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Goldman Sachs Kicking Steel While It's Down (AKS, STLD, TX, CMC)It is a bit surprising when you see a firm like Goldman Sachs downgrade many key steel stocks after their shares have fallen by so much. That is what we are seeing this morning. Many steel stocks are down more than 75% from their recent year highs. It sees lower steel and scrap prices on deteriorated demand in the coming months. Below is the firm's downgrade list, although Commercial Metals (NYSE: CMC) was actually upgraded. AK Steel (AKS) Cut to Sell from Neutral. AK Steel closed at $14.17 yesterday and it is down sharply from a high of $73.07. Steel Dynamics (STLD) Cut to Neutral from Buy. Steel Dynamics closed at $9.51 yesterday and it is down from a high of $40.92. Ternium S.A. (TX) Cut to Neutral from Buy. Ternium closed at $9.98 and is down from a 52-week high of $45.99. Goldman Sachs did issue one upgrade in the sector. Commercial Metals (CMC) was raised to Buy from Neutral. This one is indicated higher after closing at $10.58 yesterday. It is down about 70% from its $39.80 52-week high.
Jon C. Ogg Source: 24/7 Wall St. | 9 Oct 2008 | 12:28 pm Ready for reboundStocks were poised to rebound Thursday - after a rough ride in the previous session - as a rally in European stocks lifted investor sentiment and ahead of the latest reading on the U.S. job market.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 12:27 pm Gap (GPS) Gets Killed, Same-store Down 11%
Net sales dropped 6% to $1.34 billion. So much for the turnaround. Old Navy same-store numbers were down 24%, another argument for axing the brand completely. Gap trades near the bottom of its 52-week range at $15.44. It won't old that level for long. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 12:12 pm Oil hovers around $89 on recession fearsRead full story for latest details.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 12:09 pm National City up on sale talk reportNEW YORK (Reuters) - Shares of National City Corp jumped nearly 30 percent to $2.89 before the bell on Thursday after the Wall Street Journal reported that the U.S. regional bank is in sale talks.Source: Reuters: Business News | 9 Oct 2008 | 12:06 pm MarketWatch First Take: Latest bank guarantees should be one-time offersSome level of consistency in regulation will have to happen if the crisis is ever going to be wound down successfully.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 12:06 pm US may follow UK on bank bail-outsThe US could soon follow the UK down the path of using public money to recapitalise weakened financial institutions in return for preference shares., a move that would emulate Warren Buffett's investments in Goldman Sachs and GESource: FT.com - US homepage | 9 Oct 2008 | 12:01 pm Buying Into the BanksThis will be the golden age of public equity – if it works.The Treasury Department is weighing whether to buy stakes in financial institutions, Edmund Andrews and Mark Landler of the New York Times report. The plan, still preliminary, would be similar to what the British government is doing, buying some $88 billion of preferred shares in eight banks and building societies. Taking equity stakes would help recapitalize the banks, a step that many economists have argued is necessary in this financial crisis. As Zubin Jelveh explained on Portfolio.com, “Undercapitalized banks are forced to reduce their asset base, which means that they have to reduce lending.” That reluctance to lend — even to other banks — is at the heart of the credit crunch, pushing up short-term rates and shutting down markets for many securities. And there is a precedent. During the Depression, the Reconstruction Finance Corporation, created in 1932, invested in banks to the extent that the government became a shareholder in nearly every large financial institution that survived. The Treasury plan is said to be voluntary, thereby avoiding the bugaboo of “nationalization,” although that’s what it is. Treasury Secretary Hank Paulson indicated on Wednesday that the Treasury had the authority to take stakes. The new TARP program, he said “empowers Treasury to use up to $700 billion to inject capital into financial institutions, to purchase or insure mortgage assets, and to purchase any other troubled assets that the Treasury and the Federal Reserve deem necessary to promote financial market stability.” The idea of taking equity stakes, the Times reports, is even gradually being accept by Republicans who have long opposed any form of government intervention in the economy. But this is an economic crisis unlike any since the 1930’s. Markets in Asia and Europe were higher today as investors took heart from the worldwide coordinated cuts in interest rates on Wednesday. Markets are looking for leadership from governments. Fed officials, the Times says, call the unprecedented response to the crisis “regime change.” Related Links Incentives for Inflation Why the Fed Won't Raise Rates to Prick Bubbles The Song Remains the Same 
Source: Portfolio.com: Top 5 | 9 Oct 2008 | 12:00 pm Pressure on G7 after muted response to rate cutsLONDON (Reuters) - Finance ministers from the world's top economies faced calls on Thursday for united action after an emergency round of interest rate cuts and government support for ailing banks won only muted market support.Source: Reuters: Business News | 9 Oct 2008 | 11:58 am Shares rally after interventionMost European and Asian shares move higher as investors react to a co-ordinated interest rates cut and the UK bank rescue package.Source: BBC News | Business | World Edition | 9 Oct 2008 | 11:58 am Ad industry eyes the iPhoneWhere there are eyeballs, there are usually ads. And the most eye-catching gadget of late has been the iPhone, which can now run thousands of software programs available at Apple's App store.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 11:57 am IBM's earnings strength calms tech jittersNEW YORK (Reuters) - IBM posted a higher-than-expected preliminary quarterly profit and affirmed its full-year outlook, calming some fears that the financial crisis is sparking a meltdown in technology demand.Source: Reuters: Business News | 9 Oct 2008 | 11:54 am National City up on sale talk reportNEW YORK (Reuters) - Shares of National City Corp jumped nearly 30 percent to $2.89 before the bell on Thursday after the Wall Street Journal reported that the U.S. regional bank is in...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:50 am Stock futures jump as IBM spurs spending optimismNEW YORK (Reuters) - Stock index futures rose on Thursday as a stronger-than-expected profit from technology bellwether IBM suggested that the credit turmoil is not stifling all business demand.Source: Reuters: Business News | 9 Oct 2008 | 11:47 am Ireland extends deposit guarantee to foreign banksIreland today extended its depositor guarantee to the customers of British-owned banks in the republic.Source: Latest Business News from Times Online | 9 Oct 2008 | 11:38 am Treasury says has power to inject bank capitalWASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said on Wednesday a recently approved financial bailout bill gives him wide authority to inject capital into the banking system and would not rule out having Treasury take an ownership position in banks if necessary.Source: Reuters: Business News | 9 Oct 2008 | 11:37 am Iceland shares suspended, biggest bank taken overREYKJAVIK (Reuters) - Iceland seized control of its biggest bank, Kaupthing, on Thursday to try to shore up its banking system and halted all trade on its stock market.Source: Reuters: Business News | 9 Oct 2008 | 11:37 am Canada rated world's soundest bank system: surveyCANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.Source: Reuters: Business News | 9 Oct 2008 | 11:37 am Some calm returns after coordinated rate cutsLONDON (Reuters) - Many stock markets rose on Thursday and winners during the recent turmoil, such as the yen and gold, slipped as at least temporary calm returned to markets a day after coordinated global interest rate cuts.Source: Reuters: Business News | 9 Oct 2008 | 11:37 am BlackRock, Pimco bid to manage bailout assets: report(Reuters) - BlackRock Inc and Pacific Investment Management Co (Pimco) are bidding to manage mortgage-backed assets in the U.S.'s $700 billion financial bailout, Bloomberg news agency said, citing people familiar with the matter.Source: Reuters: Business News | 9 Oct 2008 | 11:37 am Euro rises against dollarThe European single currency climbed against the dollar Thursday amid hopes that heavy interest rates cuts around the world would help stem a global financial crisis, dealers said.Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:28 am London Markets: Shares in London regain some lost ground as banks, miners gainBanks and miners recoup some lost ground in London on Thursday, helping the top London index to partially recover from the previous session’s rout.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 11:26 am 5 places where the dollar is strongJust because your personal treasury is shrinking, it doesn't mean your travel plans should too. (So arrivederci, Milano. Hello, Marrakesh!)Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 11:25 am Pressure on G7 after muted response to rate cuts (Reuters)
Source: Yahoo! News: Business | 9 Oct 2008 | 11:25 am Trade finance booms amid global crisisGENEVA (Reuters) - Business is booming in the trade finance market as exporters and importers return to a tried and tested form of credit amid the chaos of the financial crisis, bankers in the sector say.Source: Reuters: Business News | 9 Oct 2008 | 11:25 am Losing faith in Yahoo (again)No tech company that relies on web-based advertising is immune to the global credit crisis, but few are as exposed to the economic meltdown as Yahoo.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 11:24 am Indications: U.S. futures climb on report of direct bank injections, IBM viewU.S. stock futures pointed to a strong opening Thursday on the day that short selling of financials is allowed again, with a report of a new idea to revive stalled credit markets and the reiteration of International Business Machines’ profit outlook providing some cheer.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 11:20 am Southern Cross shares up on debt claimsShares in Southern Cross, the troubled care homes operator, rose by 4 per cent in early trading after the company said it would resolve its debt issues by the end of the month.Source: Latest Business News from Times Online | 9 Oct 2008 | 11:16 am On housing, McCain takes sharp left turnMinutes into last night's presidential debate, the already listing ship of free-market Republicanism groaned, keeled over and began a long journey to the bottom of the political seas.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 11:16 am Long Live the Short Sale
Short selling is controversial in a sense, but this practice is part of an orderly and liquid market. There were exceptions for market makers and options professionals, but the only way investors have been able to hedge stocks or portfolios was by selling S&P futures or by taking out more expensive Put options. There has been zero liquidity in the credit markets, and corporate bond managers have been unable to hedge new positions by shorting a stock in the corporate bond issue that they own. The practice of "fair" short selling does need to be fixed. Traders for a long time have been able to engage in naked short selling where the borrowed stock was not technically located nor was it really borrowed. There has also been no "uptick rule" where a short sale could only be executed after a higher bid and ask are executed. This issue still remains, and what the rules will be in the future is still an unfinished chapter. Outright bans often come with unintended consequences. It is important to realize that for every short sale that occurs, someone else took the other side of the trade by buying the stock.
Jon C. Ogg Source: 24/7 Wall St. | 9 Oct 2008 | 11:13 am Currencies: Yen retreats on revived risk appetiteThe Japanese yen retreats and traditionally high-yielding currencies rebound Thursday following a modest revival in risk appetite, analysts say.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 11:10 am Aegon to take $573 million in chargesThe insurer Aegon NV said Thursday it will book 420 million euros ($573 million) in charges on bad bonds and other credit assets in the third quarter. Its shares, which have declined...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:09 am Iceland halts all share tradingIceland suspends trading on its national stock exchange for two days due to 'unusual market conditions'.Source: BBC News | Business | World Edition | 9 Oct 2008 | 11:09 am Europe Markets: Shares in Europe recoup some ground as banks, miners gainEuropean shares recoup some lost ground on Thursday morning, as calm returns temporarily to nervous markets, with metal stocks moving higher after a reassuring update from top steelmaker ArcelorMittal and financials also taking back some losses.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 11:02 am Earnings Watch: Updates, advisories and surprisesA roundup of the latest corporate earnings reports and what companies are saying about future quarters.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 11:01 am Talks to resume in Boeing machinists' strikeThe Boeing Co. and its striking machinists union have agreed to return to the bargaining table, both sides said Wednesday night. A federal mediator will help hammer out details of the...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am Day4 Energy and Arian Solar Complete Mexico's Largest PV Installation for L'OrealL'Oreal Solar Energy System Delivers Reliable, Renewable Electricity for Critical Business Operations BURNABY, BC, Oct. 9 /PRNewswire-FirstCall/ -...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am [video] Michael Hill, President and CEO of Gemini Explorations, Inc. Discusses Joint Venture Proposal to Develop La Tapata Gold Mine on WallSt.net's 3-Minute Press ShowCALGARY, Alberta, Oct. 9 /PRNewswire-FirstCall/ -- Gemini Explorations, Inc. (OTC Bulletin Board: GXPI), a mining exploration and development company, today announced...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am [video] Chandana Basu, CEO of PPJ Enterprise Discusses First Sale of Its Customized Billing System, AutoMed 5.0, on WallSt.net's 3-Minute Press ShowRENO, Nev., Oct. 9 /PRNewswire-FirstCall/ -- PPJ Enterprise (Pink Sheets: PPJE), a provider of comprehensive, full-service medical practice management software, today...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am U.S. consumer confidence experiences largest single month decline, as Americans' expectations for the future plummet according to RBC CASH IndexNEW YORK, Oct. 9 /PRNewswire-FirstCall/ - The implosion of Wall Street and the spreading economic crisis have taken a heavy toll on consumers, driving their confidence back down...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am The First American Corporation to Hold Third Quarter 2008 Conference CallSANTA ANA, Calif., Oct. 9 /PRNewswire-FirstCall/ -- The First American Corporation (NYSE: FAF), America's largest provider of business information, announced today...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am Honigman Opens Kalamazoo OfficeJonathan P. O'Brien, Ph.D. and Phillip D. Torrence to Lead Eight Intellectual Property and Corporate Attorneys DETROIT, Oct. 9 /PRNewswire/ -- Honigman Miller Schwartz...Source: Infocious RSS raw feed - channel BNewsBusiness | 9 Oct 2008 | 11:00 am IBM's Earnings: No Bellwether For Tech (ORCL)(MSFT)(CSCO)(INTC)
With quarterly revenue of over $25 billion, Big Blue has over two times the sales that Cisco (CSCO) does and nearly as big a lead over Microsoft (MSFT). IBM posted a 22% increase in earnings-per-share to $2.05. It also affirmed its guidance of $8.75, also a 22% improvement. IBM's advantage over most of the rest of the industry is that its business is substantially international and it operates across hardware, software, and services. In the second quarter, IBM showed sales improvement in three out of four of its major operating units: technology services, business services, and software. When the details from Q3 come out, they are likely to look the same. No matter how successful firms like Oracle (ORCL), Cisco (CSCO), Intel (INTC), and Microsoft (MSFT) are, they do business in one or two large sectors of tech, but do not cover as wide a swath as IBM does. That is IBM's advantage. It is also the reason that it is not a leading indicator for the balance of the industry. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 10:40 am Stocks Gain in Europe, but Asian Shares Are MixedStocks gained in Europe a day after central banks joined in coordinated action to cut borrowing costs, but investors said credit was hard to come by.Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 10:32 am Rise and fall of RealNetworksRealNetworks sure knows how to do a splashy product launch.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 10:28 am ArcelorMittal shares soar as steal giant reaffirms guidanceShares of ArcelorMittal rise 11% Thursday after the world’s largest steel producer reaffirms its guidance for the third quarter and says second-half profit will top the record $13.09 billion it earned in the first half.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 10:26 am Zimbabwe inflation hits new highZimbabwe's annual inflation rate soars to a record 231,000,000% as measured in July, newly released official figures show.Source: BBC News | Business | World Edition | 9 Oct 2008 | 10:25 am Citigroup (C) And Wells Fargo (WFC) Find A Cowpie On Wachovia's (WB) Books
There is no better example of this than the land-grab that is going on between Citigroup (C) and Wells Fargo (WFC) to get the retail system and other assets of Wachovia (WB). As it turns out, after a close look, the Wachovia balance sheet is uglier than expected. According to The Wall Street Journal, "After burrowing deeper into Wachovia's books, Citigroup and Wells Fargo have been surprised by the concentration of assets they regard as low-quality." Low-quality is a euphemism for worthless. The two potential buyers are also fighting over who gets the Wachovia computer systems like they were playing poker in a hurricane. Now that everyone knows how badly off Wachovia is, the deal could go one of two ways. The suitors could let the banks fail. The FDIC would pick up the pieces. Citi and Wells Fargo would probably bid for the few gems which are left. The other alternative is that one of the banks who wants Wachovia gets a nice big government safety net covering losses from the bank's portfolio, thereby reducing the risks for a buyer. Either way, the FDIC will be left holding the check. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 10:17 am German exports slump in downturnGerman exports fall 2.5% year-on-year, their biggest fall for five years, as the financial crisis hits the real economySource: BBC News | Business | World Edition | 9 Oct 2008 | 10:14 am Iceland suspends trading after bank seizuresIceland's stock exchange suspended trading in all shares after Kaupthing Bank, the island's largest lender, became the the third bank to be taken into government ownership this weekSource: FT.com - US homepage | 9 Oct 2008 | 10:08 am AIG (AIG): The Buffoons Take Over The Nut House
The news is yet another example of how fast the financial system is failing. Institutions which appear to have been saved can walk into more trouble in the course of a few days. It says very little for AIG management that they misjudged the amount of money that they would need by such a substantial margin. The government will get more security for its new investment. According to the FT, the Fed will "borrow up to $37.8bn in investment-grade, fixed-income securities held in AIG’s securities lending programme and provide AIG with cash collateral." The federal government has probably got the wrong people operating AIG. Its new CEO, Edward Liddy, used to run AllState (ALL) which has about as much in common with the wrecked AIG as cab driver does with an airline pilot. Liddy may be a nice man, but he has never been in charge during a storm this large He was a fool to take the job and ruin his reputation.The Fed needs to put a team in actuaries in charge. At least they would have a better chance of predicting how bad things are getting. No one should be surprise if AIG needs more money in a few weeks. The financial markets are falling apart that quickly. But, no one is out in front of the problem. No one is working the doomsday scenario. Until the government and US financial firms plan for the worst, they will keep following the trouble down a rat hole. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 10:01 am Trade finance booms amid global crisis (Reuters)Reuters - Business is booming in the trade finance market as exporters and importers return to a tried and tested form of credit amid the chaos of the financial crisis, bankers in the sector say.Source: Yahoo! News: Business | 9 Oct 2008 | 9:59 am Norton Antivirus firm buys rivalAnti-virus software firm Symantec buys smaller rival web security firm MessageLabs for $695m.Source: BBC News | Business | World Edition | 9 Oct 2008 | 9:55 am Further decline in house pricesUK house prices registered a 1.3% fall in September, according to the Halifax, with the average home costing £172,108.Source: BBC News | Business | World Edition | 9 Oct 2008 | 9:52 am UK's trade gap narrows slightlyThe UK's goods trade gap with the rest of the world narrows slightly in August, the latest official data shows.Source: BBC News | Business | World Edition | 9 Oct 2008 | 9:40 am Paulson's New Bailout Plan: The Trouble With Owning Bank Shares
The latest idea if for the Treasury to actually buy equity in banks thereby mainlining capital into large financial institutions in the hope that they will then lend that money out. It would be a fabulous and daring program if it made any sense. According to The New York Times,"Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system." The share that the federal government has taken in AIG (AIG) shows just how well thees plans works. In exchange for an $85 billion loan, the taxpayers own 80% of the giant insurance company. That arrangement dissolved into chaos about two weeks into it implementation. AIG management had to telephone federal officials and ask for another $37.8 billion. They got it, because the Fed cannot afford to see its initial investment fail. Across town at the talks for Citigroup (C) or Wells Fargo (WFC) to buy Wachovia (WB), word is that in due diligence the Wachovia assets look worse than expected. That may mean that no one wants to buy the troubled bank or that the FDIC will have to guarantee some of the assets. The pulls the government further into the mess in yet another transaction. Paulson would like to own a percentage of major banks, but some of those major banks may fail. So, Treasury can put up more money to save them, of watch its investment go to zero. At least if it only buys toxic assets off balance sheets it will have something to show when the paper matures. Perhaps taxpayers will actually get their money back. The government is being pulled deeper into a violent whirlpool. It will end up owning banks, Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG), and bits and pieces of the rest of the financial system. As these go through serial failures someone has to come up with more cash. Or, the Fed and Treasury can just write much of their investments off. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 9:39 am Dexia shares surge after governments guarantee debtShares in Belgian-French bank Dexia soared over 25% Thursday after European governments stepped in to guarantee the group’s borrowings.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 9:25 am Land battle loomsUganda king on collision course with tenant farmersSource: BBC News | Business | World Edition | 9 Oct 2008 | 9:23 am Gas drops 4 cents a gallonGasoline prices fell more than 4 cents a gallon Thursday, according to a daily survey, as the economic crisis continues to weigh on consumer demand.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 9:22 am Asian shares boosted by interest rate cutsCoordinated cuts in interest rates in Asia Pacific, Europe and North America initially boosted the region's stock markets for the first time in a week. But the gains narrowed as the day progressed and money market rates stayed highSource: FT.com - US homepage | 9 Oct 2008 | 9:17 am Iceland seizes Kaupthing as meltdown continuesCrisis-hit Iceland has taken control of Kaupthing, its biggest bank, and suspended trading on its stock exchange for two days.Source: Latest Business News from Times Online | 9 Oct 2008 | 9:06 am Asia Markets: Hong Kong rises, Sydney drops in mixed regionAsian markets end mixed after a volatile session as investors weigh the immediate positive impact of interest rate cuts against concerns that a recovery in the global economy could be slow.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 9:05 am Banks help FTSE recoverLondon equities found support on Thursday, with broad gains in the banking and mining sectors putting the brake on the FTSE 100's slide. The benchmark index rose 140 points to 4,506.3 a recovery of 2.7...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:59 am Oil supported by Opec concernsCommodities prices were mixed on Thursday, with oil slightly down, but base metals and agricultural raw materials moved higher, following large drops in the two previous sessions amid concerns that the...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:54 am C&C chief quits as cider sales fallMaurice Pratt is quitting as chief executive of C&C Group, after the makers of Magners cider warned of a "material drop" in profits and slashed its dividend. The shares opened sharply lower on Thursday...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:51 am Microsoft in new Xbox 360 push in JapanMicrosoft Corp. will be releasing games developed by top Japanese designers for its Xbox 360 console, a senior executive said Thursday, the latest effort by the U.S. software maker to make inroads in a market where it has long struggled.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 8:49 am Dividend rise lifts WH Smith sharesShares in WH Smith were boosted in early trade as it reported better-than-expected underlying annual profits and said it was coping with softer sales at its airport units. Shares in the stationery and...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:47 am Greggs warns on profits as it pegs pricesHigher energy and ingredient costs have taken a bite out of increasing sales at Greggs, the bakery chain, which today gave warning that its full-year profits will be at least £3 million lower than forecast.Source: Latest Business News from Times Online | 9 Oct 2008 | 8:43 am Most Gulf stock markets rise at opening (AFP)
Source: Yahoo! News: Business | 9 Oct 2008 | 8:43 am British Sept. house prices fall 1.3%: HalifaxBritish house prices continue to fall in September, with the average price down 1.3% from August and 12.4% below the level seen a year ago, mortgage lender Halifax reports Thursday in its monthly survey.Source: MarketWatch.com - Top Stories | 9 Oct 2008 | 8:41 am Canada rated world's soundest bank system: survey (Reuters)
Source: Yahoo! News: Business | 9 Oct 2008 | 8:40 am Deal reached to secure Dexia's futureBelgium said on Thursday it would offer to guarantee all new financing of its banks for one year, matching terms that it, France and Luxembourg offered Dexia following a night of talks to secure the Franco-Belgian...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:35 am House price fall is smallest in seven monthsHouse prices tumbled for the eight month in a row in September, wiping more than £2,000 from the value of an average home, new figures from the Halifax show.Source: Latest Business News from Times Online | 9 Oct 2008 | 8:33 am Tokyo Shares Drop as European Markets Open HigherSome Asian markets posted gains after the previous days dramatic sell-off, but Tokyo closed down 0.5 percent. Stocks rose in early European trading.Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:27 am Kaupthing follows rivals into state ownershipThe financial crisis has claimed Iceland's largest lender, Kaupthing Bank, which on Thursday followed domestic peers into nationalisation after a collapse in confidence in the country and its banking system...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:24 am Banks put brake on FTSE's slideLondon equities found support on Thursday, with broad gains in the banking and mining sectors putting the brake on the FTSE 100's slide. The benchmark index rose 120 points to 4,487.0 a recovery of 2.7...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 8:23 am Robert PestonHow can banks be encouraged not to lend too little?Source: BBC News | Business | World Edition | 9 Oct 2008 | 8:22 am 9 ways to tough out tough timesIt's hard to find any good news about your money these days. The stock market is tumbling. Banks are failing. Home values are cratering. And you're watching your retirement disappear.Source: Business and financial news - CNNMoney.com | 9 Oct 2008 | 8:12 am Hays' fees fall as the City stops hiringHays, the recruitment consultancy, underlined the poor state of the economy when it revealed today that its UK and Irish business had shrunk in the last three months.Source: Latest Business News from Times Online | 9 Oct 2008 | 8:09 am Media Digest 10/9/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
Reuters reports that IBM's (IBM) earnings strength helped calm tech investors. Reuters reports that MetLife (MET) and The Hartford (HIG) may be in merger talks. Reuters reports that the deal for Citigroup (C) and Wells Fargo (WFC) to buy Wachovia (WB) has been hung up on the poor quality of Wachovia's assets. Reuters reports that Boeing (BA) and its union are seeking federal mediation over their strike. The Wall Street Journal writes that central bank lowered rates on the same day to try to stimulate the credit markets. The Wall Street Journal reports that AIG (AIG) needs more capital than the first $85 billion the government put in and will get another $37.8 billion. The Wall Street Journal reports that Morgan Stanley (MS) tried to calm investors after its shares fell again. The Wall Street Journal reports that Walgreen (WAG) dropped its deal for Longs Drugs (LDG) because of a worsening credit market. The Wall Street Journal reports that the deep recession in California may be an example of what may happen in the rest of the country. The Wall Street Journal reports that The Federal Reserve Bank of New York has summoned participants in the credit-default-swap market to another meeting. The Wall Street Journal reports that EMI plans its own online music service. The Wall Street Journal reports that the economy hurt most September results for retailers. The Wall Street Journal writes that investors hope GE (GE) will not hit them with bad results. The Wall Street Journal reports that Temasek, Singapore's sovereign fund, passed on taking a stake in Bank of America (BAC) The Wall Street Journal says that the SEC wants companies to do a better job of explaining how they value trouble assets. The Wall Street Journal reports the United Technologies (UTX) will raise its dividend. The Wall Street Journal reports that investors in Yahoo! (YHOO) are looking for a savior to improve that company's share price. The Wall Street Journal reports that Broadcom (BRCM) filed another patent suit against Qualcomm (QCOM). The New York Times reports that Russia is struggling to keep market open because they are in a free fall. The New York Times reports that pending home sales rose over 7% last month. The New York Times reports that Microsoft (MSFT) will release new games in Japan to try to improve market share for the Xbox 360. The FT reports that Libor is up despite rate cuts. The FT reports that distressed debt levels hit a five-year high. The FT reports that markets are bracing for the end of short-selling rules. The FT reports that the IMF sees that current credit crisis as the worst shock to the economic system since the 1930s. Source: 24/7 Wall St. | 9 Oct 2008 | 7:59 am Profits at WH Smith boosted by acquisitionsWH Smith reported better-than-expected underlying annual profits and said it was coping with softer sales at its airport units. The stationery and books retailer also announced the departure of its finance...Source: Infocious RSS raw feed - channel BNPaperBusiness | 9 Oct 2008 | 7:57 am Asian markets rebound after global rate cutsAsian markets bounced back Thursday after central banks around the world slashed interest rates to ease the global credit crunch, although fears of further turmoil kept investors jittery.Source: L.A. Times - Business | 9 Oct 2008 | 7:45 am Bad weather hits Greggs' profitsBakery chain warns that annual profits will be less than previously expected, blaming poor weather and higher costs.Source: BBC News | Business | World Edition | 9 Oct 2008 | 7:36 am Asia Markets 10/9/2008 (PTR)(SNE)
The Nikkei fell .5% to 9,157. Sony (SNE) and Canon were both up over 4%. The Hang Seng rose 2% to 15,741. China Overseas Land Investment was up over 5%. PetroChina (PTR) was up over 4%. The Shanghai Composite fell .8% to 2,075. In Europe, the FTSE, DAX, and CAC 40 all opened higher by over 1%. Data from Reuters. Douglas A. McIntyre Source: 24/7 Wall St. | 9 Oct 2008 | 7:21 am Markets positive in wake of worldwide rate cutThe FTSE 100, the UK’s benchmark index, rebounded by 2.4 per cent to 4,410 this morning in a sign that tentative confidence is returning to the market following the huge plunges earlier this week. By mid-morning shares were off their best and the index of leading shares was up 1.19 per cent at 4,418,69.Source: Latest Business News from Times Online | 9 Oct 2008 | 7:15 am After another down day, how low will Yahoo shares go?Yahoo Inc. shares fell to a five-year low of $13.20 on Wednesday before rebounding to close down 5.6% at $13.76, below even the lowest of the deflated price targets set by Wall Street analysts.Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am Britain unveils massive rescue planLeaders insist the $87-billion cash infusion for fragile banks differs from the U.S. plan.Britain's announcement of an $87-billion bailout of its flailing banking system boosted confidence in the nation's financial sector Wednesday but didn't immediately alleviate the panic gripping investors. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am How the Fed interest-rate cut may affect youIt could put more money in your pocket, pull some out, or both. Figuring it all out may be trickier than usual. Here are some questions and answers.The Federal Reserve's cut in its benchmark interest rate Wednesday could put more money in your pocket -- or take some out. Or both. Figuring out how you're affected may be more complicated than usual. Here are questions and answers: Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am For insensitivity, Wachovia refuses to be outdoneWhile waiting to see if the government will relieve it of bad loans, the bank prepares to send 75 employees on a Mediterranean cruise.As ailing Wachovia Corp. waits to see whether it will be acquired by Wells Fargo & Co. or Citigroup Inc. -- possibly with taxpayers paying the tab for hundreds of billions of dollars in bad loans -- some of the company's top brokers are preparing to depart Saturday for an all-expenses-paid cruise of the Greek Isles. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am CEO turnover hits a record highA survey says 1,132 chiefs have left their posts this year amid a tough economy.The roiling economy appears to be ripping into the ranks of upper management, pushing the chief executive turnover rate in a popular survey to an all-time high. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am Is the stock market ready for a comeback?Fear of stocks, low interest rates and officials' concerted action create the setting for a possible recovery.The economic prognosis is relentlessly bleak. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am Federal debt-purchasing program may exclude statesExclusion could deal a blow to California as it prepares to offer $4 billion in IOUs.A new federal program designed to ease credit by purchasing short-term business debt probably won't be available to California and other beleaguered state and local governments, Treasurer Bill Lockyer said Wednesday. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am Federal Reserve orders emergency half-percentage-point rate cutThe Fed lowers its benchmark federal funds rate to 1.5%. Other central banks also cut rates.Emergency interest rate cuts Wednesday by the Federal Reserve and five other central banks left in doubt whether government efforts to cure the financial crisis would show results fast enough to avert fresh panic and serious economic damage. Source: L.A. Times - Business | 9 Oct 2008 | 7:00 am Wachovia talks hit snag over division of assets: report (Reuters)
Source: Yahoo! News: Business | 9 Oct 2008 | 5:58 am Currency: Dollar under pressure after plungeThe New Zealand dollar recovered from another dramatic plunge overnight but is expected to remain under pressure as investors avoid risky investments. The NZ dollar was trading at US60.85c at 5pm, having recovered to US61.12c by...Source: New Zealand Herald - Business | 9 Oct 2008 | 5:39 am Oscars will take movie ads, ending 50-year banThe decision by the Academy of Motion Picture Arts and Sciences comes as TV advertising budgets tighten and viewership falls.Looking to save its primary source of revenue, the Academy of Motion Picture Arts and Sciences has lifted its longtime ban on running commercials for movies during the Oscars. Source: L.A. Times - Business | 9 Oct 2008 | 5:06 am Treasury says has power to inject bank capital (Reuters)
Source: Yahoo! News: Business | 9 Oct 2008 | 4:46 am Asian central banks cut interest ratesAsian central banks joined their western counterparts in co-ordinated cuts to interest rates in an effort to curb the risk that the intensification of the credit crisis could lead to a severe global recessionSource: FT.com - US homepage | 9 Oct 2008 | 4:42 am Bollard bucks trend, says no to early rate cutThe Reserve Bank is holding off on any interest rate cut, bucking the trend of the leading world economies. Following the Reserve Bank of Australia's decision to cut rates by 1 per cent on Tuesday, the world's other major banks...Source: New Zealand Herald - Business | 9 Oct 2008 | 2:00 am Warehouse Extra stores canned - takeover door openedWarehouse shares have soared 12.62 per cent today after the retailer retreated from food retailing, making it easier for a supermarket chain to now take it over. The Warehouse is closing down its Warehouse Extra stores at a cost...Source: New Zealand Herald - Business | 9 Oct 2008 | 1:00 am After The Close - WednesdayAIG (AIG), the troubled insurer taken over by the gov't in an $85 bil bailout, said the Fed has agreed to loan it an additional $37.8 bil. That's...Source: Investor's Business Daily: BUSINESS | 9 Oct 2008 | 12:29 am Business Briefs - WednesdayGoogle jumps into in-game ads. The leader in online search and ads launched AdSense for Games, which will place ads in Web-based games. Google's...Source: Investor's Business Daily: BUSINESS | 9 Oct 2008 | 12:29 am In Brief - WednesdayMetLife (MET) will cut an unspecified number of jobs this year and sell 75 mil shares of common stock to raise capital. It sees Q3 EPS of...Source: Investor's Business Daily: BUSINESS | 9 Oct 2008 | 12:29 am Heating, Air-Conditioning Installer Stays Optimistic With Piles Of CashThis would not seem to be the time to hitch your wagon to the stalled engines of new construction.Source: Investor's Business Daily: BUSINESS | 9 Oct 2008 | 12:29 am Trends & Innovations - WednesdayTechnique may boost transplantsSource: Investor's Business Daily: BUSINESS | 9 Oct 2008 | 12:29 am Markets braced for end of short-selling banThe lifting of the temporary ban comes as financial stocks have been pummelled, leaving traders wondering whether the nearly three-week measure had helped stem price fallsSource: FT.com - US homepage | 9 Oct 2008 | 12:18 am Latest updates: Financial crisis4.15pm-SEOUL: South Korea's central bank cut has its key interest rate by a quarter percentage point to 5 percent in a surprise move. The Bank of Korea said in a statement that it decided to lower its benchmark seven-day repurchase...Source: New Zealand Herald - Business | 9 Oct 2008 | 12:00 am NZ Shares: Market steady after global turmoilThe New Zealand sharemarket was slightly lower again on open today as a simultaneous interest rate cut by world central banks failed to relieve pressure on international markets. It has treaded water this morning, with the NZX-50...Source: New Zealand Herald - Business | 8 Oct 2008 | 11:30 pm Fed offers AIG fresh $37.8bn injectionThe Federal Reserve threw another financial lifeline to AIG, agreeing to provide up to $37.8bn in additional liquidity to the stricken insurerSource: FT.com - US homepage | 8 Oct 2008 | 11:11 pm Obama opens up biggest poll leadThe Democratic candidate notches up his widest advantage as he continues to focus on the economy – the single issue that now looks certain to decide the presidential campaignSource: FT.com - US homepage | 8 Oct 2008 | 11:09 pm Pressure grows on Sir Fred Goodwin to quit if RBS receives rescue fundsPressure was mounting on Sir Fred Goodwin to resign as chief executive of Royal Bank of Scotland (RBS) last night as the bank prepares to tap the Government’s £500 billion rescue fund (see Commentary, facing page).Source: Latest Business News from Times Online | 8 Oct 2008 | 11:00 pm Henry Paulson warns that more banks could collapseHenry Paulson, the US Treasury Secretary, attempted once more to soothe the world’s fractious markets, urging calm and patience while reassuring investors that Washington is movingly as swiftly as feasible to implement the $700 billion bailout for US banks under the Troubled Assets Relief Programme (TARP).$Source: Latest Business News from Times Online | 8 Oct 2008 | 11:00 pm Savers vault from the banks to a safe place at homeSales of household safes have surged as wealthy savers concerned about the health of banks opt to keep cash at home.Source: Latest Business News from Times Online | 8 Oct 2008 | 11:00 pm UK banks thrown £400bn lifelineBritain's largest banks are preparing to boost their capital reserves after the government launched a dramatic £400bn rescue plan to restore confidence among financial institutions and avert a severe economic slowdownSource: FT.com - US homepage | 8 Oct 2008 | 10:50 pm Retailers report weak September sales (AP)
Source: Yahoo! News: Business | 8 Oct 2008 | 10:42 pm Gary Paykel to receive city's top awardOne of the country's best-known business leaders is to be presented with Auckland City's highest award. Gary Paykel is to be presented tonight with the Distinguished Citizens Award, the highest award the Auckland City Council can...Source: New Zealand Herald - Business | 8 Oct 2008 | 10:42 pm Economy - Wednesday (Investor's Business Daily)Investor's Business Daily - Home loan demand rose 2.2% in the week ended Oct. 3, according to the Mortgage Bankers Association's index. Mortgage applications for buying a home rose 3.2% -- from the prior week's 6-year low -- with the Federal Housing Administration continuing to gain market share. Refinancing activity edged up 0.9%. The average rate on a 30-year fixed-rate loan fell to 5.99% from 6.07%. The rate on a 15-year fixed mortgage decreased to 5.71%, the lowest in three weeks. A one-year ARM dipped to 6.6%.Source: Yahoo! News: Business | 8 Oct 2008 | 10:41 pm Russia pulls out of Georgia buffer zonesRussian forces pulled out from the contentious buffer zones flanking Georgia's breakaway enclaves of South Ossetia and Abkhazia, two days ahead of a deadline set under a ceasefire brokered by the European UnionSource: FT.com - US homepage | 8 Oct 2008 | 10:31 pm VIX Index of U.S. Stock Option Prices Advances 7.2% to 57.53Source: Bloomberg - All Podcasts | 8 Oct 2008 | 10:29 pm Advisors Capital's Lieberman Says Financials Attractive Via ETFSource: Bloomberg - All Podcasts | 8 Oct 2008 | 10:27 pm US high-end retailers batteredLuxury retailers saw sales fall, while consumers again sought out low-cost retailers such as Wal-Mart and Costco amid the turmoil in the financial marketsSource: FT.com - US homepage | 8 Oct 2008 | 9:58 pm Global market report - how the world is faring___ EUROPE - World markets were in retreat once more on Wednesday as concerns about the state of the global economy dominated sentiment despite a coordinated rate cut by top central banks aimed at shoring up confidence in the...Source: New Zealand Herald - Business | 8 Oct 2008 | 9:30 pm Wall St closes down 2pcEarly calculations show that the Dow Jones has closed the day down more than 2 per cent. Other indexes are also down for the day. An overnight half-point rate cut by the Fed was intended to help ease the stymied credit markets....Source: New Zealand Herald - Business | 8 Oct 2008 | 9:29 pm Author Steve Fraser Describes Historic Wall Street ImageSource: Bloomberg - All Podcasts | 8 Oct 2008 | 9:17 pm 6 Stocks With Great Returns on Capital (Stock Screen)We found six companies that offer investors great returns on capital.Source: SmartMoney.com | 8 Oct 2008 | 9:16 pm Selloff ContinuesA late drop left the Dow 189 points lower, despite an emergency rate cut from the Federal ReserveSource: SmartMoney.com | 8 Oct 2008 | 9:13 pm ETFs Sell Off Despite Global Rate Cuts (Daily ETF Wrap-Up)Central banks across the globe agree to cut rates, but ETFs still post losses.Source: SmartMoney.com | 8 Oct 2008 | 8:35 pm Kiwi dollar drops below US60c overnightThe New Zealand dollar had another rough night, falling to a five-year low of almost US58.00c before recovering this morning. It was trading at US61.12c at 8am today, down from US62.47c at 5pm yesterday but up on the overnight...Source: New Zealand Herald - Business | 8 Oct 2008 | 8:30 pm What the Rate Cut Means for Consumers (Consumer Action)How the Fed's move will impact rates on mortgages, credit cards and money markets.Source: SmartMoney.com | 8 Oct 2008 | 8:30 pm Top wool mill to close, 34 jobs lostA Timaru wool mill has announced it is closing its doors next month and 34 employees will be made redundant - the result of a global downturn in the wool market. Chargeurs New Zealand general manager Roger O'Brien told company...Source: New Zealand Herald - Business | 8 Oct 2008 | 8:15 pm The 52-Week Low Club (YHOO)(MSFT)(SIRI)(XL)(CHTR)(LVLT)(ORCL)(CSCO)(F)(DELL)
Sirius (SIRI) Merger a failure.Sells off to $.45 from 52-week high of $3.94. Xl Cap (XL) Met Life warns, kills shares in industry. Down to $6.22 from 52-week high of $81.63. Charter (CHTR) Troubled cable company, heavy with debt, gets more troubled. Falls to $.52 from 52-week high of $2.98. Level 3 (LVLT) Big internet network company has too much debt. Dips to $1.66 from 52-week high of $5.01. Oracle (ORCL) Concerns about enterprise software sales softening. Down to $16.01 from 52-week high of $23.62. Cisco (CSCO) Another tech icon hurt by IT spending concerns. Sells down to $17.80 from 52-week high of $32.24. Ford (F) More concerns about cash position and car sales. Runs down to $2.10 from 52-week high of $9.24. Dell (DELL) Looks like the holidays may be weak for PC company. Off to $13.23 from 52-week high of $30.77. Douglas A. McIntyre Source: 24/7 Wall St. | 8 Oct 2008 | 7:46 pm U.K., Iceland spar over online banksThe U.K. has threatened to sue Iceland to recover millions of euros Brits deposited in banks such as the collapsed IceSave, which has an online branch open to foreigners. European Bureau Chief Stephen Beard reports.Source: Marketplace | 8 Oct 2008 | 7:44 pm Most Funds Fared Poorly in Third Quarter (Fund Insight)It's been a historic three months for markets. Here's how mutual funds fared.Source: SmartMoney.com | 8 Oct 2008 | 7:43 pm Bailout Act Includes Tax Breaks for the Little Guy (The Tax Guy)The unpopular Fed bailout act does offer some nice tax breaks.Source: SmartMoney.com | 8 Oct 2008 | 7:27 pm Financial crisis is not eco-friendlyGlobal warming and other environmental worries sparked a green business boom in recent years. But with the flow of money freezing up, so is spending on renewable energy technology and sustainable products and services. Sarah Gardner reports.Source: Marketplace | 8 Oct 2008 | 6:49 pm Recession is nothing new for MichiganSigns of recession are everywhere in Michigan, which has been dealing with the auto industry's decline for years. New York Bureau Chief Amy Scott visited the Detroit area for our "Road to Ruin?" series and tells Kai Ryssdal what she saw.Source: Marketplace | 8 Oct 2008 | 6:43 pm Feds are hiring staff for the bailoutThe government has been collecting applications from asset managers to work on the bailout. They're the people who will buy and manage those bad loans and securities for the Treasury. Washington Bureau Chief John Dimsdale reports.Source: Marketplace | 8 Oct 2008 | 6:41 pm Today's 3 Picks: AA, MET, GFI (Market Movers)Alcoa's profit miss disappoints. MetLife gets dogged. Gold Fields glitters.Source: SmartMoney.com | 8 Oct 2008 | 6:20 pm Governments need to create jobsThe bailout didn't give the economy a psychological boost as was hoped. Consumers just aren't consuming. Commentator Robert Reich proposes a WPA-style solution -- put people to work on infrastructure and invest in schools.Source: Marketplace | 8 Oct 2008 | 6:11 pm Even with price cuts, retail is downSeptember was not a good month for retail. No surprise there, right? Well, the drop in sales was even more than expected. Now retailers are especially worried about the holidays. Jaime Bedrin has the story.Source: Marketplace | 8 Oct 2008 | 6:02 pm States can't get loans eitherBusinesses aren't the only ones squeezed by the credit crunch. State governments rely on short-term loans to keep services running. Jeff Tyler reports on the problems facing California and Massachusetts.Source: Marketplace | 8 Oct 2008 | 5:43 pm Coordinated rate cuts unprecedentedThe Fed and five other central banks made history by coordinating half-percentage-point interest-rate cuts. That had never been done before. Steve Henn reports how it came about.Source: Marketplace | 8 Oct 2008 | 5:37 pm 7 Ways to Save on Winter Heating Bills (Deal of the Day)How to prepare your home for cold weather and limit the impact of soaring energy costs.Source: SmartMoney.com | 8 Oct 2008 | 5:22 pm Bankers Might Need 50 Years to Regain Credibility: CommentarySource: Bloomberg - All Podcasts | 8 Oct 2008 | 5:14 pm Kurzendoerfer Says $80 Oil Is `Within Striking Distance'Source: Bloomberg - All Podcasts | 8 Oct 2008 | 5:12 pm Levitt Says Lack of Derivatives Clearinghouse `Appalling'Source: Bloomberg - All Podcasts | 8 Oct 2008 | 5:08 pm Falling Crude Is Bright Spot in Dark Market (Ticked Off)One investment strategist sees a bright spot amid the market's meltdown: falling oil prices.Source: SmartMoney.com | 8 Oct 2008 | 4:42 pm UPS, Forward Air Cut to `Neutral' From `Buy' At Merrill LynchSource: Bloomberg - All Podcasts | 8 Oct 2008 | 3:37 pm The Biggest LoserHigh noon in the battle over Wachovia Bank has come and gone, but instead of heading back to the courtroom Citigroup and Wells Fargo are continuing their talks until Friday.Signs of hope that the battle would be resolved by the end of their two-day standoff were dashed when the noon deadline came today but reports that negotiations continue renewed them. The Wall Street Journal reported that Citigroup was seeking partners to join its bid for the ailing North Carolina-based bank. Meanwhile, Bloomberg reported that Wells Fargo and Citigroup were in talks to split up the assets of Wachovia by geographic area, with Citigroup getting its Northeast branches and Wells getting its footprint in the South and Mid-Atlantic. But the desperation factor is rising in all corners of this fight. And perhaps nowhere as much as it is in Vikram Pandit's corner office. It looks as if Citigroup will turn out to be a loser in this takeover, even if it does end up with some piece of Wachovia. Everyone with a stake in this race is baffled about why Citigroup never signed a merger agreement with Wachovia in the first few days after it announced its intention to buy it for $2.2 billion and help from the federal government. Such an agreement might have kept Wells Fargo at bay. And Pandit's response to this so far is weak. In a town hall meeting with employees earlier this week, he claimed that Wachovia chief executive Robert Steel verbally confirmed they had a deal two days before the Wells offer. "We saved Wachovia from collapsing," Pandit told employees, according to the Financial Times. "We have to be compensated for that. That is like somebody buying a $2 ticket, winning $10…and somebody says, 'I am going to come and steal it away from you for two-and-a-half bucks.'" Actually, that's not a great analogy. It's more like agreeing to give your used sofa to someone for free, but then turning around and taking fifty bucks from someone else who's willing to come pick it up from you sooner. Why wouldn't you take the better offer? It's not as if you signed a contract with the first guy. Meanwhile, an editorial in the Wall Street Journal suggests that Pandit's effort to paint Citigroup as the Sunday night hero (à la Jamie Dimon) is way off base. Indeed, the Fed's motivation for orchestrating the Citigroup deal may have been to help boost confidence in Citigroup just as much as it was to save Wachovia. A beefed-up Citi, after all, would be less inclined to need a government bailout down the road. "We suspect [the government's] real agenda has little to do with who gets Wachovia's branch network and mortgage portfolio and everything to do with convincing investors and other banks that Citigroup isn't itself in trouble," the editors write. "The feds appear to be acting on the belief that if Citi were left on the outside in this deal, the markets would take that as a sign that it is being culled from the federally protected herd." This all leaves Pandit with very little ground to stand on. Meanwhile, the earthquake rattles on. Related Links Did Citi Question its Wachovia Deal? Charlotte's Web What's Wachovia Worth?
Source: Portfolio.com: Top 5 | 8 Oct 2008 | 3:30 pm Brookings's Mann Says Obama Helped Himself Most in DebateSource: Bloomberg - All Podcasts | 8 Oct 2008 | 2:46 pm City Index's Hougaard Says Dow Has `Date' With 9000Source: Bloomberg - All Podcasts | 8 Oct 2008 | 2:44 pm Like Money in the Bank (Today From Barron's)Companies that generate lots of cash are the place to be when credit is tight.Source: SmartMoney.com | 8 Oct 2008 | 2:07 pm Rolling Out the TARPNow that the TARP bill has passed, Neel Kashkari and his team at the Treasury Department are going to have to very quickly come up with a fair and transparent way of spending $700 billion on a very wide range of complex financial assets. How are they going to do that?The most detailed public proposal to date comes from Lawrence Ausubel and Peter Cramton at the University of Maryland. In a densely argued 21-page paper, they propose a two-part reverse auction, starting with the more commonly held assets and then moving on to the stuff that is really difficult to value. The cleverest bit of the Ausubel-Cramton proposal is that it recognizes that banks don't have a single price below which they're unwilling to sell any given asset. Instead, as the price falls, they are still willing to sell some, just not all, of their holdings. Let's say you're a bank with $100 million, face value, of a subprime-mortgage-backed security. You would love to get that asset off your balance sheet, since the market is worried that if it turns out to be worthless, you might be insolvent. But, at the same time, the bond is still paying out money, and according to your best estimate of its expected future cash flow, if you hold it to maturity you should get a present value of 60 cents on the dollar. Right now, you can't mark the bond to market, because there is no market for such instruments. The only people remotely interested in buying up subprime-mortgage bonds are the distressed-debt hedge funds, and they're looking to make annualized returns of more than 30 percent. Enter the Treasury. Kashkari puts you into a virtual room with a handful of other financial institutions that hold that same bond: All of you own $1 billion, face value, of it. He announces at the end of the auction that he's going to buy half of the bonds in the room. And then the reverse auction starts. The bidding starts high: at, say, 100 cents on the dollar. At that point, you're more than willing to tender all your bonds to be sold—and so is everybody else. So you bid 100 percent of your bonds at 100 cents on the dollar, everybody else does too, and the total quantity of bonds tendered comes to the full $1 billion. Supply ($1 billion) exceeds demand ($500 million). And so the price gets brought down a notch. At 90 cents on the dollar, everybody's still interested in selling all their bonds. And the same thing happens at 80 cents. But at 70 cents, something interesting happens: Not all the bonds are tendered. You're still happy to sell your full $100 million holding at that point, but when the bids are tallied up, it turns out that only $950 million of bonds have been tendered. Some bank has started paring back its bid. At 60 cents, you still bid the full $100 million. You think that the bonds are probably worth that much, but you'd much rather have $60 million in nice liquid cash than $100 million face value of bonds you think are probably worth 60 cents on the dollar. Most of your fellow bidders seem to think the same way: The amount tendered at 60 cents on the dollar is $850 million. But it's coming down. And so the auction moves to 50 cents. Now what do you do? You think that the bonds are worth 60 cents, but the stock market doesn't necessarily believe you, and it would start bidding up your stock price if you said you'd managed to sell off most of your subprime debt at 50 cents on the dollar. On the other hand, you think that the bonds are actually a reasonably good investment at that level. So you tender $80 million of your bonds. That way, you get $40 million in cash—which would certainly be welcome—and you also retain a small $20 million holding in a security which you think will bring in a good 60 cents on the dollar if you hold it to maturity. The holding is small enough that the market no longer worries about your solvency, and everybody comes away happy. At 50 cents, however, there's still $650 million of bonds tendered. And so the price comes down again, to 40 cents. At that point, you really don't want to sell—you think that there's a lot of upside in the security at that level. But you also need the liquidity, and you want to be able to demonstrate that you've managed to get at least some of your subprime assets off your balance sheet. So you offer to sell Treasury $40 million of your bonds at 40 cents on the dollar. That brings you $16 million in useful cash and reduces your subprime exposure by a significant amount. You don't like it, but it's better than selling nothing at all and ending up where you started. At 40 cents, the total number of bonds tendered is the magic $500 million, and the auction clears. Some banks will have ended up tendering all of their bonds at that level—maybe they're more pessimistic about that security's intrinsic value, or maybe they just really need the money or to get the bonds off their balance sheet. In any event, there's now a public and transparent price for the bonds: 40 cents. That can be used to mark all the bonds that were not tendered to market, rather than guessing wildly on the basis of credit-default swap prices or some model. This is the basis of the Ausubel-Cramton approach. It's quite elegant, in that clearly solvent banks will tend to drop out of the bidding quite early, once it reaches their own estimation of the value of the securities, while more troubled banks will end up selling bonds to Treasury at discount prices. Taxpayers are protected, and although the more troubled banks will end up with more government funds, they'll still be losing out on an intrinsic-value basis. Once marks are set for a wide range of relatively widely held subprime and other mortgage securities, the Ausubel and Cramton proposal foresees a second round of auctions for less liquid assets, which involves using the prices generated in the first round as inputs to help get at least a rough idea of how much the more complex instruments might be worth. Conceivably, there could even be a third round along similar lines. Eventually, the $700 billion is spent; the government ends up with a large number of mortgage-backed assets, as well as various chunks of bank equity that were extracted along the way from the largest participants in the program. There is a problem with this model, however. There's an evolving consensus that we're no longer seeing a liquidity crisis, but rather a solvency crisis. Banks don't just lack cash; they're fundamentally insolvent, with their assets (things like mortgage-backed bonds) worth less than their liabilities (including their deposits). Improving liquidity, through rate cuts or swap lines or discount windows or buying unsecured commercial paper or any other means, can no longer get us out of our present hole. What we need is a recapitalization of the banking system. The thinking behind the TARP is that the solvency crisis is a direct result of the liquidity crisis. (Remember that it was conceived before the most recent downward lurches in global markets.) Why are banks insolvent? Because they're sitting on worthless assets. Why are the banks' assets worthless? Because there's no bid for them. So create a $700 billion bid for those assets, get a two-way market in them moving again—and presto—the solvency disappears. There are more than a few problems with this line of thinking. Firstly, the logic is a bit screwy: Even if insolvency was a direct result of illiquidity, there's no guarantee that you can simply run the movie backward and hope that restored liquidity will result in solvency. What's more, just because the government is willing to spend 40 cents on the dollar for a mortgage-backed bond at the end of a descending clock auction doesn't mean anybody else is: The market won't necessarily really believe those bonds are worth 40 cents. Sure, the banks will use that mark when officially valuing their balance sheet. But investors in the banks' stocks and bonds might well still be skeptical and mark those instruments down accordingly. In order for people to really start believing in the price, you need a two-way market, with multiple sellers and buyers at or around the 40-cent level. If Treasury remains the only buyer in town, that's not going to happen. But more important, what if the banks really are insolvent at that level of 40 cents on the dollar? The price revealed by the TARP would make crystal clear what many investors already suspect—that the banks are worthless. Far from rescuing the market from crisis, if the TARP auctions cleared at a very low level, they could actually precipitate it. In that event, Treasury would have to try a very different tack. They could use the TARP, still, and try deliberately overpaying for bank assets: Instead of paying 40 cents, they'd bid 80 cents. That would help to recapitalize the banking system, since the banks would be getting the fair-value 40 cents for their toxic loans, plus another 40 cents on top, which they could use to stay afloat. Under that kind of system, Treasury would presumably be much more aggressive in terms of the amount of equity that banks would have to give them in order to participate in the auction. Or maybe the auction would be a decreasing-equity auction, rather than a decreasing-price auction: Treasury would set the bid at 80 cents, and then see if there were any bidders willing to hit that bid and give up 10 basis points of equity per $10 million of bonds sold. If there weren't, they would bring the level down to 9 basis points, and so on. The big problem with any kind of recapitalization auction, however, where the Treasury deliberately pays above the market rate for toxic securities, is that it defeats one of the main purposes of the TARP: to set a transparent mark for illiquid bonds. If everybody knows that Treasury is overpaying, then no one will believe for a minute that the securities still left on banks' books are worth nearly that much—and the market in such securities will remain frozen. It's probably much simpler and easier to take the route chosen by Gordon Brown, the British prime minister: Ignore the asset side of banks' balance sheets altogether, and just start writing multibillion-dollar checks to big entities in the financial system in return for shares and/or preferred stock. That's essentially what the U.S. government did with American International Group; it's a bit weird that it chose a very different route for the banking system as a whole. Related Links Beware ETNs Google's Goof Giselle Was Right
Source: Portfolio.com: Top 5 | 8 Oct 2008 | 12:30 pm Shock, Not Much AweThis had better work. The late sell-off in stocks came as Treasury Secretary Henry Paulson gave a gloomy outlook on the weeks ahead as governments work to combat the global credit crisis. "One thing we must recognize—even with the new Treasury authorities—some financial institutions will fail," he said at a news conference. Earlier in the day, the Fed unanimously agreed to cut its benchmark rate by a half point, to 1.5 percent. It was the first worldwide coordinated rate cut since the aftermath of the September 11 attacks. But lending rates among banks remain high. "It does not do anything to change the price of money, it is the availability of money" that is the problem, one trader told the Financial Times' Alphaville blog. For the Fed, the half-point cut may be as low as it dares to go, says Yves Smith on Naked Capitalism: "The Fed is probably unwilling to cut beyond that for fear of winding up in Japan-style zero-interest-rate territory." Still, the rate cuts came on a day when it appeared that the global bloodbath in the stock markets would only grow, with Tokyo closing down 9.4 percent. And the Lex column on the Financial Times’ website argues that the rate cuts will make a difference: The coordinated action also came on a day when Britain announced that it would buy some $88 billion of preferred shares in eight banks and building societies (the U.K. equivalent of savings and loans). Hit the Panic Button Broken English The Fed Turns Up the Tap
Source: Portfolio.com: Top 5 | 8 Oct 2008 | 12:00 pm
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