Signs of a Coming Apocalypse in Muni Land?


JPMorgan beats the Street [Reuters & CNBC] "JPMorgan reported higher-than-expected quarterly earnings, helped by narrowing losses on bad loans that allowed it to release $2 billion in reserves. JPMorgan, the first of the major U.S. banks to report earnings for the fourth quarter, said profit increased to $4.8 billion, or $1.12 a share, from $3.3 billion, or 74 cents a share, a year earlier. 'This was a pretty good number and… the indication for other investment banks is rather positive,' Jeff Hart, Principal at Sandler O'Neill, told CNBC."

Goldman Reveals New Crisis Funding [CNBC via The Financial Times] "Goldman Sachs has revealed details of about $5 billion in investment losses suffered during the crisis for the first time this week, in a move that will deepen the debate over companies’ financial disclosures. The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, DC. The figures, issued as part of internal reforms aimed at silencing Goldman’s critics, show that the bank suffered $13.5 billion in losses from 'investing and lending' with its own funds in 2008."

China Engages in More Tightening on Inflation Fears [Financial Times] "China ordered banks to hold more of their deposits on reserve with the central bank on Friday in a move aimed at reducing the amount they can lend and tackling stubbornly high inflation in the country. The central bank raised the required deposit reserve ratio by 0.5 percentage points for all Chinese banks, effective from January 20, bringing the publicly announced ratio to 19 per cent for the country’s main lenders. The requirement was already at its highest level since reserve requirements were introduced in the mid-1980s after the central bank raised the ratio six times last year."

Signs of a Coming Apocalypse in Muni Land? [Wall Street Journal] "With the market for municipal bonds tumbling, cities, hospitals, schools and other public borrowers are scrambling to refinance tens of billions of dollars of debt this year, another sign that the once-safe market is under duress. The muni bond market was hit with the latest wave of bad news Thursday, prompting a selloff that sent the market to its lowest level since the financial crisis. A New Jersey agency was forced to cut the size of a bond issue by about 40% because of mediocre demand, and pay a higher rate than expected. And mutual fund giant Vanguard Group shelved plans for three new muni bond funds, citing market turmoil."

Feds to Auction Bank Warrants—Including Citi [CNBC] "The U.S. Treasury said on Friday it intends to auction warrants in Citigroup, Boston Private Financial Holdings and Wintrust Financial during the current quarter."

Retail Sales Numbers Rise—Along with Consumer Prices [Reuters via CNBC] "Sales at U.S. retailers rose slightly less than expected in December, but retail sales for all of 2010 reversed two years of contraction and posted the biggest gain in more than a decade, a government report showed on Friday. Consumer prices, meanwhile, rose by the most in 18 months."

European Debt 'Skepticism' Continues [Bloomberg] "Europe has yet to allay investor 'skepticism' about the sustainability of the region’s debt, and any spread of the crisis would cloud the global economic outlook, the International Monetary Fund’s No. 3 official said."