Employment surprise: Canada adds jobs in April
OTTAWA - The Canadian economy saw an unexpected increase in jobs during April, despite a deepening economic recession, leaving the unemployment rate at 8%.
Statistics Canada said 35,900 positions were added during the month, driven by an increase in self-employment.
"Despite this increase, overall employment has fallen by 321,000 since the peak in October 2008," the federal agency said. "The unemployment rate was unchanged at eight per cent in April, remaining at its highest level in seven years, with the growth in employment coinciding with an increase in the labour force."
Most economists had expected 50,000 job losses in April, with the unemployment rate rising to 8.3%.
• TSX -176.38
• DOW -102.43
• Dollar -.49c to 85.29USD
• Oil -$.37 to $56.71US per barrel hitting a 5 month high
• Gold +$4.50 to $915.00USD per ounce
• Canadian 5 yr bond yields + .07bps to 2.09 http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_usNEW LINK
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise
Ten U.S. banks need to raise a total of US$75B
Janet Whitman, Financial Post NEW YORK -- After poring over the books of America's 19 largest financial firms in a two-month, 150-person-strong investigation, U.S.
regulators are forcing ten of them to raise a combined US$75-billion in capital as a buffer against future losses from bad loans.
Soon after the results were released, several of them raced to detail how they would do just that with Wells Fargo announcing plans to issue US$6-billion of common stock.
The dollar amount tallied in the government-mandated "stress" tests to determine the health of the banks is less than many analysts were forecasting. That could help restore faith that the financial system is stabilizing -- or fan criticism that the tests weren't rigorous enough.
The immediate reaction from investors seemed to be positive. A leading bank sector stock index surged in after-hours trading, while individual stocks such as Citigroup Inc., which must raise a further US$5.5-billion, and Fifth Third Bancorp, which has to raise an additional US$1.1-billion, rising 6.8% and 25.3% in after hours trading respectively.
"I guess it is pretty much good news in that we didn't have any real negative surprises from the leaks that we've seen through the week," said Kim Rupert, managing director of Action Economics LLC in San Francisco.
At a media briefing late Thursday as the results of the stress test were being made public, top U.S. government regulators said they were hopeful that the banks would be able to raise capital through private sources rather than turning to U.S.
taxpayers again for a handout.
Plans by Wells, the biggest U.S. mortgage originator, to sell US$6-billion of common stock would meet a good chunk of the US$13.7-billion it's being required to raise.
Meanwhile Citigroup said it was looking to exchange an additional US$5.5-billion of preferred securities for common stock to fill its capital shortfall.
Besides selling common stock, banks also will look to raise fresh capital by selling assets, offloading toxic loans into the government's "bad bank" if it gets off the ground.
Banks must make their capital-raising plans known within a month. They have six months to raise the money.
If the companies can't raise the funds from private sources, the U.S. government will pump in more money from its existing US$700-billion bailout fund.
Banks will be loath to accept this funding, however, because of the stigma that goes with needing a government bailout and the constraints that go with it, such as limits on executive bonuses that make it difficult to hire and retain top talent.
The results of the test are bound to widen the gap between healthy and ailing former Wall Street titans.
Bank of America Corp. was determined to need nearly US$34-billion in additional capital, by far the largest requirement of any of the top banks, while Morgan Stanley must raise US$1.8-billion and Citi US$5.5-billion.
Their healthier rivals Goldman Sachs Group Inc. and JPMorgan Chase & Co. were deemed not to need funds.
Bank of New York Mellon Corp., MetLife Inc., American Express, State Street Corp., BB&T Corp., US Bancorp and Capital One Financial Corp. also aren't required to raise more capital.
Other banks being ordered to raise funds include KeyCorp at US$1.8-billion; PNC Financial Services Group Inc. at US$600-million; Regions Financial Corp. at US$2.5-billion; SunTrust Banks Inc. at US$2.2-billion; and GMAC LLC at US$11.5-billion.
The stress test estimated that losses for the 19 banks for this year and next could total U$600-billion on top of the hundreds of billions already lost. About US$455-billion of those losses are expected to come from bad home-mortgage loans.
Seeking to emphasize the point that the tests were stringent, regulators said that the more than 9% loss projected over two years is worse than the worst two-year period of the Great Depression, regulators said.
Timothy Geithner, the U.S. Treasury Secretary, didn't rule out having to go to the U.S. Congress to ask for more money beyond the US$700-billion bailout fund.
He said the U.S. government would extend the window allowing other banks to get government funds, but would not require them to under go stress tests.
Mr. Geithner cautioned that, though there are tentative signs the economy as a whole is on the mend, the government remains only at the beginning of its effort to stabilize the financial sector.
"We want to do this right...to get the economy back on track," he said.
Friday, May 8, 2009
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