What’s Important in the Financial World (12/28/2011) New Fed Members, New iPad

Crude oil prices have moved higher for a week, based on fear of a supply interruption threatened by Iran. The rogue nation said it may stop shipments through the Strait of Hormuz, which is the passage for about a fifth of the world’s oil. The focus of how oil prices will move has jumped quickly from what the recession will do to demand and China’s appetite to the accessibility of crude from one of the world’s largest producing regions. The situation may determine whether the U.S. will go ahead with sanctions on Iran or back down to preserve access to oil.

ECB Deposits

Banks deposited $590 billion overnight at the European Central Bank on Wednesday. That was higher than the record set on Tuesday. The actions say that the sovereign debt crisis in Europe is not nearly over, at least as far as bank executives are concerned. The use of the ECB also shows that financial firms in the region do not want to lend money to one another. That implies that one or more large institutions could reach the brink of collapse. Despite ECB efforts, some banks have lost a portion of their deposits as money moves to safer havens like the U.S. This cripples the ability of these EU banks to make loans, which could, in turn, further hurt any chance of an economic recovery in the region.

4G iPad Rumors

Conversation about the business world can never stray long from Apple (NASDAQ: AAPL). New speculation is that the next generation of the iPad will be released in the latter half of 2012. It may add some of the features of the iPhone 4S, which could include the voice recognition feature. The largest single mystery about a new iPad will be whether it can operate on new 4G superfast broadband networks. Apple products have lagged in this regard. Apple’s major competitors, particularly HTC and Samsung, have released products for the 4G market for most of the past year.

Fed Board Nominations

President Obama has announced his two nominations for open positions on the Fed board of governors. The fates of Jeremy Stein, a Harvard economist, and Jerome Powell, an investment banker and former Treasury official, will rest with the Senate. Republicans in the body have developed a habit of blocking presidential appointments. Senate Banking Committee Chairman Tim Johnson is a Democrat, but that does not mean the party has a clear path to final approval of the two nominees.

Douglas A. McIntyre