Markets rally from lows
Markets around the world rallied from multi-year lows as investors grew more confident about the US banking system. After Federal Reserve Chairman Ben Bernanke said the banks may not need to be nationalised the Standard & Poor’s 500 Index leapt four per cent and in Asia the MSCI Asia Pacific Index advanced 1.2 per cent. Stocks in Asia performed less well than they might have done after Japan released figures showing its exports slumped almost 50 per cent in January. In London the TFSE 100 Index was up over one per cent in early trade, after yesterday’s 0.9 per cent fall.
Bernanke no to nationalisation
Federal reserve Chairman Ben Bernanke has rejected the idea of outright nationalisation of the US banks, reported Bloomberg.com. He indicated he favours a “public-private partnership” that the government could eventually retreat from. Bernanke said yesterday that “supervision” was the key to his solution, rather than shareholder control, and his comments reassured investors who had feared that their shareholdings cold be wiped out by nationalisation, under Treasury Secretary Geithner’s plan. As a result the sector saw its “biggest gain” for a month.
Pros and Cons: nationalisation of the British banking system 
Obama vows to rebuild America
President Obama talked of America facing its “day of reckoning” in an address to Congress, reported the Times. He vowed to “rebuild” and “recover” and the address, made to a joint session of the House and Senate, was the “most detailed vision” yet of how he plans to achieve a recovery. However the reality of the task remains clear, with his $787bn stimulus package facing “almost unanimous” Republican opposition. Republicans and some economists alike have said his ambitious plans are “unattainable”.
Can Barack Obama really steer the US off the rocks?
RBS and Lloyds to increase lending
Royal Bank of Scotland and Lloyds Banking Group are set to increase new mortgage lending by “more than £40bn”, reported the Daily Telegraph. The new pledge, expected to be announced this week, comes as part of the government’s latest £500bn bail-out, in return for which the two banks have agreed to increase loans to homeowners and small businesses. The plan follows a similar commitment by Northern Rock earlier this week and the government is hoping that the boosts to lending will help to “kick-start” the housing market.
The Mole: Sir James Crosby had to go after losing Gordon Brown's confidence
Business investment collapses
The UK economy is thought to have shrunk “even more dramatically” than previously thought in the second half of last year, said the Independent. Official figures are expected to show today that the economy shrank 1.6 per cent in the fourth quarter, worse than previous estimates. The downgrade is expected after the Office of National Statistics said that business investment in the last quarter of the year was 3.9 per cent lower than the previous three month period, and 7.7 per cent down on the same quarter of the year before.
The Mole: after Black Wednesday comes Incredibly Awkward Thursday
China nearing deflation
Railway freight in China’s Shanghai region “plunged” 31 per cent in January and industrial production slipped 12 per cent, “dashing hopes” of economic recovery, reported the Daily Telegraph. The poor data raised serious question marks over the effectiveness of the Chinese government’s stimulus policies. The country’s central bank said the outlook was “going from bad to worse” and there were fears that it might be falling into “Japan-style” deflation. Economic growth was running at 6.8 per cent in the fourth quarter but has worsened since then.
After the credit crunch, what next for the world?
...in brief..................
Citigroup nears government support and TomTom loses its way
Citigroup and the US Treasury are “nearing agreement” on a deal that would give the federal government a stake of 40 per cent or so in the bank, reported the Financial Times. No agreement has yet been reached on the plan, which stops short of nationalisation, but an announcement is expected today or tomorrow…………
Sir Philip Green is to merge his Bhs and Arcadia businesses, to “streamline” his retail empire, reported the Daily Telegraph. Senior staff at the businesses were told yesterday that Bhs will be operated as an Arcadia brand, leading to cost-cutting and likely job losses…………
Mortgage lending fell 43 per cent in January over the same month in 2008, in spite of a small rise in the number of mortgages granted over the previous month, reported the Times. The value of mortgages advanced in January was “unchanged” from December…………
Suitors are lining up for the assets of Sunday Sport publisher Sport Media Group, with it revealing it has received a “number” of approaches, said the Independent. The interest comes as welcome news to the group, which has still not been able to renegotiate its debt, despite a “fast approaching” deadline…………
Irish anti-fraud police raided the Dublin headquarters of Anglo Irish Bank yesterday, reported the Financial Times. The move was part of an investigation into alleged criminal activity in the wake of disclosures that chairman Sean FitzPatrick kept loans from the bank hidden for eight years…………
TomTom, Europe’s largest maker of satellite navigation devices, has “lost its way”, said the Guardian. The company announced a “plunge” into the red yesterday after “over-paying” for digital cartographer Tele Atlas. Consumer demand for its equipment has also started to “dry up”…………
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