- Safe Haven Investments: Imminent Danger and Opportunities on Oct 28, 2008 | by Mark Anthony | about AAUK, ANR, ACI
- Adventures in Icelandic Monetary Policy on Oct 28, 2008 | by Felix Salmon
- Don't Be Fooled - Inflation is Coming on Oct 28, 2008 | by Robert Nabloid | about IAU, IPE, GLD
- FOMC Preview: How Far Will the Fed Go? on Oct 28, 2008 | by Kathy Lien | about UUP, UDN
- China Wants the U.S. Dollar to Drop Dead on Oct 28, 2008 | by The Prudent Investor | about HAO, FXI, GXC
- Ignore the Hype - Gold as Currency is Dead on Oct 28, 2008 | by Bapcha's Stocks | about GLD
- Perhaps It's Time to Think of a New Currency Regime? on Oct 28, 2008 | by Gaurav
Full Version: Economic and Financial News
Volcker says US is in a recession
Bizjournals.com - Charlotte,NC,USA
Former Federal Reserve Chairman Paul Volcker said the United States is in a stronger economic position today than during the Great Depression. ...
Economic Crisis Contract for Congressional Candidates
MarketWatch - USA
The Contract bars a repeat of President Hoover's terrible mistake at the beginning of the Great Depression of raising income tax marginal rates. ...
From Panic to Depression?
National Review Online - New York,NY,USA
By raising taxes during an economic downturn, the economic pain of the 1930s was made deeper and more permanent. The higher Hoover taxes discouraged work, ...
Pushing on a String or at the End of Their Rope?
Barron's - USA
And, as in the Great Depression, the US central bank is being criticized for being too easy and risking inflation amidst a severe debt deflation. ...
Asia's passing pleasure moment
Asia Times Online - Kowloon,Hong Kong
But Washington was haunted by two fears: that the end of the pumped-up demand of the war years would mean the return of the Great Depression, ...
Economic crisis drives final decisions for US voters (Feature)
Monsters and Critics.com - USA
By Chris Cermak Oct 28, 2008, 7:58 GMT Washington - With the United States facing the most serious financial crisis since the Great Depression, the economic ..
Economic policies hurt US
The Student Printz - Hattiesburg,MS,USA
If you haven't heard by now, our nation is experiencing what could be the most serious economic downturn since the Great Depression, and Americans are ...
Labor Unions Prolonged the Depression
Wall Street Journal - USA
Before they cast their votes, the American people ought to be aware of Mr. Obama's commitment to the passage of a new Wagner Act, and of what the economic ...
With Rate Cuts, FOMC Returns to Scene of the Crime
Wall Street Journal Blogs - New York,NY,USA
This is the worst financial crisis to hit the markets since the Great Depression so returning the Fed funds rate quickly to the 2003 low following the 2001 ...
Bizjournals.com - Charlotte,NC,USA
Former Federal Reserve Chairman Paul Volcker said the United States is in a stronger economic position today than during the Great Depression. ...
Economic Crisis Contract for Congressional Candidates
MarketWatch - USA
The Contract bars a repeat of President Hoover's terrible mistake at the beginning of the Great Depression of raising income tax marginal rates. ...
From Panic to Depression?
National Review Online - New York,NY,USA
By raising taxes during an economic downturn, the economic pain of the 1930s was made deeper and more permanent. The higher Hoover taxes discouraged work, ...
Pushing on a String or at the End of Their Rope?
Barron's - USA
And, as in the Great Depression, the US central bank is being criticized for being too easy and risking inflation amidst a severe debt deflation. ...
Asia's passing pleasure moment
Asia Times Online - Kowloon,Hong Kong
But Washington was haunted by two fears: that the end of the pumped-up demand of the war years would mean the return of the Great Depression, ...
Economic crisis drives final decisions for US voters (Feature)
Monsters and Critics.com - USA
By Chris Cermak Oct 28, 2008, 7:58 GMT Washington - With the United States facing the most serious financial crisis since the Great Depression, the economic ..
Economic policies hurt US
The Student Printz - Hattiesburg,MS,USA
If you haven't heard by now, our nation is experiencing what could be the most serious economic downturn since the Great Depression, and Americans are ...
Labor Unions Prolonged the Depression
Wall Street Journal - USA
Before they cast their votes, the American people ought to be aware of Mr. Obama's commitment to the passage of a new Wagner Act, and of what the economic ...
With Rate Cuts, FOMC Returns to Scene of the Crime
Wall Street Journal Blogs - New York,NY,USA
This is the worst financial crisis to hit the markets since the Great Depression so returning the Fed funds rate quickly to the 2003 low following the 2001 ...
Greetings from RGE Monitor!
The financial wildfire has turned around the stagflationary trends seen earlier this year into a vicious cycle of global deflation in debt, assets, wages, and goods. Headline consumer inflation has peaked in most of the developed and emerging world, except in places where food/fuel subsidies were recently rolled back or post-Q3 data are still unavailable. According to the IMF's October World Economic Outlook, the world's average consumer prices have increased 6.2% y/y Q2 2008. JPMorgan expects world CPI inflation to slow to 2.6% y/y Q2 2009. Lower commodity prices subdued headline inflation and are expected to continue doing so on slackening global demand. Core inflation has yet to show a significant decline but a feedback loop of debt deflation, asset deflation, commodity deflation, wage deflation, and slower global growth will likely lead to flat or lower headline and core consumer and producer prices in Q4 2008 through 2009. But in the short- to medium-term, stag-deflation seems the most likely scenario for the world economy.
The continued fall of U.S. house prices has morphed into global de-leveraging, which threatens to spark global deflation. Debt deflation at first sent investors seeking safety in commodities as inflation accelerated worldwide due to the weakening dollar. The dollar weakened as the world seemed resilient to the U.S. slowdown. But the lag between U.S. growth and growth in the rest of the world soon ended and so did the lag between growth and inflation.
Commodity prices slid on fund liquidation to cover losses in other asset classes and on expectations that commodity demand will weaken in a global recession. The prospect of a U.S. hard landing and a global recession, and demand destruction triggered by high commodity prices earlier this year, has already led to an across the board commodity selloff, with the CRB falling almost half from its July peak. Oil has fallen even further as the prospect of slower demand growth from China and other emerging markets may fail to offset falling demand from the OECD, especially the U.S. where demand for all petroleum products have fallen. Not even a 1.5 million barrel production cut from OPEC and the news that many producers were cutting production (erasing this year's earlier production increase) was enough to stem the decline.
Meanwhile many oil producing companies (even state-owned ones like Russia's )are feeling the double whammy of lower demand and tighter credit which may freeze capex and new projects, especially from the most expensive, unconventional supplies. With marginal costs of production still rising (for now), this may point to a mid-term supply crunch once an expansion finally begins. Such supply constraints could occur in agricultural and metals over time, especially given that some base metals are trading below cost.
Commodity exporting countries are being pressured by falling prices and the withdrawal of global credit which may sharply reduce inflows and thus imports contributing to another source of slack in the global economy in the next few quarters. Countries like Russia, Venezuela and Iran could account for the most significant slowing though many petro-states have become used to oil prices above $70-80 a barrel and the negative wealth effects of current and looming asset price corrections will have an effect. While Chinese government infrastructure spending might limit the drop in demand for some commodities, its coffers do have their limits and even if Chinese property sector stabilizes, the past forecasts of Chinese demand growth for products like steel, copper and coal might have been over optimistic meaning that fundamental and technical factors could point to further downside for commodities until the credit markets stabilize.
As investors recast their outlook for corporate earnings in light of a slowdown in global activity, stock and corporate bond prices all over the world declined in a virulent episode of asset deflation. Debt deflation exacerbated asset deflation by reducing the amount of leverage investors could take on. Wage deflation will most likely contribute to a worsening the corporate earnings outlook by inhibiting consumer spending. Labor markets have slackened on the corporate belt-tightening triggered by tighter financing and sagging sales. Continued loosening of labor markets, marked by rising unemployment, will slow wage growth as jobs are cut back. With household financial wealth shrinking in bearish markets and rising debt servicing burdens, lower household income will further erode consumption.
The carry trade succumbed to bank de-leveraging and investor repatriation, resulting in the appreciation of carry trade funding currencies - the most popular being the JPY and USD. Bank de-leveraging has led to a shortage of these currencies, as most cross-border bank liabilities were denominated in them. With tighter lending, investors have had to unwind their carry trades to meet margin calls and, as asset prices adjusted to a recessionary outlook, to avoid further losses. U.S. and Japan provided the lion's share of the world's investment flows. The repatriation of U.S. and Japanese investor funds sapped the strength of other currencies versus the USD and JPY.
The spread of recession and financial crisis beyond the U.S. to several other countries kills the appetite for foreign investments, driving repatriation. This leads to further currency depreciation in carry trade destination currencies especially emerging markets which had over-hedged or under-hedged against USD strength. A stronger dollar may contribute to further commodity price declines as countries with weaker currencies are able to purchase fewer goods. By the same token, weaker non-U.S. currencies may sow the seeds of higher inflation in countries vulnerable to imported inflation. In an environment where high yield alone is no longer attractive, the combination of slowing growth and rising inflationary pressures may set up emerging markets for further punishment from currency markets.
The financial wildfire has turned around the stagflationary trends seen earlier this year into a vicious cycle of global deflation in debt, assets, wages, and goods. Headline consumer inflation has peaked in most of the developed and emerging world, except in places where food/fuel subsidies were recently rolled back or post-Q3 data are still unavailable. According to the IMF's October World Economic Outlook, the world's average consumer prices have increased 6.2% y/y Q2 2008. JPMorgan expects world CPI inflation to slow to 2.6% y/y Q2 2009. Lower commodity prices subdued headline inflation and are expected to continue doing so on slackening global demand. Core inflation has yet to show a significant decline but a feedback loop of debt deflation, asset deflation, commodity deflation, wage deflation, and slower global growth will likely lead to flat or lower headline and core consumer and producer prices in Q4 2008 through 2009. But in the short- to medium-term, stag-deflation seems the most likely scenario for the world economy.
The continued fall of U.S. house prices has morphed into global de-leveraging, which threatens to spark global deflation. Debt deflation at first sent investors seeking safety in commodities as inflation accelerated worldwide due to the weakening dollar. The dollar weakened as the world seemed resilient to the U.S. slowdown. But the lag between U.S. growth and growth in the rest of the world soon ended and so did the lag between growth and inflation.
Commodity prices slid on fund liquidation to cover losses in other asset classes and on expectations that commodity demand will weaken in a global recession. The prospect of a U.S. hard landing and a global recession, and demand destruction triggered by high commodity prices earlier this year, has already led to an across the board commodity selloff, with the CRB falling almost half from its July peak. Oil has fallen even further as the prospect of slower demand growth from China and other emerging markets may fail to offset falling demand from the OECD, especially the U.S. where demand for all petroleum products have fallen. Not even a 1.5 million barrel production cut from OPEC and the news that many producers were cutting production (erasing this year's earlier production increase) was enough to stem the decline.
Meanwhile many oil producing companies (even state-owned ones like Russia's )are feeling the double whammy of lower demand and tighter credit which may freeze capex and new projects, especially from the most expensive, unconventional supplies. With marginal costs of production still rising (for now), this may point to a mid-term supply crunch once an expansion finally begins. Such supply constraints could occur in agricultural and metals over time, especially given that some base metals are trading below cost.
Commodity exporting countries are being pressured by falling prices and the withdrawal of global credit which may sharply reduce inflows and thus imports contributing to another source of slack in the global economy in the next few quarters. Countries like Russia, Venezuela and Iran could account for the most significant slowing though many petro-states have become used to oil prices above $70-80 a barrel and the negative wealth effects of current and looming asset price corrections will have an effect. While Chinese government infrastructure spending might limit the drop in demand for some commodities, its coffers do have their limits and even if Chinese property sector stabilizes, the past forecasts of Chinese demand growth for products like steel, copper and coal might have been over optimistic meaning that fundamental and technical factors could point to further downside for commodities until the credit markets stabilize.
As investors recast their outlook for corporate earnings in light of a slowdown in global activity, stock and corporate bond prices all over the world declined in a virulent episode of asset deflation. Debt deflation exacerbated asset deflation by reducing the amount of leverage investors could take on. Wage deflation will most likely contribute to a worsening the corporate earnings outlook by inhibiting consumer spending. Labor markets have slackened on the corporate belt-tightening triggered by tighter financing and sagging sales. Continued loosening of labor markets, marked by rising unemployment, will slow wage growth as jobs are cut back. With household financial wealth shrinking in bearish markets and rising debt servicing burdens, lower household income will further erode consumption.
The carry trade succumbed to bank de-leveraging and investor repatriation, resulting in the appreciation of carry trade funding currencies - the most popular being the JPY and USD. Bank de-leveraging has led to a shortage of these currencies, as most cross-border bank liabilities were denominated in them. With tighter lending, investors have had to unwind their carry trades to meet margin calls and, as asset prices adjusted to a recessionary outlook, to avoid further losses. U.S. and Japan provided the lion's share of the world's investment flows. The repatriation of U.S. and Japanese investor funds sapped the strength of other currencies versus the USD and JPY.
The spread of recession and financial crisis beyond the U.S. to several other countries kills the appetite for foreign investments, driving repatriation. This leads to further currency depreciation in carry trade destination currencies especially emerging markets which had over-hedged or under-hedged against USD strength. A stronger dollar may contribute to further commodity price declines as countries with weaker currencies are able to purchase fewer goods. By the same token, weaker non-U.S. currencies may sow the seeds of higher inflation in countries vulnerable to imported inflation. In an environment where high yield alone is no longer attractive, the combination of slowing growth and rising inflationary pressures may set up emerging markets for further punishment from currency markets.
Wall Street Breakfast: Must-Know News
by SA Editor Eli Hoffmann
- Asia surges, then retreats. Asian stock markets erased most of their early gains Wednesday (see below) despite a huge Wall Street rally, with the exception of Japan's Nikkei which stormed to a 7.7% gain on hopes the Bank of Japan will halve its interest rate to 0.25% from 0.5% this week. "Investors are wary that we are going to see prices back down again," one broker said of the midday jitters. "Everybody is taking profits on everything they bought in the last couple of days," a trader noted. ABN Amro's Alexandra Dalzell echoed the concerns of many after yesterday's grand slam: "You can't help but think this extreme strength (on Wall Street) is going to be followed by extreme weakness, and really what we would like to move toward is a level of stability."
- Treasury may open TARP to private banks. Treasury officials may expand the government's financial rescue plan (TARP) to include non-publicly-traded banks, potentially opening up the program to thousands of new institutions. Such a move may also placate the powerful community-banking industry, an outspoken critic of TARP, due to its fears bigger rivals will use the government's largesse to sweep up healthy firms that are too small to fight back. About 6,000 privately-held financial institutions aren't eligible under the current rules. (table: TARP participants)
- GMAC seeks bank status. Auto finance and mortgage company GMAC (GM) is seeking to become a bank holding company in order to access the government's $700B financial bailout money, sources say. As a bank holding company, GMAC could receive equity injections from the Treasury and sharply reduce its borrowing costs through access to the Fed's discount window. On Tuesday GMAC said the Fed approved it to use its commercial paper funding facility. Becoming a bank could require GM to reduce its 49% stake in GMAC to 24.9%; Cerberus owns the other 51%.
- How low can it go? The Fed will likely shave its key fed funds target rate to just 1% today, and signal further reductions to levels unseen since Dwight Eisenhower was president. "Inflation risks are off the table," economist Mark Gertler says, which is why it can afford to be 'very aggressive' in stimulating the anemic U.S. economy. "If the economy shows additional signs of a deepening recession, I think the Fed will decide that the floor is not 1 percent," former Fed governor Lyle Gramley said. "Zero is a possibility."
- Consumer confidence plunges to record low. The Conference Board's Consumer Confidence Index plummeted to an all-time low of 38, down from 61.4 in Sept., falling way short of consensus estimates of 52. "The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," it said. "In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Looking ahead, consumers are extremely pessimistic." Ian Shepherdson of High Frequency Economics called the data extraordinarily awful, and noted the lower-than-expected expectations index indicates real consumer spending could fall at an annualized rate of about 3.5%, even worse than the 3% he previously expected.
- Rio takes jab at BHP, miners. Rio Tinto (RTP) CEO Tom Albanese said no one in the mining industry is immune from the global financial crisis, and criticized companies like BHP Billiton (BHP) for failing to publicly acknowledge the need to review investment strategies. In particular, BHP has launched a $73B hostile takeover bid for Rio and has shown no signs of reviewing its growth spending. Many mining companies worldwide have been forced to close mines or cut back production, and to defer investments on growth projects, as commodity prices have fallen and profit margins have been squeezed.
- Tightening things up at Motorola. Sanjay Jha, Motorola's (MOT)s new co-CEO and head of its mobile phone unit, is moving quickly to scale back the struggling division by simplifying the way it makes devices and cutting additional jobs. Sources say Jha has decided to make Google's (GOOG) Android OS the software platform for Motorola's showcase phones. Motorola may scrap dozens of phone designs already in development, which will likely lead to short-term production delays.
- Crude climbs. Crude futures are up more than 5% in overnight trading (see below), its first rise in four days, on speculation efforts to unlock global credit markets are beginning to work and may help revive demand. OPEC will probably cut crude output quotas a second time to avoid inventory growth, Venezuelan Oil Minister Rafael Ramirez said today.
- Home prices drop, again. Home prices fell 16.6% in August from a year ago, in-line with forecasts, after a 16.3% decrease in July. It's the 20th straight monthly drop in the S&P/Case-Shiller index. "The downturn in residential real estate prices continued, with very few bright spots in the data," S&P's David Blitzer said. Sales of distressed properties accounted for 35-40% of the month's total. "House prices will remain on a downward trend for some time and until they are low enough to stimulate sufficient demand to clear the market," economist Joshua Shapiro said.
- Retail sees small bounce. Retail chain store sales increased 0.5% vs. a week ago, following a 1.6% decline last week. Sales were up 1.3% vs. last year. "Overall, consumers continue to spend modestly and mainly on everyday items," ICSC's Michael Niemira said. Research firm ShopperTrak expects a pick-up in retail activity this week. "More and more folks are holding out. Theyre looking for the markdowns."
Earnings: Wednesday Before Open
- Aetna (AET): Q3 EPS of $1.12 in-line. Revenue of $7.98B (+14.4%) in-line. Sees full-year EPS of $3.90-3.95 vs. $4.00. (PR)s
- Bayer (BAYRY.PK): Q3 profit fell 76% to 277M ($353M) vs. 1.18B the previous year, and short of the 302M consensus. Sales +2% to 7.95B. Bayer still expects 2008 sales of around 33B. (Bloomberg)
- Newmont Mining (NEM): Q3 EPS of $0.44 beats by $0.02. Revenue of $1.34B (-17%) vs. $1.46B. (PR)
- Nexen (NXY): Q3 EPS of $1.68 beats by $0.35. Revenue of $2.21B (+53%) in-line. CEO Charlie Fischer to retire at year-end. (PR)
- Praxair (PX): Q3 EPS of $1.11 beats by $0.05. Revenue of $2.85B (+20.2%) vs. $2.73B. Sees Q4 EPS of $1.03-1.08 vs. $1.09 (PR)
- Sony (SNE): FQ2 EPS of ₯19.83 misses by ₯72.07. Revenue of ₯2.1B (-0.5%) vs. ₯2.7B. Operating income -90.1% Y/Y to ₯11B. Shares +1.95% in Tokyo. (PR)
- SPX Corp. (SPW): Q3 EPS of $1.66 beats by $0.01. Revenue of $1.51B (+28.8%) vs. $1.6B. (PR)
- Suncor Energy (SU): Q3 EPS of C$1.04 misses by C$0.19. Revenue of C$8.95B in-line. Production from the company's oil sands operations averaged 245,600 barrels per day. (PR)
- United Microelectronics (UMC): Q3 EPS of $0.02 in-line. Revenue of $768M (-20.2%) vs. $809M. "Customers have adopted a cautious attitude with regard to their wafer demand forecasts due to uncertainty related to the current global economic situation." Shares +44% in Amsterdam. (PR)
- Wabco (WBC): Q3 EPS of $0.97 misses by $0.01. Revenue of $655M (+10%) vs. $715M. (PR)
Earnings: Tuesday After Close
- Ace Limited (ACE): Q3 EPS of $1.51 beats by $0.04. Net premiums written and earned increased 17% and 15%. (PR)
- Centex (CTX): FQ2 EPS of -$1.62 misses by $0.68. Revenue of $1B (-54%) vs. $1.3B. Records $103M of impairments and land-related charges. Shares -2.7%. (PR)
- Chicago Bridge & Iron (CBI): Q3 EPS of $0.09 beats by $0.07. Revenue of $1.56B vs. $1.6B. Shares +0.7%. (PR)
- Dreamworks Animation (DWA): Q3 EPS of $0.38 beats by $0.06. Revenue of $151.5M (-5.7%) vs. $130M. Shares -0.3%. (PR)
- Fiserv (FISV): Q3 EPS of $0.81 misses by $0.02. Revenue of $1.08B (+16.9%) in-line. Shares -1.5%. (PR)
- FMC Corp. (FMC): Q3 EPS of $1.13 beats by $0.11. Revenue of $281M (+31%) vs. $731M. Shares +3.8%. (PR)
- Manitowoc (MTW): Q3 EPS of $0.80 misses by $0.01. Revenue of $1.11B (+19.6%) vs. $1.26B. Shares -4.7%. (PR)
- McKesson (MCK): FQ2 EPS of $1.17 beats by $0.14. Revenue of $26.6B (+8.6%) vs. $26.2B. "We did begin to see some customers delay their purchasing decisions," CEO John Hammergren says. (PR)
- STMicroelectronics (STM): Q3 EPS of -$0.32 vs. consensus of $0.18. Revenue of $2.46B vs. $2.5B. Gross margin was 37.2%. Shares +5.2% in Frankfurt. (PR)
Today's Markets
- Asia: Nikkei +7.74% to 8,212. Hang Seng +0.84% to 12,702. Shanghai -2.94% to 1,720. BSE Sensex +0.4% to 9,045.
- Europe: London +5.2%. Paris +6.6%. Frankfurt +0.1%.
- U.S. futures: Dow -0.68% to 9,207. S&P -0.83% to 931. Nasdaq -1.2%. Crude +5.1% to $65.92. Gold +1.2% to $749.50.
US Market
- Wall Street Breakfast: Must-Know News by SA Editor Eli Hoffmann
- U.S. Treasury: Stealthy Impotence by Casey B. Mulligan
- Housing Bubble: Two-Thirds of the Way Back to 2000 by Stephen Hsu
- Dow Jones: Predictive Value of Inflation Adjusted Averages by H.J. Huneycutt
- How Much Longer Must This Deleveraging Process Go On? by Jeff Miller
- Pickens's New Investment Strategy: Cash by Tim Iacono
- Money Supply Indicator Supports Deflation Argument by Simit Patel
- America Needs an Independent Clearinghouse for OTC, CDS by Paul Richards
- What to Do with a Dividend Freeze by Dividends4Life
- Wednesday Outlook: Government Policy, Emerging Markets by David Fry
- Wednesday Outlook: Out of the Blue? Well, Not Really by David Fry
- Felix Zulauf: Bracing for a 'Soft' Economic Depression by The Sovereign Society
- Will Volatility Be Embedded in the System for a Generation? by Roger Ehrenberg
- What Is Right with FICO by Zubin Jelveh
- Living Within Our Means: Automotive Edition by Diane Lim Rogers
- Biggest Monthly Changes in Short Interest by Bespoke Investment Group
- Dow to S&P Ratio at a Six Year High by Eddy Elfenbein
- Modified Misery Index Hits All-Time High by Paul Kedrosky
- Green Realty Corp Q2 2008 Earnings Call Transcript
- Meruelo Maddux Properties Inc. Q3 2008 Earnings Call Transcript
- Cognitive Disconnect of the Day by Felix Salmon
- Masco Corporation Q3 2008 (Quarter End 9/30/08) Earnings Call Transcript
- Maguire Properties Inc. Q3 2008 Earnings Call Transcript
- Associated Estates Realty Corporation Q3 2008 Earnings Call Transcript
- Bond Expert: Tuesday Wrap by John Jansen
- John Hussman: Preparing for Extreme Possibilities by John Hussman
- Pace of US Housing Price Declines Continues to Slow by Research Recap
- Where Are Cash-Rich Companies Hoarding Their Money? by Graham Summers
- Kilroy Realty Corporation Q3 2008 (Qtr End 09/30/08) Earnings Call Transcript
- So We Find a Bottom - Then What? by Roger Nusbaum
- Case-Shiller Home Price Indices Hit New Record Annual Declines by Tim Iacono
- FOMC Preview: How Far Will the Fed Go? by Kathy Lien
- What Dividend Yield Can - And Can't - Tell Us by James Picerno
- In an Unpredictable Market, Consumer Confidence Hits Record Low by Toro
- Surviving the Short-Term to Participate in the Long-Term by Richard Shaw
- Changing the Nation's Mindset About Housing by Markham Lee
- Is Too Big to Fail Also Too Big to Save? by David Enke
- Dispelling the Gloom: Examining a Few Healthy Companies by Rick Newman
- Tuesday Market Roundup: Still Waiting for That Bounce by Jordan Kahn
- The Spreading Crisis: Finance to Business to Consumer by Felix Salmon
- Ten Largest S&P 500 Declines Without a Rally by Bespoke Investment Group
- Only Abatement of Risk Aversion Will Stop VIX from Further Fall - JP Morgan Strategist by FP Trading Desk
- Tuesday Options Update: GS, MS, RF, TSN, RCII, TGT, MSFT & PG by Andrew Wilkinson
- Where Buyers Should Be Looking by Felix Salmon
- Price Dividend Ratio: Lessons From History by Babak
- Don't Be Fooled - Inflation is Coming by Robert Nabloid
- Case-Shiller Shows More Record Home Price Declines in August by Index Universe
- Consumer Nonfidence by Bespoke Investment Group
- Declining Numbers Don't Tell the Whole Story by Toro
- Financial Stability and the Fed by Mark Thoma
- Taking Issue with the Way TARP Has Been Executed by Markham Lee
- On Bulls and Bears - Is it an Age Thing? by Lloyd Sakazaki
- Obama Tax Plan: Uncertainty Weighing on Market by David I. Templeton
- SPY 2% Gaps During the Current Bear Market by Bespoke Investment Group
- Options Trader: Tuesday Outlook - Turnaround? by Philip Davis
- Are We Approaching a Bounce in the Market? by Jordan Kahn
- Bond Expert: Tuesday Outlook by John Jansen
- Why We Couldn't Handle Another Depression by Michael Panzner
- Eight Thoughts on the Current Crisis by David Merkel
- The Same Assumptions That Allowed Reckless Leverage Have Now Reversed by Don Fishback
- Sticking Issues with Credit Default Swaps by Bapcha's Stocks
- REITs: Insurers Supplant Banks As Lenders by SA Editor Judy Weil
- As the Sell-Off Continues, Investors Look to the Election by Chris Krasowski
- Laws of Closed-End Fund Investing Suspended? by Joe Eqcome
- ETF Assets Surge While Mutual Funds' Leak by Tom Lydon
- Let's Get Ready to Rebound by Tom Lydon
- PowerShares BuyWrite ETF is a 'Volatility Smoother'?: A Response to Tom Lydon by Gary Gordon
- Wednesday Outlook: Government Policy, Emerging Markets by David Fry
- Wednesday Outlook: Out of the Blue? Well, Not Really by David Fry
- Invesco To Launch Mutual Fund Made Up of PowerShares ETFs by Index Universe
- A Map of Asian ETFs by Vlada Kynsky
- U.S. Treasury: Stealthy Impotence by Casey B. Mulligan
- How Much Longer Must This Deleveraging Process Go On? by Jeff Miller
- Living Within Our Means: Automotive Edition by Diane Lim Rogers
- Modified Misery Index Hits All-Time High by Paul Kedrosky
- FOMC Preview: How Far Will the Fed Go? by Kathy Lien
- Is Too Big to Fail Also Too Big to Save? by David Enke
- Don't Be Fooled - Inflation is Coming by Robert Nabloid
- Consumer Nonfidence by Bespoke Investment Group
- Financial Stability and the Fed by Mark Thoma
- On Bulls and Bears - Is it an Age Thing? by Lloyd Sakazaki
China Wants the U.S. Dollar to Drop Dead by The Prudent Investor
U.S. Consumer Confidence Hits Record Low on Rising Financial Headwinds and Worsening Economy
Global Stagflation a Fading Threat. Worry About Deflation Instead?
- The Conference Board Consumer Confidence Index fell to 38 in October (lowest reading since records began in 1967) from 61.4. This is the biggest decline since 1970s and is also below readings in past 4 recessions
- In spite of easing gas prices, tightening credit conditions, worsening job losses, declining returns from stock market, continued fall in home prices and high debt is affecting household wealth and consumer confidence. Consumer spending will contract in H2-08 exacerbated by credit crisis (esp. for mortgages and auto loans). Consumer credit contracted -3.75% (most on record) in August; household net worth declined $438bn to $56tr in Q2-08
Global Stagflation a Fading Threat. Worry About Deflation Instead? - The opening up of spare capacity has been historically associated with significant downward pressure on inflation. Given that we expect spare capacity to continue to increase at least till Q4 2009, inflation is unlikely to be a serious issue (Goldman Sachs)
- Roubini: Due to a fall in aggregate demand, U.S. recession and global economic slowdown will be accompanied by a reduction - rather than an increase - in inflationary pressures. However, a supply-side shock would lead to stagflation
Government Said to Be Discussing Plan to Aid Homeowners
- NY Times
- 10/29/2008 08:23 PM
- Bloomberg
- 10/29/2008 05:07 PM
- Bloomberg
- 10/29/2008 02:12 PM
- Bloomberg
- 10/29/2008 02:08 PM
- Bloomberg
- 10/29/2008 08:04 AM
Treasury, FDIC Said to Develop Program to Avert Foreclosures
- Bloomberg
- 10/29/2008 02:12 PM
- FT ($)
- 10/29/2008 05:08 PM
- Bloomberg
- 10/29/2008 04:30 AM
- WSJ ($)
- 10/29/2008 10:25 PM
- FT ($)
- 10/29/2008 10:23 PM
- FT ($)
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Fed Cuts Rate to 1% to Avert Prolonged Recession
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Wall Street Breakfast: Must-Know News
by SA Editor Eli Hoffmann
- Fed cuts to 1%. In a unanimous decision, the Fed dropped its key fed funds target to 1% from 1.5%, while the discount rate fell to 1.25% from 1.75%. "The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures," it said. The Fed hinted it may not be done with rate cuts: "... downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability." New in its statement were its reference to "slowing economic activity in many foreign economies" that "is damping the prospects for U.S. exports," and its more dovish stance on inflation, which it now "expects" to moderate.
- Fed moves free cash. Credit markets continued to thaw Thursday after the Fed lowered its target lending rate to 1% and agreed to pump $120B into Brazil, Mexico, Singapore and South Korea through swap agreements. Three-month Libor is expected to drop 20 BPs to 3.22%. Libor has declined for 13 days in a row. "The swap lines are not unlimited but at least they will take a lot of tension out of the credit markets," economist Mark Tan said. "The inclusion of Singapore is an extension to the region because it's the center for Asia's dollar markets." Taiwan, Hong Kong and China all lowered their key lending rates.
- ECB bank loans top $1T. The ECB says it has now lent an unprecedented $1T (774B) to banks, not including dollar loans. Still, while credit markets are looser than they were two weeks ago, they're by no means back to normal analysts say. "Short-term money markets are responding to the liquidity flood from the ECB and the prospect of lower interest rates, but we are not out of the woods on longer-term lending," ING's Padhraic Garvey said.
- FDIC to help troubled homeowners. The government is preparing to unveil a plan that will guarantee $500B in loans to troubled borrowers, sources say. The program would use $50B from the $700B TARP pot to lower loan interest rates for five years. FDIC will run the program, which could affect 3 million distressed loans. "It will take a massive and quick infusion of funds for refinancings and other foreclosure prevention to turn the tide," researcher David Abromowitz said.
- Poor DB earnings beat expectations. Deutsche Bank (DB) reports Q3 net income fell 73% to 435M from 1.62B the previous year. The results were better than the expected net loss of 251M thanks to new EU accounting rules and a tax benefit. Q3 results included 1.2B in writedowns related to the credit crisis, bringing the bank's total writedowns to 8.5B since the crisis began. Revenue fell 14% to 4.37B from 5.10B. CEO Josef Ackermann cautioned on dividend expectations for 2008, saying the dividend policy will be balance with 'our commitment to conserving capital strength in a highly uncertain environment.'
- High crude helps Shell. Royal Dutch Shell (RDS.A) reports Q3 profit climbed 22% as record high oil prices offset production cuts in Nigeria and the Gulf of Mexico. Net income rose to $8.45B from $6.92B the previous year. Profit was $8.04B with $800M of gains in fair-value adjustments, vs. expectations of $7.22B. With oil prices now down from July's highs and lost production in Nigeria and Russia, Shell plans to mine Canadian oil sands and develop a gas-to-liquids venture in Qatar. Shares -1.6% premarket.
- Investors eye premium on RTP deal. Rio Tinto (RTP) is facing pressure from some institutional investors to start talks with BHP Billiton (BHP) on its $87B hostile takeover bid. Investors have seen Rio's share price battered in recent weeks and are interested in BHP's premium of 3.4 of its shares for each Rio share vs. the current ratio of roughly 2.7 to 1. An inside source said a few small funds are in favor of the deal but Rio is not facing a wave of investor pressure to begin negotiations. Rio CEO Tom Albanese said recent movements in stock or commodity prices have not changed the company's views that BHP's
- offer undervalues the company's operations and growth projects. Premarket: RTP +6.9%.
- Tysabri suffers another setback. Shares of Irish drugmaker Elan (ELN) plunged as much as 49% in Dublin after a patient taking its multiple sclerosis treatment Tysabri contracted a life-threatening brain illness, the third case since July. Elan's ADRs are -18.4% in U.S. premarket trading. Elan markets the drug together with U.S. firm Biogen Idec (BIIB).
- Bleak outlook for pension plans. Corporate pension plans may be in serious trouble. At the end of last year S&P 500 companies had a combined pension plan surplus of about $60B; through September of this year that figure likely turned into a combined deficit of $75B, which may by now be -$300B or more.
- Japan announces $50B stimulus package. Japan said it will pump ₯5T ($51B) into its economy, including funds for households and local governments. "We're facing a storm that comes once in every 100 years," Prime Minister Taro Aso said. "While Japan's financial system remains relatively sound there will surely be an impact on the real economy." The Bank of Japan is expected to cut interest rates tomorrow after a Nikkei newspaper report raised expectations of a rate cut, causing the yen to slump and stocks to rise. If BoJ holds its rate steady, the yen could appreciate again as the stock market resume its fall.
Earnings: Thursday Before Open
- CVS Caremark (CVS): Q3 EPS of $0.60 in-line. Revenue of $20.86B (+1.8%) vs. $21.06B. (PR)
- Deutsche Bank (DB): Q3 EPS of 0.39 vs. 1.57 consensus. Revenue of 4.37B in-line. Shares +14.5% in Frankfurt. (AP)
- Eastman Kodak (EK): Q3 EPS of $0.33 beats by $0.05. Revenue of $2.4B (-5.1%) vs. $2.53B. (PR)
- Motorola (MOT): Q3 EPS of $0.05 beats by $0.03. Revenue of $7.48B (-15.1%) vs. $7.82B. (PR)
- Shell (RDS.A): Q3 EPS of $2.62 misses by $0.05. Revenue of $131.57B vs. $123.81B. Shares -1.3%. (PR)
- Taiwan Semi (TSM): Q3 EPS of $0.19 in-line. Revenue of $2.98B (-88.9%) in-line. Sees Q4 revenue of NT$69-71B vs. NT$84.64B. Shares +6.9% in Taiwan. (PR)
- Unilever (UL): Q3 earnings of $0.51 beats by $0.02. Revenue of $13.40B vs. $14.36B. Sees full-year sales growth "well in excess" of its target. Shares +3.4% in London. (PR)
Earnings: Wednesday After Close
- Advance Auto Parts (AAP): Q3 EPS of $0.59 beats by $0.02. Revenue of $1.19B (+2.6%) in-line. Shares -1.2%. (PR)
- Allied Waste (AW): Q3 EPS of $0.28 beats by $0.02. Revenue of $1.61B (+3.2%) in-line. Shares +0.2%. (PR)
- Ameriprise Financial (AMP): Q3 EPS of $0.14 misses by $0.68. Revenue of $2.03B (-6.4%) vs. $1.95B. Shares flat. (PR)
- Amkor Technology (AMKR): Q3 EPS of $0.44 beats by $0.12. Revenue of $720M (+4.4%) vs. $725M. Shares -2.8%. (PR)
- Atmel (ATML): Q3 EPS of $0.09 beats by $0.08. Revenue of $400M (-5%) in-line. Shares +2%. (PR)
- CA Inc. (CA): FQ2 EPS of $0.41 beats by $0.04. Revenue of $1.11B (+3.7%) in-line. Approves $250M share repurchase. Shares +1.8%. (PR)
- Cliffs Natural Resources (CLF): Q3 EPS of $1.61 misses by $0.66. Revenue of $1.19B (+92%) vs. $1.23B. Shares -0.5%. (PR)
- CME Group (CME): Q3 EPS of $4.13 beats by $0.15. Revenue of $681M (+20.5%) vs. $644M. Shares -3.2%. (PR)
- Curtiss-Wright (CW): Q3 EPS of $0.60 in-line. Revenue of $436M (+9.9%) vs. $441M. (PR)
- Grey Wolf (GW): Q3 EPS of $0.12 misses by $0.05. Revenue of $234M (+2.4%) in-line. (PR)
- Hartford Financial (HIG): Q3 EPS of -$8.74 vs. -$1.54 consensus. Says volatile credit and equity markets and the largest catastrophe in the past three years significantly affected results. Shares -1.8%. (PR)
- JDS Uniphase (JDSU): FQ1 EPS of $0.11 beats by $0.02. Revenue of $380M in-line. Shares -1.7%. (PR)
- MetLife (MET): Q3 EPS of $0.88 misses by $0.01. Revenue of $13.38B (+14.6%) vs. $13.26B. Shares +1.3%. (PR)
- Murphy Oil (MUR): Q3 EPS of $3.04 beats by $0.39. Revenue of $8.19B (+71.3%) vs. $6.93B. Sees Q4 EPS of $1.00-1.40 vs. $1.99. Shares -1.1%. (PR)
- Oil States International (OIS): Q3 EPS of $1.66 beats by $0.41. Revenue of $815M (+54.5%) vs. $677M. Sees Q4 EPS of $1.45-1.55 vs. $1.32. Shares +11.5%. (PR)
- O'Reilly Automotive (ORLY): Q3 EPS of $0.40 in-line. Revenue of $1.11B (+67.9%) in-line. (PR)
- Owens-Illinois (OI): Q3 EPS of $0.90 beats by $0.05. Revenue of $2.01B (+4.2%) in-line. Shares +0.5%. (PR)
- Prudential Financial (PRU): Q3 EPS of $0.74 misses by $0.20. Revenue of $6.15B (-9.2%) vs. $6.72B. "Unfavorable financial market conditions are having a substantial negative effect on reported results of our domestic businesses and market values in our investment portfolio." Shares flat. (PR)
- RealNetworks (RNWK): Q3 EPS of -$0.03 in-line. Revenue of $152M in-line. Shares +2.2%. (PR)
- Smith Micro Software (SMSI): Q3 EPS of $0.19 beats by $0.04. Revenue of $26.6M (+30.6%) vs. $26.1M. Shares +8.7%. (PR)
- Standard Pacific (SPF): Q3 EPS of -$0.07 beats by $0.40. Revenue of $400M (-37.8%) vs. $421M. (PR)
- Symantec (SYMC): FQ2 EPS of $0.37 beats by $0.02. Revenue of $1.52B (+7%) in-line. Sees Q3 EPS of $0.30-0.33 vs. $0.36 and revenue of $1.45-1.5B vs. $1.61B. Shares -5.6%. (PR)
- Tesoro (TSO): Q3 EPS of $1.63 beats by $0.15. Revenue of $8.7B (+47.4%) vs. $7.81B. Shares +4.5%. (PR)
- TheStreet.com (TSCM): Q3 EPS of -$0.04 misses by $0.10. Revenue of $16.7M (+3.8%) vs. $19.2M. Names Jim Cramer Chairman, allowing CEO Thomas Clarke to focus "on navigating the company through this difficult economic environment." Shares -0.3%. (PR)
- ValueClick (VCLK): Q3 EPS of $0.15 in-line. Revenue of $153M (-2.5%) in-line. Sees Q4 EPS of $0.15-0.16 vs. $0.19, and revenue of $140-150M vs. $168M. Shares +2.9%. (PR)
- Visa (V): FQ4 EPS of $0.58 beats by $0.02. Revenue of $1.71B (+16.7%) in-line. Sees full-year revenue growth at the lower end of the 11-15% range. Shares -0.4%. (PR)
- Whiting Petroleum (WLL): Q3 EPS of $2.49 beats by $0.16. Revenue of $425M (+106.9%) vs. $358M. (PR)
Today's Markets
- Asia markets had a stellar day. Nikkei +9.96% to 9,030. Hang Seng +12.82% to 14,330. Shanghai +2.55% to 1,764. India closed.
- Europe is notably higher at midday. London +1.8%. Paris +1.5%. Frankfurt, yesterday's laggard, +4.7%.
- U.S. futures indicate a strong open. Dow +3.5%. to 9,160. S&P +3.1% to 956. Nasdaq +3.2%. Crude +1.5% to $68.49. Gold +2.3% to $771.50.
US Market
- A 1% Cut Isn't What It Used To Be by Larry MacDonald
- Corporate America Is (Inadvertently) Helping Obama by Rick Newman
- Depression's All Talk, So Far by Saj Karsan
- Reflationary Trade Here to Stay by Ashraf Laidi
- Wall Street Breakfast: Must-Know News by SA Editor Eli Hoffmann
- Bears Have Rallies Too by Macro Man
- Home Price Reality Check by Tim Iacono
- Have the Markets Put the Cart Before the Horse? by Bob Lang
- Lubricated Global Banking Machine Still Sputters by The Prudent Investor
- Understanding Negative Bond Yields by Devin Hobbes
- USG's Gloomy Outlook on Housing, Manufacturing by SA Editor Judy Weil
- Hedge Fund of Funds' Revealing Q3 Report by Fred Wilson
- Consumer Confidence and Dollar Plunge; Oil Prices Soar by Jonathan O'Shaughnessy
- Does the Yield Curve Work During Times of Panic? by Zubin Jelveh
- Commodity Trading Advisors and Capturing Alpha by Mebane Faber
- Fed Watch: More Easing Expected by Tim Duy
- Signs of an Economic Bottoming Process by Dominic Vignola
- Misleading Leading Indicators by Paul Carton
- Sector Performance Before and After the Latest Rally by Brett Steenbarger
- SPX Corp. Q3 2008 Earnings Conference Call Transcript
- Boston Properties Inc., Q3 2008 Earnings Call Transcript
- United Rentals Inc. Q3 2008 Earnings Call Transcript
- Bond Expert: Wednesday Wrap by John Jansen
- Some Credit Crunch Realities by Zubin Jelveh
- Unwinding of the Carry Trade Has Finally Hit Currencies by Jeffrey Frankel
- Bailout, Schmailout by Jeff Jarvis
- Five Key Quotes From Raymond James On Credit Markets by SA Editor Judy Weil
- Centex Corporation F2Q 09 (Qtr End 9/30/08) Earnings Call Transcript
- Palm Harbor Homes Inc. F2Q09 (Qtr End 9/26/08) Earnings Call Transcript
- Fed Rate Cut May Benefit Gold and Stall U.S. Dollar by J Clinton Hill
- Local Bank Hints Seattle's Economy Facing Headwinds by SA Editor Judy Weil
- Wednesday Market Roundup: High VIX Means More Market Volatility by Jordan Kahn
- Hottest Potato in Washington: The Homeowner Bailout Plan by Rick Newman
- S&P 500 Earnings vs. Valuation Matrix by Bespoke Investment Group
- Next Investment Opportunity? Citigroup Analyst Says Healthcare Stocks by FP Trading Desk
- Wednesday Options Update: MGM, LVS, XHB, RYL, RIGL & LM by Andrew Wilkinson
- Pre-Paid Legal Services, Inc. Q3 2008 Earnings Call Transcript
- Fed Is Catching Up to Reality by Zubin Jelveh
- Durable Goods: A Brief Reprieve by James Picerno
- Strange Bedfellows in the Markets' Price Action by Macro Man
- Three Areas of Opportunity for the Bold by Jason Kelly
- 15 More Thoughts on the Current Crisis by David Merkel
- Interactive Brokers FX Summary by Andrew Wilkinson
- Dividends: Yields Are Rising, But Will Growth Continue? by Dobromir Stoyanov
- Timing the Market Ahead of Elections by Teeka Tiwari
- Is the U.S. Treasury Impotent? by Casey B. Mulligan
- Consumer Sentiment Hits New Low...Finally! by Ockham Research
- Options Trader: Wednesday Outlook by Philip Davis
- RBC Analyst: Despite Surge, Markets Could Remain Volatile in 2009 by FP Trading Desk
- Bond Expert: Wednesday Outlook by John Jansen
- The New Paradigm of the World Economy by Angelo Airaghi
- Five Signs of a Market Bottom by Andrew Mickey
- Market Condition Summary: Improving, but Remain Cautious by J Clinton Hill
- Tuesday's Coordinated Comedy Datapoints by Greg Newton
- Capitalism in Jeopardy? by Gene Chan
- Death of the Dollar Still Inevitable: The Dead Cat Bounce Explained by Nicholas Jones
- Two Ways to Gain Exposure to Option Selling Funds by Mebane Faber
- Towards a New Valuation Model by Vinny Catalano
- Only 3 Sectors Squeak Out a Gain Last Week by The Correct Call
- SPX Put Bomb Update by Bill Luby
- Bullish Divergence Comes to the Market by Vlada Kynsky
- Don't Let Fear Get in the Driver's Seat by Jeff Pierce
- Is Case-Shiller the Best Measure of U.S. Housing Prices? by James Rohrig
- Next Two Months Could Be Among the Most Important in Market History by Sean Hannon
- What's Going on with the Dollar? by Zacks.com
- Greed, When Others Are Fearful, Is Good by Benjamin Taylor
- Advice to Summiteers for Reforming the Global Casino by Hazel Henderson
- Buy, Sell or Hold Update: Brazil ETF Soars in Three Trading Days by William Patalon III
- Fed Rate Cut May Benefit Gold and Stall U.S. Dollar by J Clinton Hill
- Three Areas of Opportunity for the Bold by Jason Kelly
- Only 3 Sectors Squeak Out a Gain Last Week by The Correct Call
- A 1% Cut Isn't What It Used To Be by Larry MacDonald
- Depression's All Talk, So Far by Saj Karsan
- Bears Have Rallies Too by Macro Man
- Consumer Confidence and Dollar Plunge; Oil Prices Soar by Jonathan O'Shaughnessy
- Does the Yield Curve Work During Times of Panic? by Zubin Jelveh
- Fed Watch: More Easing Expected by Tim Duy
- Signs of an Economic Bottoming Process by Dominic Vignola
- Some Credit Crunch Realities by Zubin Jelveh
- Bailout, Schmailout by Jeff Jarvis
- FOMC Statement: What It Really Says by David Merkel
- Local Bank Hints Seattle's Economy Facing Headwinds by SA Editor Judy Weil
- Fed Funds Target Rate: Exercise in Futility by David Merkel
- Durable Goods: A Brief Reprieve by James Picerno
- Strange Bedfellows in the Markets' Price Action by Macro Man
- 15 More Thoughts on the Current Crisis by David Merkel
- Is the U.S. Treasury Impotent? by Casey B. Mulligan
- The Reykjavik Scenario (or How Interest Rates Can't Control Monetary Inflation) by Francis Schutte
- Market Condition Summary: Improving, but Remain Cautious by J Clinton Hill
- Capitalism in Jeopardy? by Gene Chan
- Don't Let Fear Get in the Driver's Seat by Jeff Pierce
- Next Two Months Could Be Among the Most Important in Market History by Sean Hannon
- Advice to Summiteers for Reforming the Global Casino by Hazel Henderson
Fed Extends Swap Lines to Four EM Central Banks - Federal Reserve: Fed has authorized the establishment of temporary liquidity swap facilities with the central banks of four large and systemically important economies. These new facilities will support the provision of dollar liquidity in amounts of up to $30 bn each by the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore
- The swap line comes at the same time as the IMF announced a liquidity boost, in which a country may borrow up to 5 times its quota at the Fund. In the case of Mexico and Brazil, the amount available would be $23.5 bn and $22.6 bn respectively
Fed Interest Rate Path 2008: A Second 50bps Cut in October
- Oct 29: FOMC decided to lower target for federal funds rate and discount rate 50bps to 1% and 1.25% respectively
- Systemic problems in money markets may increase as the funds rate approaches zero. At near-0% rates, it would become difficult for money market mutual funds to cover their costs and still offer positive yields to investors, which could intensify outflows from money funds (Goldman Sachs)
International / Europe: Sarkozy Boldly Attacks Financial Crisis, but Europe
Wants
Results
By STEVEN ERLANGER
Initially praised for his leadership and quick response to
the crisis, the French president, Nicolas Sarkozy, is
facing increasing pressure as the European recession
gathers pace.
Full Story:
http://www.nytimes.com/2008/10/30/world/eu...amp;tntemail1=y
Wants
Results
By STEVEN ERLANGER
Initially praised for his leadership and quick response to
the crisis, the French president, Nicolas Sarkozy, is
facing increasing pressure as the European recession
gathers pace.
Full Story:
http://www.nytimes.com/2008/10/30/world/eu...amp;tntemail1=y
New York Region: Layoffs Sweep From Wall St. Across Region
By PATRICK MCGEEHAN
As businesses have begun cutting jobs, New York leads all
states in number of first-time unemployment claims.
Full Story:
http://www.nytimes.com/2008/10/30/nyregion...amp;tntemail1=y
By PATRICK MCGEEHAN
As businesses have begun cutting jobs, New York leads all
states in number of first-time unemployment claims.
Full Story:
http://www.nytimes.com/2008/10/30/nyregion...amp;tntemail1=y
Bernanke Signals Door `Open' for Cutting Rates to Lowest Level on Record Federal Reserve Chairman Ben S. Bernanke signaled he's ready to cut interest rates to the lowest level on record should the central bank's actions fail to stem the deepening economic slump.
Fed Opens Swaps of $30 Billion Each With Korea, Brazil, Mexico, Singagore The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.
Fed Opens Swaps of $30 Billion Each With Korea, Brazil, Mexico, Singagore The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.
U.S. Economy Shrank 0.3% in the Third Quarter as Consumer Spending Dropped The economy suffered its biggest decline since 2001 in the third quarter, ushering in what may be the worst recession in a quarter-century and boosting the chances of Barack Obama and fellow Democrats in next week's elections.
European Economic Confidence Plunges by Record as Financial Crisis Deepens European confidence in the economic outlook fell by a record after the worsening credit crisis sent stocks plunging, shut off companies' access to funding and heightened concerns that a recession looms.
Japan's Government Plans to Spend Almost $51 Billion to Stimulate Economy Japan's Prime Minister Taro Aso promised to pump 5 trillion yen ($51 billion) into the economy to help households and small businesses, and indicated he would delay elections until the global financial crisis subsides.
ECB's Wellink Says Europe Growth Will Be `Closer to' Zero Than 1% in 2009 European Central Bank Governing Council member Nout Wellink said economic growth in Europe may stagnate next year as the global financial crisis bites.
Bernanke Signals Door `Open' for Cutting Rates to Lowest Level on Record Federal Reserve Chairman Ben S. Bernanke signaled he's ready to cut interest rates to the lowest level on record should the central bank's actions fail to stem the deepening economic slump.
Jobless Recipients in U.S. Hover at Five-Year High; New Claims Unchanged The number of Americans filing first- time claims for unemployment benefits was unchanged last week and the total number of recipients hovered close to a five-year high, signs the labor market is deteriorating.
U.K. House Prices Declined the Most Since 1991 in October, Nationwide Says U.K. house prices dropped by the most in at least 17 years in October as banks tightened their grip on credit and the prospect of a recession deterred potential buyers, Nationwide Building Society said.
Fed Offers $120 Billion to Emerging-Market Central Banks as Crisis Spreads The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.
Greenspan Slept as Off-Balance-Sheet Toxic Debt Escaped Regulator Scrutiny As George Miller welcomed 60 bankers to the chandeliered Charlotte City Club one evening in September, the focus was on more than the recent bankruptcy of Lehman Brothers Holdings Inc. From their 31st-floor perch, members of the American Securitization Forum, which Miller leads, fretted about the future of their $10.7 trillion industry.
European Economic Confidence Falls More Than Expected: Table of the Day Following is a summary of October eurozone economic sentiment from the European Commission in Brussels:
European Economic Confidence Plunges by Record as Financial Crisis Deepens European confidence in the economic outlook fell by a record after the worsening credit crisis sent stocks plunging, shut off companies' access to funding and heightened concerns that a recession looms.
Japan's Government Plans to Spend Almost $51 Billion to Stimulate Economy Japan's Prime Minister Taro Aso promised to pump 5 trillion yen ($51 billion) into the economy to help households and small businesses, and indicated he would delay elections until the global financial crisis subsides.
ECB's Wellink Says Europe Growth Will Be `Closer to' Zero Than 1% in 2009 European Central Bank Governing Council member Nout Wellink said economic growth in Europe may stagnate next year as the global financial crisis bites.
Bernanke Signals Door `Open' for Cutting Rates to Lowest Level on Record Federal Reserve Chairman Ben S. Bernanke signaled he's ready to cut interest rates to the lowest level on record should the central bank's actions fail to stem the deepening economic slump.
Jobless Recipients in U.S. Hover at Five-Year High; New Claims Unchanged The number of Americans filing first- time claims for unemployment benefits was unchanged last week and the total number of recipients hovered close to a five-year high, signs the labor market is deteriorating.
U.K. House Prices Declined the Most Since 1991 in October, Nationwide Says U.K. house prices dropped by the most in at least 17 years in October as banks tightened their grip on credit and the prospect of a recession deterred potential buyers, Nationwide Building Society said.
Fed Offers $120 Billion to Emerging-Market Central Banks as Crisis Spreads The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.
Greenspan Slept as Off-Balance-Sheet Toxic Debt Escaped Regulator Scrutiny As George Miller welcomed 60 bankers to the chandeliered Charlotte City Club one evening in September, the focus was on more than the recent bankruptcy of Lehman Brothers Holdings Inc. From their 31st-floor perch, members of the American Securitization Forum, which Miller leads, fretted about the future of their $10.7 trillion industry.
European Economic Confidence Falls More Than Expected: Table of the Day Following is a summary of October eurozone economic sentiment from the European Commission in Brussels:
US Market
- Bad News for Housing by Todd Sullivan
- Stock Market Cycles, Part 4: Primary Cycles by John Lounsbury
- ECRI WLI Growth Rate at Lowest in History by Kirk Lindstrom
- Keep an Eye on Emerging Markets Bonds by Bill Luby
- Economic Bipolarity by Michael Panzner
- Are Investor Fund Inflows Highest at Market Tops? by David I. Templeton
- Housing Update: Underwater Loans, O'Neil's Plans by Tim Iacono
- Global Stock Markets: Torrid October Ends with a Bang by Prieur du Plessis
- Commodities Dropping to 52-Year Low by Money Morning
- In Defense of the U.S. Taxpayer: End Deferred Compensation and Its Tax Subsidy by Roger Ehrenberg
- Get Ready to Buy Like It's 2002 by Dr. O
- Why the Fed's Out of Control by Nicholas Jones
- Weekly Leading Index Forecasting Darker Economic Times by Steven Hansen
- The Worst Is Likely Behind Us by John Derrick
- FHA/HUD: Fee Stooges by Ira Artman
- Learning Curves: Identifying a Recession by Ira Artman
- VIX Watch: Uptrend Could Still Continue by Jeff Pierce
- The Trouble with Rescues and Stimulus by Diane Lim Rogers
- Berkeley Housing Symposium: Discussing Leamer and Shiller by Brad DeLong
- Finally, Three Reasons to Buy by Jeff Miller
- Canadian Banks Benefit From Market Turmoil by Larry MacDonald
- October's End: Reversal Patterns Are Global by Brett Steenbarger
- A Global Bounce by Kirk Shinkle
- Keep an Eye on Emerging Markets Bonds by Bill Luby
- Seven Tax Free Income Stocks by Stockerblog
- Health Benefit Provider Stocks Seriously Ailing by Mike Havrilla
- Cosmetic and Reconstructive Medicine ETF Outpaces Healthcare Sector by Mike Havrilla
- Keep an Eye on Emerging Markets Bonds by Bill Luby
- Global Stock Markets: Torrid October Ends with a Bang by Prieur du Plessis
- Commodities Dropping to 52-Year Low by Money Morning
- Get Ready to Buy Like It's 2002 by Dr. O
- We Simply Do Not Have a Financial System by Steve Waldman
- VIX Watch: Uptrend Could Still Continue by Jeff Pierce
- The Trouble with Rescues and Stimulus by Diane Lim Rogers
- Berkeley Housing Symposium: Discussing Leamer and Shiller by Brad DeLong
- Finally, Three Reasons to Buy by Jeff Miller
- A Global Bounce by Kirk Shinkle
Barclays Turns to Qatar Again? Assessing The Role of Sovereign Wealth Funds in the Credit Crisis
- To avoid turning to the UK government to meet new capital requirements by a year end deadline, Barclays will issue 3bn GBP in reserve capital instruments which will pay 14% interest and 4.3b GBP in convertible notes (paying 9.75%) and converting to ordinary shares next June (total capital raised ~$11.8b). Qatar Holding, the state holding company of Qatar and a subsidiary of Qatar Investment Authority as well as Challenger, a company representing Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, chairman of Qatar Holding and Qatar's Emir, will invest as much as £2.3bn in the instruments, almost doubling their existing shareholding in Barclays to 15.5% (June rights issue gave stakes of 6% for QIA and 2% for Challenger). Qatar also participated in Credit Suisse's recent capital raising
Bank Of Japan Cuts Policy Rate To 0.3% - First Rate Cut Since 2001
- Oct 31: Bank of Japan cut the policy rate 20bp to 0.3% - the 1st rate cut since 2001 - over growing concern the Japanese economy may already have tumbled into recession
- Prior to this cut, the BoJ had kept target rate on hold at 0.5% since Feb-07
Reserve Bank of India Cuts Key Policy Rates In an Emergency Meeting: More Easing to Come?
- Nov 1: Outside a scheduled meeting, RBI lowered repo rate to 7.5% from 8% (second cut in 2 weeks; 150 bps cut since Oct), reduced cash reserve ratio to 5.5% from 6.5% (350 bps cut since Oct), and also cut the amount banks are required to invest in govt bonds to 24% from 25%
- RBI had kept rates on hold during Oct 24 meeting but has aggressively cut rates starting October (first time in over 4 years) amid liquidity squeeze, spike in overnight call and inter-bank rates, and also to contain risks from slowing domestic demand and global growth
Wall Street Breakfast: Must-Know News
by SA Editor Eli Hoffmann
- GM, Chrysler deal on hold. Reluctant to broaden its $700B financial bailout, the Treasury turned down a request by General Motors (GM) for up to $10B to help finance a merger with Chrysler, sources say. Instead, it will try to speed up the Energy Department's $25B loan program for fuel-efficient vehicles. Some think the refusal is politically motivated, and say the pair hopes to move forward with talks after Tuesday's election, when the extent of the government's role in a merger should become clearer. While Obama basically supported a government guarantee of their debt last week, McCain's position remains unclear.
- Thousands of banks pursue rescue cash. Not long ago, many banks worried taking on government money through its $700B TARP framework would give investors the impression they were in need of a bailout. In an abrupt change of attitude, officials now say up to 1,800 publicly-traded banks - and potentially thousands more private banks - could apply for government investments in coming weeks as institutions worry they will be judged as too unhealthy to qualify, or lacking the savvy to deploy cheap government capital, if they don't try for the money. Some bankers worry the $125B now earmarked for 'other' banks won't suffice.