Receiving Wide Coverage ...
Hold on Tight: The Dow bounced back up again yesterday by 423 points, 4 percent. As the Post described: "investors cheered a better-than-expected report on jobless claims in another round of volatile trading that continued a week-long pattern of wild swings between gains and losses." The Journal referred to the week as "one of the most volatile streaks in history for stocks." The Times said the move from "panicked selling to fevered buying and back" has left "investors bewildered about what might come next." But banks shouldn't expect the huge number of trades to help their bottom lines. The Journal notes, "a stock-trading surge likely won't generate enough commission revenue for banks and securities firms to overcome the losses they are expected to take this quarter from holding stock inventories whose value has fallen with the recent market rout." Wall Street Journal, New York Times, Washington Post
Wall Street Journal
Bank of New York Mellon faces civil suits in Florida and Virginia related to its pricing of currency trades for pension funds in those states. Virginia's attorney general, Kenneth Cuccinelli II, charges the bank waited until the end of the day to make the currency trades, which allowed it to "choose a price for the client," and that BNY Mellon used the widest trading range of the day, giving the bank the largest possible margin. The bank strongly denies the allegations of wrongdoing.
Bank of America CEO Brian Moynihan had private meetings with Treasury Secretary Timothy Geithner and Federal Reserve Board Governor Daniel Tarullo this week, after the banker requested the appointments the week before. Among the topics: Moynihan stressed the importance of a wide-ranging settlement on the foreclosure suit the bank, and others, face from federal agencies and the 50 state attorneys general. Settlement talks have been going on since March.
Mortgage rates fell last week, with the 30-year fixed-rate loan averaging 4.32%, according to a Freddie Mac survey, with 0.7 points, near the 50-year lows set last fall, and some say the rates could drop below 4%, since the rates are tied to the yield on the 10-year Treasury note, which hit a low of 2.14% on Wednesday. The Fed's announcement that it will keep interest rates low for at least the next two years also gives mortgages rates a downward trend.
New York Times
The Swiss central bank said it's considering pegging the value of the Swiss franc to the euro, to stop its currency from becoming massively overvalued. The move would be temporary, until market volatility calms down and investors stop flocking to the currency, which is seen as a safe haven.
Bank of America could still explore bankruptcy as an option for its Countrywide mortgage unit, the Times' Deal Professor says in a column. B of A's acquisition of Countrywide, the "deal from hell" has already cost the Charlotte, N.C., bank tens of billions of dollars in litigation settlements and charges to earnings, and there is still no end to the potential losses tied to the mortgage unit. While B of A's lawyers are likely studying a bankruptcy filing, BofA itself is not insolvent, and a Countrywide bankruptcy filing could tie up related litigation for years, if not decades.
Indebted countries like France, Italy and Spain could find themselves in even-deeper trouble if they are forced to rescue their private banks, like Société Générale, UniCredit and Santander. Meanwhile, the governor of the French central bank said Thursday that the banks' stress tests showed adequate capital to ride out difficulties.
Eric Thorne, an investment adviser at Bryn Mawr Trust, described the stock market as "very, very tense, emotional and momentum-driven." Société Générale CEO Frédéric Oudéa denied "most vigorously" rumors about its financial condition that had produced a series of attacks on the bank in the market.
A former investment columnist tackles "Five Myths About the Dow." But we're guessing Scan readers already knew the truth, right? If you don't, here is the answer to #5: The Dow is great but you need to invest globally too.
A story looking at the rumors of a downgrade for France and the psychology of the European markets asks: "Are panicked investors creating their own panic?" Investors are looking for reassurances and decisive actions from European governments, the lack of which has lead to "the current market fear that some argue is out of proportion to the immediate level of risk."