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Shares and Dollar Up as G20 Accepts Japan Stimulus Policy Shares and Dollar Up as G20 Accepts Japan Stimulus Policy

April 22, 2013 - On Monday, the dollar increased to nearly 100 Yen and stocks were up after it was announced the G20 had accepted the bold stimulus policies of Japan. That helped to offset the gloom from the outlook on global growth.

The G20 released a statement following two days of meetings that said it took into consideration the possible side effects that extended period of stimulus can produce but did not single out Japan. Some had feared the G20 would mention Japan directly.

However, the move gives acceptance to the third largest economy in the world that the re-inflation of their economy is one of the keys to global recovery.

The move by the G20 also removed any obstacles that were remaining for further weakness in the yen, setting the stage for the symbolic 100 yen to the dollar.

Both the dollar and euro were up against the yen, while the euro eased back slightly against the dollar.

Stock markets in Europe were up for the second consecutive session following increases in Asia and the rise in Wall Street on Friday. Stocks were helped by a spike in the blue chip index in Italy after the long awaited political stalemate moved closer to being resolved.

The FTSE MIB Milan Index was up 2% on hopes that Italy’s re-election of Giorgio Napolitano, as president will produce a new government within a few days ending months of political freeze.

Gold rebounded from the sharp selloff experienced last week, though investors’ sentiment remained uncertain following the biggest ever one-day loss in dollar terms that the precious metal has ever experienced. Spot gold was up over 2% to $1,427.20 per ounce, well over the low of two years of $1,321.35 that was touched during trading last week.

U.S. Allows Merger between Busch Inbev and Grupo Modelo U.S. Allows Merger between Busch Inbev and Grupo Modelo

April 21, 2013- The U.S. Justice Department announced late last week it had approved the merger worth $20.1 billion between Grupo Modelo and Anheuser-Busch InBev. The approval came after the two beer giants came to an agreement with the DOJ over antitrust concerns.

The settlement reached says the two companies must divest all of Modelo’s business to in the U.S. to Constellation Brands, including its licenses for Corona beer and its other beer products.

The settlement will enable Constellation Brands to become a fully integrated, independent and viable competitor in the marketplace, said Bill Baer an Assistant Attorney General and head of the DOJ’s antitrust division.

The new proposal still needs the approval of a federal court. Under the settlement, Constellation would receive the Modelo brewery located in Mexico, Modelo beer licenses for the U.S. and the interest of Modelo in the joint venture with Crown, which imports and sells certain beers made by Modelo in the U.S.

The DOJ argued that the deal as it had been originally configured would have harmed consumers in the U.S. Constellation Brands said it would spend over $4.75 billion for the assets. Its company spokesperson said it would solidify the company’s place in the beer market in the U.S. over the long term.

In the new settlement, AB InBev becomes owner of the Mexican businesses of Modelo and can market Corona as a brand globally outside the U.S. alongside its other beer products such as Budweiser. The settlement also means AB InBev will have access to the entire Mexican market.

The DOJ said the settlement reached will help the U.S. consumer and if just 1% of a difference in prices is made, consumer across the U.S. will save nearly $1 billion annually.

Profits up at GE despite Problems in Europe Profits up at GE despite Problems in Europe

April 19, 2013 - The largest industrial group in the U.S. by market capitalization, General Electric, reported a rise of 14% in profits for the first three months of 2013. That increase came even though results in its businesses in Europe were much worse than anticipated.

GE’s earnings per share were up 17% to 35 cents, which was in line with expectations by Wall Street analysts.

GE said that U.S. and emerging economies demand was in line with its expectations, but Europe continued to drop as the economic crisis in the region deepened. Revenue in the company’s industrial businesses fell 17%.

The CEO of GE, Jeff Immelt, said the water and power division of GE had suffered quite badly. He said more pressure was attributed to the water and power services in Europe. Because of that, Immelt said the company’s margins were negatively impacted.

Revenues from the water and power division fell by over 26% and GE’s profits in that sector dropped by 30%.

Overall, the group said its profits grew by 14% to $3.5 billion boosted in part from strong performances in aero-engines, which saw an increase of 9% to over $936 million and equipment for locomotives.

The company’s financial services sector, GE Capital, reported an increase of 9% in profits to $1.94 billion. That was helped by smaller tax charges and a profit of $690 million from real estate, up from just $56 million during the same three months in 2012.

The tax rate for the group fell to 12% from the rate of 17% during the same period a year ago. Immelt said the first half of 2013 would be a tough period for the water and power division partly because of the comparisons to last year when the demand for wind turbines from GE boomed in the United States, as developers placed orders prior to the a tax credit they feared would expire. That division, said Immelt, is expected to grow during the second six months of 2013.

Morgan Stanley Reports lower Revenue, but Higher Profits Morgan Stanley Reports lower Revenue, but Higher Profits

April 18, 2013 - Morgan Stanley saw a slowdown in its trading activity during the first three months of 2013, which caused the securities firm to have lower revenues. However, due to its cost controls the firm recorded higher profits.

Revenues for Morgan Stanley dropped to $8.5 billion in the first quarter compared to $8.9 billion during the same period a year ago. Advisory fees, equity trading and fixed income all traded lower during the quarter.

Morgan Stanley was able to exceed forecasts on revenue by analysts but missed in earnings. The company earned 50 cents per share for the first three months of this year, which was better than the same period a year ago when the company experienced a per share loss of 5 cents, but did not meet the analyst’s estimate of 53 cents per share.

Morgan Stanley’s net income for the quarter was $84 million, compared to a loss last year during the first quarter of $94 million.

Nevertheless, the adjust earnings per share of 61 cents, which takes out profit and loss that companies must record from swings in their own debt value, compared favorably with the estimates of analysts that were 56 cents per share.

CEO James Gorman, said the quarter showed the firm had solid momentum in all sectors. Gorman previously stated the industry would have to adjust to many new regulations by eliminating jobs and not handing out lavish bonuses.

Morgan’s wealth management announced revenues of more than $3.5 billion compared to last year’s figure of $3.3 billion. Morgan Stanley is set to pay the last 35% of its stake in the joint venture with Smith Barney for over $4.7 billion during June.

Bank of America Profits up But Short of Forecasts Bank of America Profits up But Short of Forecasts

April 17, 2013 - Bank of America Corp. enjoyed a strong first quarter increase in profits compared to the same quarter one year ago, when the bank had problems due to large charges that were debt-related.

The bank said its results were pushed by an increase it is brokerage income, higher fees in investment banking and an improvement in credit quality, which was in part offset by lower gains on debt securities sales and lower income from mortgage banking.

Profit at the bank was reported at $2.62 billion in comparison with one year earlier when it was just $653 million. On the basis of per share, which also includes preferred dividends’ payments, the bank showed a profit of $0.20 versus last year in the same quarter a profit of just $0.03.

Revenue for this quarter was up by over 5.5% to reach $23.5 billion. Analysts had the bank forecasted for earnings per share of $0.22 and revenue reaching $23.41 billion.

Bank of America two years ago embarked on a difficult retreat from the home mortgage business, but is now preparing a new run at that same market in the U.S.

However, Bank of America’s surge to take back the home mortgage business, comes at a time when peers like Wells Fargo and JP Morgan Chase reported results a week ago that showed a substantial slowdown in home lending.

As many of its peers have done, Bank of America is cutting costs to help offset less revenue. During the first quarter, expense that was noninterest dropped by 5.2% from the same quarter last year and fell by 1.1% from the last quarter of 2012 to settle at $18.1 billion.

Back at the end of 2011, the bank announced job cuts of 30,000 to reduce its costs by over $8 billion each year by the middle of 2015.

Euro Falls but Gold Bounces Back Euro Falls but Gold Bounces Back

April 16, 2013 - On Tuesday, the Euro was down at the start of trading in Europe following economic sentiment that was downbeat from Germany. Stocks extended their declines and oil futures remained down despite the price of gold recovering.

Economic expectations from Germany deteriorated during April, falling for only the first time in the past five months, according to a survey compiled by ZEW.

After the results of the survey were revealed, the euro dropped to $1.302 versus the dollar, a low for today’s session. One analyst said the new survey highlights the fears investors have that the recovery in Germany will not last long.

Confirmation that consumer price inflation in the eurozone dropped to 1.7% a low of 31-months during March indicates that the Central bank in Europe has room to lower interest rates even more. Inflation in the UK remained steady at 2.8% between February and March, while Sterling and the Bund remained steady.

In Spain, the government’s funding costs fell sharply on Tuesday at an auction of its Treasury bills. The Treasury in Spain sold $6.63 billion of six and 12-month notes, which topped the target. At the same time, Greece sold nearly 2.14 billion in Treasury bills that were 13-weeks.

Gold jumped off its low of two years Tuesday having been hit hard over the past two trading session. Spot gold hit $1,382.60 per troy ounce up over $35 from Monday’s close. Since April 12, the precious metal lost close to 13% of its value.

Oil futures continued to struggle as Brent crude for June delivery was just below the $100 per barrel price.

Futures on the U.S. market were higher, which indicates a higher start to the day on Wall Street.

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