USA Daily Bulletin ? 20/03/12 ? SharesInv.com

By Millennium Traders

U.S. builders started construction on new homes in February at a slightly slower pace, but an increase in permits indicates that work will pick up in the coming months. The Commerce Department reported that housing starts fell 1.1% to an annual rate of 698,000 last month, compared with an upwardly revised 706,000 in January. New construction of single-family homes, which account for three-quarters of the housing market, dropped nearly 10% to an annual rate of 457,000 however, compared to a year ago, is higher by 18%. Construction on multi-dwelling units such as apartment buildings surged higher by nearly 29% to an annual rate of 233,000. Work Permits to begin new construction climbed 5.1% during February to an annual rate of 717,000, striking the highest level since the middle of the recession during October 2008. Single-family home permits increased 4.9% to an annual rate of 472,000. Permits for condominiums and apartments rose a mere 3.3% to a rate of 219,000.

Territorial new construction statistics: Midwest rose 3%; South rose 1.5%; Northeast fell 12.3% and West fell 5.9%. While the housing market remains in a severe slump as the worst seen since the government began record-keeping in the early 1960s, there is evidence of signs of a slow motion improvement with sales of new and existing homes have been on the rise since the end of the last summer. In the past four months, housing starts have averaged an annual rate of 697,000; striking the best stretch of home building since the final months of 2008.

U.S. Treasury Secretary Tim Geithner said Tuesday that troubled European countries should take a steady, multi-year approach to fixing their budgets. ?The path of fiscal consolidation should be gradual with a multi-year phase-in of reforms,? said Treasury Secretary Tim Geithner in testimony prepared for a House Financial Services Committee hearing. ?If every time economic growth disappoints governments are forced to cut spending or raise taxes immediately to make up for the impact of weaker growth on deficits, this would risk a self-reinforcing negative spiral of growth-killing austerity.? Geithner added that he was encouraged by the progress Europe was making.

The Federal Reserve and its district banks earned the second-highest amount in its history during 2011 as the central bank profited from increasing its balance sheet to boost the U.S. economy. On Tuesday, the Federal Reserve and its district banks reported that it earned $77.4 billion, down from $81.7 billion in 2010. The historical earnings allowed the Fed to distribute $75.4 billion to the U.S. Treasury which was also the second-highest level ever paid. The Feds balance sheet hit level of $2.92 trillion in 2011, up from $2.43 trillion in 2010. The earnings were derived primarily from $83.6 billion in interest income on securities acquired through open market operations, from Treasury securities, federal agency and government-sponsored enterprise mortgage-backed securities, and GSE debt securities, as reported by the Fed.

Because the Fed effectively pays for those securities out of money it created out of thin air, the so-called quantitative easing programs are extremely profitable. A Federal Reserve official on Tuesday said the central bank doesn?t pay attention to profit when it conducts its operation. Federal Reserve Chairman Ben Bernanke and other policy makers have said they would stop the programs when the U.S. economy is strong enough, though there?s considerable debate over when that will happen, and Fed officials haven?t ruled out buying more securities. The Fed repeated that it doesn?t expect to record a loss on any of its emergency loan programs. On its portfolio of assets, unrealized losses totaled $4.3 billion, which the Fed attributed to ?instrument-specific credit risk? on commercial and residential mortgage loans; the Fed earned $428 million on the securities it did sell.

ECB data showed on Tuesday, for a second week, the Euro-system?s balance sheet shrank but remained close to the high hit after the European Central Bank?s second three-year loan operation. The Euro-system consists of the ECB and the 17 euro-zone national central banks. By the end of last week, the balance sheet fell to EUR2.986 trillion from EUR3.006 trillion the previous Friday. The balance sheet fell by EUR19.488 billion, compared with a drop of EUR17.38 billion in previous week. On March 6, ECB?s balance sheet soared to a record EUR3.023 trillion after banks tapped the ECB in late February for more than half a trillion in three-year loans. ECB?s balance sheet was EUR1.046 trillion larger than a year earlier and now amounts to 32% of euro-zone gross domestic product.

In the week ending March 16, net lending to credit institutions increased by EUR89.1 billion to EUR172.6 billion after an increase of EUR10.6 billion a week earlier. Last Wednesday, a main refinancing operation of EUR17.5 billion matured and a new one of EUR42.2 billion was settled and fixed-term, one-week deposits of EUR219.5 billion matured and new deposits in the amount of EUR218 billion were collected. On the same day, a longer-term refinancing operation of EUR14.3 billion matured and a new one of EUR9.8 billion was settled. Due to settled purchases under the ECB?s covered bond-buying program, Eurosystem holdings of securities for monetary policy purposes rose a mere EUR400 million last week to EUR283.4 billion. under the Securities Markets program, the value of bond purchases totaled EUR217.8 billion by the end of last week. The value of the Euro-system?s gold and gold receivables holdings remained unchanged.

Complaints from foreign officials about the potential effect of U.S. rules to prevent banks from making risky bets with their own money, suggesting it would not hurt liquidity in international markets was disputed again by U.S. Treasury Secretary Timothy Geithner on Tuesday. From counterparts in Europe, Japan, Canada and elsewhere, U.S. officials have come under fire publicly and privately in recent months over the so-called Volcker Rule to prevent proprietary trading by banks. Geithner said the U.S. is reviewing concerns, but downplayed the potential for any dire consequences. ?I do not believe, that the rule as drafted presents a meaningful risk to liquidity or credit in those countries,? Geithner said.

In the last two months, a number of foreign officials visiting Washington have made a point to bring up their concerns about the Volcker Rule. As currently proposed, the primary worry is that the U.S. rules would discourage financial firms from trading foreign sovereign debt while providing an exemption for U.S. debt which could put a damper on liquidity in already fragile sovereign debt markets, critics contend. Bank of Japan Deputy Gov. Kiyohiko Nishimura told a group of bankers meeting in Washington earlier this month, ?The Volcker rule is intended to restrict the proprietary trading by banking entities; however, the rule could have significant implications for important market-making activities, as well as market liquidity.?

This article originally appeared on www.stockmarketsreview.com, and is reproduced here as part of our collaboration with StockMarketsReview.com

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Source: http://www.sharesinv.com/articles/2012/03/21/usa-daily-bulletin-200312/

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