Tuesday, April 14, 2009

Financial Chronicle April 10,2009

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Faber Says S&P 500 May Rise to 1,000 on Bank Earnings (Update3)

By Rita Nazareth and Ken Prewitt

April 13 (Bloomberg) -- The Standard & Poor’s 500 Index may rise 17 percent to 1,000 in the next three months as government spending boosts bank profits, investor Marc Faber said.

U.S. stocks probably reached their bear market low when the S&P 500 fell to 666.79 during trading on March 6, Faber, who publishes the Gloom, Boom and Doom report, told Bloomberg Radio in an interview from Thailand.

Financial shares may increase further after the S&P 500 Banks Index jumped 25 percent on April 9, the biggest rally since at least 1989. Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among more than 30 S&P 500 companies scheduled to announce results this week.

“You have essentially a government that gives financials free money at the expense of the taxpayer,” Faber said. “With this free money, they may actually have decent earnings in the near future.” (more)

The IEA warns of shortages - "The next oil crisis is coming"

by Michael Kläsgen

A shortage of oil could trigger another global recession around 2013 – says the IEA. By 2010 the price will reach new highs.

The IEA in Paris is warning of a new, much more severe global economic crisis around 2013. The reason is that investments in oil from new projects are being cancelled by large oil companies. If demand starts increasing in 2010, the oil price could explode, fire up inflation and put global growth at risk.

"We are concerned, that oil companies are reducing their investment levels. When demand returns a supply shortage could appear. We are even predicting that this shortage could occur in 2013." Said Nobuo Tanaka, head of the IEA in an interview with Sueddeutsche Zeitung.

Oil reserves declining markedly (more)

Lindsey Williams: Hyperinflation Coming Soon.

Moody's Downgrades The Whole Country

Joe Weisenthal|Apr. 8, 2009, 8:33 AM

The Federal government is still AAA, but every municipal debt issuer is now suspect and shaky according to Moody's.

For the first time ever, the ratings agency placed all munis on negative outlook, a precursor to potential downgrades. Historically, the agency looked at munis individually and considered them to be too diverse to make blanket statements about.

But it seems overspending and the hollowing out of the revenue base is a nationwide phenomenon affecting cities and states everywhere.

And of course the US government is affected by those same phenomenon -- we think the government's revenue expectations remain wildly optimistic, given the slowdown and the collapsing of the income gap -- but alas the Fed still has the printing press and should be able to hold onto its AAA rating for awhile longer.

Meanwhile, New York actually managed to float a bond at a 5.55% interest rate and a 2036 maturity. Who'd have guessed?