Jobless Rate in U.S. Jumps to 6.5%, Highest Since 1994, as Payrolls Tumble The U.S. unemployment rate climbed to the highest level since 1994 as payrolls tumbled, signaling that the economic slump inherited by Barack Obama will last well into his first year as president.
German Industrial Output Drops Most Since 1995, Raises Odds of Recession Industrial production in Germany declined the most in almost 14 years in September, increasing the likelihood of a recession in Europe's largest economy.
Zero-Interest-Rate World May Be Ahead as King, Trichet Take an Ax to Rates The age of free money may be at hand.
Banks Make It Harder, Expensive for European Companies to Borrow, ECB Says Banks are making it harder and more costly for companies in Europe to get loans as the economic outlook worsens, the European Central Bank said.
Bank of Korea Cuts Rates for Third Time in a Month to Stave Off Recession The Bank of Korea lowered interest rates for the third time in four weeks and signaled it's ready to act again to prevent the economy from sinking into the first recession in a decade. The nation's shares and currency rose.
ECB May Be Forced to Cut Deposit Rate as Banks Park Record Sums Overnight The European Central Bank may be forced to lower its deposit rate further if banks continue to park record amounts of cash with it overnight, economists said.
U.K. Personal Insolvencies Rise 8.8% as Banking Crisis Widens to Consumers U.K. personal insolvencies increased in the third quarter as unemployment rose, a sign that the worst economic slump since the early 1990s is hitting consumers.
French September Trade Gap Expands to a Record $8 Billion as Exports Fall The French trade deficit widened to a record in September as a global economic slowdown curbed exports.
King Helps Brown Increase `Political Heat' on Banks Loath to Lower Rates Bank of England Governor Mervyn King is helping Prime Minister Gordon Brown turn up the heat on financial institutions refusing to cut interest rates for U.K. homeowners and businesses.
China's Finance Minister Xie Called Back From Peru Early to Fix Economy China's Finance Minister Xie Xuren was called back from an international economic conference in Peru before the meeting began, following orders from Beijing to help resolve problems at home, an organizer of the event said.
U.S. October Employment Situation, 240,000 Jobs Are Cut: Table of the Day Following is a summary of the October employment situation from the Labor Department.
Full Version: Economic and Financial News
Fed Commercial Paper Holdings Climb to $244.6 Billion, Pushing Down Yields The Federal Reserve expanded its holdings of commercial paper issued by U.S. corporations by $98.9 billion, boosting its share of the $1.6 trillion market in short-term debt to 15 percent.
Bernanke Tack Toward Democrats May Seal Larger Government Role Under Obama Federal Reserve Chairman Ben S. Bernanke's tack toward Democratic positions before the election may help ensure the government has a bigger role in the economy after Barack Obama becomes president.
Fed's Warsh Says Revamping `Financial Architecture' Essential to Recovery Federal Reserve Governor Kevin Warsh said an economic recovery from the worst financial crisis in seven decades may hinge on how fast policy makers and financial institutions create new rules and ways of doing business.
Bernanke Tack Toward Democrats May Seal Larger Government Role Under Obama Federal Reserve Chairman Ben S. Bernanke's tack toward Democratic positions before the election may help ensure the government has a bigger role in the economy after Barack Obama becomes president.
Fed's Warsh Says Revamping `Financial Architecture' Essential to Recovery Federal Reserve Governor Kevin Warsh said an economic recovery from the worst financial crisis in seven decades may hinge on how fast policy makers and financial institutions create new rules and ways of doing business.
11/7/2008
Chrysler Cash Drains Away as Crisis Deepens
- Reuters 11/7/2008
Ford Posts $3B Operating Loss
- CNN Money 11/7/2008
Retailers Post Worst Oct. Sales Figures Since 71'
- Los Angeles Times 11/7/2008
Retailers Report a Sales Collapse
- New York Times
Chrysler Cash Drains Away as Crisis Deepens
- Reuters 11/7/2008
Ford Posts $3B Operating Loss
- CNN Money 11/7/2008
Retailers Post Worst Oct. Sales Figures Since 71'
- Los Angeles Times 11/7/2008
Retailers Report a Sales Collapse
- New York Times
US Market
- The Real Unemployment Numbers by Trader Mark
- CB Richard Ellis Group, Inc Q3 2008 Earnings Call Transcript
- The One-Word Topic of the Day, and Week: Obama by Research Recap
- S&P 500 Stocks Furthest Above and Below Consensus Price Targets by Bespoke Investment Group
- NBER Says Recession Evidence Is Now 'Conclusive' by Bespoke Investment Group
- Arbor Realty Trust, Inc. Q3 2008 (Qtr End 09/30/2008) Earnings Call Transcript
- Jobs Are Obama's Job No. 1 by Rick Newman
- On Second Thought, It's 61% Worse by Bespoke Investment Group
- Friday Options Update: GM, YHOO, FLR, KBR, DIS, GS by Andrew Wilkinson
- Amazon, Apple, Google: Waiting for the Fill by Fred Wilson
- VIX's Double Jump by Bill Luby
- In the Face of Mounting Pain, Avoid Extremes by James Picerno
- Bond Expert: Treasury Update by John Jansen
- What a Recession Looks Like by Felix Salmon
- What's Happened to the Equity Risk Premium? by Felix Salmon
- Pain, Then Gain by Kevin S. Price
- Post Election Stock and Sector Performance by Bespoke Investment Group
- Options Trader: Friday Outlook by Philip Davis
- On Second Thought, Employment's 61% Worse by Bespoke Investment Group
- Bond Expert: Friday Outlook by John Jansen
- Non-Farm Payrolls: 524K Jobs Lost in 2 Month by Kathy Lien
- We Have a Debt to Discharge by David Merkel
- The Real Unemployment Numbers by Trader Mark
- The One-Word Topic of the Day, and Week: Obama by Research Recap
- NBER Says Recession Evidence Is Now 'Conclusive' by Bespoke Investment Group
- Jobs Are Obama's Job No. 1 by Rick Newman
- On Second Thought, It's 61% Worse by Bespoke Investment Group
- What a Recession Looks Like by Felix Salmon
- German Recession Now Nearly Certain by Edward Hugh
- On Second Thought, Employment's 61% Worse by Bespoke Investment Group
- Non-Farm Payrolls: 524K Jobs Lost in 2 Month by Kathy Lien
US Market
- The Reagan Counterrevolution by Peter Schiff
- Waiting for New Market Uncertainty to Settle by Tate Dwinnell
- Stock Market Cycles, Part 5: Secular Cycles by John Lounsbury
- Is Jim Cramer Right? Is Apple Really a Market Barometer? by Dr. Duru
- It Might Be Impossible to Stop the Decline of Housing Prices by Steven Hansen
- Economy Loses 240,000 Jobs in October, Defines Obama's Challenges by Peter Morici
- The Chickens of Irresponsibility Come Home to Roost Under Obama's Reign by Enzio von Pfeil
- Does Obama Have What it Takes to Turn the Economy Around? by Jeff Pierce
- Ebbing Economic Tide is Lowering All Boats by Richard Shaw
- Insights from a Derivatives Salesman by Roger Ehrenberg
- Ten High Yield, Below Book Stocks by Stockerblog
- Hats Off to the Bank of England by Macro Man
- Investors Face the Psychological Pressure by Tim Price
- Time to Reform the Fed by Larry MacDonald
- Buffett on Investing vs. Business by Nadav Manham
- Unemployment Rate Soars, Recovery Outlook Worsens by NuWire Investor
- Detroit is Hemorrhaging by Diane Lim Rogers
- Picture This: Currency Trends by Jeff Pierce
- Sector Update as of November 8 by Brett Steenbarger
- 'Great' Companies That Are, Literally, Good to Go by Paul Kedrosky
- Exploring the Exploding Costs of Education and Medical Services by Balaji Viswanathan
- A Diversified ETF Portfolio by Enterprising Investor Forum
- ETF Update: High-Grade Bond Opportunity?, Homebuilders on Edge, Retail Holiday Fears by Tom Lydon
- ETF Coping Strategies for the Economic Crisis by Tom Lydon
- Got a Beef with the Market? Buy Cattle. by Hard Assets Investor
- The Reagan Counterrevolution by Peter Schiff
- Economy Loses 240,000 Jobs in October, Defines Obama's Challenges by Peter Morici
- The Chickens of Irresponsibility Come Home to Roost Under Obama's Reign by Enzio von Pfeil
- Does Obama Have What it Takes to Turn the Economy Around? by Jeff Pierce
- Ebbing Economic Tide is Lowering All Boats by Richard Shaw
- Hats Off to the Bank of England by Macro Man
- Investors Face the Psychological Pressure by Tim Price
- Buffett on Investing vs. Business by Nadav Manham
- Unemployment Rate Soars, Recovery Outlook Worsens by NuWire Investor
- Detroit is Hemorrhaging by Diane Lim Rogers
Stunned Icelanders Struggle After Economy´s Fall
By SARAH LYALL
REYKJAVIK, Iceland - The collapse came so fast it seemed unreal,
impossible. One woman here compared it to being hit by a train.
Another said she felt as if she were watching it through a window.
Another said, "It feels like you´ve been put in a prison, and you don´t
know what you did wrong."
This country, as modern and sophisticated as it is geographically
isolated, still seems to be in shock. But if the events of last month -
the failure of Iceland´s banks; the plummeting of its currency; the first
wave of layoffs; the loss of reputation abroad - felt like a bad dream,
Iceland has now awakened to find that it is all coming true.
It is not as if Reykjavik, where about two-thirds of the country´s
300,000 people live, is filled with bread lines or homeless shanties or
looters smashing store windows. But this city, until recently the center
of one of the world´s fastest economic booms, is now the unhappy
site of one of its great crashes. It is impossible to meet anyone here
who has not been profoundly affected by the financial crisis.
Overnight, people lost their savings. Prices are soaring. Once-
crowded restaurants are almost empty. Banks are rationing foreign
currency, and companies are finding it dauntingly difficult to do
business abroad. Inflation is at 16 percent and rising. People have
stopped traveling overseas. The local currency, the krona, was 65 to
the dollar a year ago; now it is 130. Companies are slashing salaries,
reducing workers´ hours and, in some instances, embarking on mass
layoffs.
"No country has ever crashed as quickly and as badly in peacetime,"
said Jon Danielsson, an economist with the London School of
Economics.
The loss goes beyond the personal, shattering a proud country´s sense
of itself.
"Years ago, I would say that I was Icelandic and people might say,
`Oh, where´s that?´ " said Katrin Runolfsdottir, 49, who was fired
from her secretarial job on Oct. 31. "That was fine. But now there´s
this image of us being overspenders, thieves."
Aldis Nordfjord, a 53-year-old architect, also lost her job last month.
So did all 44 of her co-workers - everyone in the company except its
owners. Some 75 percent of Iceland´s private-sector architects have
been fired in the past few weeks, she said.
In a strange way, she said, it is comforting to be one in a crowd.
"Everyone is in the same situation," she said. "If you can imagine, if
only 10 out of 40 people had been fired, it would have been different;
you would have felt, `Why me? Why not him?´ "
Until last spring, Iceland´s economy seemed white-hot. It had the
fourth-highest gross domestic product per capita in the world.
Unemployment hovered between 0 and 1 percent (while forecasts for
next spring are as high as 10 percent). A 2007 United Nations report
measuring life expectancy, real per-capita income and educational
levels identified Iceland as the world´s best country in which to live.
Emboldened by the strong krona, once-frugal Icelanders took regular
shopping weekends in Europe, bought fancy cars and built bigger
houses paid for with low-interest loans in foreign currencies.
Like the Vikings of old, Icelandic bankers were roaming the world
and aggressively seizing business, pumping debt into a soufflé of a
system. The banks are the ones that cannot repay tens of billions of
dollars in foreign debt, and "they´re the ones who ruined our
reputation," said Adalheidur Hedinsdottir, who runs a small chain of
coffee shops called Kaffitar and sells coffee wholesale to stores.
There was so much work, employers had to import workers from
abroad. Ms. Nordfjord, the architect, worked so much overtime last
year that she doubled her salary. She was featured on a Swedish radio
program as an expert on Iceland´s extraordinary building boom.
Two months ago, her company canceled all overtime. Two weeks
ago, it acknowledged that work was slowing. But it promised that
there would be enough to last through next summer.
The next day, everyone was herded into a conference room and fired.
Employers are hurting just as much as employees. Ms. Hedinsdottir
has laid off seven part-time employees, cut full-time workers´ hours
and raised prices. The Kaffitar branch on Reykjavik´s central
shopping street was perhaps half full; in normal times, it would have
been bursting at its seams.
While business is dwindling, costs are soaring. When the government
took over the country´s failing banks in October, Ms. Hedinsdottir´s
latest shipment of coffee - more than 109,000 pounds - was
already on the water, en route from Nicaragua. She had the money to
pay for it, but because the crisis made foreign banks leery of doing
business with Iceland, she said, she was unable to convert enough
cash into foreign currency.
"They were calling me every day and asking me what the situation
was, and they got really nervous," Ms. Hedinsdottir said of her
creditors. They got so nervous that they sent the coffee to a warehouse
in Hamburg, Germany, where it now sits while she tries to find the
foreign currency to pay for it.
Her fixed costs are no longer fixed. Five years ago, the company built
a new factory, borrowing the 120 million kronur - about $1.5
million - in foreign currencies. But the currency´s fall has increased
her debt to 200 million kronur. This summer, her monthly payments
were 2.5 million kronur; now they may be double that - the
equivalent of $38,500 in Iceland´s debased currency.
"My financial manager is talking to the banks every day, and we don´t
know how much we´re supposed to pay," Ms. Hedinsdottir said.
In a recent survey, one-third of Icelanders said they would consider
emigrating. Foreigners are already abandoning Iceland.
Anthony Restivo, an American who worked this fall for a potato farm
in eastern Iceland and was heading home, said all of the farm´s
foreign workers abruptly left last month because their salaries had
fallen so much. One man arrived from Poland, he said, then realized
how little the krona was worth and went home the next day.
At the Kringlan shopping center on the edge of Reykjavik, Hronn
Helgadottir, who works at the Aveda beauty store, said she could no
longer afford to travel abroad. But the previous weekend, she said,
she and her husband had gone for a last trip to Amsterdam, a holiday
they had paid for months ago, when the krona was still strong.
They ate as cheaply as they could and bought nothing. "It was strange
to stand in a store and look at a bag or a pair of shoes and see that
they cost 100,000 kronur, when last year they cost only 40,000," she
said.
In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently
fired secretary, said she had worried for some time that Iceland would
collapse under the weight of inflated expectations.
"If you drive through Reykjavik, you see all these new houses, and
I´ve been thinking for the longest time, `Where are we going to get
people to live in all these homes?´" she said.
The real estate firm that used to employ Ms. Runolfsdottir built about
800 houses two years ago, she said; only 40 percent have been sold.
According to Icelandic law, Ms. Runolfsdottir and other fired
employees have three months before they have to leave their jobs. At
the end of that period, she will start drawing unemployment benefits.
Meanwhile, her husband´s modest investment in several now-failed
Icelandic banks is worthless. "They were encouraging us to buy
shares in their firms until the last minute," she said.
She feels angry at the government, which in her view has mishandled
everything, and angry at the banks that have tarnished Iceland´s
reputation. And while she has every sympathy with the hundreds of
thousands of foreign depositors who may have lost their money, she
wonders why the Icelandic government - and, in essence, the
Icelandic people - should have to suffer more than they already
have.
"We didn´t ask anyone to put their money in the banks," she said.
"These are private companies and private banks, and they went
abroad and did business there."
Despite all this, Icelanders are naturally optimistic, a trait born,
perhaps, of living in one of the world´s most punishing landscapes
and depending for so much of their history on the fickle fishing
industry. The weak krona will make exports more attractive, they
point out. Also, Iceland has a highly educated, young and flexible
population, and has triumphed after hardship before.
Ragna Sara Jonsdottir, who runs a small business consultancy, said
she had met for the first time with other businesses in her office
building. "We sat down and said, `We all have ideas, and we can help
each other through difficult times,´ " she said.
But she said she was just as shocked as everyone else by the
suddenness, and the severity, of the downturn. When the prime
minister, Geir H. Haarde, addressed the nation at the beginning of
October, she said, her 6-year-old daughter asked her to explain what
he had said.
She answered that there was a crisis, but that the prime minister had
not told the country how the government planned to address it. Her
daughter said, "Maybe he didn´t know what to say."
http://www.nytimes.com/2008/11/09/world/eu...iceland.html?_r
=3&oref=slogin&partner=rssnyt&emc=rss&pagewanted=print&oref=
slo
By SARAH LYALL
REYKJAVIK, Iceland - The collapse came so fast it seemed unreal,
impossible. One woman here compared it to being hit by a train.
Another said she felt as if she were watching it through a window.
Another said, "It feels like you´ve been put in a prison, and you don´t
know what you did wrong."
This country, as modern and sophisticated as it is geographically
isolated, still seems to be in shock. But if the events of last month -
the failure of Iceland´s banks; the plummeting of its currency; the first
wave of layoffs; the loss of reputation abroad - felt like a bad dream,
Iceland has now awakened to find that it is all coming true.
It is not as if Reykjavik, where about two-thirds of the country´s
300,000 people live, is filled with bread lines or homeless shanties or
looters smashing store windows. But this city, until recently the center
of one of the world´s fastest economic booms, is now the unhappy
site of one of its great crashes. It is impossible to meet anyone here
who has not been profoundly affected by the financial crisis.
Overnight, people lost their savings. Prices are soaring. Once-
crowded restaurants are almost empty. Banks are rationing foreign
currency, and companies are finding it dauntingly difficult to do
business abroad. Inflation is at 16 percent and rising. People have
stopped traveling overseas. The local currency, the krona, was 65 to
the dollar a year ago; now it is 130. Companies are slashing salaries,
reducing workers´ hours and, in some instances, embarking on mass
layoffs.
"No country has ever crashed as quickly and as badly in peacetime,"
said Jon Danielsson, an economist with the London School of
Economics.
The loss goes beyond the personal, shattering a proud country´s sense
of itself.
"Years ago, I would say that I was Icelandic and people might say,
`Oh, where´s that?´ " said Katrin Runolfsdottir, 49, who was fired
from her secretarial job on Oct. 31. "That was fine. But now there´s
this image of us being overspenders, thieves."
Aldis Nordfjord, a 53-year-old architect, also lost her job last month.
So did all 44 of her co-workers - everyone in the company except its
owners. Some 75 percent of Iceland´s private-sector architects have
been fired in the past few weeks, she said.
In a strange way, she said, it is comforting to be one in a crowd.
"Everyone is in the same situation," she said. "If you can imagine, if
only 10 out of 40 people had been fired, it would have been different;
you would have felt, `Why me? Why not him?´ "
Until last spring, Iceland´s economy seemed white-hot. It had the
fourth-highest gross domestic product per capita in the world.
Unemployment hovered between 0 and 1 percent (while forecasts for
next spring are as high as 10 percent). A 2007 United Nations report
measuring life expectancy, real per-capita income and educational
levels identified Iceland as the world´s best country in which to live.
Emboldened by the strong krona, once-frugal Icelanders took regular
shopping weekends in Europe, bought fancy cars and built bigger
houses paid for with low-interest loans in foreign currencies.
Like the Vikings of old, Icelandic bankers were roaming the world
and aggressively seizing business, pumping debt into a soufflé of a
system. The banks are the ones that cannot repay tens of billions of
dollars in foreign debt, and "they´re the ones who ruined our
reputation," said Adalheidur Hedinsdottir, who runs a small chain of
coffee shops called Kaffitar and sells coffee wholesale to stores.
There was so much work, employers had to import workers from
abroad. Ms. Nordfjord, the architect, worked so much overtime last
year that she doubled her salary. She was featured on a Swedish radio
program as an expert on Iceland´s extraordinary building boom.
Two months ago, her company canceled all overtime. Two weeks
ago, it acknowledged that work was slowing. But it promised that
there would be enough to last through next summer.
The next day, everyone was herded into a conference room and fired.
Employers are hurting just as much as employees. Ms. Hedinsdottir
has laid off seven part-time employees, cut full-time workers´ hours
and raised prices. The Kaffitar branch on Reykjavik´s central
shopping street was perhaps half full; in normal times, it would have
been bursting at its seams.
While business is dwindling, costs are soaring. When the government
took over the country´s failing banks in October, Ms. Hedinsdottir´s
latest shipment of coffee - more than 109,000 pounds - was
already on the water, en route from Nicaragua. She had the money to
pay for it, but because the crisis made foreign banks leery of doing
business with Iceland, she said, she was unable to convert enough
cash into foreign currency.
"They were calling me every day and asking me what the situation
was, and they got really nervous," Ms. Hedinsdottir said of her
creditors. They got so nervous that they sent the coffee to a warehouse
in Hamburg, Germany, where it now sits while she tries to find the
foreign currency to pay for it.
Her fixed costs are no longer fixed. Five years ago, the company built
a new factory, borrowing the 120 million kronur - about $1.5
million - in foreign currencies. But the currency´s fall has increased
her debt to 200 million kronur. This summer, her monthly payments
were 2.5 million kronur; now they may be double that - the
equivalent of $38,500 in Iceland´s debased currency.
"My financial manager is talking to the banks every day, and we don´t
know how much we´re supposed to pay," Ms. Hedinsdottir said.
In a recent survey, one-third of Icelanders said they would consider
emigrating. Foreigners are already abandoning Iceland.
Anthony Restivo, an American who worked this fall for a potato farm
in eastern Iceland and was heading home, said all of the farm´s
foreign workers abruptly left last month because their salaries had
fallen so much. One man arrived from Poland, he said, then realized
how little the krona was worth and went home the next day.
At the Kringlan shopping center on the edge of Reykjavik, Hronn
Helgadottir, who works at the Aveda beauty store, said she could no
longer afford to travel abroad. But the previous weekend, she said,
she and her husband had gone for a last trip to Amsterdam, a holiday
they had paid for months ago, when the krona was still strong.
They ate as cheaply as they could and bought nothing. "It was strange
to stand in a store and look at a bag or a pair of shoes and see that
they cost 100,000 kronur, when last year they cost only 40,000," she
said.
In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently
fired secretary, said she had worried for some time that Iceland would
collapse under the weight of inflated expectations.
"If you drive through Reykjavik, you see all these new houses, and
I´ve been thinking for the longest time, `Where are we going to get
people to live in all these homes?´" she said.
The real estate firm that used to employ Ms. Runolfsdottir built about
800 houses two years ago, she said; only 40 percent have been sold.
According to Icelandic law, Ms. Runolfsdottir and other fired
employees have three months before they have to leave their jobs. At
the end of that period, she will start drawing unemployment benefits.
Meanwhile, her husband´s modest investment in several now-failed
Icelandic banks is worthless. "They were encouraging us to buy
shares in their firms until the last minute," she said.
She feels angry at the government, which in her view has mishandled
everything, and angry at the banks that have tarnished Iceland´s
reputation. And while she has every sympathy with the hundreds of
thousands of foreign depositors who may have lost their money, she
wonders why the Icelandic government - and, in essence, the
Icelandic people - should have to suffer more than they already
have.
"We didn´t ask anyone to put their money in the banks," she said.
"These are private companies and private banks, and they went
abroad and did business there."
Despite all this, Icelanders are naturally optimistic, a trait born,
perhaps, of living in one of the world´s most punishing landscapes
and depending for so much of their history on the fickle fishing
industry. The weak krona will make exports more attractive, they
point out. Also, Iceland has a highly educated, young and flexible
population, and has triumphed after hardship before.
Ragna Sara Jonsdottir, who runs a small business consultancy, said
she had met for the first time with other businesses in her office
building. "We sat down and said, `We all have ideas, and we can help
each other through difficult times,´ " she said.
But she said she was just as shocked as everyone else by the
suddenness, and the severity, of the downturn. When the prime
minister, Geir H. Haarde, addressed the nation at the beginning of
October, she said, her 6-year-old daughter asked her to explain what
he had said.
She answered that there was a crisis, but that the prime minister had
not told the country how the government planned to address it. Her
daughter said, "Maybe he didn´t know what to say."
http://www.nytimes.com/2008/11/09/world/eu...iceland.html?_r
=3&oref=slogin&partner=rssnyt&emc=rss&pagewanted=print&oref=
slo
Economy
China Announces $586 Billion Stimulus Plan, Tax Cuts to Boost the Economy China announced a 4 trillion yuan ($586 billion) stimulus plan to spur expansion in the world's fourth-largest economy, helping sustain global growth as the U.S., Europe and Japan teeter on the brink of recession.
Taiwan's Central Bank Cuts Interest Rates for Fourth Time in Two Months Taiwan's central bank lowered its benchmark interest rate for the fourth time in two months, adding to a series of cuts in the U.S., Europe and Asia aimed at preventing a prolonged global recession.
Emerging Economies Pledge New Stimulus to Tackle Slump as Recessions Loom Finance ministers from emerging economies said they will take new measures to tackle the global economic slowdown at a meeting of the Group of 20 nations in Sao Paulo yesterday.
G-20 is Ready to Act `Urgently' to Support Growth, Draft Statement Says The Group of 20 nations is ready to act ``urgently'' to bolster growth as the world's leading industrialized economies battle the threat of recession, a draft of a statement to be released today says.
Treasury, Congressional Democrats Clash Over Policing Loans Made by Banks Senate Democrats and U.S. Treasury officials clashed today over pressing banks participating in the government's $700 billion financial rescue plan to show they are using the funds to increase lending.
Obama Will Need at Least 18 Months to Turn Economy Around, Stiglitz Says President-elect Barack Obama will need at least 18 months to turn around the U.S. economy, even if he ``does everything perfectly,'' Columbia University Professor Joseph Stiglitz said.
Pending Sales of Existing Homes in U.S. Decline 4.6% as Lending Dwindles Fewer Americans signed contracts to buy previously owned homes in September, indicating the credit crisis will inflict more damage on the housing market.
Zero-Interest-Rate World May Be Ahead as King, Trichet Take an Ax to Rates The age of free money may be at hand.
Treasury Probes Two and Five-Year Notes as Trading Failures Reach Record The Treasury Department is reviewing the trading of two- and five-year notes after a scarcity in U.S. government securities triggered by the credit crunch led to a record level of failed transactions.
Chinese Growth May Be Slowest in Almost Two Decades as Export Demand Wanes China's economy may expand at the slowest pace in nearly two decades next year as demand for exports slumps in the U.S. and Europe and government spending fails to bridge the gap.
U.S. October Employment Situation, 240,000 Jobs Are Cut: Table of the Day Following is a summary of the October employment situation from the Labor Department.
China Announces $586 Billion Stimulus Plan, Tax Cuts to Boost the Economy China announced a 4 trillion yuan ($586 billion) stimulus plan to spur expansion in the world's fourth-largest economy, helping sustain global growth as the U.S., Europe and Japan teeter on the brink of recession.
Taiwan's Central Bank Cuts Interest Rates for Fourth Time in Two Months Taiwan's central bank lowered its benchmark interest rate for the fourth time in two months, adding to a series of cuts in the U.S., Europe and Asia aimed at preventing a prolonged global recession.
Emerging Economies Pledge New Stimulus to Tackle Slump as Recessions Loom Finance ministers from emerging economies said they will take new measures to tackle the global economic slowdown at a meeting of the Group of 20 nations in Sao Paulo yesterday.
G-20 is Ready to Act `Urgently' to Support Growth, Draft Statement Says The Group of 20 nations is ready to act ``urgently'' to bolster growth as the world's leading industrialized economies battle the threat of recession, a draft of a statement to be released today says.
Treasury, Congressional Democrats Clash Over Policing Loans Made by Banks Senate Democrats and U.S. Treasury officials clashed today over pressing banks participating in the government's $700 billion financial rescue plan to show they are using the funds to increase lending.
Obama Will Need at Least 18 Months to Turn Economy Around, Stiglitz Says President-elect Barack Obama will need at least 18 months to turn around the U.S. economy, even if he ``does everything perfectly,'' Columbia University Professor Joseph Stiglitz said.
Pending Sales of Existing Homes in U.S. Decline 4.6% as Lending Dwindles Fewer Americans signed contracts to buy previously owned homes in September, indicating the credit crisis will inflict more damage on the housing market.
Zero-Interest-Rate World May Be Ahead as King, Trichet Take an Ax to Rates The age of free money may be at hand.
Treasury Probes Two and Five-Year Notes as Trading Failures Reach Record The Treasury Department is reviewing the trading of two- and five-year notes after a scarcity in U.S. government securities triggered by the credit crunch led to a record level of failed transactions.
Chinese Growth May Be Slowest in Almost Two Decades as Export Demand Wanes China's economy may expand at the slowest pace in nearly two decades next year as demand for exports slumps in the U.S. and Europe and government spending fails to bridge the gap.
U.S. October Employment Situation, 240,000 Jobs Are Cut: Table of the Day Following is a summary of the October employment situation from the Labor Department.
Wall Street Breakfast: Must-Know News
by SA Editor Eli Hoffmann
- China bailout brings global cheer. Asia, Europe and U.S. futures all moved higher Monday (see below) after China rolled out a $586B economic stimulus package to kick-start its slowing economy. "Over the past two months, the global financial crisis has been intensifying daily," the State Council said in its statement. "In expanding investment, we must be fast and heavy-handed." Analysts praised the long-awaited plan, but doubted it could prevent China's economy from slowing further amid global economic slowdown. The package includes corporate tax cuts and incentives for rural development and technical innovation. The government also promised a shift to a looser monetary policy. China's Q3 growth of 9% was its lowest level in five years. China's government relies on rapid growth to maintain political stability.
- YouTube goes long. With an eye towards boosting advertising revenue, YouTube (GOOG) will begin showing full-length movies and TV shows from MGM Studios' (SNE, CMCSA) archives. YouTube features millions of home videos and some TV clips, but most videos are short and usually run ten minutes or less. The company has been experimenting with full-length shows for several months, and signed a similar deal with CBS (CBS) in October. The new partnership, to be announced later today, will put YouTube in more direct competition with online video site Hulu (NWS, GE).
- AIG bailout balloons. The government raised its aid package to AIG (AIG) to $150B from a present $123B to reduce the troubled insurer's interest payments, allow more time to sell off assets, and save itself from collapse. Renegotiation of the government's bailout, which started out at $85B and gave taxpayers an 80% stake in AIG, came after AIG rapidly depleted the original sum. The details: The $85B, two-year loan at Libor +8.5% gets swapped for a $60B, five-year loan at Libor +3%. AIG will pay only 0.75% on the unborrowed portion of the loan, vs. a current 8.5%. The government will use its $700B Troubled Asset Relief Program facility to buy $40B in AIG preferred shares yielding 10%. The government's stake remains unchanged at 79.9%. The remaining $50B will be used to buy up AIG's balance-sheet-depleting distressed assets, placing them into two separate financing entities. Read the Fed's release.
- Citi courts ?? Undaunted by its failure to acquire Wachovia (WB), Citigroup (C) is in advanced discussions to acquire an unnamed regional bank to compliment Citi's retail-banking unit, sources say. A deal could alleviate some of the internal strife that was exacerbated by Citigroup's botched attempt to buy Wachovia, as well as boosting Citi's deposit base - an alluring prospect in a period where funds are so scarce. Citigroup also comes armed with another $25B, courtesy of taxpayers. Oh, wait - they're not supposed to use government money for acquisitions.
- Exelon strikes out. NRG Energy (NRG) rejected a $6.1B unsolicited takeover bid from Exelon (EXC), arguing the bid 'significantly undervalues' NRG and pointing to Exelon's recent credit downgrade and lack of secured financing. S&P cut Exelon's credit rating last month by one notch to BBB due to its "willingness to pursue an aggressive growth at the detriment of creditworthiness" in bidding for junk-rated NRG. A successful acquisition would have made Exelon the largest U.S. power producer. NRG left room open for a higher bid that would include debt refinancing.
- G-20 consensus on need for action. After meeting this weekend, the G-20 agree to act 'urgently' to restore stability and support growth. The nations called on governments to cut interest rates and raise spending, and to employ 'all their policy flexibility,' both monetary and fiscal. "The solution to this crisis must be rapid," said Brazil's Finance Minister Guido Mantega, forecasting a 60-90 day timeline to new financial regulation. "We need to change the tire on the car while it's still moving."
- Big Three bailout could open can of worms. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid formally requested that Treasury Secretary Henry Paulson consider giving "temporary assistance to the auto industry" using its $700B bailout fund Saturday. The proposition is forcing a broad debate on Capitol Hill about how far the government should go to bail out failing industries, and where the money should come from. Premarket: GM -10.5%.
- Astra aids hearts, investors. AstraZeneca (AZN) should see sales jump for Crestor, its cholesterol-lowering drug, after a new study showed the drug significantly reduced the risk of severe heart attacks. Crestor is already one of Astra's best-selling drugs, and is used by over 15M patients in 95 countries. The data should boost sales for the entire class of cholesterol-lowering drugs, including cheaper drugs that have already gone off patent. Shares +8% premarket.
- Libor eases, again. Three month Libor slid 6 BPs to 2.24% - the lowest since Nov. 2004 and the 21st consecutive decline. Overnight lending was up 2 BPs to 0.35%, still 0.65% lower than the fed funds target rate of 1%.
Earnings: Monday Before Open
- AIG (AIG): Q3 EPS of -$3.42 misses by $2.52. Includes more than $8B in writedowns. "Reported earnings are not indicative of the underlying core earnings power of our insurance businesses, which remain solidly capitalized," AIG says. Shares +28.3%. (PR)
- Clear Channel Outdoor (CCO): Q3 EPS of $0.06 misses by $0.07. Revenue of $813M (-0.5%) vs. $838M. (PR)
- DISH Network (DISH): Q3 EPS of $0.20 vs. consensus of $0.58. Revenue of $2.94B (+5.4%) in-line. (PR)
- Frontier Communications (FTR): Q3 EPS of $0.15 misses by $0.01. Revenue of $558M (-3.1%) in-line. (PR)
- HSBC (HBC): Says Q3 profits was ahead of 2007, with Asia growth the key driver. Takes a $4.2B impairment charge on its U.S. business. Tier-1 capital ratio rises to 8.9% from 8.8% in June. Shares -0.3% in London. (DJ)
- Nortel (NT): Q3 EPS of -$0.30 in-line. Revenue of $2.32B (-14.3%) in-line. Sees full-year revenue and operating margin at the low end of previously announced ranges. Shares -3.3% in Frankfurt. (PR)
- Southern Union (SUG): Q3 EPS of $0.40 beats by $0.07. Revenue of $657M (+25.1%) vs. $618M. Shares (PR)
Today's Markets
- Asia markets were broadly higher, led by China. Nikkei +5.81% to 9,081. Hang Seng +3.52% to 14,745. Shanghai +7.27% to 1,875. BSE Sensex +5.74% to 10,536.
- In Europe, bourses are trading up at midday. London +2.8%. Paris +3.4%. Frankfurt +3.3%.
- U.S. futures indicate a higher open Monday. Dow +1.6% to 9137. S&P +1.8% to 953.50. Nasdaq +2%.
- Crude +5.44% to $64.34. Gold +2.57% to $753.
U.S. Lost 240,000 Jobs in October as the Financial Crisis Worsened, Unemployment Rate Spiked to 6.5%
- Payrolls declined by -240,000 in Oct after falling 284,000 in Sep (biggest 2-month decline since 2001); Employment down by 1.2 million ytd with over half of the decrease in just last 3 months as firms were hit by liquidity crunch; total 10 mn now unemployed; households survey: Employment down by -297,000; ADP: Private employment down -157,000
- Unemployment rate rose from 6.1% to 6.5% (highest since 1994); Long-term unemployment rate (marginally attached, discouraged, part-time for economic reasons workers) rose to 11.8% as hiring and rehiring are under freeze
China's $586 Billion Plan to Counter Crisis Drives Up Stocks, Metals, Oil China, the biggest contributor to world growth, unveiled a 4 trillion yuan ($586 billion) plan to sustain its economy, spurring gains in stocks, metals and oil.
Japan Machine Orders Have Biggest Quarterly Drop in Decade as Exports Slow Japanese machinery orders tumbled 10.4 percent last quarter, matching the biggest drop on record, as manufacturers cut investment plans in anticipation the global slowdown will stifle overseas demand.
G-20 Calls for Interest-Rate Cuts, More Spending to Stem Financial Crisis The Group of 20 nations is prepared to act ``urgently'' to bolster growth and called on governments to cut interest rates and raise spending as the world's leading industrialized economies battle the threat of a recession.
Italian, French Industrial Output Falls as Likely Recession Hits Car Sales Industrial production in France and Italy fell in September as signs that both economies are already in recession slammed their auto industries.
Summit Pits Bush Against Sarkozy-Merkel Push for Global Markets Regulation This week's economic-crisis summit will pit U.S. and Canadian support for free markets against European demands for greater state control.
Fitch Downgrades Hungary, Emerging Economies as Worldwide Slowdown Spreads Fitch Ratings cut its debt ratings for four Eastern European countries and downgraded the outlook for Russia, South Korea and Mexico as the global slowdown spreads to emerging economies.
Erdogan's IMF Aversion, Spending Plans Raise Qualms Among Business Backers Turkish Prime Minister Recep Tayyip Erdogan says his $700 billion economy doesn't need more help from the International Monetary Fund to fight the credit crisis. Yes it does, business leaders say.
Brown Seeks `Global Consensus' on Tax, Spending Policies at G-20 Summit Prime Minister Gordon Brown will call on governments around the world to coordinate tax and spending policies to shore up a slowing world economy, his strongest signal yet that he will cut tax in the U.K.
Australia Central Bank Signals It Is Ready to Cut Key Interest Rate Again Australia's central bank signaled it's prepared to add to the most aggressive interest-rate cuts in 17 years as it tries to ensure the economy sidesteps a looming global recession.
U.K. October Factory Prices Decline More Than Expected: Table of the Day Following is a summary of U.K. producer prices for October from the Office for National Statistics in London:
Japan Machine Orders Have Biggest Quarterly Drop in Decade as Exports Slow Japanese machinery orders tumbled 10.4 percent last quarter, matching the biggest drop on record, as manufacturers cut investment plans in anticipation the global slowdown will stifle overseas demand.
G-20 Calls for Interest-Rate Cuts, More Spending to Stem Financial Crisis The Group of 20 nations is prepared to act ``urgently'' to bolster growth and called on governments to cut interest rates and raise spending as the world's leading industrialized economies battle the threat of a recession.
Italian, French Industrial Output Falls as Likely Recession Hits Car Sales Industrial production in France and Italy fell in September as signs that both economies are already in recession slammed their auto industries.
Summit Pits Bush Against Sarkozy-Merkel Push for Global Markets Regulation This week's economic-crisis summit will pit U.S. and Canadian support for free markets against European demands for greater state control.
Fitch Downgrades Hungary, Emerging Economies as Worldwide Slowdown Spreads Fitch Ratings cut its debt ratings for four Eastern European countries and downgraded the outlook for Russia, South Korea and Mexico as the global slowdown spreads to emerging economies.
Erdogan's IMF Aversion, Spending Plans Raise Qualms Among Business Backers Turkish Prime Minister Recep Tayyip Erdogan says his $700 billion economy doesn't need more help from the International Monetary Fund to fight the credit crisis. Yes it does, business leaders say.
Brown Seeks `Global Consensus' on Tax, Spending Policies at G-20 Summit Prime Minister Gordon Brown will call on governments around the world to coordinate tax and spending policies to shore up a slowing world economy, his strongest signal yet that he will cut tax in the U.K.
Australia Central Bank Signals It Is Ready to Cut Key Interest Rate Again Australia's central bank signaled it's prepared to add to the most aggressive interest-rate cuts in 17 years as it tries to ensure the economy sidesteps a looming global recession.
U.K. October Factory Prices Decline More Than Expected: Table of the Day Following is a summary of U.K. producer prices for October from the Office for National Statistics in London:
Fed's Lockhart Sees Downturn Extending Through June 2009, Inflation Waning The downturn in the U.S. economy will probably persist through the first half of 2009, while continuing to damp inflation, said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta.
Fed Commercial Paper Holdings Climb to $244.6 Billion, Pushing Down Yields The Federal Reserve expanded its holdings of commercial paper issued by U.S. corporations by $98.9 billion, boosting its share of the $1.6 trillion market in short-term debt to 15 percent.
Bernanke Tack Toward Democrats May Seal Larger Government Role Under Obama Federal Reserve Chairman Ben S. Bernanke's tack toward Democratic positions before the election may help ensure the government has a bigger role in the economy after Barack Obama becomes president.
Fed Commercial Paper Holdings Climb to $244.6 Billion, Pushing Down Yields The Federal Reserve expanded its holdings of commercial paper issued by U.S. corporations by $98.9 billion, boosting its share of the $1.6 trillion market in short-term debt to 15 percent.
Bernanke Tack Toward Democrats May Seal Larger Government Role Under Obama Federal Reserve Chairman Ben S. Bernanke's tack toward Democratic positions before the election may help ensure the government has a bigger role in the economy after Barack Obama becomes president.
Don't Repeat the Errors of the New Deal - Amity Shlaes, New York Post
Obama Can Be FDR, Not Carter - David Blake, Financial Times
Why the Democrats Could Easily Fail - Bill Fleckenstein, MSNMoney
Economic Advice for Obama: Blame Bush - W. Rees-Mogg, Times of London
How About a New Bretton Woods? - Joseph Calhoun, RealClearMarkets
The Specter of Deflation - Robert Samuelson, Washington Post
Canada Is a Relative Bastion of Free Markets - Jacqueline Thorpe, Nat'l Post
Automakers Need More Than a Bailout - Paul Ingrassia , Wall Street Journal
Pessimism and the Inevitable Market Rebound - Ken Fisher, Forbes
Free Markets Need Mark-to-Market - Eric Smith, RealClearMarkets
The New Compensation Reality on Wall Street - Michael Lewis, Bloomberg
How Merrill Faltered and Fell - Gretchen Morgenson, New York Times
Obama Can Be FDR, Not Carter - David Blake, Financial Times
Why the Democrats Could Easily Fail - Bill Fleckenstein, MSNMoney
Economic Advice for Obama: Blame Bush - W. Rees-Mogg, Times of London
How About a New Bretton Woods? - Joseph Calhoun, RealClearMarkets
The Specter of Deflation - Robert Samuelson, Washington Post
Canada Is a Relative Bastion of Free Markets - Jacqueline Thorpe, Nat'l Post
Automakers Need More Than a Bailout - Paul Ingrassia , Wall Street Journal
Pessimism and the Inevitable Market Rebound - Ken Fisher, Forbes
Free Markets Need Mark-to-Market - Eric Smith, RealClearMarkets
The New Compensation Reality on Wall Street - Michael Lewis, Bloomberg
How Merrill Faltered and Fell - Gretchen Morgenson, New York Times
Do Depressions Have a Silver Lining? - Becker-Posner Blog
Welcome to Wall Street, President Obama - Prieur du Plessis, Postcards
The Wealth Effects of House Price Declines - Felix Salmon, Market Movers
The New and Improved Fed Funds Market - James Hamilton, Econbrowser
Reading Robert Samuelson and Loving It - D. Warsh, Economic Principals
Defusing the Option-ARM Time Bomb - Ross Kaplan, City Lakes Blog
Welcome to Wall Street, President Obama - Prieur du Plessis, Postcards
The Wealth Effects of House Price Declines - Felix Salmon, Market Movers
The New and Improved Fed Funds Market - James Hamilton, Econbrowser
Reading Robert Samuelson and Loving It - D. Warsh, Economic Principals
Defusing the Option-ARM Time Bomb - Ross Kaplan, City Lakes Blog
US Market
- Be Very Afraid of Deflation by Alex Filonov
- Wall Street Breakfast: Must-Know News by SA Editor Eli Hoffmann
- CBRE: All That Real Estate Money Out There Waiting... by SA Editor Judy Weil
- Global Stock Markets: Valuations Improving by Prieur du Plessis
- Fed Watch: From Bad to Worse? by Tim Duy
- REITs: Is Now the Time to Buy? by Zacks.com
- Ten Highest Yielding Quarterly Dividend Stocks by Stockerblog
- Parsing the Dismal October Employment Report by Zacks.com
- U.S. Economy: There Are No Problems, Only Solutions by James Quinn
- Tough Out There for Both Bulls and Bears by Jeff Pierce
- Markets Are at a Crossroads by Zach Bass
- Consumer Spending and Recession by Stephen Hsu
- 'Yes We Can!' (As Long As We're Prepared) by Kip Herriage
- Lessons from the Great Depression and One of the Biggest Tax Hikes in U.S. History by Mark J. Perry
- Fed Funds Become a Victim of Unintended Consequences by Zubin Jelveh
- Recent Employment Data Didn't Capture the Negative Impacts by Jeff Miller
- Sentiment Overview: Bullishness Is on the Rise, Insiders Are Buying by Babak
- Stocks vs. Bonds: An Update for the Current Market by David Merkel
- Dividend Stocks: 6 More Increases in the News by Dobromir Stoyanov
- S&P 500: Out with Technology, In with Financial by David I. Templeton
- Nassim Taleb: Renegade Trader with Renegade Ideas - That Work by Guy Bennett
- Coming Soon: The Zombie Condos That Ate New York by Jeffrey Bernstein
- Catastrophe Bonds and the Problem of Investor's Choice by Stephen Hsu
- Ten Reasons to Invest in Florida by Stockerblog
- U.S. Weekly Leading Index Now at Six Decade Low by Steven Hansen
- Welcome to Wall Street, Barack Obama by Prieur du Plessis
- Insights from a Derivatives Salesman by Roger Ehrenberg
- October's Worst Stock Performers by eChristian Investing
- U.S. Future Inflation Gauge Tumbles to 81-Month Low by Steven Hansen
- Bear Markets: Look Forward, Not Back When Investing by David I. Templeton
- Ending the Recession Debate: We're Already in One by Andy Sutton
- The Current Economic Crisis: Hell, Meet Handbasket by Doug Hornig
- 16 Recently Pounded Stocks That Are Still Up for the Year by Alan Brochstein
- The Long Case for Autos by Jack Miller
- Be Very Afraid of Deflation by Alex Filonov
- Fed Watch: From Bad to Worse? by Tim Duy
- Parsing the Dismal October Employment Report by Zacks.com
- U.S. Economy: There Are No Problems, Only Solutions by James Quinn
- Consumer Spending and Recession by Stephen Hsu
- 'Yes We Can!' (As Long As We're Prepared) by Kip Herriage
- Recent Employment Data Didn't Capture the Negative Impacts by Jeff Miller
- U.S. Weekly Leading Index Now at Six Decade Low by Steven Hansen
- Welcome to Wall Street, Barack Obama by Prieur du Plessis
- October's Worst Stock Performers by eChristian Investing
- U.S. Future Inflation Gauge Tumbles to 81-Month Low by Steven Hansen
- Ending the Recession Debate: We're Already in One by Andy Sutton
- The Current Economic Crisis: Hell, Meet Handbasket by Doug Hornig
- The Long Case for Autos by Jack Miller
German Investor Confidence Unexpectedly Climbs After Bailouts, Rate Cuts German investor confidence unexpectedly rose in November as governments and central banks stepped up efforts to fight the turmoil on financial markets.
China's Exports Cool as Government Pledges Spending to Stimulate Economy China reported the slowest export growth in four months, two days after the government pledged an unprecedented $586 billion of spending to sustain the expansion of the world's fourth-largest economy.
U.K. Home Sales Drop to Lowest in at Least 30 Years as House Prices Fall U.K. home sales declined to the lowest level in at least three decades and the lending freeze pushed down prices for a 15th month, the Royal Institution of Chartered Surveyors said.
China's Inflation Slows, Leaving Room for Further Interest-Rate Reductions China's inflation cooled to the slowest pace in 17 months, making further interest-rate cuts more likely as the world's fourth-biggest economy loses steam.
ECB's Quaden Sees Forecast Revisions Paving Way for Lower Interest Rates European Central Bank council member Guy Quaden said he expects the bank to reduce its forecasts for economic growth and inflation ``substantially'' next month, paving the way for lower interest rates.
Slovakia Cuts Interest Rates, Coming Into Line With ECB Before Euro Entry The Slovak central bank unexpectedly cut its benchmark interest rate to 3.25 percent, bringing it to the level of the European Central Bank as the eastern European nation prepares to adopt the euro at the beginning of next year.
Fannie, Freddie Said to Plan Mortgage Program Lowering Homeowner Payments Fannie Mae, Freddie Mac and housing industry officials plan a new mortgage modification program designed to cut payments for hundreds of thousands of homeowners facing foreclosure, according to people briefed on the matter.
China's `Huge' Stimulus May Help World Economy Along With Domestic Growth China's massive effort to shore up its domestic economy may also do the world a favor.
India Needs to Lower Interest Rates Further to Bolster Economy, Jalan Says India needs to cut interest rates further as two reductions in less than a month haven't been enough to make loans affordable for companies and consumers, a former central bank governor said.
Bonuses for Bailed-Out Wall Street Should Go to Zero, U.S. Taxpayers Say U.S. taxpayers, who feel they own a stake in Wall Street after funding a $700 billion bailout for the industry, don't want executives' bonuses reduced. They want them eliminated.
German November Investor Confidence Unexpectedly Climbs: Table of the Day Following is the summary of the November economic sentiment survey from Germany's ZEW Institute in Mannheim.
China's Exports Cool as Government Pledges Spending to Stimulate Economy China reported the slowest export growth in four months, two days after the government pledged an unprecedented $586 billion of spending to sustain the expansion of the world's fourth-largest economy.
U.K. Home Sales Drop to Lowest in at Least 30 Years as House Prices Fall U.K. home sales declined to the lowest level in at least three decades and the lending freeze pushed down prices for a 15th month, the Royal Institution of Chartered Surveyors said.
China's Inflation Slows, Leaving Room for Further Interest-Rate Reductions China's inflation cooled to the slowest pace in 17 months, making further interest-rate cuts more likely as the world's fourth-biggest economy loses steam.
ECB's Quaden Sees Forecast Revisions Paving Way for Lower Interest Rates European Central Bank council member Guy Quaden said he expects the bank to reduce its forecasts for economic growth and inflation ``substantially'' next month, paving the way for lower interest rates.
Slovakia Cuts Interest Rates, Coming Into Line With ECB Before Euro Entry The Slovak central bank unexpectedly cut its benchmark interest rate to 3.25 percent, bringing it to the level of the European Central Bank as the eastern European nation prepares to adopt the euro at the beginning of next year.
Fannie, Freddie Said to Plan Mortgage Program Lowering Homeowner Payments Fannie Mae, Freddie Mac and housing industry officials plan a new mortgage modification program designed to cut payments for hundreds of thousands of homeowners facing foreclosure, according to people briefed on the matter.
China's `Huge' Stimulus May Help World Economy Along With Domestic Growth China's massive effort to shore up its domestic economy may also do the world a favor.
India Needs to Lower Interest Rates Further to Bolster Economy, Jalan Says India needs to cut interest rates further as two reductions in less than a month haven't been enough to make loans affordable for companies and consumers, a former central bank governor said.
Bonuses for Bailed-Out Wall Street Should Go to Zero, U.S. Taxpayers Say U.S. taxpayers, who feel they own a stake in Wall Street after funding a $700 billion bailout for the industry, don't want executives' bonuses reduced. They want them eliminated.
German November Investor Confidence Unexpectedly Climbs: Table of the Day Following is the summary of the November economic sentiment survey from Germany's ZEW Institute in Mannheim.
Paulson's Revised AIG Terms Begin Government Transfusion to `Zombie' Firms The revised bailout of American International Group Inc. marks a new phase in the government's effort to shore up financial markets: It's the first time cash from the rescue fund Congress created last month has been committed to a failing company.
American Express Declines After Gaining Fed Approval to Convert to a Bank American Express Co., the credit-card company most dependent on capital markets for fundraising, fell 6 percent in New York trading on concern converting to a bank to gain deposits won't protect it from rising credit losses.
Fed Says Overnight Securities Excluded From Support for Money-Market Funds The Federal Reserve said a $540 billion program to support money-market mutual funds will begin in about two weeks and will exclude securities with remaining maturities of less than seven days.
American Express Declines After Gaining Fed Approval to Convert to a Bank American Express Co., the credit-card company most dependent on capital markets for fundraising, fell 6 percent in New York trading on concern converting to a bank to gain deposits won't protect it from rising credit losses.
Fed Says Overnight Securities Excluded From Support for Money-Market Funds The Federal Reserve said a $540 billion program to support money-market mutual funds will begin in about two weeks and will exclude securities with remaining maturities of less than seven days.
Wall Street Breakfast: Must-Know News
by SA Editor Eli Hoffmann
- Europe's funding risks. Over the next three years, around $2.1T of European corporate and bank debt will mature, creating 'substantial refinancing risk,' according to Standard & Poor's. After the collapse of Lehman Brothers, new bond issues are virtually frozen, leaving companies in a difficult position when it comes times to raise new debt to pay off maturing bonds. In Europe specifically, S&P reports, funding pressures have 'escalated sharply since September as stress in the global financial system accelerated.' Euro-denominated senior bank debt is being offered at spreads close to 225 basis points over swaps, nearly 10 times wider than pre-August 2007 levels. Through the end of 2008 alone, $206B of European debt will mature, most of it in the financial sector.
- "Good morning, this is Bank AmEx." American Express (AXP) is now a bank-holding company, a move it hopes will help it unlock the government's $700B bailout fund. It joins recently converted Goldman Sachs (GS) and Morgan Stanley (MS). "Everybody wants to be a bank because everybody wants access to government funding," Calyon's Craig Maurer said. "It's common sense," a person familiar with AmEx's strategy explained. "How could you possibly pass up the flexibility to be able to access these programs...?" Just last month, AmEx said it had ample funds to function for at least a year - even if it were shut out of the credit markets. "Given the continued volatility in the financial markets, we want to be best positioned to take advantage of the various programs the federal government has introduced or may introduce to support U.S. financial institutions," CEO Kenneth Chenault said (PR).
- Buffett, Ross eye Dexia's bond unit. The insurance businesses of investors Warren Buffett (BRK.A) and Wilbur Ross (AGO) are close to buying all or part of the U.S. bond insurance unit of Dexia, Financial Security Assurance, sources tell Belgian business daily De Tijd. Dexia received a €6.4B bailout from French, Belgian and Luxembourg governments in September. FSA posted an H1 net loss of $752M, and its AAA credit rating is under threat.
- Money market bailout postponed. The Fed has delayed the launch of its money-market rescue program, MMIFF, which is supposed to help funds struggling to meet redemption requests by buying their short-term debt, until Nov. 24. "The reason for the delay appears to be the Fed's preoccupation with other bailouts and wrangling over how the money-fund program will be set up," WSJ says. One issue is who's on the hook if some of the debt goes bad. Another is the possibility of bringing securities lenders under the fund's umbrella in coming weeks. In the meantime, money-market pressure has eased and money has begun trickling back into the industry, which may mean the Fed will get by with substantially less than the $540B originally budgeted.
- Citigroup launches $20B mortgage modification program. Citigroup (C) offered to modify the terms of as much as $20B in residential mortgages for borrowers who are current on their loan payments but at risk of falling behind (PR). Citi will reach out to 500,000 homeowners, of whom about 130,000 will see a reduction in their monthly loan payments. To qualify, mortgage-related payments must exceed 40% of their income. Other banks that have launched loan-modification programs include JP Morgan Chase (JPM) and Bank of America (BAC) - suggesting banks may be better off with mass modifications rather than foreclosures and/or case-by-case negotiations. None, though, has found a way to restructure mortgages bundled into securities and sold to investors, which account for the majority of recent mortgages issued.
- More homeowner help on the way. Sources say leading U.S. housing agencies will today announce efforts to modify loan terms for troubled borrowers in an effort to reverse a rising tide of foreclosures. HUD will make it easier for borrowers to qualify for a loan guarantee under its 'Hope for Homeowners' program that got a slow start in October but promises to refinance as much as $300B in failing loans.
- StatoilHydro buys into U.S. shale. Chesapeake Energy (CHK) agrees to sell StatoilHydro (STO) a 32.5% stake in its U.S.-based Marcellus shale acreage for $1.25B. Statoil will also pay $2.13B to fund 75% of the drilling and other completion expenses on those assets from 2009 to 2012. Norway's largest oil and gas producer, Statoil is turning to unconventional sources to increase reserves as production drops at maturing fields in the North Sea.
- Vodafone trims outlook. Vodafone (VOD) cut its full-year sales forecast for the second time in four months, to £38.8B ($60.8B) from £39.7B, down from the initial forecast of £39.8B-40.7B. The revised forecast is a setback for the world's largest mobile phone company and for CEO Vittorio Colao who took over in July and promised 'economic challenges won't slow us down.' Vodafone also promised to launch a £1B cost-cutting campaign, while is simultaneously raised its interim dividend by 3.2% 'as the primary reward to shareholders.' Shares +6.2% pre-market.
- Banks won't lend until it's safe to - Kashkari. "Although progress has been made in the last month, our capital markets remain fragile and confidence remains shaky," bailout boss Neel Kashkari said Monday, noting markets need time to stabilize. Addressing complaints the Treasury hasn't gone far enough to insist its capital infusions are use to ease stressed credit markets, Kashkari said this: "As confidence returns to our institutions and our markets, we believe banks will put this capital to use by extending loans to creditworthy businesses and consumers. The last thing we want, however, is to encourage banks to resume the poor lending practices that are the cause of the current economic problems."
- GM loses 1/4 of its market cap. Shares of GM (GM) fell 23% to $3.36 Monday, the lowest since 1946, as concern mounted the automaker could run out of cash after acknowledging in a regulatory filing it could be at risk of violating the terms of some debt convenants if it doesn't steady its deteriorating finances by year-end. Shares were also pressured after several analysts issued negative reports, including Deutsche Bank's Rod Lache who said that failing a government bailout, "we believe that GM's collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers and sectors of the U.S. economy." Sources say a large industrial credit insurer, Euler Hermes, has canceled insurance protection for suppliers of GM and Ford (F) over the past two weeks as the risk increased that the carmakers could fail to pay for deliveries.
- Oil demand keeps shrinking. The International Energy Agency will likely cut its 2009 oil demand forecast again, say former IEA analysts. The agency's report, due out Nov. 13, could slash estimated demand growth to 320K-500K barrels/day from 700K. Last week, the IMF warned of the first simultaneous recession in the U.S., Japan and Europe in more than 60 years. "Given the downward revisions to the IMF data, it is highly likely they will revise demand down," JPMorgan's Lawrence Eagles said.
Earnings: Tuesday Before Open
- Toll Brothers (TOL): FQ4 revenue of $691M, down 41% from a year ago. Backlog of $1.33B , down 54%. Net signed contracts of $267M, down 27%. Cash on hand of $1.63B, up from $1.5B in FQ3. "The preliminary signs of stability we had discussed in early September... were upended by the past month's financial crisis... [driving] home buyer confidence and our traffic and demand down to record lows." (PR)
- Tyco International (TYC): FQ4 EPS of $0.81 beats by $0.08. Revenue of $5.28B (+6.7%) in-line. (PR)
- Vodafone (VOD): FH1 EPS of £7.49 beats by £0.69. Revenue of £19.9B vs. £19.67B. Shares +7.2% in London. (.pdf)
Earnings: Monday After Close
- Bidz.com (BIDZ): Q3 EPS of $0.13 beats by $0.02. Revenue of $55.4M (+38.2%) vs. $55.9M. Sees full-year revenue of $215-225M vs. $240M. Shares -2.1%. (PR)
- Focus Media (FMCN): Q3 EPS of $0.53 in-line. Revenue of $225M (+63.6%) vs. $232M. Sees Q4 EPS of $0.45-0.46 vs. $0.57. Shares -22%. (PR)
- Hill-Rom (HRC): FQ4 EPS of $0.38 misses by $0.16. Revenue of $424M (+14.1%) vs. $416M. (PR)
- KKR Financial (KFN): Q3 EPS of $0.33 misses by $0.08. Revenue of $M in-line. Suspends dividend to conserve capital. (PR)
- Las Vegas Sands (LVS): Q3 EPS of $0.02 misses by $0.09. Revenue of $1.1B (+67.2%) vs. $1.16B. Shares +6.7%. (PR)
- Lions Gate Entertainment (LGF): FQ2 EPS of -$0.41 misses by $0.25. Revenue of $381M (+8.2%) in-line. Shares -4.1%. (PR)
- Liz Claiborne (LIZ): Q3 EPS of $0.39 beats by $0.02. Revenue of $1.01B (-15.9%) vs. $1.1B. (PR)
- Rockwell Automation (ROK): FQ4 EPS of $1.08 beats by $0.10. Revenue of $1.48B (+8.3%) in-line. (PR)
- Sirius XM Radio (SIRI): Q3 EPS of -$0.09 in-line. Revenue of $613M (+15.8%) vs. $587M. (PR)
- Starbucks (SBUX): FQ4 EPS of $0.10 misses by $0.03. Revenue of $2.52B (+3%) vs. $2.58B. Operating margin contracted 630 BPs to 4.9% from 11.2% due to lower revenue. Shares -3.4%. (PR)
- Virgin Mobile (VM): Q3 EPS of $0.08 beats by $0.04. Revenue of $323M (+1.2%) vs. $315M. (PR)
Today's Markets
- Asia markets failed to sustain Monday's gains as the effects of China's headline-grabbing $586B stimulus plan fade. Nikkei -3% to 8,809. Hang Seng -4.77% to 14,041. Shanghai -1.66% to 1,844. BSE Sensex -6.61% to 9,840.
- Europe is lower at midday. London -2.3%. Paris -2.8%. Frankfurt -2.4%.
- U.S. futures indicate a weak open. Dow -1.82% to 8727. S&P -1.9%. Nasdaq -1.8%. Oil -3.3% to $60.25.
US Market
- Wall Street Breakfast: Must-Know News by SA Editor Eli Hoffmann
- Wall Street Breakfast: Must-Know News by SA Editor Eli Hoffmann
- This Market Is One of Opportunity by Ockham Research
- Great Expectations for Obama, But Not the Markets by Tony Daltorio
- Stuff Stocks Still Too Expensive by Vitaliy Katsenelson
- Are We in Deflation or Inflation? by Gary Tanashian
- The Magic Formula's Top 11 Dividend Stocks by Steve Alexander
- My U.S. Infrastructure and Employment Plan by William Ellard
- Bloomberg Picks a Fight With the Fed on Disclosure by The Prudent Investor
- Going Long Printing Presses and Taxes by Keith Robison
- Five Factors That Can Determine the Fate of the U.S. Dollar by Simit Patel
- What's Happening to the Fed Funds? by Zubin Jelveh
- The Economic Crisis and Its Aftermath: A Detailed Analysis by Dear John Thain
- The End of the Economy As We Know It? by SW Richmond
- All Hope Isn't Lost for the Concept of De-Coupling by Tim Iacono
- Jeffrey Saut: Hedging Positions in Unprecedented Times by Jeffrey Saut
- Navigating the Foreclosed Property Market by Tim Iacono
- The Case for Derivatives by Roger Ehrenberg
- With Numbers Like These, Is Bullishness Possible? by Toro
- Has the Microcap ETF Bottomed? by Microcap Speculator
- Stocks at Fair Value: Will They Overshoot Now? by Larry MacDonald
- Tuesday Outlook: Shills Needed by David Fry
- The Orchard Enterprises Inc. Q3 2008 Earnings Call Transcript
- Early Stimulus Wears Off by Chris Krasowski
- S&P 500 Dividend Aristocrats and Your Portfolio by Avi Morris
- Where Are the TIPS Strips? by Felix Salmon
- Kairos: Timing Your Investments in this Market by David Gordon
- Expect More Bailout Borrowing; But Who Will Do the Lending? by Diane Lim Rogers
- Do Stocks That Cut Dividends Perform Worse Than the Market? by Dobromir Stoyanov
- Perception: Top Socially Responsible Companies Include Google, Campbell, J&J by Marketing Charts
- Fed Balks at Releasing Toxic Waste Details by Tim Iacono
- The Brave New World of Federal Funds by Mark Sunshine
- An Opportunity in USD/CAD? by Kathy Lien
- Acadia Realty Trust Q3 2008 Earnings Call Transcript
- Monday Options Update: CAT, HMY, GE, ACAS, BWLD, GM & GS by Andrew Wilkinson
- Against Summers by Felix Salmon
- The Wonderful World of Dividend Yields by James Picerno
- President-Elect Obama and the U.S. Dollar by Joseph Trevisani
- The Wealth Effect of House Price Declines by Felix Salmon
- Monday Market Roundup: Bad News for Circuit City and GM by Jordan Kahn
- Options Trader: Monday Outlook by Philip Davis
- U.S. Is Playing Financial Dominoes by David Merkel
- Bond Expert: Monday Outlook by John Jansen
- Monday Outlook: Lowering Expectations by The Mole
- Monday, November 10: Week in Review by Jonathan Cavuoto
- Great Expectations for Obama, But Not the Markets by Tony Daltorio
- Are We in Deflation or Inflation? by Gary Tanashian
- My U.S. Infrastructure and Employment Plan by William Ellard
- Going Long Printing Presses and Taxes by Keith Robison
- Five Factors That Can Determine the Fate of the U.S. Dollar by Simit Patel
- What's Happening to the Fed Funds? by Zubin Jelveh
- The Economic Crisis and Its Aftermath: A Detailed Analysis by Dear John Thain
- The End of the Economy As We Know It? by SW Richmond
- 'Group of 20' Sees Need for Further Rate Cuts by TheLFB
- Jeffrey Saut: Hedging Positions in Unprecedented Times by Jeffrey Saut
- Expect More Bailout Borrowing; But Who Will Do the Lending? by Diane Lim Rogers
- Fed Balks at Releasing Toxic Waste Details by Tim Iacono
- President-Elect Obama and the U.S. Dollar by Joseph Trevisani
- The Wealth Effect of House Price Declines by Felix Salmon
- China Stimulus Package Boosts Commodities, Hurts Our Wallets by Bespoke Investment Group
- U.S. Is Playing Financial Dominoes by David Merkel
11/11/2008
End of the Road
- New York Post 11/11/2008
Fed Covers Up Financial Crisis
- Canada Free Press 11/11/2008
AIG Has Become Money Pit for the U.S. Government
- International Herald Tribune 11/11/2008
Fannie, AIG Struggling After Federal Takeover
- Washington Post 11/11/2008
Fannie Says $100B Pledge May Not Be Enough
- Bloomberg 11/11/2008
A Town Drowns in Debt as Home Values Plunge
- New York Times 11/11/2008
Big Banks Step Up Efforts to Modify Mortgages
- Chicago Tribune 11/11/2008
U.S. to Push Banks to Step Up Lending
- Washington Post 11/11/2008
Harvard Prepares for Financial Strains
- Wall Street Journal 11/11/2008
Students Forced to Borrow More for College
- Los Angeles Times 11/11/2008
GM's Skid Quickens as Crunch Raises Threat
- Bloomberg 11/11/2008
Starbucks Profit Drops 97% on Store Closing Costs
- USA Today
End of the Road
- New York Post 11/11/2008
Fed Covers Up Financial Crisis
- Canada Free Press 11/11/2008
AIG Has Become Money Pit for the U.S. Government
- International Herald Tribune 11/11/2008
Fannie, AIG Struggling After Federal Takeover
- Washington Post 11/11/2008
Fannie Says $100B Pledge May Not Be Enough
- Bloomberg 11/11/2008
A Town Drowns in Debt as Home Values Plunge
- New York Times 11/11/2008
Big Banks Step Up Efforts to Modify Mortgages
- Chicago Tribune 11/11/2008
U.S. to Push Banks to Step Up Lending
- Washington Post 11/11/2008
Harvard Prepares for Financial Strains
- Wall Street Journal 11/11/2008
Students Forced to Borrow More for College
- Los Angeles Times 11/11/2008
GM's Skid Quickens as Crunch Raises Threat
- Bloomberg 11/11/2008
Starbucks Profit Drops 97% on Store Closing Costs
- USA Today
Citi, Fannie, Freddie to Halt Some Foreclosures
- Bloomberg
- 11/11/2008 10:08 AM
- WSJ ($)
- 11/11/2008 05:35 AM
- Washington Post
- 11/11/2008 05:19 AM
- NY Times
- 11/11/2008 05:05 AM
- Bloomberg
- 11/11/2008 07:32 AM
- Bozeman Chronicle
- 11/11/2008 09:03 AM
- WSJ ($)
- 11/11/2008 05:36 AM
- LA Times
- 11/11/2008 05:28 AM
- NY Times
- 11/11/2008 05:05 AM
Goldman Sachs urged bets against California bonds it helped sell
- LA Times
- 11/11/2008 05:26 AM
- WSJ ($)
- 11/11/2008 05:42 AM
- LA Times
- 11/11/2008 05:25 AM
- WSJ ($)
- 11/10/2008 09:39 PM
- Bloomberg
- 11/11/2008 07:34 AM
- WSJ ($)
- 11/10/2008 09:40 PM
Expanded $150 bn Bail-Out Package for AIG; Government Takes Over Toxic CDS and Mortgage-Backed Portfolios
- Nov 9: AIG's new deal will increase government aid to the stricken insurer from $123bn to $150bn. Under the new plan between the insurer, New York Fed and U.S. Treasury, the government will swap the $85bn two-year loan for a $60bn five-year loan at a lower interest rate. The government will also use TARP to buy some $40bn in preferred shares in AIG (10% interest rate), and purchase $50bn of the company's distressed assets
IMF's Lending Programs: Taking on a Key Role in Resolving the Crisis?
- The IMF has been more and more challenged by its ability to contribute to solve the current global financial meltdown after years of low demand for its assistance as buoyant capital markets and rising commodity prices allowed many developing nations to raise funds on their own, at the same time that IMF's own budget worsened
- The institution is providing funds through two different ways. A less conditional borrowing facility (SLF) in which countries can borrow up to 5 times their quota, with a three month duration, and borrowing for countries in need of longer term programs, which will likely be subject to more specific conditions.
Wall Street Breakfast: Must-Know News
by SA Editor Rachael Granby
- Little progress on Big Three bailout. House Speaker Nancy Pelosi, arguing General Motors (GM) is too big to fail, urges 'immediate action' to help automakers, but faces resistant Republicans and a noncommittal White House. Pelosi wants to include automakers in TARP, but without bipartisan support, the measure is unlikely to pass until a new congressional session begins in January. The Treasury too has been hesitant to aid automakers, concerned that expanding a rescue to include non-financial companies would raise expectations of assistance from other industries facing a slowdown. Meanwhile, General Motors' (GM) shares sank to their lowest levels in 65 years as the company warned it may run out of operating cash by the end of the year.
- Help for homeowners. The Federal Housing Finance Agency, the regulator for Fannie Mae (FNM) and Freddie Mac (FRE), unveiled plans yesterday to stem foreclosures by easing mortgage payments for potentially over 400,000 homeowners. Homeowners spending more than 38% of their income on mortgage payments and delinquent by 90 days or more could be eligible to have their mortgage rate cut, the life of their loans extended or their principal reduced. FDIC's Sheila Bair said the measure is 'a step in the right direction, but falls short of what is needed,' arguing the Fannie/Freddie focus is too narrow and ignores the 60% of seriously delinquent mortgages held by Wall Street firms and other investors. MBA Chief Economist Jay Brinkmann says a 50% success rate in the loan modification program would be 'a good result.'
- Banks win with AIG's new terms. Many banks that had bought protection from AIG (AIG) on mortgage-backed securities will be able to recoup their investments under AIG's revised rescue which will see a new facility buy around $70B of these securities. Companies that had previously sought and received collateral from AIG (including GS, MER, UBS, DB), much of which came when AIG received government funds in September, will be able to keep their collateral. Banks which participate in selling securities to the new facility will be compensated for the full, or par, value. "It's like a home run for some of the banks," says Carlos Mendez of ICP Capital. "They bought insurance from a company that ran into trouble and still managed to get all, or most, of their money back."
- AmEx looks to TARP. Sources say American Express (AXP), which just this week received approval to become a bank holding company, is requesting $3.5B in federal aid under TARP. The card issuer has not been directly impacted by the housing crisis, but faces slowing consumer spending and rising defaults. The TARP funds would allow AmEx greater flexibility in funding its operations while it deals with the market downturn. AmEx has not announced its application for aid, and federal regulators won't disclose which companies have been approved or denied for assistance.
- Changing TARP on the fly. The Treasury is considering adding a private enterprise element to TARP, say sources familiar with the matter, which would require firms to raise private capital in order to qualify for public assistance. The condition would probably not apply to the existing $250B capital repurchase program, but may become relevant for future capital investments. The same sources said the Treasury is unlikely to conduct auctions to buy troubled assets, as originally intended under TARP, and instead will continue to inject capital directly into the financial sector. These modifications could be officially announced as early as today.
- Fed wants clearinghouse role. As pressure mounts to build a central credit-default swaps clearinghouse, the Federal Reserve is angling to become its lead regulator. Sources involved in private talks between the Fed, the S.E.C., the Treasury and the Commodity Futures Trading Commission said the agencies discussed a memorandum that would outline clearinghouse oversight, and a regulatory structure announcement could come by the end of the week. CME Group (CME), which is competing with Intercontinental Exchange of Atlanta (ICE) and NYSE Euronext (NYX) to create a system, says it is open to Fed oversight.
- Execs want more regulation and less. A survey released earlier today shows over 75% of company executives believe credit-rating agencies must be regulated. The survey also showed support for lifting global bans on short-selling, as well as for beefing up supervision of hedge funds and structured-finance products. Respondents were divided on the need for a global financial regulator. The survey was timed for this weekend's G-20 summit in the hopes that global leaders will consider the opinions of business executives before enacting broad regulations.
- Microsoft's Verizon grab. Microsoft (MSFT) is nearing a deal to become the default search provider for Verizon Wireless' (VZ) mobile phones. A successful deal would be a slap in the face to rival Google (GOOG), which has been in negotiations with Verizon for months. Under its current offer, Microsoft would share ad revenue with Verizon and would guarantee payments of $550-$650M over five years, roughly twice Google's offer. Verizon is still in discussions with Google, but sources say Microsoft's offer is favored.
- If at first you don't succeed, try a hostile bid. After its $6.1B takeover bid was rejected earlier this week, Exelon (EXC) launches a hostile bid for NRG Energy (NRG). Exelon will take its offer directly to shareholders, will file a lawsuit against NRG and its directors and will try to nominate its own directors to the board. NRG had rejected the original bid after arguing it undervalued the company and pointing to Exelon's recent credit downgrade, but had left the door open to a higher bid which would include debt refinancing. NRG advised shareholders not to take any action while it reviews the proposed exchange offer.
- Hedge funds get clobbered. Hedge funds lost an average 5.52% in October, the fifth consecutive down month. The average hedge fund has lost 15.3% in 2008 so far, putting the industry on track for its worst year ever. October was an especially bad month as hedge funds were forced to sell assets at sharply reduced prices to cover redemption requests. Many investors are shocked by the size of the losses after being promised by money managers that their funds could make money in any market.
- Recession metrics. A survey of economists says the current U.S. slowdown will be the longest in three decades, and the drop in consumer spending could be the worst ever. The respondents expect the economy to shrink an annualized 3% in Q4 after 'the economy fell off a cliff in October' and for growth to decline at a 1.5% pace in Q1 2009. The odds of an official contraction occurring within the next twelve months rose to 100%.
- Confidence rises. Consumer confidence roared back in November. The IBD/TIPP Economic Index jumped 23.6% – the biggest one-month increase in the index's eight-year history - to reach 50.8. Any readings above 50 indicate optimism, and the index showed gains in all three of its key components. Confidence improved on falling gas prices, the government's economic rescue plans and possibly on hope connected to the U.S. presidential election.
- Chain store sales. In the slowest weekly growth since April, chain store sales rose 0.4% last week vs. a year ago, and fell 1.0% vs. the week before, ICSC says. Consumers continued to buy everyday items but scaled back on other purchases. Redbook reported national chain store sales fell 1.2% in the first week of November vs. the previous month and fell 1% vs. a year ago.
Earnings: Wednesday Before Open
- ING Group (ING): Confirms a Q3 loss of €478M following "steep declines in equity markets, widening credit spreads, declining property prices and the failure of several banks." Consensus was for -€499.50. "Markets continue to be turbulent, so we expect pressure on asset prices to continue to impact results in the fourth quarter," chairman Michel Tilmant said, "while weakening economic conditions will put pressure on results into 2009." Shares +2.1% in Amsterdam. (PR)
- JA Solar Holdings (JASO): Q3 EPS of $0.26 misses by $0.01. Revenue of $312M (+149.4%) vs. $304M. (PR)
Earnings: Tuesday After Close
- Spectrum Brands (SPC): FQ4 EPS of $0.06 misses by $0.09. Revenue of $706M (+7.2%) vs. $685M. (PR)
- Hologic (HOLX): FQ4 EPS of $0.30 in-line. Revenue of $442M (+118.4%) in-line. Sees 2009 EPS of $1.22-1.24 vs. $1.30. (PR)
- Petrobras (PBR): Q3 net income of R$10.85B, up 96% from a year ago. Total production +6% from a year ago and +2% from last quarter. (.pdf)
- Intrepid Potash (IPI): Q3 EPS of $0.66 misses by $0.07. Revenue of $146M (+176.6%) vs. $143M. (PR)
Today's Markets
- Asia markets closed mostly down. Nikkei -1.3% to 8,