What's Important in the Financial World (8/31/2012)

Bundesbank President to Resign

The chief of Germany’s powerful central bank may step down. German newspaper Bild reports that German Bundesbank President Jens Weidmann will resign. The reason given is his battle with ECB President Mario Draghi over whether the European Central Bank should buy the bonds of the European Union’s financially weakest nations to bring down the interest rates they pay on their sovereign paper. Weidmann believes the ECB would be overstepping its mandate. However, German resistance to the plan could still prevail because of its huge contributions to any and all bailout programs for the region. Weidmann and other German financial leaders may well be able to block ECB action, which has been supported vocally by leaders from France and Italy. Germany, for the most part, still favors strict austerity as the best solution to budget problems in the region. Lower interest rates, brought down by any future ECB programs, only lets these nations off the hook, as Weidmann sees it.

Spotlight on Ben Bernanke

The focus of the markets today will be Ben Bernanke’s speech at a banker’s conference in Jackson Hole. Investors have held their breath for days in anticipation. The waiting also has been one of the primary catalysts in stock market movement this week. Experts see the results of Bernanke’s comments as binary. If he supports more bond purchases by the Fed, known as QE3, the markets will react well. If he says the Fed wants to watch jobs and GDP numbers in advance of a decision, the markets will react negatively, as many investors already see the economy as being in dire straights. And the downward pressure on the economy can only be made worse by the fiscal cliff at the end of 2012.

Ads to Target Twitter Users

Twitter, which many investors consider a primary challenger to Facebook Inc. (NASDAQ: FB), will allow advertisers to target users based on their activity on the short message platform. Advertisers will be able to pick from about 350 topics that Twitter management tracks among its members. In its announcement, Twitter management said:

Today we’re taking an important next step by allowing you to target your Promoted Tweets and Promoted Accounts campaigns to a set of interests that you explicitly choose. By targeting people’s topical interests, you will be able to connect with a greater number of users and deliver tailored messages to people who are more likely to engage with your Tweets. When people discover offers and messages about the things they care about on Twitter, it’s good for both marketers and users.

Douglas A. McIntyre