Thursday, December 03, 2009

Bank of America To Repay TARP Funds

The market is mostly higher in early trading, after some mixed economic data. Last night, after the bell Bank of America (BAC) announced it will repay the govt. TARP funds to the tune of $45 billion. $26 billion will come from excess reserves within the company, with the remainder coming from proceeds of securities sales.

The stock is currently 3% higher on the news, but the bigger picture is brighter as it removes the govt. oversight that makes it harder for BAC to compete with the likes of Goldman Sachs (GS), who has already repaid TARP and can pay employees what the market will bear.

In economic news, the initial jobless claims fell to 457,000 last week, below the 480,000 consensus. That is slightly good news on the jobs front, but the ISM Services Index came in at 48.7, which still shows contraction in the services sector. (consensus was 51.5)

The dollar is slightly lower today. Oil prices are roughly flat near $76.50, and gold is up slightly to $1215 as it continues to make new highs.

Asian markets were higher overnight, and European bourses are higher today as well after the ECB left its benchmark rate unchanged at 1.00%, stating that these levels remain appropriate.

The 10-year yield is higher to 3.36%, and the VIX is also higher to 21.43.

I have to run out for a bit, I'll try post again later with some trading comments.


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