The Australian (Labor) government will retain its ruling of four pillars banking regulation in a bid to prevent mergers from Australia’s four biggest banks, said the Australian treasurer Wayne Swan on Monday.

The government will also establish a scheme that would give depositors of banks and insurance companies quick access to funds should a financial institution fail.

Following the recent global credit crunch and the instability in the financial markets, this would give a broader review of the health of the financial system in the country.

Swan said that, “the government considers that Australia is best served by a stable banking system that can continue to draw on the strength and risk management skills of four major banks rather than a smaller number”.

It comes after the announcement of one of the four major banks Westpac merged with the fifth biggest bank (St. George Bank) creating the biggest bank in Australia with a market capitalisation of $66B.

Popularity: 59% [?]

The Bush Administration has proposed to require fingerprint collection from international visitors when they are going through airports or cruise liners.  The fingerprints collected would be sent to Homeland security department soon after the visitors leave, according to a proposed rule.

 (Here’s a type of fingerprint scanner used in the UK but not necessarily in UK aiports.  Taken from VirginMedia.com website)

 

The proposal to be announced Tuesday will close a security gap identified after the 9/11 attacks.

According to DJ Newswires, Airlines and cruise ship operators must provide the department with biographical information before they leave the country and to do that they will need to have biometric information - such as fingerprints.  The data needs to be collected and then transmitted within 24 hours of the visitor leaving the US, according to a homeland security official who spoke on condition of anonimity as the announcement had not yet been made.

Here’s a link for some of the places where an international visitor would require their fingerprints.  Ten fingerprint scanners have already been enforced in some US airports since November 29, 2007.

What is your take on this?  Are you prepared to provide your identity and have Uncle Sam know exactly where you’ve been and when you were there?

Expect to see more of these fingerprint scanners at an airport near you.

Popularity: 96% [?]

In an aggressive effort to help home builders and struggling owners, the US Senate passed a combination of tax breaks to address the dwindling housing market.

The senate passed a regulation by allowing a $25.5B new property tax deduction to relieve the banks and homebuilders and a $7,000 tax credit for a purchase of a foreclosed home.

(picture taken from www.larealestateblog.net)

Despite the majority of the senate voting 84-12, the chances of the legislation becoming law is very slim.  Some senate republicans and the white house have criticized the various aspects of the housing bill.  In a letter sent to the White House speaker Nancy Pelosi, “We must not prolong necessary corrections in the housing market, bail out lenders or subsidize irresponsible borrowing and lending”.

The most controversial provision in the bill would allow businesses to offset their losses this year and next year against gains made from previous years, which may help homebuilders and financial firms that made billions during the good times and are now facing insurmountable losses and writedowns.

This has angered some conservatives and other housing groups who believe that these businesses do not deserve a bailout.

The White House is pushing forward its own package stimulus proposals which includes, tax credits for first time home buyers, increased housing assistance for low income rental housing and modest property tax deductions.

House democratic leaders hope to pass their legislation by the end of the month.

Popularity: 92% [?]

In the last couple of days, huge losses mount for Opes Prime’s clients as the stockbroking firm had been determined that it was insolvent.

(graphic picture taken from website: www.opesprime.com.au)

Opes prime is a firm that deals in stockbroking, asset management and corporate finance. It has recently collapsed after one of its prime auditors Ernst & Young only took two hours to determine that the firm was insolvent.

As administrators of the collapsed stockbroker rushed to seize control of a mysterious British Virgin Islands company which links three of the firms directors clients were told they could only collect $0.30c in the dollar in return for their share portfolios which were liquidated by its secured creditors to recover around $1.3 billion in debts.

Opes Prime administrator John Lindholm predicted it could be even less if he was unable to recover from favoured clients who were protected from margin calls.

Opes Prime directors called in the administrators on March 27 when they discovered a $200M hole in its accounts. ASIC investigators have discovered that six clents’ accounts had been protected from margin calls through “top ups” with other people’s stock.

It has also since been discovered that Riqueza (a British Virgin Islands based company whose sole director is Jay Moghe - who also owns Opes Singapore) is one of the main focus of the investigation as Riqueza was used as an intermediary between Opes Prime and two other investment vehicles named Leverage Capital Pty. Ltd. (owned by Laurie Emini and Julian Smith and Hawkswood Investments Pty. Ltd. (owned by Laurie Emini, Julian Smith & Anthony Blumberg).

Mr Moghe who is a sole director and shareholder of Riqueza is a Singapore-based businessman, who also recently resigned as the chief executive of an Opes Prime subsidiary based in the Virgin Islands, said that while he was the sole director and sole shareholder of Riqueza - had been wrested from him. Therefore, he “has no control over it”… he says he knew there were some transfers but he has no control over any of it,” Mr. Moghe said last Tuesday.

On a strange twist of fate, Mick Gatto a Melbourne underworld figure who was acquitted of murder in 2005 over the fatal shooting of Melbourne hitman Andrew “Benji” Venjiamin - boasted to The Australian Financial Review that he could do a much better job of tracking the losses than the administrators of the collapsed broker.

According to The Australian Financial Review, ‘Mr Gatto and business associates John Khoury and Matt Thomas said they were confident they could achieve a better result than the $0.30c in the dollar return flagged by the Opes Prime administrator John Lindholm.

According to Mr Gatto, although he “wanted to try and get a result for everyone and while acting for his clients” - he could not say which ones he is acting for.

This will be interesting to see how this story unfolds whilst investigations are ongoing.

Popularity: 100% [?]

I am a little surprised on where the market is at the moment.  I initially thought, we had a fair way to go further down and yet it seems that big Ben had his way on the Fed intervention.  On a technical analysis, it seems that the markets had bounced off with a rally on the way up.  Here’s where the markets are at the moment.

This is the 10 year chart of the S&P as of the 04th April 2008.

It showed a bounce off the support level at 1,312 and rallied up from there.  It now seemed to consolidate around the 1,370 mark and will more likely consolidate around the 1,388 resistance level.

This is the 10 year chart for the UK 100 as of today the 04th April 2008.

This too had a rally from hitting the support at 5,568.5 and opened and closed higher in the last 5 days.  It now seemed to be heading in the resistance level of 5,970.

This is the 10 year chart for the ASX 200 as of the 04th April 2008.

It also seemed to have hit the resistance line of January 2007 high at 5,677.  This will be an interesting one to watch on Monday as it seemed to also be trading at or just under the resistance level of a bearish flag formation.

This is the 10 year chart of the Nikkei 225 index as of 04th April 2008.

This index surged through in the last 4 days of trading and have also gone past the resistance bearish flag of around 13,233 level and is on it’s way to test the resistance line of 13,716 - also the matching the early October 2005 level.

I think there are certainly some oversold stocks that are great for long term outlook, but I believe there are still some uncertainty in the current marketplace that one needs to place some disciplined approach to trading and investment.

What is your take on the current market?

Popularity: 85% [?]

As per my previous post about the Federal Reserve lowering rate, as of this morning (US time) they have indeed lowered their rate to as low as 75 basis points. Although, the expectation in the market is around 100 to 200 basis points in the view to shock the market and induce the economy - 75 basis points is still relatively high and in fact higher than what they have provided recently.

As a matter of fact, the Federal Reserve has cut the benchmark lending rate by 2 percentage points this year, the most aggressive easing since the federal funds rate became a target of policy in the late 1980’s.

The current lending rate for the Federal Reserve is 2.25 percent.

This created a rally in the markets as the Dow is up 356.09 points (as of this writing). The ASX 200 futures is up 104.9 points, the Nikkei is up 176.65 points (all current as of this writing).

Expect to get a spurt on the local markets because of this announcement. On technical analysis, there are some good opportunities for short-term gains. Fundamentally, this action is an attempt by the officials to prop up the faltering economy and restore faith in the US financial system. In a way, this is telling something about the US economy as the Federal Reserve is trying their best to aggressively tackle this ongoing issue.

Will this market hold higher? Only time will tell…

Popularity: 79% [?]

Many in the market are expecting that the Federal Reserve will make another rate cut as a reflection of the deteriorating state of the US economy.  In a desperate attempt to save an economy in crisis, it is expected that this cut could be as large as 50 to 200 basis points.  Although, it is more likely it will be around the 50 - 75 basis points mark.

There is a general feeling with some market watchers that the Fed may take an aggressive approach and shock the economy into action.  As President Bush declared, “we’re in challenging times”.

Mark Zandi, a chief economist at Moody’s Economy.com also states that: “The Fed is on high alert — something you don’t see but once every quarter century; maybe, in this case since the Great Depression.  This is a very unusual period.”

At the moment, the Fed is fighting multiple battles at once, a housing collapse, a severe credit crunch and a wall street turmoil which feeds on each other creating a vicious circle that may be hard for the Fed to break.

This may not be the end of it - if it does help the economy, it may only be temporary and a rate cut may not be enough to get the economy back on track.

Popularity: 80% [?]

This is the latest news in US.

Bear Sterns is a company that was trading at around $170 in February last year is now to be overtaken by JP Morgan at just $2 a share.

The Federal Reserve’s attempt to induce cash in to struggling companies and to avert a financial slowdown did not do much good for Bear Sterns as investors are still and customers still drove the price of Bear Sterns down after the cash infusion was announce.

At the moment, the whole market is not only very cautious but also very volatile.

It will be a matter of the smartest and the less debt ridden company will win in the end.

For more story on this go to Bloomberg.com

Popularity: 78% [?]