Mark Gongloff is off the newsletter this morning, so today's 7.5 Things are brought to you by Jillian Berman.
Thing One: Fed's Announcement Is A BFD: Ben Bernanke announced yesterday that he would start throwing money around with an aim to stimulate the economy. Investors offered their approproiately Pavlovian response, sending stocks through the roof. Fed-haters and Mitt Romney also offered their expected response of consipiracy theories and the like.
Though his Federal Reserve’s statement said the bond buying and low-interest rates are a meant to combat high unemployment and a sluggish economy, Bernanke noted in his press conference that it probably won’t work completely. “I don't think it's a panacea. I don't think it's going to solve the problem,” he said.
Still, it’s the Fed’s most forceful move in months. It’s the first time the central bank has said that it will continue a given program until the economic outlook changes, according to The New York Times. The aggressive maneuver -- arguably too late in the game -- may have been acknowledgement that the Fed’s previously slower approach wasn't totally working.
Thing Two: Things In Europe Are Sort Of Not A Disaster: In this morning’s edition of unexpectedly good news, eurozone employment held steady last quarter. That marks the first time in a year that the number of people with a job in the region hasn’t fallen, the Wall Street Journal reports.
Meanwhile, eurozone finance ministers are set to gather today for the latest meeting that will save Europe. The ministers might throw Greece a bone by giving the country a little bit more time to reach its budget goals, but they are unlikely to offer more aid, according to the WSJ. The meeting will also focus on Spain, which is trying to get a European credit line to save its banking system with essentially no strings attached, a plan the finance ministers are unlikely to support, according to Bloomberg.
Thing Three: Your Healthcare Is Expensive, You're Not Imagining It: Californians may be paying more for their health care than they need to thanks to some close dealings between hospitals and doctors, one state official is alleging. California’s attorney general Kamala Harris is investigating whether hospital systems’ relationships with doctors and their ownership structure has given them the power to boost prices, violating antitrust laws, the Wall Street Journal reports.
The stakes are high, given that Americans are struggling to deal with rising health care costs. Many Americans -- particularly those without prescription drug coverage -- skip doctors visits or medical tests, cut pills in half or take other measures to save money that could put their health at risk, according to a Consumer Reports survey released yesterday.
Thing Four: Wall St. Execs May Have Used Secret Information: Some Wall Street executives that attended a meeting with the Treasury Secretary and may have used the private information he told them to make trades. The Securities and Exchange Commission is investigating whether some hedge funds and other firms traded based on information Henry Paulson disclosed at a July 2008 meeting when he was Treasury Secretary, according to the Wall Street Journal. The probe also focuses on whether Paulson indicated that the government would help mortgage giants Fannie Mae and Freddie Mac, which were struggling at the time.
Thing Five: Great News For Private Equity: The private equity business is booming, thanks in large part to the private equity business. Deals between U.S. private equity firms are set to rake in $28 billion, double the amount of last year and on pace to be the most since 2007, the Wall Street Journal reports. The news of the cozy dealings comes just days after The New York Times revealed a lawsuit alleging that private equity firms like Bain Capital, where Mitt Romney used to be CEO, were conspiring to keep the costs of buyout targets low. So glad to hear everyone is so chummy.
Thing Six: Government Help Isn't Only For Poor People And Corporations: Most rich communities can’t really say they built it when it comes to their homes. Most homeowners in wealthy areas like Silicon Valley, California, and Arlington County, Virginia, get help from the government to buy their homes, Reuters reports. And while the government is helping out the rich, normal, struggling homeowners can’t get government-backed Fannie Mae and Freddie Mac to give them a break by lower the principal on their loans.
Thing Seven: London Whale Losses Lessening: JPMorgan Chase may have taken a huge reputational hit from the London Whale trading disaster, but thankfully the bank’s bottom line is recovering. JPMorgan has erased the stock decline that came in the wake of the trading loss, according to Bloomberg. Maybe Jamie Dimon can rest a little bit easier than he already is.
Thing Seven And A Half: Scary CEOs: You’re welcome. You can now be certain in the knowledge that some of your favorite CEOs also look like some of your favorite famous villains.
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Calendar Du Jour:
8:30 a.m. ET: Retail Sales for August
8:30 a.m. ET: Consumer Price Index For August
9:15 a.m. ET: Industrial Production and Capacity Utilization for August
9:55 a.m. ET: University of Michigan Consumer Sentiment for September
10:00 a.m. ET: Business Inventories for July
Heard On The Tweets:
@EddyElfenbein: Every single forecast that inflation will rise or interest rates will go up or the dollar will plunge has failed to materialize. All of them
@AnnCensky: Don't know about you, but I already have QE3 fatigue.
@williamalden: Big iphone discovery by me: If you hold the 4S angled away from your torso it appears taller and newer.
@ditzkoff: I'm going to pull the soda-ban equivalent of Footloose but instead of inspiring a town to dance again, I'm just going to drink lots of soda.
@ditzkoff: Great minds discuss ideas. Average minds discuss events. Small minds discuss people. Tiny minds discuss how eat ham bun without choke choke.