The Bank of America Corporation is being sued by Ambac Assurance Corp. which is part of Ambac Financial Group Inc. Ambac’s goal is to try and recoup the 100’s of millions of dollars which it lost after the company insured over $1.68 billion of securities. These securities were partially backed by the Bank of America’s Countrywide Home Loans unit and according to Ambac, these mortgages were risky.
On Tuesday, Ambac filed a complaint in the state court in New York. Countrywide Home Loans has been accused of lying about the underwritten loans which backed the securities while Countrywide described these as adjustable-rate pay option mortgages with negative amortization.
According to Ambac, the securities were issued between 2005 and 2007 and 8 transactions were completed. Furthermore, the corporation stated that they are currently facing claims of over 600 million dollars since the end of October last year. Also, the loans which were supporting the Ambac insured certificates had lost over $3 billion by the end of November 2014. Ambac made it very clear that they never would have guaranteed payments if they were aware that they had been deceived by the Countrywide department of the Bank of America.
The Bank of America is the 2nd largest bank in the U.S. and they acquired Countrywide in the middle of 2008. This is the second lawsuit Ambac has opened against the bank after they filed a similar suit in 2010. The Bank of America has stated that they are currently investigating the claims made by Ambac. The Bank of America Corp. is currently trading at $17.90 a share.
On their first day of trading in 2015, U.S. stocks didn’t wow investors and they closed almost flat. This came after the main indices gave back gains after disappointing data on U.S. manufacturing and construction was released on Friday. The decline on Friday also snapped a two week winning streak for the indices. In a report released on Friday, data showed that the Institute for Supply Management manufacturing index dropped in December to 55.5%. In November, this index was at 58.7%. The data came in below analyst forecasts for 57 percent and has been linked partially to the labor issue which is occurring at the main ports on the West Coast. Also, in November, spending on U.S. construction fell 0.3%. Economists had expected construction to increase by 0.2 percent. Furthermore, the 2nd and final reading for the Markit U.S. manufacturing index was 53.9 in December. This was down from the November reading of 54.8. As a result, at the close of U.S. trading, the S&P 500 index (SPX) declined 0.03% while the NASDAQ Composite index was also on the downside declining 0.20%. On the upside was the Dow Jones Industrial Average (DJIA) which advanced 0.06%. For the week, this blue-chip index fell 1.2% percent.
It seems the euro (EUR) does not have much to celebrate in the New Year and on Monday in early Asian trading, this currency fell to its lowest level since March 2006. This decline came in response to ongoing investor speculation that the European Central Bank (ECB) is very likely to start a quantitative easing program shortly. The aim of this program is to limit the risks of deflation. The euro was also negatively impacted by the growing uncertainty over the future of Greece in the Eurozone which was further stirred when unnamed sources from the German government stated in a popular German magazine on Saturday that the Eurozone would cope even if Greece exited. With no additional triggers for selling, the euro passed the psychological $1.20 level and traded at $1.1864. Meanwhile, the New Zealand dollar (NZD) also failed to impress against the greenback and also traded near two-and-a-half year lows on Monday. This came in response to a strong greenback which has been boosted by investor sentiment that the U.S. Federal Reserve will hike interest rates this year. During late Asian trade, the NZD/USD currency pair hit 0.7620. This marked the pair’s lowest level since the 9th of December2014. The pair finally consolidated at 0.8053, declining 0.86%.
On Monday, oil prices slid to five-year lows with weak demand and concerns over the supply glut dragging on the oil markets. In November last year, the Organization of the Petroleum Exporting Countries (OPEC) decided that they would not reduce their output and as a result, oil prices plummeted. Adding to the supply glut was the high oil exports out of Iraq as well as OPEC's record-high production in Russia. As a result, the West Texas Intermediate and the Brent oil benchmarks have lost more than 50% of their peaks which they reached in June 2014. On Monday, February Brent crude dropped as low as $55.36 a barrel and then edged back up to $55.51, down 91 cents while U.S. crude slid down to $51.60 a barrel, down $1.09. Analysts also stated that the weak euro (EUR) impacted oil prices further since this weak currency reduces the purchasing power of holders of the EUR for oil which is U.S. dollar-denominated.