Financial thoughts

Russia

U.S. Treasury Secretary Tim Geithner told a U.S. Senate panel that he believes Fannie Mae and Freddie Mac should reduce principal on some home mortgages.

“We’ve been encouraging Fannie and Freddie to take another look at the map, at the economics of the finance, because we think there is a strong case in some circumstances to add principal reduction as part of their strategies to help maximize return of the taxpayer,” Geithner testified Wednesday to a subcommittee of the Senate Appropriations Committee.

At the end of last year 12.1 percent of mortgages were delinquent or in foreclosure, compared with 12.4 percent a year earlier, according to the U.S. Office of the Comptroller of the Currency.

Fannie Mae and Freddie Mac, the mortgage finance companies under government conservatorship since 2008, haven’t granted principal reductions because it would cost the taxpayer-funded companies almost $100 billion, Edward DeMarco, the acting director of the Federal Housing Finance Agency, said in a Jan. 20 letter to Congress. The agency oversees Fannie Mae and Freddie Mac.

“What Mr. DeMarco has said is that they are taking another look at their numbers, looking at our economic case fast cash. We are in the process of working through that with him and I hope he is going to be in a position to indicate what he plans to do in the next several weeks,” Geithner said.

“This is an important part of a credible national strategy that they have been reluctant to move even though they have done a lot of things that are very very helpful.”

The FHFA will release a study next month about whether it makes sense to allow forgiveness on underwater loans guaranteed by Fannie Mae and Freddie Mac, according to DeMarco.

“We are offering a rich array of tools to help borrowers with their mortgage payments,” DeMarco said today on Bloomberg Television’s “Street Smart” program with Trish Regan.

Three out of four borrowers with GSE loans who owe more than their homes are worth are current on their mortgages, DeMarco said.

Source

The older they get, the deeper in debt — that’s the story for today’s 20-somethings, according to a new survey by PNC bank.

The bank found that two thirds of 20 and 21-year-olds carry debt.  The burden averages $12,000 and it’s mainly mortgage debt.  By their late 20s, 87 percent are in debt, averaging $78,500.  But mortgage debt makes up the bulk.

Student debt actually goes up through the 20s, from $9,500 for 20 and 21-year-olds, to $20,300 for 28 and 29-year-olds installment payday loans.

The survey of 2,000 young people found that 60 percent feel stressed by debt, a figure that holds even through the 20s.

Source

About the only thing Kevin Flynn enjoys more than drinking his home-brewed beer is sharing it with fellow beer club members at festivals and tasting competitions. So Flynn and his buddies were shocked to discover that Wisconsin law prohibits sharing homemade suds anywhere outside the brewer’s home.

The law could “pretty much be the end of competitions in Wisconsin,” he lamented. “At least legal ones.”

An explosion of interest in home brewing is forcing lawmakers across the country to review long-forgotten alcohol laws, some of which date back to Prohibition. Although the old rules have rarely been enforced, beer enthusiasts fear they could criminalize the rapidly growing hobby and kill scores of annual tasting events that bring tourists to small towns and cities.

In Wisconsin, Flynn and other home brewers may soon be off the hook. The state Legislature last week passed a bill to allow them to transport homemade beer and wine and to share it with other adults. Brewers will still not be permitted to sell anything they make, and they will remain exempt from permit requirements and taxes.

The proposal now heads to Gov. Scott Walker, who plans to sign it into law.

At least 17 states have ambiguous laws on whether home brewers can transport beer or wine outside the home, according to the American Homebrewers Association in Boulder, Colo.

The patchwork of rules can be frustrating for hobbyists who would prefer to spend their time exchanging recipes for pale ale or rhapsodizing about different varieties of hops, barley and yeast.

Some states _ including Georgia and South Carolina _ have restrictions similar to Wisconsin’s. In Kansas and Minnesota, home brewers can only make beverages for themselves or family members. Other states permit homemade beer and wine to be consumed by guests, too, as in Arizona, Hawaii, Idaho and Illinois.

A few states have been slow to accommodate the trend. Utah just legalized home brewing in 2009, and Oklahoma followed in 2010. Mississippi and Alabama are the only states that still forbid it.

Dan Grady of the Wisconsin Homebrewers Alliance, who led the legislative effort to revise Wisconsin’s law, said beer-makers need to be watchful in case states try to use the issue to generate money for their tight budgets.

“States are under enormous pressure. It’s a revenue issue,” he said. “Everything is on the table these days.”

Gary Glass, director of the home brewers association, said it’s a balancing act when considering whether to pursue a change in the law.

“The question becomes, at what point does a home brewing community want to take on having the law changed if it’s not really having an impact to what they’re doing?”

Glass, who organizes the group’s popular national conference, said he’s had trouble securing a venue in states with vague home brewing laws payday loans for self employed. The conference, which changes its location annually, brings in $500,000 to local economies.

A grassroots reform effort succeeded last year in Oregon, where the law had been similar to Wisconsin’s. Glass, who helped draft Wisconsin’s bill, said the legislation’s demise would have set a bad precedent for home brewing.

“In this economy, you’re stifling an industry that’s growing,” he said. “It sounds like a bad move.”

More than ever, people with little or no experience brewing beer or other fermented beverages are investing in kits and ingredients to make their own. The hobby has expanded into a vibrant beer culture, with brewers freely sharing their concoctions among neighbors and friends and in clubs and competitions.

Last year, there were 411 beer competitions sanctioned by the home brewers association and the Beer Judge Certification Program. That’s up from fewer than 100 in the early 1990s.

“Back in the day, everybody thought home brewing would just be what your grandfather would do,” said Jason Heindel, president of the Beer Barons of Milwaukee Cooperative.

Home brewing has also helped invigorate the booming craft brewing industry. And it’s generated a cottage industry of its own. An annual survey of brewing supply shops around the country showed an increase in sales for beginner brewing kits, according to the home brewing association.

Home brewing was illegal in the United States until 1978, when the federal government lifted Prohibition-era restrictions on making alcohol in the home. The revised law allowed homemade beer and wine to be offered at tasting competitions but also left most alcohol regulations up to individual states. So many states have their own home-brewing rules that supersede federal policies.

In Wisconsin last year, brewers were caught off guard when the state Department of Revenue ruled that it was illegal for home brewers to share beer outside the home. The decision came after Racine officials inquired about a contest known as the Schooner Home Brew Competition.

After the department’s announcement, organizers quietly moved the contest, one of the state’s largest, from Racine to nearby Union Grove. But they didn’t advertise it because they feared possible fines.

Grady said home brewers in other states can learn from Wisconsin.

“Home brewers need to look at their state law, because they might be just as ambiguous as Wisconsin,” he said. “And if there’s ambiguity, they need to contact their lawmakers to get them clarified, much like we’re doing here.”

Source

Shares of Apple reached $600 for the first time on Thursday, setting yet another milestone for the stock market’s most valuable company.

The stock hit $600.01 moments after the market’s open before quickly falling back below that level. Shares closed down 1% at $585.56.

Apple’s (, Fortune 500) stock price growth has risen for the past three years, boosted in particular by record sales of the iPhone and iPad. The much-hyped third-generation iPad is set to go on sale Friday.

It was almost exactly one month ago that Apple cracked the $500 level for the first time. Apple passed the $400 level for the first time seven months earlier, and it’s been just 17 months since it passed $300. Shares traded above $200 for the first time in October 2009.

At $600, the combined value of Apple’s outstanding shares is more than $559 billion, the third-highest valuation ever for a public company. It now only trails General Electric (, Fortune 500) and Microsoft (, Fortune 500), which both soared to around $600 billion during the dot-com bubble at the turn of the century.

Apple’s valuation is huge, but analysts say that the fundamentals back it up.

Despite its monumental rise, Apple’s stock is still trading at just 14 times its expected earnings per share for 2012. That’s relatively cheap, considering that the tech-heavy Nasdaq 100 trades at about 18 times future earnings.

Apple had $127.8 billion in sales during the 2011 calendar year, putting it neck-and-neck with Hewlett-Packard (, Fortune 500), the nation’s largest tech company by revenue. This year, Apple is on pace to become the biggest technology company in the world, measured by revenue, outpacing current global No. 1 Samsung.

Last quarter, Apple posted $13 billion in profit. It was one of the most profitable quarters ever for any U.S. company, trailing only ExxonMobil’s (, Fortune 500) record-setting $14.8 billion quarter from the fall of 2008, when oil prices were at an all-time high.

Analysts attribute the stock’s recent rise primarily to Apple’s outstanding iPhone sales. Apple sold 37 million of the devices last quarter, and early indications are that the phones are continuing to sell well this quarter across the globe.

Investors are also investors buying into the belief that Apple will soon have a dividend. The company has nearly $100 billion in cash sitting around, and CEO Tim Cook has hinted that he’s willing to part with some of it.

"Some of money that got put to work starting late last year was from investors that want dividend," said Alex Gauna, tech analyst at JMP Securities. "That’s how this whole thing got started. But lately it’s been all about the iPhone." 

Source

The biggest inflows into India

Americans spent $50.96 billion on their pets in 2011.

That’s an all-time high and the first time in history more than $50 billion has gone to the dogs, cats, canaries, guppies and the like, the American Pet Products Association said in a report issued Thursday.

Food and vet costs accounted for about 65 percent of the spending. But it was a service category — one that includes grooming, boarding, pet hotels, pet-sitting and day care — that grew more than any other, surging 7.9 percent from $3.51 billion in 2010 to $3.79 billion in 2011.

APPA President Bob Vetere said 2012 should be another banner year for services, predicting it would grow 8.4 percent to an estimated $4.11 billion in 2012.

Owners are taking care of their pets, said Dr. Jessica Vogelsang, a San Diego veterinarian and author of pawcurious.com. “They are planning ahead. When they go on vacation, they want to make sure their pets are well cared for,” she said.

Spending in 2011 was up 5.3 percent from 2010, when it totaled $48.35 billion, Vetere said. He estimated 2012 sales would total $53 billion.

In 2011, people spent $19.85 billion on food, $13.41 billion on vet care, $11.77 billion on supplies and over-the-counter medicines, $3.79 billion on other services and $2.14 billion on live animal purchases.

In 2010, they spent $18.76 billion on food, $13.01 billion on vet care, $10.94 billion on supplies and over-the-counter medicines, $3.51 billion on other services and $2.13 billion on live animal purchases.

Food sales did slow, Vetere said, even though the 5.8 percent growth exceeded projections of 4.1 percent growth.

APPA numbers indicate that animal sales and adoptions are flattening out and the number of people who switched over to high-end food products is topping out.

Pet ownership is becoming less of an impulse decision, Vogelsang said. “I am seeing a lot of people saying, ‘This isn’t the time for us.’ People are more interested in pets than ever before but they are taking their time, once they make the commitment, to do it right.”

“I don’t think this is a bad thing. I am proud of the owners,” she said.

Pet insurance is another area that is expected to grow briskly, Vetere said. Included in the veterinary care category, insurance was estimated to be $450 million in 2011 and expected to grow to more than $500 million in 2012.

The pet industry is also a major attraction for entrepreneurs and investors looking for creative and innovative products, Vetere said.

Vogelsang believes the trend is toward “very specific items geared to the specific needs of pets. We are seeing a lot of puzzle feeders for dogs — not just toys but ones that are geared toward the mental needs of the animal. Then there are bionic toys for destructive chewers, a lot of very niche items,” she said.

Source

Asking prices for London homes rose to close to a record in February, helping push national values up the most in almost a decade, Rightmove Plc said.

Average asking prices in the U.K. capital rose 2.5 percent from January to 449,252 pounds ($710,300), less than 1,000 pounds below the record reached in October, the operator of Britain

Iraq’s prime minister says all intelligence or tips about weapons smuggling and insurgent travel from Iraq to Syria must be investigated _ no matter how weak the information may be.

Nouri al-Maliki on Saturday ordered a review of Iraq’s 363 miles (605 kilometers) of border with Syria to clamp down on illegal traffic between the two counties.

Last week, U.S. intelligence chief James Clapper said a series of bombings against the Syrian regime in recent months in Damascus and Aleppo bear the hallmarks of al-Qaida instant payday loan lenders. Iraqi and U.S. officials believe some of the terror fighters may be coming to Syria from Iraq.

In a statement, al-Maliki identified weapons smuggling as a top problem.

Source

The Swiss Competition Commission said Friday it has launched an investigation into possible cartel behavior by a dozen banks including the country’s two biggest institutions UBS and Credit Suisse.

The banks are suspected of colluding to influence key interest rates and the trading conditions for derivatives, the commission said in a statement Friday.

“Specifically, collusion between derivative traders might have influenced the reference rates LIBOR and TIBOR,” it said.

The London Interbank Offered Rate, LIBOR, and the Tokyo Interbank Offered Rate, TIBOR, underlay many commercial interest rates.

The commission said the banks are also suspected of illegally influencing market conditions for derivatives based on these reference rates.

The foreign institutions named in the Swiss probe are Bank of Tokyo-Mitsubishi UFJ, Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, JP Morgan Chase & Co., Mizuho Financial Group Inc., Rabobank Groep N.V., Royal Bank of Scotland Group PLC, Societe Generale SA, and Sumitomo Mitsui Banking Corporation.

Competition authorities in the United States and Britain have launched similar investigations.

Source