Fed Estimates Wealth Shrink of 39%, U.S. Import Prices Fall

Arthi Gupta
12 Jun, 2012
New York City

Speculation mounted on Wall Street for another stimulus as the euro zone stress lift bond yields of Spain and Italy. Import prices fell 1% in May, the largest monthly decline in two years. The median households lost more than one third of its wealth in three years to 2010.

[R]10:10 AM New York – Speculation mounted on Wall Street for another stimulus as the euro zone stress lift bond yields of Spain and Italy. Import prices fell 1% in May, the largest monthly decline in two years. The median households lost more than one third of its wealth in three years to 2010.[/R]

Stocks in early trading in New York advanced on the growing optimism that the Fed may offer more stimulus measures soon. However, many economists doubted what the Fed can do as the euro zone debt stress mounts.

The yield on the U.S. Treasury increased 2 basis points to 1.61% and the euro edged lower to $1.24 81 and one dollar fetched 79.53 yen.

Crude oil eased and gold, silver and copper added between 05% and 1% in New York trading.

The yield of 10-year Italian bonds rose to 6.14%, an increase of 10 basis points and crossed above 6% for the first time in a few months.

The sustained increase in the rate added to the urgency of action from policy makers to shore of the confidence in the third largest economy with the second largest manufacturing base in Europe.

Spanish 10-year bond yield rose to 6.66%, above 6.5% for the second day in a row.

In Asian trading most markets closed lower expect a technical rebound in Australia lifted broader indexes and in India pressure mounted on the Reserve Bank to ease rates after weak industrial production data.

India''s industrial production grew 0.1% from a year ago in April following the revised 3.2% drop in March, according to data published by the Central Statistics Office today. During April last year, production rose 5.3%.

Housing Crash Wipe Out Home Equities

The median household lost 39% of its wealth in the housing market crash in three years to 2010, according to the latest estimate by the Federal Reserve.

The median household net worth declined to 1992 levels after adjusting for inflation and the impact of the decline varied from middle class to rich families.

The median family’s net worth declined to $77,300 from $126,400 in 2007 and the wealthiest 10% families enjoyed median net worth increased 1.9% to $1.17 million according to the Fed.

Fed estimated in all $7 trillion of home equities were wiped out and household net worth peaked at $66 trillion at the end of 2007 and dropped to $54 trillion in 2008 and rebounded to $63 trillion at the end of the first quarter this year.

U.S Import Prices Fall

U.S. import prices fell 1% in May, marking the largest monthly drop since June 2010, according to data released by the U.S. Labor Department today.

Export prices dropped 0.4% in May, the first monthly decline of 2012.

Bayer CropScience to Acquire Abbott & Cobb Unit

Bayer CropScience, a subsidiary of Bayer AG agreed to purchase the watermelon and melon seed business of Abbott & Cobb Inc., a privately-held seed company headquartered in Pennsylvania.

The acquisition is expected to strengthen the vegetable business of Bayer CropScience.

Earnings Review

Diodes Incorporated ((DIOD)), the manufacturer and supplier of application-specific standard products estimates second quarter revenue will range between $155 million and $164 million or up 7% to 13% sequentially.

FactSet Research Systems Inc. ((FDS)), the provider of integrated financial information reported third-quarter revenues rose 10.2% to $202.31 million from $183.65 million in the prior-year quarter. Net income in the quarter climbed 10.8% to $48 million or $1.05 per share compared to net income of $43.31 million or 92 cents per share a year ago.

Shanda Games Limited ((GAME)), the Chinese online games provider said first quarter net revenues grew 11% to 1.39 billion yuan from 1.25 billion yuan in the same period last year. Net income in the quarter rose 7.6% to 336.8 million yuan compared to net income of 313 million yuan last year. On a per American Depositary Share basis, earnings rose to 1.20 yuan from 1.10 yuan a year ago.

Texas Instruments Incorporated ((TXN)), the maker of analog chips expects second quarter revenue to be in the range of $3.28 billion to $3.42 billion compared to its prior guidance of $3.22 billion to $3.48 billion.