Derivatives Fell for fourth Consecutive Quarter|
According to the Office of the Comptroller of the Currency in its Q2 report on
Friday, the amount of derivatives held by insured U.S. banks and savings
institutions fell for the fourth consecutive quarter. According to the report,
the amount of notional derivatives held by U.S. institutions fell $5.5 trillion
to $222 trillion. Trading revenue at U.S. institutions was reported as $2
billion which is 73% less than the $7.4 billion recorded in Q2 of 2011. Martin
Pfinsgraff, Deputy Comptroller for Credit and Market Risk at the OCC, said the
sharp drop in trading revenue for the sector was driven by the
“highly-publicized losses” at J.P. Morgan Chase & Co. (JPM). “Trading revenues
were weak in the second quarter,” said Pfinsgraff in a statement. “While both
normal seasonal weakness and reduced client demand played a role, it was clearly
the highly-publicized losses at J.P. Morgan Chase that caused the sharp drop in
trading revenues.” Pfinsgraff noted that J.P. Morgan reported a $3.7 billion
loss from credit trading activities, causing the bank to report an aggregate
$420 million trading loss for the quarter. Trading revenues in Q2 of 2012 were
69% lower than revised Q1 2012 revenues of $6.4 billion. The report noted that
trading risk exposure, as measured by value-at-risk modeling, increased 1% in Q2
from Q1 at the five largest trading companies. Value-at-risk modeling is
typically an estimate of the maximum amount a bank expects it can lose in a
certain period of time during a quarter.
Vivus Inc. (VVUS) shares were lower by 12% into early afternoon trading after
reporting that the European Medicines Agency committee signaled it will be
recommending against approval for the company's weight-loss drug Qsiva. In July
the U.S. Food and Drug Administration approved the company to sell the
weight-loss drug, making it the second FDA clearance for a new weight-loss drug
in less than a month after Arena Pharmaceuticals Inc.'s (ARNA) Belviq received
FDA approval. European agency's Committee for Medicinal Products for Human Use
or CHMP announced that, based on preliminary feedback, the company expects an
opinion recommending against approval of Qsiva's marketing authorization
application with the formal decision expected to follow CHMP's October meeting.
Vivus said it may resubmit the application or appeal the decision and request a
re-examination if a negative recommendation is given. "We await the official
decision and the formal report which should provide us specifics on any
additional requirements leading to the approval of Qsiva in Europe," Vivus
President Peter Tam said.
Rockwell Collins Inc. (COL) said Friday it faces "unprecedented uncertainty"
because of military spending cuts set to take place in 2013 under the
sequestration (reductions in federal spending under the budget act) plan that
Congress approved in the Budget Control Act of 2011. "Given the...challenges
facing the U.S. Congress for the balance of this year, it is more than
reasonable to assume sequestration impacts will occur," Rockwell Collins said.
Rockwell expects 2013 operating earnings of $4.30 to $4.50 a share. According to
reports, more than $50 billion in spending cuts are projected for the Pentagon
in January 2013.
As the iPhone maker launches its latest mobile phone, shares of Apple (AAPL)
moved above $700 a share on Friday. The latest iPhone 5 has a bigger screen, but
the updated operating system for it has been the center of controversy over
Apple’s mapping application, introduced to replace one from Google (GOOG) that
has been available on earlier iPhones. Apple counts on the iPhone for the
majority of both its revenue as well as profits and has seen its shares soar
this year on the continuing popularity of the devices.
Per reports on Friday, the troika of Greece's international lenders may wait
until after the U.S. presidential election in November before it releases its
report on the debt-laden country's progress toward meeting its bailout
requirements. The report by the European Commission, the European Central Bank
and the International Monetary Fund on Greece's debt situation was expected
during October. Citing EU officials and diplomats, policy makers want to avoid
any potential shock to the world economy. The two sides have narrowed their
differences on a planned multi-billion austerity package, with some 2 billion
euros /$2.6 billion to 2.5 billion euros worth of measures remaining unresolved,
per Greece's finance minister, Yannis Stournaras.
Protectionist measures are on the rise around the world per the head of the
World Trade Organization on Friday after the Geneva-based group said world trade
will grow more slowly in 2012 than predicted earlier this year. "I remain
convinced that this recovery will be slow," WTO Director-General Pascal Lamy
told a business group. He said the pressure to throw up trade barriers is
greater today than it was during 2008-2009, in the immediate aftermath of the
financial crisis. Earlier Friday, the WTO slashed its forecast for growth in
global trade for 2012 to 2.5% from 3.7%, citing global headwinds including
anemic U.S. growth and China's slowdown. Director-General Lamy said, "The last
thing we need is for this disappointing, slow growth to be impacted by more
protectionism." In recent weeks, the U.S. and China have filed high-profile
cases against each other with WTO tribunals. Director-General Lamy said an
increase in WTO formal disputes is a natural consequence of the rise in trade
restrictions globally, including antidumping and counter-subsidy tariffs. He
warned that a proliferation of regional and bilateral trade pacts has made
reaching a global deal to liberalize trade more difficult. Such deals may lower
tariffs among the parties involved, but they can lower the incentive for parties
to come to the table to tackle more difficult non-tariff issues, he said. "The
risk of fragmentation becomes more acute in today's world where tariffs are
increasingly an instrument of the past," Director-General Lamy said.
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Sept 21, 2012