Federal Reserve On Alert

Daily Market Commentary for February 29, 2012

On Wednesday, Federal Reserve Board Chairman Ben Bernanke said in testimony prepared for the House Financial Services Committee that recent improvement in the unemployment rate has put the Federal Reserve on alert and watching incoming data closely.
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On Wednesday, Finland's Parliament backed the 130 billion euro ($175 billion) rescue package for Greece negotiated by euro-zone finance ministers earlier this month. Lawmakers voted 111-72 in favor of the bailout, which is the second by Greece's euro-zone partners and the International Monetary Fund in two years. The approval gives Finland's government a mandate to agree to a final deal on the rescue package at a summit meeting of European leaders this week.

Commerce Department reported Wednesday that the U.S. economy grew faster than originally reported by3% during Q4, mainly because of increased commercial construction, consumer spending and lower imports. According to revised data, it was still the fastest increase in a year and a half. Real final sales in the U.S. excluding imports and inventories, rose 1.1% instead of 0.9% as originally reported. A major source of Q4 growth was inventories - totaling $54.3 billion instead of $56 billion as initially reported. As measured by the consumer PCE index, inflation rose 1.2% in Q4 or by 1.3% on a 'core' basis if food and energy are excluded. Also during Q4, real disposable income climbed 1.4%, compared with an earlier reading of 0.8% and personal savings rate was 4.5%, up from an initial estimate of 3.7%.

ISM-Chicago PMI accelerated to a reading of 64.0% in February from 60.2% in January. The index measuring production was the highest since April with new orders hitting an 11-month high, order backlogs moved out of contraction and employment had the biggest one-month gain since March 2008.

According to a report released Wednesday by state Comptroller Thomas DiNapoli, the average cash bonus for New York City residents employed by the securities industry is expected to fall 14% in 2011 with the average cash bonus having declined by 13% to $121,150 during 2011. "Cash bonuses were down in 2011, reflecting a difficult year on Wall Street," DiNapoli said. "Profits were down sharply and securities firms in New York City resumed downsizing in the second half of the year." DiNapoli said the average bonus fell a bit less than the total cash bonus pool because the pool was shared among fewer workers than in 2010. State Comptroller's report suggests that profits for New York City broker/dealer operations for NYSE members was likely less than half of 2010's $27.6 billion.

The Organization for Economic Cooperation and Development Wednesday said imports to members of the Group of Seven leading developed economies and the BRICS group of large developing economies fell by 0.2% from Q3, having fallen by 0.7% in that three-month period. Trade flows involving most major economies fell during Q4, reflecting faltering growth in the global economy. Exports from those two groups fell by 1.2%, having risen by 0.9% during Q3. While imports to the U.S. rose by 1.8% and to China rose by 4.7%, there were declines in both exports and imports in Germany, France and Italy. For the first time since Q2 2009, exports from the world's first and second largest economies fell. Imports to and exports from India and South Africa fell while imports to and exports from Russia and Brazil rose. The decline in imports by the G-7 and BRICS nations during Q3 was the first since Q1 2009. The G-7 comprises of - Canada, France, Germany, Italy, Japan, the U.K. and the U.S, while the BRICS group comprises Brazil, Russia, India, China and South Africa.


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