At its last meeting in April, the central bank’s top officials discussed how coming tax increases and spending cuts could weigh on the recovery, and debated whether the Fed should provide additional stimulus to spur consumer spending.

"Participants expected that the government sector would be a drag on economic growth over coming quarters. They generally saw the U.S. fiscal situation also as a risk to the economic outlook; if agreement is not reached on a plan for the federal budget, a sharp fiscal tightening could occur at the start of 2013," the minutes from the meeting said.

The central bank is not alone in its fear of a coming "fiscal cliff" in 2013. The Bush tax cuts, payroll tax cut and extended unemployment benefits are all set to end, at the same time that the government slashes more spending.

While the Fed also acknowledged improvement in the economy early in the year, several members expressed concern that it could be due to waning temporary factors such as warmer winter weather.

As the Fed prepares to wind down its latest round of stimulus, known as Operation Twist, some have called for the central bank to do more to fuel growth.

Fiscal cliff: What you need to know

While those calls have yet to be answered, the minutes showed that the Fed is not ready to close the door on that option.

"Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough," the minutes said.

Operation Twist was designed to bring down long-term interest rates and encourage spending by shifting $400 billion from short-term to long-term bonds faxless cash advances. Launched last September, the program is set to end in June.

Since 2008, the Fed has taken numerous steps to bolster the economy, including keeping its key interest rate near zero in an effort to give businesses and consumers cheaper access to credit.

In addition, the Fed has also enacted two rounds of asset purchases known as quantitative easing, also designed to bring down interest rates. But nearly four years later, the economy is still struggling to return to robust growth, leading many to call for more action from the Fed.

The minutes also showed that Fed members discussed the job market in great detail.

"Labor market conditions improved in recent months," the minutes said. "So far this year, payroll employment had expanded at a faster pace than last year and the unemployment rate had declined further, although it remained elevated."

At the last meeting, the Fed improved its forecast for the unemployment rate this year, but continued to believe the economy would be weak enough to warrant historically low interest rates until "at least through late 2014."

The unemployment rate was at 8.1% as of April, and the Fed expects it to fall to between 7.8% and 8% by the end of the year.

Separately, the Fed released a new schedule of two-day meetings for its policy-making committee. Previously, the meetings were set to last either one or two days. 

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The Senate Banking Committee on Monday announced future oversight hearings, including one that will look into the trading losses at JPMorgan Chase from a regulatory angle. Lawmakers plan to question regulators, not JPMorgan Chase (, Fortune 500) officials.

Sen. Bob Corker, a Tennessee Republican, was the first to call for a hearing on Friday.

"Clearly the losses posted by JPMorgan are significant, and as policy makers we should understand in detail what has transpired," Corker said in a letter to Banking Committee chairman Tim Johnson, a South Dakota Democrat.

House Financial Services Committee and House Oversight Committee staff members said they had no plans yet to hold hearings yet.

The JPMorgan controversy comes a little less than two years after a big push for Wall Street reform led to the passage of the Dodd-Frank Act.

On Friday, two senators who helped craft the Volcker Rule — a new, not-in-effectpart of Dodd-Frank that bars banks from making trades for their own profit-chasing purposes — denounced JPMorgan’s trades.

JPMorgan CEO Jamie Dimon said last week that the faulty trades would have been allowed under the Volcker Rule, named for former Fed chief Paul Volcker, since the rule appears as though it will allow for economic hedging free instant credit score.

However, Democratic senators Jeff Merkley of Oregon and Carl Levin of Michigan, said they intended the law to ban the kind of trades that JPMorgan Chase traders made. They plan to push regulators to write and enforce a strict ban on so-called proprietary trading and hedging against economic forces.

"The law very clearly already excludes this activity," Levin said in a call with the media on Friday. "It specifically says that every single position that you take as a hedge has got to be tied to a specific risk arising from another specific position. Now, that’s about as clear as you can write. So the regulators are now hopefully going to implement the law as written."

The news has even drawn angry accusations from the political field. Elizabeth Warren, a Democratic candidate for U.S. Senate in Massachusetts, has called Dimon to step down from his position as a board member of the New York Federal Reserve.

"This is about accountability," Warren told CNN’s "Starting Point" on Monday. "Jamie Dimon not only is CEO of JPMorgan Chase, he holds this position of public trust, advising the New York Fed on how to regulate risk for these large financial institutions like his own financial institution,"  

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President Karolos Papoulias has summoned party leaders back to negotiations at 7:30 p.m. (1630GMT), after talks on Sunday failed to lead to the creation of a coalition government.

The conservatives New Democracy party won May 6 general elections, but the poll failed to produce an outright winner. The second-placed left wing party, Syriza, has refused to join a coalition, demanding that the terms of an international bailout be scrapped or radically renegotiated.

Syriza leader Alexis Tsipras will not attend Monday’s meeting, party officials said.

“They are looking for an accomplice to continue their catastrophic work _ we will not help them,” Panos Skourletis, a spokesman for the party, told Mega television.

The political turmoil has taken a toll on markets across Europe, with shares on the Athens Stock Exchange 3.5 percent lower at 590.38 in midday trading.

“Voices of support (in Europe) to Greece … are becoming fewer and fewer, while there is a frenetic increase of those that are predicting the country’s exit from the euro,” an editorial in Greece’s top-selling Ta Nea said. “The dramatic drop in state revenues during the election campaign and the serious souring of the atmosphere in Europe toward Greece mean that after almost certain repeat elections there will be a need for even tougher austerity measures.”

Greece’s two traditionally dominant parties, New Democracy and the Socialist PASOK were hammered on May 6, as the bailed-out country suffers through a fifth year of recession, with more than one in five Greeks out of work.

Since the election, Syriza has gained support, and in a survey published Monday led with a projected 20.5 percent of public support, pushing New Democracy to second place with 19.4 percent, while PASOK was third with 11.8 percent. No margin of error was given in the Rass poll of 1,002 people, conducted May 10-11 for the Eleftheros Typos newspaper.

New Democracy and PASOK could form a government without Syriza, but the small Democratic Left party that would provide the required support is insisting that such a coalition would be unworkable.

“The president has invited us to a new meeting and I will attend,” Democratic Left leader Fotis Kouvelis told Antenna television. “I will repeat my position, that without the participation of the second largest party, the government would not have sufficient popular and parliamentary support.

Shut out of main debt markets, Greece is surviving on rescue loans from other euro countries and the International Monetary Fund, who have repeatedly warned that payments will only continue if the country continues its draconian cost-cutting program.

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That’s just one of the mysteries surrounding the news that JPMorgan Chase, widely thought one of the safest U.S. banks, is gushing red ink from bad trading bets. As details slowly emerged Friday, the shares of the nation’s largest bank fell hard, as did those of several rivals.

The story behind the loss is complex, and rich in irony. How it’s viewed could influence regulators implement a major financial overhaul law called Dodd-Frank. How hard regulators crack down on bank could have a big impact on the stability of the financial system.

Here are answers to some questions about the loss:

Q: How exactly did the bank lose so much so fast?

A: First, start with the irony. JPMorgan says the losses came from a trading portfolio designed to offset losses in the bank’s lending business. Instead of offsetting losses, these so-called “hedges” added to them.

JPMorgan extends money to companies through loans and by buying bonds. The bank was worried that it might not get all its money back, so it bought protection. Though it didn’t detail how it did this, banks typically buy credit default swaps, essentially insurance contracts that pay out when companies stiff their lenders.

It gets more complex. In the often dizzying, Alice-in-Wonderland world of banking, these hedges are themselves sometimes hedged, and that’s exactly what JPMorgan did. The bank apparently thought it had bought too much protection, so it hedged its hedge.

It’s that second hedge, basically a bet that companies would pay back their loans, that led to the losses.

Q: How does the “London Whale” figure into the story?

A: News reports before the bank announced its loss said that a trader at the bank dubbed the “London Whale” had invested heavily in an index of credit-default swaps, and that the bets were producing losses. But in a conference call Thursday, Jamie Dimon, the CEO of JPMorgan, said the news reports about London trades were only “somewhat related” to the losses. He provided no other details.

Q: Why are other bank stocks falling on the news?

A: It’s not just the size of the bet that’s scaring investors, but its complexity. The fact is, not even experts know how precisely big banks make money, and occasionally lose it. Their wagers are largely hidden. The opaqueness, which investors normally shrug off, is spooking them now.

Investors are uneasy also because JPMorgan has a reputation of managing risks better than almost anyone in the business. Investors seem to be asking: If this bank can lose $2 billion in six weeks, maybe others can, too?

Finally, there’s the regulatory threat. The loss comes amid heated debate in Washington over just how tightly to regulate banks. “The timing of the JPMorgan announcement couldn’t be worse,” said Whitney Tilson, head of hedge fund T2 Partners, speaking at an industry gathering in Las Vegas.

Investors fear that bank profits could be pinched by the so-called Volcker Rule restricting trading that banks do with their own money, as opposed to clients’ funds. Dimon has been an outspoken critic of the rule, and an impactful one given his skill at navigating his bank in recent years. JPMorgan was the only bank to remain profitable during the 2008 financial crisis.

Now that Dimon has been pushed off his pedestal, investors are worried that regulators will be tougher in enforcing the new rule.

Q: Isn’t the trading that led to the loss banned already?

A: No. The rule doesn’t take effect until July, and even then regulators are suggesting banks will have another two years to comply.

In any case, it’s not clear that the trade in question were subject to the rule. In the conference call Thursday, Dimon said the trades that backfired were hedges, not bets for profit, so they wouldn’t have fallen under the rule.

But some experts have doubts.

Nancy Bush, a banking analyst at NAB Research, says it’s not always clear what is hedging and what is gambling. The size of JPMorgan’s loss makes her suspicious.

“So they made money on hedges and then they hedged some more,” she said. “At some point it goes from being a hedge to being a money maker. They crossed the line here somewhere and it’s going to cost them.”

Sen. Carl Levin from Michigan, the chair of a subcommittee that investigated the crisis, put it more bluntly. “This is not a hedge,” he said. He called the loss a “stark warning” about the danger of “risky bets” at banks.

Q: How much will the trading loss hurt JPMorgan?

A: Likely not much at all, putting aside the impact of tougher regulation. JPMorgan is a big money maker. The $2 billion loss, which is before accounting for taxes, compares with $19 billion in net income last year and $16 billion the year before that.

What’s more, Dimon said that $2 billion loss will be offset by $1 billion trading bets that have already paid off. Dimon said there are $7 billion more paper gains from trades that he can tap in case losses grow.

Q: Are more losses possible?

A: Dimon said he is trying to unwind the bad bets in a “responsible” manner to minimize losses, but prices can move against him. That would mean more losses. Dimon has said the $2 billion could become $3 billion depending on how markets react.

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The results beat analysts’ expectations but the company failed to boost its guidance for the year.

Macy’s Inc. shares fell 4 percent in early premarket trading.

The retailer said Wednesday that its net income rose to $181 million, or 43 cents per share, for the three-month period ended April 28. That’s up from $131 million, or 30 cents per share, a year ago.

Revenue rose 4.3 percent to $6.14 billion.

Analysts surveyed by FactSet had expected 40 cents per share on revenue of $6.14 billion.

Revenue at stores opened at least a year climbed up 4.4 percent for the quarter.

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Prices climbed 2.4 percent in April from a year earlier, the smallest gain since February 2010, after a 2.8 percent increase in March, the Bank of Korea said in a statement in Seoul today. Prices fell 0.1 percent from March.

]]> http://finstories.com/s-korea-producer-price-inflation-eases-before-rate-decision-bloomberg/feed/ http://finstories.com/hundreds-march-as-japan-goes-without-nuclear-power/ http://finstories.com/hundreds-march-as-japan-goes-without-nuclear-power/#comments Sun, 06 May 2012 11:00:03 +0000 ManInBlack http://finstories.com/hundreds-march-as-japan-goes-without-nuclear-power/ Hundreds of Japanese are marching and waving “No nukes” banners to celebrate the last of this nation’s 50 nuclear reactors switching off.

The crowd at a Tokyo park Saturday said they were not concerned about government warnings of power shortages.

One of three reactors at Tomari nuclear plant in the northern island of Hokkaido is going offline for routine maintenance checks.

After last year’s March 11 quake and tsunami set off meltdowns at Fukushima Dai-ichi plant, no reactor stopped for checkups has gone back up personal business card. Japan requires new tests on withstanding quakes and tsunamis, and it needs local residents’ approval to restart reactors.

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