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Morning Notes For September 8th 2010 at Trader’s Narrative

Morning Notes For September 8th 2010

The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:

  • Bank Basel capital standards could wind up being higher than investor expectations – banks may be required to hold common equity equivalent to 4.5-5% of their assets and during strong economic times, banks may have to accumulate an incremental 2-2.5%. Tier-1 capital would total 5.5-6% w/an additional 3% buffer. Expectations had been for total tier-1 to be 7-8%. WSJ
  • Obama launching slew of new initiatives during speech in Cleveland today (the speech is due to start at 2:10PM ET according to Politico); however, Congress is unlikely to act soon on the new proposals. Specifically, Obama will propose to expand and make permanent the R&D tax credit, allow businesses to write-off 100% of their capital investments through 2011, and spend an extra ~$50B on infrastructure. Obama is against a compromise on extension of the Bush tax cuts. Obama on Wednesday will make clear that he is against any extension of the Bush rates for the “wealthiest” Americans. WSJ & NYT
  • Businesses told the WSJ that the new 100% depreciation write-off idea may help accelerate some investment plans but it won’t do much to boost longer-term demand. Some CEOs likened the depreciation idea to the “cash for clunkers” and homebuyers tax credit, which only accelerated demand (rather than create new demand). – WSJ
  • White House - surprise decision by Chicago Mayor Daley not to seek reelection could mean that Rahm Emanuel leaves the White House to run - Time/Washington Post
  • Bloomberg News says homebuilders are finishing developments abandoned during the recession as banks unload foreclosed projects at rock-bottom prices.

Global equity performance map:
overnight global equity markets Sep 2010

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