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Usd/cad
The USD/CAD is pushing above its short term resistance at 1.0565-1.0575, which expected to act as a support level now.
The expected short term target is at 1.07-1.072
That was a quick move!
Target achieved with a profit of more than 100 pipsJ
For detailed technical analysis for each of the major currency pairs visit the Technical Studies Center
Oil recovers to hold above $79
Prices rebound after a three-day slump as investors eye rising gasoline demand and dismiss falling consumer confidence.
NEW YORK (Reuters) -- Oil rose above $79 a barrel Tuesday as rising gasoline demand in the United States helped investors shrug off a drop in consumer confidence in the world's biggest energy user.
Crude gained even as the U.S. dollar strengthened against other currencies in afternoon trade.
A report from MasterCard SpendingPulse on Tuesday showed U.S. gasoline demand rose last week, coming in 5.1% higher than year-ago levels and 0.1%higher than in the previous week.
"Weekly gasoline figures showed demand jumped last week, and that may begin to eat away at fuel inventories at a time when refiners have been processing less crude," said Gene McGillian of Tradition Energy in Stamford, Connecticut.
Most analysts expect government data due out Wednesday to show U.S. fuel inventories fell last week on lower-than-normal refining activity, according to analysts polled by Reuters.
U.S. crude for December delivery settled up 87 cents at $79.55 a barrel.
The dollar, often considered a "safe-haven" investment, rose Tuesday in reaction to flagging U.S. consumer confidence, which fell to a lower-than-expected 47.7 point in October, from a revised 53.4 in September. Consumer confidence was the weakest since July.
As the dollar strengthens, crude becomes more expensive for holders of other currencies.
Distillate stocks, including diesel and heating oil, probably fell 900,000 in the United States last week amid colder-than-normal temperatures, according to analysts polled by Reuters. Gasoline stocks probably fell by 300,000 barrels and crude probably rose 1.4 million barrels, according to the average analyst estimate.
Private industry group American Petroleum Institute will release its own weekly inventory data later Tuesday.
Better-than-expected quarterly earnings from oil giant BP Plc helped boost confidence in industrial sector companies, sending their shares higher.
U.S. gross domestic product (GDP) data is due to be released Thursday. Analysts expect data to show that the U.S. economy grew 3.3% in the third quarter. Data showing lower growth could prompt investors to shun riskier commodities, whose prices have rallied this month.
Iran seeks major changes to a United Nations nuclear fuel deal before it agrees to send its low-enriched uranium outside the country for processing, Iranian state media reported Tuesday.
Tense negotiations between Western powers and OPEC's No. 2 oil producer over its uranium enrichment have helped to push oil prices higher.
OPEC oil ministers this week raised the prospect of boosting oil production when OPEC meets in December if crude stocks fall fast, although an Iranian official said there was no indication OPEC should boost supplies soon.
$8,000 home credit still in play
Negotiations about whether and how to extend and expand the tax credit for homebuyers are moving quickly. Here are the latest developments.
NEW YORK (CNNMoney.com) -- Confused about whether lawmakers will extend the $8,000 first-time homebuyer credit and what it would look like?
That's understandable, since the situation is still very fluid.
Here's where things stand.
Support for the credit: There is still bipartisan support in Congress for extending the credit past Nov. 30 and making it available to more homebuyers.
Some of the issues still in play: Just how far past Nov. 30, the size of credit and how many more buyers would qualify.
It's still not clear where President Obama stands on the issue. Last week, Housing Secretary Shaun Donovan said the administration wanted to review more data to better assess the cost of the credit before weighing in.
What's on the table now: There appears to be movement toward a compromise deal that falls between the most and least generous proposals that have been put forth so far.
"There is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home," financial policy analyst Jaret Seiberg wrote in a research note for Concept Capital's Research Group.
The latest idea under discussion is a credit worth up to $8,000 for first-time homebuyers and up to $6,500 for homeowners looking to trade up to a bigger primary residence and who have already lived in their current home for five years.
To qualify for the full credit, however, homebuyers must have adjusted gross income of less than $125,000 ($225,000 for married couples filing jointly).
In addition, the credit would only apply to homes sold for $800,000 or less. Contracts to buy a home must be signed by April 30, 2010, and the deals must close by June 30 in order for a buyer to qualify for the credit.
Rationale for extending the credit: Supporters of the credit say it has helped to boost existing home sales in recent months. Extending the credit would help further support sales, stabilize housing prices and generate jobs in the face of an expected rise in foreclosures next year, which is expected to put downward pressure on prices.
If the credit is allowed to expire, they say, the housing market and the broader economy will grow moribund again.
"The most fundamental argument for the credit is that nothing works in the economy if housing is falling -- it hurts household wealth and credit becomes tight," said Mark Zandi, chief economist at Moody's Economy.com. "[The credit] is a good insurance policy. It's vital to stem the housing price declines."
What critics say: Though extending the credit has bipartisan support, it is not without its critics.
Critics, while acknowledging that the credit has helped to generate additional home sales, say it has been poorly targeted and therefore not cost-effective.
They point to estimates that only 10% to 20% of the nearly 2 million homebuyers who will have gotten the credit by Nov. 30 bought solely because of the tax break.
In other words, a large majority of homebuyers who benefited from the credit would have bought their homes without it.
By one economist's estimate, the government may have spent $43,000 for each sale that occurred strictly because of the credit.
In a position paper published this week, the liberal Center on Budget and Policy Priorities said making the credit available to existing homeowners would not help stabilize housing prices or reduce inventory.
Do banks have something to hide?
Even experts have a hard time getting a handle on how bad losses might get as the commercial real estate market implodes.
NEW YORK (Fortune) -- The banks have taken some lumps since the economy went bad. But some believe their biggest headaches are yet to come.
The pace at which U.S. commercial banks are adding to their loan loss reserves has slowed this year, while loans continue to go bad at a brisk pace.
Despite the optimism of lenders like Wells Fargo (WFC, Fortune 500), some observers warn that banks aren't socking away enough for a rainier day.
The disconnect is particularly acute in commercial real estate, where lenders are facing a surge of defaults on commercial mortgages and construction loans made when prices were much higher and demand for space much stronger.
Banks have been recognizing commercial real estate losses slowly, even though the high season for defaults isn't expected to arrive until next year.
That's not the only problem. Ill-defined or inconsistently applied rules for valuing securities and handling loan modifications can make it hard to say how healthy banks really are, from Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) on down.
The risk is that this year's recovery could turn out to be a false dawn, delivering another blow to investor trust -- not to mention people's 401(k)s.
"The credibility of the banking system could take another step back," said Paul Miller, an analyst at FBR Capital Markets. "Everyone is expecting we've seen the peak in losses, but it's impossible to know for sure because you can't get an apples-to-apples comparison."
Extend, pretend?
Banks have been swimming in losses since the collapse of the credit markets in mid-2007 sapped demand for all sorts of goods and services.
Loans written off as uncollectible hit their highest level on record in the second quarter, according to government data. Loan loss reserves are also at a peak since the government started keeping track in 1984, according to data from the Federal Reserve Bank of St. Louis.
Taking losses on souring loans and troubled assets eats into profits, which tends to drive down share prices and executives' pay. The losses also erode capital, reducing lendable funds and forcing banks to raise new money by selling stock or businesses.
Accordingly, banks have been eager to stretch their losses across as long a period as possible. Facing a triple-digit bank-failure count and trying to manage hundreds of troubled lenders, regulators are willing to go along, up to a point.
In April, accounting rule makers gave banks more leeway in valuing hard-to-trade securities. That's led to current discussions over when banks will have to bring some off balance-sheet assets and liabilities back in house.
"Politically, this sort of forbearance is the lowest-cost way of stopping the train wreck," said Wayne Landsman, an accounting professor at the University of North Carolina. "The banks wanted that April change very badly, and you have to assume they wanted it for a reason."
Behind the curve
The risk, of course, is that deferring the reckoning can create a bigger problem later. And there are those who believe the banks are doing just that.
Nonperforming and restructured assets grew six times as fast as loan reserves over the past year, analysts at Keefe Bruyette & Woods estimate, while reserve building as a proportion of new troubled loans tapered off after peaking in the fourth quarter of 2008.
This pattern suggests "the banks are not ahead of the curve in providing for troubled loans," the KBW analysts wrote in a report earlier this month.
Plenty of trouble is ahead. Prices on apartment, industrial, office and warehouse properties dropped 33% over the past year, according to the Moody's/REAL commercial property price index.
Real estate research firm Foresight Analytics estimates banks should have booked losses on around $110 billion of defaulted commercial real estate and construction loans. But so far they have taken their medicine in only about a third of those cases.
That means the banks could face a backlog of $70 billion or so defaulted but unreserved loans as we head into the teeth of down cycle in commercial real estate -- where the bulk of bubble-era loans are due to be repaid or refinanced between 2010 and 2012.
Regional and community banks, rather than the giant TARP-taking entities, will bear the brunt of this onslaught. Banks with between $100 million and $10 billion in assets have almost $900 billion of commercial real estate exposure, Foresight estimates. That's three times their capital.
"Right now, we're closer to the beginning of this problem than the end," said Matthew Anderson, a partner at Foresight in Oakland, Calif.
Apples and oranges
Even some seemingly well established positive trends look muddled with a closer look at the numbers.
For instance, publicly disclosed financial reports have been showing a slowdown in the growth of early-stage delinquencies, those in which borrowers are a month or two behind on their bills. Investors have been cheered by this trend because it suggests the worst losses are behind the banks.
But regulatory filings by the same banks often paint a less upbeat picture, said FBR's Miller.
He said nonperforming asset levels were 17% higher in regulatory filings than in public statements, according to FBR estimates based on second-quarter data for the top 25 banks and thrifts by assets -- suggesting that some big banks are understating problem loans as they go through the restructuring process.
One view into this puzzle is the banks' handling of loan modifications and other changes, under the category of troubled debt restructurings.
Troubled debt restructurings have doubled over the past year, according to KBW, as banks extend loan maturities and cut interest rates or loan balances, particularly on troubled residential loans.
But not all institutions account for restructured loans in the same fashion -- which could mean some bank investors are in for a surprise down the road as many restructured loans go sour.
"The issue is that accounting for loan mods is not transparent and makes delinquency data appear better on the surface," FBR's Miller wrote in a note to clients this month.
Troubled debt restructurings have become such a hot [Censored]on that Private Bancorp (PVTB), a Chicago-based commercial lender, felt compelled to address the issue in its third-quarter conference call with investors Monday.
"It is important to recall the company does not hold any troubled debt restructured loans on its balance sheet and does not restructure problem loans to defer or delay problem loan status," chief risk officer Kevin Van Solkema said.
But even cleared of those questionable practices, Private Bancorp has enough problems.
Its shares lost half their value over two days this week after the bank nearly doubled its estimate of loans it won't be able to collect, mostly in the commercial real estate and construction sectors. Many of the bad loans were written since new management took over two years ago in a self-proclaimed "strategic growth plan era."
Stifel Nicolaus analysts responded the next day with a comment that could apply to more banks as the loss-recognition process creeps forward.
"It is now apparent that loans made during the strategic growth plan era are not immune to the credit cycle," they wrote. "A consequence of this revelation should be a higher degree of investor skepticism and a lower stock valuation for an indefinite period."