Standard & Poor's website confirms that the ratings agency has cut France's debt rating by one notch.






AA is the new AAA






The University of Michigan confidence survey came in at 74, almost 3 points above expectations and up from 69.9 last month.

Outlook and current conditions improved.

This was the fifth straight month of improving prints in confidence.






Here is a good synopsis of the S&P downgrade issue by Miller Tabak's Peter Boockvar:

With the likelihood of an S&P credit downgrade of France, Spain, Italy, Belgium and Portugal, it's important to understand that #1, they are just following what the markets have priced in and #2, Fitch and Moody's in some circumstances have already moved ahead of S&P. With respect to France, they will likely lose their AAA rating at S&P but Fitch specifically said earlier in the week that they will maintain their AAA rating for them thru 2012. On Italy, S&P is currently at A, in line with Moody's and one notch below Fitch. A downgrade will likely take them to A-. With Belgium, S&P is at AA, one notch above Moody's and one below Fitch. Portugal has a BBB- S&P rating, two notches above Moody's and one above Fitch, so catch up is what S&P would be doing with them. With Spain, S&P is already one notch above Moody's at AA-. We'll also see whether Austria loses its AAA rating. Following a French downgrade, the EFSF will also lose its AAA rating but buyers of EFSF bonds have certainly been put on notice that it was a high likelihood. I say this all from a credit perspective because equity markets have behaved with a much more sanguine view of things that doesn't fully square with the reality of a very tenuous global economy.






JPM - investment banking and capital markets activities were worse than expected while credit and compensation ratios were better. A lower tax rate (22% vs. 34% consensus) contributed to the bottom line, which appeared to be about $0.95 a share at its core.

The bank completed its buyback program (nearly $1 billion in fourth quarter 2011).

The commentary indicated an improving commercial and industrial loan picture and continued progress in credit.

As GS mentions in its assessment of this report, it was a relatively low-quality report (after 11 consecutive quarters of beats), which could weigh modestly on the bank sector (after its market-leading performance thus far in 2012).






Every American citizen should be concerned about the Fed's lack of transparency and poor forecasting abilities.

Richmond Fed President Jeffrey Lacker was forecasting 2011 real GDP growth in the U.S. at 3.5%; it came in half that amount.

Lacker admits that he and the other Fed members only recently realized that the structural headwinds (fiscal imbalances, structural unemployment, etc.) in the U.S. will limit and be a governor on domestic growth.

I find this mind-boggling and scary, as, with 150-plus economists on staff, this is not exactly confidence-building and exposes a serious and fundamental flaw in the Fed's forecasting and in the policy based on that errant forecasting.

As a result, it shouldn't be too surprising that many, in support of Ron Paul, are in favor of abolishing the Federal Reserve.






It's embarrassing for the Fed. You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets. It's also embarrassing for economics. My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.

-- Justin Wolfers, Economics Professor at the University of Pennsylvania

This morning, the Fed released transcripts from the mid-2000s (covered by both The Wall Street Journal and The New York Times) that revealed an unflagging optimism and provided a profoundly unflattering view of Greenspan, Geithner, Bies, Warsh, Yellin, Bernanke et al. in their ability to foresee the economic collapse and debt crisis in 2007-2009.

Here are some examples of several wrong-footed quotes from some of the Fed's players during the 2006-2007 period, which was the end of the housing boom:

"I think we are unlikely to see growth being derailed by the housing market."

-- Ben Bernanke, Federal Reserve Chairman

"It's fitting for Chairman Greenspan to leave office with the economy in such solid shape. The situation you're handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot."

-- Janet Yellen, Vice Chairman of the Federal Reserve

"I'd like the record to show that I think you're pretty terrific, too (referring to Greenspan). And thinking in terms of probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative."

-- Timothy Geithner, Treasury Secretary (praising Greenspan in Greenspan's final Fed meeting)

"I would say that the capital markets are probably more profitable and more robust at this moment, or at least going into the six-week opportunity, than they have perhaps ever been."

-- Kevin Warsh, Former Federal Reserve Governor

The Fed's lack of transparency and poor forecasting abilities (at nearly every inflection point) should be a concern to every American citizen, as the Fed wields huge power in establishing monetary policy.

Perhaps too much power.