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Fed Said to Ask Stress-Tested Banks to Submit Plans on TARP
2009-11-24 05:00:03.1 GMT
By Scott Lanman and Craig Torres

Nov. 24 (Bloomberg) — The Federal Reserve asked nine of the U.S. banks that were part of this year’s stress tests to submit plans for repaying the government’s capital injections, a person familiar with the situation said.
The central bank this month asked Bank of America Corp. and eight other banks to give plans including a timetable, said the person, speaking on condition of anonymity. The firms may have the option to repay Troubled Asset Relief Program funds soon if they’ve been able to raise common equity and would continue to exceed capital buffers set in the stress tests, the person said.
“It would send a terrific message to the market if there was a plan and a timetable for at least the top banks in TARP to pay the money back,” said Joel Conn, president of Lakeshore Capital Inc. in Birmingham, Alabama, which owns stock in PNC Financial Services Group Inc. “It would signify they are good enough to stand on their own.”
The Fed’s request may turn up the pressure for banks accustomed to more flexibility on the timing and process of TARP repayment. Together the nine banks have received about $142 billion in bailout funds, out of the $700 billion Congress authorized in 2008 for the financial rescue.
The banks in the stress test that have yet to repay TARP are Bank of America, PNC, Citigroup Inc., Fifth Third Bancorp, GMAC Inc., KeyCorp, Regions Financial Corp., SunTrust Banks Inc. and Wells Fargo & Co.
To contact the reporters on this story:
Scott Lanman in Washington at +1-202-624-1934 or slanman@bloomberg.net
Craig Torres in Washington at +1-202-654-1220 or ctorres3@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz at +1-202-624-1862 or cwellisz@bloomberg.net

Treasuries Little Changed as Stocks Fall, U.S. May Trim Growth
2009-11-24 12:30:04.638 GMT
By Anna Rascouet and Wes Goodman

Nov. 24 (Bloomberg) — Treasuries were little changed as stocks fell around the world and investors speculated a report will show U.S. growth is slow enough to keep the Federal Reserve from raising interest rates.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., increased government-related securities to 63 percent of assets in October, the most since July 2004. The U.S. is scheduled to sell a record $42 billion of five-year notes today, after yesterday’s two-year auction drew the lowest yield ever. The Fed will publish minutes from its November meeting, when it specified rates will stay unchanged as long as inflation expectations are stable.
“Today’s U.S. data could underpin speculation that the Fed will not reverse monetary policy until later next year,” Ulrich Wortberg, a fixed-income strategist at Helaba Landesbank Hessen- Thueringen in Frankfurt wrote in a note today. “Rate hike speculation will be suppressed.”
The 10-year note yield traded at 3.35 percent at 7:20 a.m. in New York, according to BGCantor Market Data. The 3.375 percent security maturing in November 2019 was at 100 7/32.
The MSCI World Index of shares fell 0.2 percent.
The U.S. economy expanded at an annual rate of 2.8 percent in the third quarter, versus the 3.5 percent pace reported Oct.
29, according to the median forecast in a Bloomberg News survey.
The Commerce Department report releases the data today. A separate report today may show consumer confidence slipped this month.
To contact the reporter on this story:
Anna Rascouet in London at +44-20-7073-3844 or arascouet@bloomberg.net
Wes Goodman in Singapore at +65-6212-1568 or wgoodman@bloomberg.net
To contact the editor responsible for this story:
Daniel Tilles at +44-20-7673-2649 or dtilles@bloomberg.net

U.S. Economy Expanded at a 2.8% Annual Rate in Third Quarter
2009-11-24 13:30:01.538 GMT
By Timothy R. Homan

Nov. 24 (Bloomberg) — The U.S. economy expanded at a 2.8 percent annual rate in the third quarter, less than the government reported last month, reflecting a smaller gain in consumer spending and a bigger trade deficit.
The increase in gross domestic product from July through September reported today by the Commerce Department in Washington compares with a 3.5 percent gain previously estimated. Corporate profits climbed by the most in five years.
Smaller increases in spending show the U.S. was dependent on government stimulus programs to help dig the world’s largest economy out of its worst recession since the 1930s. Growing profits lifted purchases of equipment and software, indicating investment by companies such as Verizon Communications Inc. will help make up for smaller gains in household purchases as unemployment mounts.
“We expect profits to continue climbing this quarter as GDP rises further,” Joseph Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “This will add momentum to the recovery by motivating firms to expand and hire again early next year.”
The pace of growth matched the median forecast of 78 economists in a Bloomberg survey. Estimates ranged from gains of
2.4 percent to 3.5 percent.
The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947.
To contact the reporter on this story:
Timothy R. Homan in Washington at +1-202-624-1961 or thoman1@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz in Washington at +1-202-624-1862 or cwellisz@bloomberg.net

Home Prices in 20 U.S. Cities Rise for Fourth Straight Month
2009-11-24 14:00:29.766 GMT
By Courtney Schlisserman

Nov. 24 (Bloomberg) — Home prices in 20 U.S. cities rose for a fourth straight month in September, pointing to improvement in real estate that’s helping the economy emerge from recession.
The S&P/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year-over-year decline since the end of 2007.
Rising home sales, aided by government programs and a decline in mortgage rates this year, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Home buying and consumer spending may still be hampered by higher unemployment, which may prompt more foreclosures.
“The worst of the rate of home price declines has passed but a strong recovery is not expected,” Steven Wood, president of Insight Economics LLC in Danville, California, said before the report.
Economists forecast the 20-city home-price index would decline 9.1 percent from September 2008, after a previously reported 11.32 percent drop in the 12 months ended in August, according to the median forecast of 30 economists in a Bloomberg News survey. Estimates ranged from decreases of 8.3 percent to 10.3 percent. Year-over-year records began in 2001.
Nineteen of the 20 cities in the S&P/Case-Shiller index showed a smaller year-over-year decline than in August.
Compared with the prior month, nine of the 20 areas covered showed an increase while 10 had a decline. The biggest month-to- month gain was in Detroit and Minneapolis, which both increased 1.8 percent.
To contact the reporter on this story:
Courtney Schlisserman in Washington at +1-202-624-1943 or cschlisserma@bloomberg.net
To contact the editor responsible for this story:
Christohper Wellisz at +1-202-624-1862 or cwellisz@bloomberg.net

Consumer Confidence in U.S. Unexpectedly Increased (Update2)
2009-11-24 15:25:36.931 GMT
By Bob Willis

Nov. 24 (Bloomberg) — Confidence among U.S. consumers unexpectedly rose in November as a brightening outlook masked growing concern over joblessness.
The Conference Board’s confidence index increased to 49.5 from 48.7 the prior month. The New York-based Conference Board’s index, which focuses on the labor market and purchase plans, averaged 58 in 2008 and 103.4 in 2007.
The report showed Americans fretted over jobs, signaling the highest unemployment rate in 26 years may restrain spending and limit the recovery from the worst recession since the 1930s.
Target Corp. last week said it remains cautious about sales this quarter and expects to offer incentives spur holiday shopping.
“Labor market perceptions are very weak,” said David Sloan, chief U.S. economist at 4Cast Inc. in New York, who forecast an increase in confidence. “What did drive is up was expectations, optimism that things will get better, not that things have gotten better.”
Other reports today showed home prices rose and the economy grew at a slower pace last quarter as consumer spending climbed less than the government previously estimated.
To contact the reporter on this story:
Bob Willis in Washington +1-202-624-1837 or bwillis@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz +1-202-624-1862 or cwellisz@bloomberg.net

Richmond Fed Manufacturing Survey for November (Text)
2009-11-24 15:12:10.562 GMT
By Chris Middleton

Nov. 24 (Bloomberg) — The following is the text of the Richmond Federal Reserve Bank’s manufacturing sector activity survey for November.
Manufacturing activity in the central Atlantic region expanded for the seventh straight month but was virtually flat on balance this month, according to the Richmond Fed’s latest survey. Looking at the main components of activity, growth in shipments and new orders tapered off, while employment returned to negative territory after being positive for the last two months. Other indicators were generally in line with a month ago. Capacity utilization continued to grow more slowly, while backlogs edged slightly lower than a month ago.
Vendor delivery times were virtually unchanged, while manufacturers reported slower growth in inventories.
Looking forward, assessments of business prospects for the next six months were generally on par with last month’s readings. Firms looked for steady growth in shipments, new orders, capacity utilization and capital expenditures in the months ahead, while they expected employment to stabilize and reverse its negative reading that was seen last month.
Survey measures of prices revealed that growth in raw materials and finished goods increased at a quicker pace in November. Respondents indicated that over the next six months they expected slightly slower growth in both raw materials and finished goods prices from what they had anticipated last month.
To contact the reporter on this story:
Chris Middleton in Washington at +1-202-624-1993 or cmiddleton2@bloomberg.net
To contact the editor responsible for this story:
Marco Babic at +65 6212-1886 or mbabic@bloomberg.net

Home Prices Declined 3.8% in Third Quarter on Foreclosures
2009-11-24 15:12:51.350 GMT
By Kathleen M. Howley

Nov. 24 (Bloomberg) — U.S. home prices fell 3.8 percent in the third quarter from a year earlier, the smallest decline since the first quarter of 2008, as a tax credit for first-time homebuyers boosted demand and slowed foreclosure-driven price drops.
Prices were little changed in September from August, according to a report today from the Federal Housing Finance Agency in Washington. Prices were 0.2 percent higher in the third quarter than in the second quarter.
Prices fell in all nine U.S. regions in the three months ended in September from a year earlier as banks seized real estate from delinquent borrowers. Even as the $8,000 tax credit fueled housing demand among first-time buyers, a 26-year high in unemployment boosted defaults by prime borrowers, according to a Nov. 19 report from the Mortgage Bankers Association in Washington.
“Any recovery in housing won’t be on firm ground until the job market comes back,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.
There are increasing signs that the real estate market is improving after a three-year slump. Home prices in 20 U.S.
cities rose for a fourth straight month in September, according to the S&P/Case-Shiller home-price index.
The index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year- over-year decline since the end of 2007

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