Dow: 12,806 (+0.62%) S&P 500: 1,364 (+.74%)
Fear the beard. Federal Reserve Chairman (and “Just for Men” sponsor) Ben Bernanke stopped by Congress for his semi-annual 2-day address on the US economy. Investors were initially disappointed by the lack of specifics during the hearing, dropping the Dow 82 points – then stocks powered back to finish up 78 points (the biggest negative-to-positive comeback in 6 months). The National Association of Home Builders reported the largest monthly jump in confidence for newly built, single-family homes since ’02 and solid earnings from some big boy companies helped stocks up. The only black-eye was scandal news out of HSBC.
Ben Bernanke is mum on new stimulus
Dark, grim and scary. Nope, this isn’t a summary of the critics’ reviews for The Dark Knight Rises (get tickets for Thursday night while you still can), this was the sentiment in the room after Ben Bernanke’s testimony before the Senate on the economy. But he’s still slow to use the Federal Reserve’s monetary policy tools to help the slowing economy. The Fed only has so many tools to fix the economy, and Bernanke is reluctant to use any more stimulus unless things get worse. The Boos from Wall Street could be heard inside the Capital Dome in Washington.
Goldman Sachs and Coca-Cola earnings impress
The first slew of major earnings data this week came in mixed, but leaned toward positive. Coca-Cola (KO) added almost 2% on solid earnings that beat forecasts (Fact du Jour: What country consumed the most Coca-Cola beverages per capita last year? See the bottom of this paragraph). Goldman Sachs (GS) gained over 1% after easily beating 2nd quarter earnings expectations despite the adverse global market conditions. The investment bank also announced the sale of its hedge-fund administrator to Boston-based competitor State Street and plans on building a new in-house bank for lending to ultra-wealthy private clients. When expectations are low, it’s easy to win: Citigroup, JPMorgan, and Goldman all beat analyst earnings expectations, and saw their stocks rise even though earnings are down from last year (the answer by the way is “Mexico” – we were looking for “What is Mexico”).
British Bank HSBC charged with aiding money laundering
The Barclays Libor-rate fixing scandal (manipulated interest rates screwed borrowers out of millions) and JPMorgan‘s $4B trading loss are still fresh memories. But hey, when it rains, it pours. Now British-based HSBC (HBC), Europe’s largest bank, is under fire for what sounds more like the plot to the last Batman movie – charges that they gave terrorist, criminal and drug cartels access to the US (and maybe even Gotham’s) financial system. In a hearing of HSBC executives today, the U.S. Senate argued that the firm failed to guard against money-laundering (when financial institutions facilitate financial transactions/accounts for criminals) involving Mexican druglords and U.S. sanctions against Iran. Head of Compliance David Bagley even stepped down mid-hearing and their shares slipped 0.5%
- The Senate today, the House tomorrow: Day 2 of Ben Bernanke’s semi-annual report to Congress on the U.S. Economy
- More Earnings…IMB, Ebay, Bank of America…
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