“The possibility that monetary policy could be used directly to support financial stability goals, at least on the margin, should not be ruled out,” he said at a conference at the Boston Federal Reserve Bank.Bernanke did not directly discuss the outlook for the U.S. economy or monetary policy in his speech, which offered thoughts about how central banking might shift in the wake of the financial crisis.The crisis has brought the goal of financial stability into co-equal status with macroeconomic health as a central banking goal, elevating the importance of regulation to guard against systemic risks, Bernanke said.However, he said it was too soon to say how effective regulation would be in warding off financial imbalances.As for monetary policy, he said it was unlikely central banks would move away from the current focus on so-called flexible inflation targeting, in which they make clear their inflation goals as a way of ensuring the public’s expectations of inflation remain low.Bernanke said that in the United States, policymakers were still striving to refine their communications. “The (Fed) continues to explore ways to further increase transparency about its forecasts and plans,” he said.To help spur stronger growth, the Fed is considering ways to assure financial markets it won’t tighten financial conditions any time soon.It has already said it expects financial conditions will warrant extremely low interest rates at least through the middle of 2013, and officials are discussing setting explicit goals for inflation and unemployment.Despite an aggressive easing of monetary policy by the Fed, the U.S. economy continues to suffer from the effects of a burst real estate bubble.Economists have long debated whether central banks should prick perceived asset bubbles when they are forming.Before the financial crisis, most central bankers, Bernanke included, argued against using interest rates to lean against bubbles.While those views have softened, Bernanke said regulation, supervision and monitoring would remain “the first line of defense” against the threat of financial instability.”The evolving consensus … is that monetary policy is too blunt a tool to be routinely used to address possible financial imbalances,” he said.
* Sheds light on deteriorating credit-worthinessBy Nanette ByrnesOct 17 (Reuters) — A $1.9 billion accounting gain by
Citigroup , more than half of the $3.8 billion net income
it reported for the third-quarter, highlights a controversial
accounting rule that analysts say is adding volatility to many
large banks’ reported earnings.They expect it to continue to be a factor as more banks
report earnings in the coming weeks.Last week, JPMorgan Chase & Co reported an
identical gain. Other banks that use the same accounting
treatment include Goldman Sachs , Morgan Stanley ,
Bank of America , HSBC , Barclays and
many German banks, according to Moody’s senior credit officer
and bank accounting specialist Donald Robertson.The rule allows banks to value some types of assets and
liabilities on a mark-to-market basis. In the case of JPMorgan
and Citigroup, a weakening of the banks’ debt relative to U.S.
Treasuries is what has led to these reported gains.As their debt lost value, it became cheaper for the banks
to retire the debt if they chose to do so. The chance to retire
debt at a price below its issue price produced the gain Citi
and JPMorgan are reporting, and the boost to reported earnings.”It just creates noise when trying to compare one bank to
another,” said Moody’s Robertson.The rule makes it harder to compare companies because banks
have wide discretion on how they apply it. They can use it on
financial liabilities with some exceptions, including deposit
liabilities or deferred tax liabilities. Or they can use it
only for certain individual instruments, and not for others.It’s a degree of latitude that makes it difficult to
compare one bank with another and to predict how big an impact
it will have on a bank prior to its reported earnings.Once a bank chooses to use the rule, it must stick to mark
to market valuation until the liability in question expires or
otherwise disappears.’UNIVERSALLY DESPISED‘“This is the most vilified accounting rule I’ve ever seen.
It’s amazing how universally despised it is,” said Robert
Willens, author of the Willens Report, which analyzes corporate
accounting and tax matters.It does have some supporters, however, and they argue that
the rule highlights valuable information that otherwise would
be absent from quarterly reports. In Citibank’s case, it is the
bond market’s view that its bonds are getting riskier.”There is good information in these gains,” Jack
Ciesielski, an independent accounting analyst and publisher of
The Analysts’ Accounting Observer told Reuters by email.”They are telling you the degree of faithlessness existing
in the bond market for these companies. The fact that we see
them in a big way for the first time since the credit crisis is
disconcerting,” he said.In practice, analysts tend to knock these figures out of
their earnings analysis, arguing that a gain or loss this
period may be reversed in the future, said Ciesielski, and that
the figures don’t pertain to ongoing profitability.Of the 1,000 banks Moody’s tracks globally, about 70 use
this accounting, including many of the largest banks, Robertson
said. Moody’s analysts strip it out of their earnings figures.With controversy swirling, rulemakers are considering
changing the rule, according to Robert Stewart, a spokesman
for the Financial Accounting Foundation, an overseer of
rule-making for U.S. accounting.The original aim of the rule, which went into effect
November 2007, was to address the mismatch between assets,
which financial companies often carry on their books at fair
market value, and liabilities carried at cost, Stewart noted.
But the study, conducted by Matthew Robbins and colleagues at the Montefiore Headache Center in New York, found that a small number of people described smelling scents in conjunction with their headaches.”It’s uncommon, but distinctive,” said Robbins, noting that disturbances in the sense of smell, known as olfactory hallucinations, have not been covered in a systematic review of medical literature before.Researchers reviewed 25 reported cases of patients with headaches, migraines in most cases, and olfactory hallucinations. They also examined records from more than 2,100 patients seen over 30 months. Fourteen people, or just under 0.7 percent, had described smelling scents ahead of their headaches.”The most common was of the burning or smoke variety,” Robbins said.Some sufferers described a general burning smell. others said they smelled cigar smoke, wood smoke or burned popcorn.”Decomposition” odors, such as garbage or sewage, were the next most common smell reported. A few people described pleasant odours, including the scent of oranges, coffee or, in one case, foie gras.About 11 percent of the world’s population suffers from migraines, so even though olfactory hallucinations are an unusual part of aura, there could still be a fairly large number of people who experience them, Robbins said.It’s not clear why the hallucinated odors are most often unpleasant, or why they are only rarely part of migraine aura.But aura symptoms are thought to involve a phenomenon called “cortical spreading depression,” where a wave of increased electrical activity in nerve cells of the brain is followed by a wave of depressed activity, Robbins said.That same phenomenon might underlie olfactory hallucinations — and because the brain’s smell centres occupy much less space than its sight centres, that could, in theory, explain why phantom scents are so much less common, he added.It is also possible that some people with migraines and olfactory hallucinations do not recognize the phenomenon, he added. People know something is wrong when they see zigzag lines, but it is easy to assume a small is actually coming from somewhere.Since some disorders, such as Parkinson’s disease, can cause a person to smell scents that are not present, any such hallucinations without an accompanying headache should be checked out, he warned.
Scouler will be responsible for household, healthcare, baby
and beauty products, in addition to his responsibilities for
packaged foods, petrol and tobacco.Yaxley will oversee frozen foods and the group’s
smaller-format Express and Metro stores, in addition to his
remit for fresh foods.The appointments conclude a management rejig announced last
week, which saw the group integrate its internet and telecoms
businesses into each of its country teams.Tesco has made improving the performance of its British
business one of its top priorities as it looks to reverse a
drift lower in its market share over the past few years.Last month it announced a 500-million-pound ($786 million)
investment in cutting prices and said last week that would lead
to flat UK profits in the second half of its fiscal year after a
4.5 percent increase in the first.
NEW YORK Oct 13 (Reuters) - The Dow and S&P 500 slipped
on Thursday after JPMorgan’s earnings and China’s soft trade
data revived worries about the impact of slower growth on
profits.The declines put an end to three straight days of gains
that capped off a 12 percent increase in the S&P 500 since
hitting a low on Oct. 4. The Nasdaq stayed in positive
territory, helped by semiconductor shares.Some analysts said a pause was in store for the market,
given the S&P 500’s recent advance. The benchmark S&P 500 has
had its largest seven-day rise since March 2009 on growing
optimism that European leaders will find a way to contain the
region’s debt problems.JPMorgan Chase & Co , the second-largest U.S. bank,
slid 4.8 percent to $31.60 and was the biggest drag on the Dow
after reporting a drop in its third-quarter net profit. The
news followed disappointing results from Alcoa on
Tuesday.”It’s early, but it seems like after having a series of
great corporate earnings in the face of not-such-great macro
numbers, now maybe we’re seeing a little bit less robust
corporate earnings,” said Eric Kuby, chief investment officer
of North Star Investment Management Corp. in Chicago.Healthy U.S. profits have been among the biggest drivers
for stocks since their March 2009 lows.The Dow Jones industrial average fell 40.72 points,
or 0.35 percent, to end at 11,478.13. The Standard & Poor’s
500 Index shed 3.59 points, or 0.30 percent, to
1,203.66. But the Nasdaq Composite Index gained 15.51
points, or 0.60 percent, to close at 2,620.24.GOOGLE FLIESAfter the bell, shares of Google rose 6 percent
to $592.43 after it reported revenue that exceeded Wall
Street’s expectations.”Christmas came early for Google shareholders,” said Colin
Gillis, an analyst at BGC Partners. “The digital economy is
still strong. Google is capturing all the economics from this,
and we are moving into the sweet spot when investors want to
own Google.”China’s trade surplus narrowed for a second straight month
in September as both imports and exports were lower than
expected, pointing to cooling domestic and global economic
demand.In U.S. economic data, new claims for jobless benefits
were little changed last week and the trade deficit narrowed
marginally in August, indicating a modest improvement in the
economy.According to a Reuters poll, analysts have reined in their
expectations for U.S. economic growth, though it is still
expected to pick up a notch by year-end.JPMorgan, the first major U.S. bank to report earnings,
said profits were hurt as the European debt crisis pushed
investment banking clients to the sidelines. The KBW Bank
index shed 2.9 percent while Bank of America Corp lost 5.5 percent to $6.22.Boosting the Nasdaq, Vertex Pharmaceuticals Inc
climbed 9.1 percent to $43.88 after IMS Health said it was
revising estimates of the number of prescriptions written in
late September for Vertex’s hepatitis C drug..An index of semiconductors rose 2 percent.About 7 billion shares were traded on the New York Stock
Exchange, NYSE Amex and Nasdaq for the day, below the year’s
daily average so far of about 8 billion.Declining stocks outnumbered advancing ones on the NYSE by
a ratio of about 3 to 2, and on the Nasdaq, decliners slightly
outpaced advancers.
Fed officials discussed easing tools ranging from rebalancing the Fed’s portfolio to lengthen its average maturity — the step they ultimately took — to providing explicit guidance about their goals for the labor market.The Fed at its last policy meeting warned of significant risks to the already weak economy and launched a new plan to lower long-term borrowing costs and bolster the battered housing market.Two Fed officials wanted stronger action, while three objected to taking any new measures at all, the minutes said.
Nearly four times as many loans were resolved by special servicers in 2010, with
1,427. Additionally, the average loss severity declined to 53.4% compared to 57%
in 2009. ‘Special servicers have been increasingly successful selling
properties and working with borrowers for discounted loan payoffs,’ said Senior
Director Britt Johnson.However, current economic uncertainty makes it more difficult to predict 2012
numbers. ‘If the current economic volatility continues, special servicers may
struggle to find borrowers capable of obtaining capital for distressed real
estate,’ said Johnson.Drilling down into specific property types, loss severities fell for all major
property types except retail. However, Fitch expects the cumulative loss
severity in 2011 to continue eclipsing historical averages, which increased to
its highest level ever at 42.9% in 2010.Losses on retail and multifamily loans will remain volatile. Elsewhere, office
losses will trend north of historical averages in spite of recent improvements
in some regional markets. ‘With leases set to expire in a weaker economy, office
landlords will have to continue lowering rents and paying for tenant
improvements and rent concessions,’ said Managing Director Mary MacNeill.Though performance among hotel properties has improved notably in recent months,
they still hold the second highest amount of defaults. ‘There are still many
delinquent hotel loans to resolve, though dispositions will slow next year if
the lending environment tightens,’ said MacNeill.Fitch’s ‘U.S. CMBS Loss Study: 2010’ is available at ‘www.fitchratings.com’
under ‘Latest Research’ or by clicking on the above link.Link to Fitch Ratings’ Report: U.S. CMBS Loss Study: 2010 (Cumulative Losses Exceed 40%)
