US Economy Slow To Grow, Treasury Yield At Record Low, Kayak IPO Stalls: Wall Street News 5/31/2012

by Wall Street Job Report on May 31, 2012

On Campus, New Deals With Banks [TheNewYorkTimes] College campuses have long been attractive hunting grounds for financial institutions looking for new customers.In recent years, however, their efforts to woo students have gotten banks and other financial institutions in trouble with regulators. They are now effectively prohibited from providing gifts to students who sign up for credit cards. And the colleges themselves can no longer be paid by the lenders to steer students to student loans.

US Economy Grew Sluggishly in The First Quarter [MSNBC] The U.S. economy expanded at a snail’s pace in the first quarter, hobbled by weak spending at the federal, state and local levels, government data showed Thursday. The Commerce Department reported that Gross Domestic Product expanded at a 1.9 percent annualized rate in the first quarter, down from its initital estimate of 2.2 percent and much slower than the 3.0 percent pace clocked in the fourth quarter of last year.

Morgan Stanley Chief Defends Facebook Handling [WSJ] Morgan Stanley Chairman and Chief Executive James Gorman defended the securities firm’s role in Facebook Inc.’s tumultuous initial public offering, telling employees internally that the firm worked “100% within the rules” and calling the steep decline in Facebook’s stock “disappointing.” Mr. Gorman, in a weekly strategy meeting Tuesday that was later webcast to employees, said “speculation of nefarious activity” surrounding the social networking company’s IPO is untrue. Contrary to some reports, he said, he wasn’t “aware of any dissent” among the underwriting firms regarding Facebook’s IPO price of $38 a share.

Treasury Yield Record LowTreasury Yield At Record Low, As Government Debt Is Still Not A Problem [HuffingtonPost] he next time you hear somebody freaking out about U.S. government debt, you can remind them that there has never been a better time for the government to borrow money — ever. The interest rate on 10-year Treasury notes fell on Wednesday to 1.63 percent, breaking a record low set in 1946, according to the Wall Street Journal. There were some war bonds in World War II that had lower yields, but those did not trade actively, and the contemporary bond market really didn’t exist then, noted Guy LeBas, chief fixed-income strategist at financial services firm Janney Montgomery Scott.

May Again Bites Stock Investors [WSJ] For the third year in row, May has been a bête noire for U.S. stock-market bulls. On Wednesday, the Dow Jones Industrial Average tumbled 160.83 points, or 1.3%, to 12419.86, while Treasury yields plunged to their lowest levels on record, amid a familiar mix of fears from the European debt crisis. Wednesday’s stumble was the worst percentage decline for the Dow in seven weeks, extending a weak patch that began after the Dow rose to a 4½-year high on May 1. Since then, the Dow hasn’t been able to string together even two straight days of gains.

After Facebook, Kayak IPO Stalls [WSJ] Kayak Software Corp. slowed its march to the stock market in one of the clearest examples yet of the fallout from Facebook Inc.’s tumultuous initial public offering. Kayak, which runs a travel-listings website, didn’t launch its “roadshow” to pitch the stock to large investors, an event that had been expected to begin around Memorial Day, people familiar with the matter said. Morgan Stanley, the lead bank on the Facebook deal, also is leading the Kayak deal.

Europe Woes Ignite Selloff [WSJ] Fears Spain can’t save its troubled banks sparked a selloff in Spanish government bonds Wednesday and prompted a broad decline in stock markets and the euro, leaving Europe’s common currency in its most precarious state in months. The market slump—driven by the latest worries over the euro zone’s fourth-largest economy—underscored investors’ concerns that European policy makers don’t have the capacity to cope with the euro-zone crisis.

German Crisis Stand Challenged by EU Urging Direct Bank Aid EU Weighs Direct Aid To Banks As Antidote To Crisis [Bloomberg] he European Commission challenged Germany’s remedies for the financial crisis, calling for direct euro-area aid for troubled banks and demanding a path to common bond issuance. The commission, the European Union’s central regulator, sided with Spain in proposing that the planned permanent rescue fund, the European Stability Mechanism, inject cash to banks instead of channeling the money via national governments.

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