The Dow Jones industrial average moved up 132 points on Tuesday and all major indicators rose more than 1% as the Australian central bank’s decision to raise interest rates boosted optimism about the world economy.   Investors' show of confidence ahead of a flood of corporate earnings reports came as Australia became the first major country to raise interest rates since the onset of the financial crisis last year.  The move signals that policymakers see that country's economy as strong enough to withstand higher borrowing costs. That touched off hopes that other economies might also be growing.

Australia's decision dented demand for the U.S. dollar, which, in turn, raised commodities prices.  US energy and materials stocks moved up, oil also rose, and gold reached a record high.  Stock investors cheered the drop in the dollar because it boosts corporate profits by making U.S. goods cheaper for overseas buyers.

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Hot New Spanish Model… for Banking

Tony Daltorio, The Investment U Research Team

There’s a hot new Spanish model that has everyone in Europe going ga-ga.

No, it’s not a runway or swimsuit model. It’s Spain’s banking model.

The Bank of Spain forced Spanish banks to follow a very conservative banking model using what they call “dynamic provisioning” requirements. These requirements forced Spanish banks to build reserves during the good times. This left the banks with capital to draw upon which is helping them survive the downturn.

The Bank of Spain also restricted local banks from piling into mortgage securities. And Spain has a small credit-card and commercial property market which limited risk exposure for the banks. But the banks did their part too. They focused on the retail market rather than risky investment banking, as did their American counterparts.

This new ‘hot’ model

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by Edward Hugh: Barcelonabr /br /Spanish unemployment shot up again in February to 3.48 million in February, whilst consumer confidence took another knock amidst fears Spain's jobless would now hit 4 million as early this summer, and maybe 4.5 million, or nearly 20% of the workforce. Right, this the latest in my monthly reports on Spain, but before I go further, a quick joke. How do you know when there is an economic crisis in a country? When everyone around you in the metro is busy reading the economics page in the newspaper.br /br /br /br /The latest unemployment data released yestreday (Tuesday) show that the number of unemployment benefit claimants rose by 154,058 in February, down from last months increase of 198,838, but still nearly four times the 40,000 increase in Germany which has almost twice the population, and where the economy is apparently contracting at an even more ...

After the Madoff-Ponzi, The Lesson’s Clear

Everyone’s scrambling… House subcommittee chairman Paul Kanjo wants to launch a government investigation. Outgoing SEC Chairman Chris Cox is “gravely concerned by the apparent multiple failures” of the SEC. He too, wants to get to the bottom of this.

And of course, House Financial Services Committee chairman Barney Frank, whose regulatory urgings did a masterful job ensuring Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) didn’t fail, wants to introduce even more legislation.

He’s trying to require hedge funds and investment managers open up their books. But it’s useless. Everyone’s trying to find a complex solution to “what went wrong?” and how some of the biggest investors lost so much - when a simple answer suffices.

Investors simply violated two of Investment U’s pillars of investing - asset allocation and position sizing.

If you

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h1 style="text-align: center;"bBank Nationalization/b/h1h2 style="text-align: center;"bspan class="Apple-style-span" style="color: rgb(102, 0, 0);"Bank Nationalization Day/span/b/h2a href="http://3.bp.blogspot.com/_tvshDVnXSLc/SS_l74vGpJI/AAAAAAAAAf4/J6EgOxMC024/s1600-h/RBS-DundasHouse.jpg"img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 320px; height: 200px;" src="http://3.bp.blogspot.com/_tvshDVnXSLc/SS_l74vGpJI/AAAAAAAAAf4/J6EgOxMC024/s320/RBS-DundasHouse.jpg" alt="" id="BLOGGER_PHOTO_ID_5273686505679135890" border="0" //a Old HQ pictured. Following failure of shareholders to buy more than 0.24% (only £36m for 56m shares) of the Royal Bank of Scotland Group's £20bn share issue, RBS (1) (including Citizens Bank, USA, and NatWest Bank, England) today became the third to be formally nationalised (nearly 58%). The small take-up of the issue by existing shareholders had been expected as the offer price of 65.5p was 10p higher than the price at which the shares were trading, so those who did buy on paper lost £5m doing so. The share issue by RBS was part of the government's plan to recapitalise banks. The government will pay £15bn for the majority stake in the bank plus £5bn of ...

We are cutting our rating on Banco Santander to Sell from Buy following the recent surprise announcement of a rights offering. On November 10, 2008, Santander stated that they would be issuing 1.599 billion new shares through a rights offering at a price of 4.50 per share for a total capital increase of 7.2 billion.

As a result, we are reducing our EPADS estimates $2.03 from $2.05 for 2008 and to $1.79 from $2.25 for 2009. The share increase combined with deteriorating economic conditions in Spain and appreciation of the US$ against the will likely depress Santander's share price over the near term.

Santander reported third quarter net earnings of 2.2 billion, up 6% year over year. The rise in nonperforming loans was the only sour note in an otherwise satisfactory performance, especially relative to European peers. "STD" Free Stock Analysis: Buy? Sell? Hold?Zacks Investment Research

Morgan Stanley has some interesting comments on Sovereign Bancorp (NYSE:SOV) noting the co is in late-stage talks topotentially be acquired by Banco Santander (already a 24.9% owner of SOV), according to an article published by the Wall Street Journal late Sunday evening. According to the WSJ, a deal could be announced as early as Monday with a deal price of roughly where SOV shares closed on Friday at $3.81. Neither company has commented on the potential transaction.Selling out at the wrong time for the wrong price?Firm's initial reaction is that they would be quite surprised if Sovereign management were to sell the company at the current stock price. Friday’s closing price is just 58% of its estimated 3Q08 tangible book value per share of $6.61, and well below where the overall midcap bank group is trading at 1.6x. Their view is that after disclosing and writing-off ...

Europe is rapidly following the US into financial oblivion. The eurozone's economic cycle some six to nine months behind the US. This means the the short-term future looks bleak on the other side of the Atlantic.

But Eric Roseman says Spain's solid regulatory system should protect its banks from the worst of the storm. This is despite a major slump in real estate that is wreaking havoc in the wider economy.

This makes the country's biggest bank, Banco Santander (NYSE:STD), an interesting investment option...

viastockadvisors

“Although traded the same way as regular stocks, preferred stocks are more like bonds,” explains Harry Domash, who focuses on long-term investing for those seeking both growth and income. In his Winning Investing, the advisor looks at a pair of preferred stock favorites, which offer above-average dividend yields of 7.4% to 8.2%

Track his picks at:

http://trackthepros.com/

click on stock newsletters and then track the category to get notified of his future picks.

“Usually issued at $25 per share, preferreds generally trade in a narrow $24 to $26 range, no matter how well the issuing company fares. Investors buy them for the steady dividends, which typically equate to 4% to 8% yields.

“When issued, preferreds pay a yield determined by the annual dividend. The yield for a stock paying $1.00 annually would be 4% ($1 divided by $25).

“However, the market yield depends on the current share price. For instance, if the share price drops

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Forbes columnist Zack O’Malley Greenburg, said that many European banks are healthy and look like innocent victims of the subprime mess, and they are less likely to cut dividends.  He recommends the following banks as those likely to bounce back:

a. Allied Irish Banks

b. Banco Santander

c. Bank of Ireland

d. BNP Paribas -4% dividend

e. Commerzbank -4% dividend

f. HSBC Holdings

g. Societe General

h. Swedbank

Track Zack’s picks at:

http://www.trackthepros.com/categories.php?category_id=270