0.3%. The sectors which gained include Financials(up by 1.4%), Materials (up by 0.9%), Technology (up by 0.6%), Consumer Discretionary (up by 0.5%), Industrials (up by 0.5%), Consumer Staples (up by 0.3%), Telecom (up by 0.2%), Health Care (up by 0.2%) and Energy (up by 0.1%). The factors which till yesterday drove the markets were very much at play further helping the market on its upward path. Yesterday Fed again reinforced the fact that the economy is on a recovery path and that  [...]

Citigroup Citigroup one of the worst hit banks in the current financial crisis announced a profit of $101 million for the third quarter. This is definitely a reduction from last quarter when the bank had reported profit of $4.28 billion. However last year in the corresponding period the bank had reported a loss of $2.82 billion. Like the other banks analyzed Citigroup still continues to be plagued by high credit losses. Credit losses were marginally down from $8.4 billion in the second quarter to $8 billion in the third quarter.  Managed credit losses at $11 billion was also down from $11.5 billion in the second quarter. The total credit cost at $9.1 billion in the third quarter was lower than $12.7 billion reported in the second quarter. The bank’s third quarter revenue increased to $20.39 billion as compared to $16.26 billion in the same period a year ago. Citi had received stimulus  [...]

JP Morgan For JP Morgan Q3 financial result was a mixed bag. Investment bank and retail banking helped the bank report an increase in third-quarter profit. The bank’s Card Services and Consumer Lending segments however had a bad phase with the credit costs continuing to be high. The bank has proved to be one of the best banks to weather the current crisis. In June the bank paid back the entire $25 billion assistance it had received under TARP. Third quarter net earnings of the bank increased to $3.59 billion from $527 million last year. Net revenue for the quarter increased by 81% to $26.62 billion from $14.74 billion in the corresponding period last year. As expected the credit losses for the quarter increased by 40% to $8.1 billion from $5.8 billion last year. Segment wise Investment Banking unit had the best performance with revenue increasing by 85% to $7.5 billion. The unit generated  [...]

Last month four of the US banking giants announced their third quarter financial results. With the banking sector in doldrums, every quarterly result announcement is being awaited for some good news and being scrutinized by analyst like never before. All these four banks were among the biggest recipients of payouts from government. Lets analyse their financial statements to understand what they did right and what went wrong. Gold Man Sachs A year after receiving government aid, Goldman Sachs Group had an impressive third quarter with profits of $3.19 billion , or $5.25 a share up from $845 million, or $1.81 a share, a year earlier. Overall the bank doubled its revenue to $12.4 billion from $6.04 billion last year. In spite of having a record level of capital the firm managed an impressive return on equity of 21.4% compared with 7.7 percent in the third quarter of 2008. Segment wise the  [...]

Finally some good news for US dollar. After hitting 25-month low on Monday the dollar rebounded on Tuesday and registered an increase against major currencies. However the currency still remains weak as investors expect interest rates to remain low. The dollar index which measures dollar’s performance against six major currencies increased by 0.2% to 75.18 midway through the trading day. On Monday the index had fallen to a low of 74.93 which was also its weakest level since August 2008. Tuesday’s gain in dollar was expected as investors felt that the Monday’s fall in the currency was too much and too fast without any fundamental reason. Analysts also are of the opinion that the investors don’t have any reason to sell dollar any further after its recent falls. Dollar gained maximum against Sterling on Tuesday. Sterling lost ground on Tuesday after Fitch commented that among the  [...]

Is this the calm before the storm or after the storm. That’s what investors and analysts seemed to be debating on Tuesday. Tuesday was a mixed day for stock market with the indices increasing at time and falling later clearly showing that investors are being cautious after Monday’s rally when the Dow reached its highest level in 13 months. On Tuesday indices more or less settled in a mixed fashion. The Dow Jones industrial average finally closed at 10,246.97 up by 20 points. Other important indices like S&P and Nasdaq Composite however showed a marginal decline. The S&P 500 declined by 1 point to end at 1,093.01 while the Nasdaq composite declined by 3 points to close at 2,151.08. This was expected as after a rally like on Monday there are normally pullbacks. Many analysts feel that this lack of direction in the market is mainly on account of no major economic news this week  [...]