World Business News Headlines for October 28, 2008

Savers' flight to safety doubles Abbey deposits

Abbey, the mortgage bank owned by Spain's Banco Santander, has doubled its deposit base in a year to £1.4 billion as British customers fled from other UK banks in a bid for safety.
Source: Latest Business News from Times Online | 28 Oct 2008 | 11:24 am

Iceland raises rates sharply, others poised to cut

LONDON (Reuters) - Iceland raised interest rates by 6 percentage points to 18 percent on Tuesday, taking the opposite tack to most countries fighting a global financial crisis which the Bank of England said could cost $2.8 trillion.

Source: Reuters: Business News | 28 Oct 2008 | 11:14 am

Will the Fed go below 1%?

The Federal Reserve is widely expected to cut interest rates again next week. But could the Fed soon go where it has never gone before and bring them below 1%?

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 11:05 am

Is Goldman Sachs As Smart As Everyone Thinks? (GS, C, MS, NTRS, STI, USB)

Sometimes there is just lunacy written about financial companies, and sometimes there is lunacy inside of financial companies. Forget about the argument that there are usually both for a minute. Yesterday we covered an issue from Financial Times after they wrote an article over the weekend and this issue may not go away about Goldman Sachs Group (NYSE: GS) CEO Lloyd Blankfein placing a call to Vikram Padit at Citigroup (NYSE: C). The topic: merger.

First and foremost, this was before the bailout package was inked and it was at the height of the woes in the sector when both Goldman Sachs and Morgan Stanley (NYSE: MS) had changed their charters to become bank holding companies. But this proposition just seems almost unbelievable. We don't think that the FT's coverage of this is wrong, but the notion that even one of these companies would consider such a call brings up a significant problem for the most prestigious investment banking firm on Wall Street.

This would have been a Citi buyout of Goldman Sachs based upon financial values at the time. It would have also been the risky company taking out one of the more prized companies. In dire times when there are only questions and no answers, this would put that "too big to fail" argument front and center. The overlaps here would so numerous that in many cases the firm could have decided which team members could run the Department of Redundancy Department.

With all the conspiracy theories that get floated on blogs and websites about Hank Paulson designing everything to the direct benefit of his former form (yep, Goldman Sachs), the notion of a Goldman-Citi tie up should perhaps be no big surprise. But it is just silly.

We have pointed out how Goldman Sachs' hay day and immunity seems to be over for the time being. But this shows the outright fear that must have been going through the financial market executive heads and it reminds me of some ominous instant messages being passed around the brokerage community before even Bear Stearns had imploded. There were many IM's in conversations from December to February in the brokerage community that said "Wall Street is Bankrupt." Some of these were speculative and some were "second hand comments from executives" if you trust such notions.

We have already stood on the edge of the financial abyss twice. The sad part is that we might get to stand on that edge again if the latest package fails to save the system and the players. But on thinking of a combined Citi-Goldman, then the players pulling the puppet strings have to believe that the game is pure fiction.

Part of the entire move to become a bank holding company requires that less leverage is employed. Goldman Sachs has a history of making great bets, while Citi does not. If Goldman Sachs wants to instill some confidence it should go out and take a more serious look at some of the healthier banks out there. Northern Trust (NASDAQ: NTRS) has long been thought of as the crown jewel in banking and wealth management. There are many depository institutions which Goldman Sachs could gobble up if it chose to. US Bancorp (NYSE: USB) would essentially be a mouthful right now, and SunTrust Banks Inc. (NYSE: STI) is another possibility.

Which institutions Goldman Sachs ends up going after is an unknown. It is very likely that its strategy comes in a form which few would have envisioned. But the mere notion of the firm calling Citigroup about a possible deal just starts to ooze questions of management's faith in its own ability to navigate the treacherous waters which many of us feel are ahead (bailout or no bailout).

This makes one wonder if the current management at Goldman Sachs is going to be able to have many competitive advantages going forward.

Jon C. Ogg
October 28, 2008

Source: 24/7 Wall St. | 28 Oct 2008 | 11:04 am

VW vies for title of world's biggest company

Volkswagen briefly became the world's largest company by market capitalisation as panic-buying by hedge funds desperate to cover losses caused its value to shoot up by up to €150bn
Source: FT.com - US homepage | 28 Oct 2008 | 11:02 am

GM, Chrysler request $10 billion in aid: sources (Reuters)

Reuters - General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.

Source: Yahoo! News: Business | 28 Oct 2008 | 11:02 am

GM, Chrysler request $10 billion in aid: sources

NEW YORK/DETROIT (Reuters) - General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.

Source: Reuters: Business News | 28 Oct 2008 | 11:02 am

Dollar rallies against the yen

The dollar bounced back against the yen Tuesday after global stock markets took a rest from their recent steep declines.

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:58 am

Whirlpool posts lower profit, cuts more jobs

ATLANTA (Reuters) - Whirlpool Corp reported lower quarterly profit on Tuesday as U.S. sales fell, and the world's biggest appliance maker said it would cut 5,000 jobs by the end of this year.

Source: Reuters: Business News | 28 Oct 2008 | 10:54 am

Whirlpool posts lower profit, cuts more jobs (Reuters)

Reuters - Whirlpool Corp reported lower quarterly profit on Tuesday as U.S. sales fell, and the world's biggest appliance maker said it would cut 5,000 jobs by the end of this year.
Source: Yahoo! News: Business | 28 Oct 2008 | 10:54 am

Stocks ready to join global rebound

U.S. stocks were poised to join a global stock buying surge Tuesday, bouncing back from several days of steep losses, ahead of the start of the Federal Reserve's two-day meeting on interest rates.

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:52 am

Whirlpool to cut 5,000 jobs

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:47 am

Iceland raises interest rate from 12% to 18%

Iceland’s central bank today raised interest rates by a massive 6 percentage points to 18 per cent and said it had applied to the US Federal Reserve and the European Central Bank for extra funding.
Source: Latest Business News from Times Online | 28 Oct 2008 | 10:47 am

GE takes $5 billion Fed loan - report

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:44 am

Bargain hunting after losses boosts world stocks

LONDON (Reuters) - World stocks rose solidly on Tuesday as investors indulged in a burst of bargain hunting after five straight trading sessions of steep losses.

Source: Reuters: Business News | 28 Oct 2008 | 10:43 am

Bargain hunting after losses boosts world stocks (Reuters)

Reuters - World stocks rose solidly on Tuesday as investors indulged in a burst of bargain hunting after five straight trading sessions of steep losses.

Source: Yahoo! News: Business | 28 Oct 2008 | 10:43 am

Boeing in tentative deal to end 52-day strike

NEW YORK (Reuters) - Boeing Co and its biggest union have agreed a tentative deal to end the longest strike at the planemaker's plants for 13 years and halt revenue losses estimated at $100 million a day.

Source: Reuters: Business News | 28 Oct 2008 | 10:22 am

Financial Crisis Cost Moves Toward $25 Trillion

No one with an abacus, a calculator, or a mainframe will ever know what the global credit crisis has cost in real money. Lost jobs means lost tax revenue. Lost bank capital means a drop in share values. Government aid must be near $1.5 billion when the US's $700 billion is added to what all other nations have put in to shore up banks.

The Bank of England reckons the cost of the near-collapse of the financial system is $2.8 trillion. It does not say precisely how it came up with that figure, but in the guessing game that hardly matters.

Looking at the issue from a simpleton's perspective, Citigroup (C) has lost $200 billion of is market cap. The number for Wachovia (WB) is more like $100 billion. The loses to Lehman and WaMu shareholders are of a similar magnitude. By these calculations, investors in US financial companies have seen well in excess of $1 trillion go down the drain. Lost jobs are certainly worth hundreds of millions in tax revenue. Most of these out-of-work investment bankers were rich.

The fallen value of hedge funds cannot be tracked, but some of the larger ones such as Citadel are down by several billion. Investors in these firms may never see most of that money back.

The fallen value of real estate due to lack of a real mortgage rescue program must be well into the trillions of dollars, especially if that pool includes housing and commercial real estate worldwide. More liquidity would not have saved the real estate market, but it might have arrested its rapid decline. Banks getting capital from the US government are not lending that out again, defeating much of the purpose.

The Bank of England's figure is probably a multiple of ten times too low. A figure around $25 billion would be more accurate.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 10:21 am

Big tech goes bargain hunting

These are the days that bring out the power shopper in Larry Ellison. With so much chaos in the markets and panic in the boardrooms, the Oracle CEO sees right now as a fine time to stroll through Silicon Valley and buy pretty much whatever he wants.

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:19 am

Oil rises with global markets

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 10:07 am

SAP warns on margin, scraps revenue guidance

German business software giant SAP cut its margin guidance and scrapped a revenue forecast, citing the economic downturn as it also revealed a 5% decline in third-quarter profit.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 10:07 am

CORRECTED - UPDATE 1-Finland's Orion Q3 profit misses forecasts

(Corrects forecasts in first paragraph and second bullet point
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 10:03 am

Asian markets rebound in volatile trading

Asian stocks rebounded led by the Hang Seng which reported its biggest daily gain in a 11 years in a sign of the persistent volatility in global equity markets
Source: FT.com - US homepage | 28 Oct 2008 | 10:01 am

Earnings Watch: Updates, advisories and surprises

A roundup of the latest corporate earnings reports and what companies are saying about future quarters.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 10:01 am

Iceland's interest rate up to 18%

Iceland's central bank raises its key interest rate to 18% from 12% as the country battles against financial collapse.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 10:00 am

UDPATE 1-China's Shenhua Q3 net profit up 48 pct

* Net profit jumps 48 pct in Q3 on higher coal output, prices
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:58 am

Sarkozy moves to limit job cuts

The French president is to unveil a package of measures designed to protect jobs from the effects of the financial crisis.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 9:58 am

Oil edges higher, nears $64 as stock markets rally

LONDON (Reuters) - Oil rose toward $64 on Tuesday, tracking a recovery in European and Asian stock markets as dealers returned to buy beaten-down shares.

Source: Reuters: Business News | 28 Oct 2008 | 9:58 am

Google (GOOG) Burns More Money To Save The World

Leaving aside its huge and immensely profitable search business, Google (GOOG) has managed to lose money in almost every other business it has started or bought. YouTube is probably at the top of that list.

Google's latest foray into burning cash is to help improve the energy grid and cut the cost of electricity. According to The New York Times, "Google is now considering large investments in projects that generate electricity from renewable sources."

The sharp drop in Google's shares can be placed at the feet of concerns that the company spends too much money and that its margins will be compressed by any slowdown in the advertising business unless it cut costs. That has helped push the search company's stock to a level where it has not traded since late 2005.

If the management at Google is anything, it is smart. Perhaps that is university smart and not intelligence based on practical experience

Ethanol and solar stocks have been wounded by falling oil prices, dropping government subsidies, and rising commodities prices. Shares in solar giant Suntech (STP) are down from a 52-week high of $90 to about $12. Biofuels operator Verasun (VSE) has fallen from $17.75 to $.70.

Doing good has some limits when the shareholder's money is involved. The two founders of Google and its CEO have billions of dollars in personal wealth. Let them put up the capital to make the world "green".

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 9:56 am

World credit loss '£1.8 trillion'

The Bank of England estimates the credit crunch has caused global losses of £1.8 trillion and warns about negative equity.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 9:54 am

The risk fallacy

If you visit Lehman Brothers' website today, more than a month after the investment bank's plunge into bankruptcy, you can still find the following words: "The effective management of risk is one of the core strengths that has made Lehman Brothers so successful."

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 9:53 am

UPDATE 3-SAP scraps 2008 revenue outlook, shares slide

scrapped its 2008 revenue outlook and made no forecast
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:51 am

BP reports record $10 billion profit

LONDON (Reuters) - British oil major BP Plc may have marked the oil industry's high point by reporting a record $10.0 billion third quarter replacement cost profit on Tuesday, as the recent collapse in crude prices ensures a tougher outlook.

Source: Reuters: Business News | 28 Oct 2008 | 9:50 am

Honda warns on profit

TOKYO (Reuters) - Honda Motor Co warned of lower-than-expected annual profits as a deepening financial crisis has hammered demand for cars and sent the yen soaring, while U.S. rivals sought government aid to fund a proposed merger to survive a shrinking market.

Source: Reuters: Business News | 28 Oct 2008 | 9:50 am

Iceland lifts rates to 18% from 12%

Iceland's central bank hiked interest rates from 12 per cent to 18 per cent in one of the first indications of the dramatic impact a $6bn International Monetary Fund-led rescue package will have on the country's economic policy-making
Source: FT.com - US homepage | 28 Oct 2008 | 9:48 am

Accountants in the hotseat

Are well-intentioned but misguided accounting rules intensifying the financial crisis?

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 9:45 am

TABLE-China Shenhua Q3 net profit rises 48 pct

Oct 28 (Reuters) - Three months ended September 30, 2008
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:44 am

BRIEF-Enagas says approached by potential investors

MADRID, Oct 28 (Reuters) - Enagas Chairman Antonio
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:44 am

Boeing settles with machinists; now to Round 2 with engineers

Boeing Co. agreed in principle to settle a strike with its machinists – and immediately faces contract negotiations with its engineer and technical workers union, an effort promising to be just as heated and contentious as the one that prompted the machinists to walk out for seven weeks.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 9:40 am

UPDATE 3-UK's BG makes $3.4 bln bid for Queensland Gas

Group Plc launched a A$5.6 billion ($3.4 billion)
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:38 am

Global shares recover lost ground

European shares open higher after Japan's Nikkei index stages a late rally to close 6.4% up on the day's trading.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 9:38 am

Government Puts More Capital Into Banks: More Failure Of Tickle Down Theory

The large money center banks never planned to take the money they are getting from the government to make loans. The equity investments will be used to shore up capital, which is now old news. Bank executives talked big about improving credit liquidity, but that was a feint all along.

Since Treasury has not attached strings to the capital going to banks, the system for getting money to businesses and consumers may be a year or more from improving.

Now the tier of banks just below the heavyweights like Citigroup (C) and Bank of American (BAC) are getting capital will get $15 billion. According to The Wall Street Journal, "some banks acknowledged that perhaps only a small chunk of the money would be funneled into loans." Put another way, the purpose of the $700 billion approved by Congress to save the financial system has been perverted once again.

Will the banks all pay for their greed? Perhaps they will. They are not insulated from falling real estate prices and mortgage defaults. These actions do nothing to improve the value of mortgage-backed securities. The evil cycle almost insures that the federal government will have to put more money into the financial firms or add another rescue which deals directly with homeowners.

Either way, the cost of saving the credit system may still explode.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 9:37 am

VW passes Exxon Mobil as world's largest firm by market cap

Volkswagen’s massive stock price surge has briefly let Europe’s top automaker to stake the claim as the world’s largest company by market capitalization, passing oil giant Exxon Mobil.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 9:35 am

Honda warns on profit (Reuters)

Reuters - Honda Motor Co (7267.T) warned of lower-than-expected annual profits as a deepening financial crisis has hammered demand for cars and sent the yen soaring, while U.S. rivals sought government aid to fund a proposed merger to survive a shrinking market.

Source: Yahoo! News: Business | 28 Oct 2008 | 9:32 am

BG Group to buy Australian firm

British energy firm BG Group agrees to buy Australian gas producer Queensland Gas for 5.6bn Australian dollars ($3.4bn; £2.2bn).
Source: BBC News | Business | World Edition | 28 Oct 2008 | 9:27 am

UPDATE 2-TomTom lowers outlook, renegotiates debt terms

company TomTom on Tuesday lowered its 2008 outlook due
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:25 am

China's Shenhua Q3 net profit up 48 pct

HONG KONG, Oct 28 (Reuters) - China's Shenhua Energy Co Ltd
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:25 am

Boeing (BA) Settles With Unions: All That Wasted Time

Moving into the pit of a recession, Boeing (BA) executives managed to prolong a strike with the company's machinists for seven weeks before reaching an four-year accord. Management almost certainly knew their tipping point for settling, so what was the wait for?

In the meantime, the big aerospace firm allowed its long-delayed Dreamliner to get even later which will almost certainly cause airline customers to seek penalties. That would be another few hundred million dollars out the door. Airbus certainly took whatever advantage it could of the significant failure of the people who run Boeing.

According to The Wall Street Journal, Boeing will be able to use outside contractors to build some parts but "once the parts enter the factories, only union workers will be allowed to handle them and see them to their final destinations." That sounds like a huge win for the company.

While Boeing dawdled getting minor concessions from workers, it undermined its ability to fulfill a massive backlog of aircraft which pushes revenue out into the future. The company has years worth of planes to deliver, so it is a mystery why a four-year deal would do anything but put the most modest pressure on Boeing's profit margins. As the stand-off moved from days to weeks, Boeing's shares dropped from more than $60 to under $43. Some of the can be attributed to the stock market. The balance can be assigned to stupidity.

Anticipating the strike months ago, Boeing knew what it needed to settle. That means getting the labor stoppage out of the way without waiting seven weeks should have been a relatively simple matter.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 9:21 am

Bank of England warns of potential for more instability

Hedge funds, insurance companies and turmoil in emerging economies still pose threats to Britain’s financial system, the Bank of England warned in its twice-yearly report on financial stability Tuesday.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 9:21 am

Boeing, union reach deal to end strike

Source: Business and financial news - CNNMoney.com | 28 Oct 2008 | 9:20 am

Panasonic reports profit fall, sticks to forecasts

Panasonic's quarterly profit slumped 16 percent as a strong yen, declining gadget prices and rising material costs chipped away at the Japanese electronics maker's earnings. But...
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:18 am

Thai Hot Stocks - index up 4.35 pct, PTTEP jumps

BANGKOK, Oct 28 (Reuters) - Thailand's benchmark SET index
Source: Infocious RSS raw feed - channel BNewsBusiness | 28 Oct 2008 | 9:16 am

Asia Markets: Hang Seng rockets 14.4%, Nikkei spikes 6.4%

Most Asian markets survived early volatility to end higher Tuesday, with Hong Kong stocks spiking more than 14% to claw back from some of their steep losses in the previous five sessions. Japanese stocks nudged a new post-bubble low before reversing for a muscular gain in the afternoon.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 8:52 am

Rescue plan faces delays in hiring asset managers: report

(Reuters) - The Treasury Department's plan to begin buying bad loans and other troubled assets has been complicated by delays in hiring financial firms to oversee the $700 billion program, the Wall Street Journal said.

Source: Reuters: Business News | 28 Oct 2008 | 8:50 am

Indications: U.S. stock futures jump as Fed begins rate deliberations

U.S. stock futures jumped on Tuesday as the Federal Reserve began the first day of a two-day meeting in which rate cuts are seen as a near certainty.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 8:49 am

London Markets: London shares bounce, BP paces rebound

BP shares staged a rebound in London on Tuesday, with better-than-expected quarterly earnings from the oil giant helping to improve sentiment towards the stock as investors went bargain hunting following several sessions of heavy losses.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 8:48 am

Rescue plan faces delays in hiring asset managers: report (Reuters)

Reuters - The Treasury Department's plan to begin buying bad loans and other troubled assets has been complicated by delays in hiring financial firms to oversee the $700 billion program, the Wall Street Journal said.

Source: Yahoo! News: Business | 28 Oct 2008 | 8:37 am

London rises after Aviva reassures on capital

Shares in Aviva, the owner of Norwich Union, were among the top performers in the FTSE 100 index today after the group insisted its capital solvency was strong and revealed overall growth in sales because of a strong performance in the US.
Source: Latest Business News from Times Online | 28 Oct 2008 | 8:36 am

Pickens investors ask for exit: report

(Reuters) - About half of the investors in T. Boone Pickens' energy-oriented equity hedge fund have asked to withdraw their money on the heels of losses of about 60 percent this year, the Wall Street Journal said, citing people close to the matter.

Source: Reuters: Business News | 28 Oct 2008 | 8:32 am

Japan stocks rise in late rally

Japan's Nikkei rallies after dropping below 7,000 for the first time in 26 years, following more volatile trading.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 8:27 am

Bolshevicks Seize Detroit (GM)(F)(TM)

As far as anyone can prove, Henry Ford and Alfred Sloan were not members of the Communist Party. Neither one of them was asked to testify before the House Committee on Un-American Activities. No one has ever even hinted that either of them ever met Senator Joseph McCarthy.

Left alone, Detroit did fairly well. With the exception of being converted into the world's largest arms manufacturing apparatus during WWII, and a loan given to Chrysler in 1978 and paid back by Lee Iacocca, the federal government has not given a financial aid package to the auto industry. This relationship has been a one way street for decades. Congress mandates safety features and emissions standards. Detroit spends hundreds of millions of dollars complying. The $5 billion (or $10 billion) loan that GM (GM) is asking from the Fed to help it finance a buyout of Chrysler might be seen as a payback for all those years of regulation. However, the overarching stupidity of the management of The Big Three must be acknowledged as well.

Those who are lobbying the federal government to write a large check to GM are primarily Michigan Congressmen led by John Dingell, the Methuselah of the House who has served his district since 1955. He owes his longevity in large part to his ability to bring home the bacon from Washington for the car companies. A bailout would be the crowning achievement of his life and he could go to his grave with a number of schools in and around Detroit bearing his name.

The argument for a bailout of the car industry is perverse in its simplicity. Since the government plans to aid banks with hundreds of billions of dollars, why shouldn't automobile manufacturers have financial support as well? Banking is viewed as "strategic" to the US economy. In other words, it is at the core of what makes the US system of commerce viable. Detroit would posit that, as one of the largest employers in the country and as an anchor of the American manufacturing system, it should enjoy the same status.

The other part of the argument for providing capital to the auto industry is only whispered, but it is as important as any other. Large businesses ruined by longstanding poor stewardship cannot be disqualified for financial aid if they fall under the rubric of "too big to fail."

The car industry's logic has the power of being simple to the extent that it hides its own flaws. Banks, insurance companies, and brokers made remarkably poor decisions by hitching their fortunes to financial derivatives, particularly those tied to mortgages. But, in the case of the credit system, the failure was global and could not be addressed by allowing the American system to crater and leave the vacuum to be filled by healthy operators abroad. The results of poor judgment n the management of banks pervaded the global system and once the poison was in the blood it moved everywhere.

The American automotive industry is in an entirely different situation. It made a series of decisions that led to its reliance on large and extremely profitable SUVs and pick-up trucks. The US car makers did not hedge their bets as almost all Japanese and most European firms did. The model line-ups had remarkably few light, fuel-efficient cars. Even though the downturn in the American car market has hurt almost every company in the industry, most outside the US are still healthy. Toyota (TM) and VW are now probably the most powerful auto manufacturers in the world. Another dozen, including Honda, Renault, BMW, and Nissan, will be pinched in the recession but will not be put out of business.

The US car companies have no reasonable argument that the American economy needs them to remain independent for the commerce system to work well. They cannot make the case that they are part of a global industry which is on the verge of collapse. The problems of Detroit are specific to Detroit. The disease of bad management did not spread outside the US in this industry.

If any or all of The Big Three are merged out of existence or bought by overseas competitors , the normal course of consolidation will have gone on its evolutionary way, uninterrupted by meddling from the government.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 8:24 am

Aegon taps Dutch government for $3.7 billion

Insurance group Aegon said Tuesday that it will get a 3 billion euro ($3.7 billion) injection from the Dutch government to strengthen its capital position as it also revealed a roughly 350 million euro third-quarter loss due to higher impairment charges and weak markets.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 8:24 am

Magazine Business Starts To Follow Newspapers Down The Tank (NYT)(WPO)(GCI)(MHP)(TWX)

There are no Wall Street analysts who believe that newspapers will recover from the ongoing financial crisis. Publishers have argued that housing, employment, and car markets were the cause of their declining revenue. When those industries recovered, they reasoned, so would the newspaper industry. Based on the third quarter results from large newspaper chains including The New York Times Company (NYT) and Gannett (GCI), it is almost certain that the internet has mortally wounded this business and that the websites set up by local papers are not pulling in enough revenue to offset what print versions are losing.

The Audit Bureau of Circulations released its numbers for newspapers today. For the six months ending in September most large dailies lost a significant portion of their subscribers compared to the same period a year ago. The biggest papers in Boston, Houston, Philadelphia, and Atlanta all dropped over 10%.

As the year wears on there is growing evidence that the magazine industry will not escape the fate of newspapers. Several of the largest weekly magazines, business publications, and the flagship properties at some of the big print companies are experiencing tremendous advertising page attrition which is, in many cases, accelerating.

According to ad page figures given to 24/7 Wall St. by media newsletter MIN, some of the largest publications at Hearst and Conde Nast are down significantly.

At Hearst, Cosmopolitan's ad pages are off almost 11% through November. Redbook is down 10% for the same period. Good Housekeeping is only off 4%.

All of the big Conde Nast magazines are posting sharp advertising page drops. The New Yorker is down 24% through November. Vanity Fair is off 12% but its November issue lost 34% of its ad pages compared to the year before. Vogue dropped 7% but pages were down 32% for November compared to the same month in 2007. The Newhouse family, which owns Conde Nast, has been experiencing large losses at some of its newspapers, further compounding the trouble.

Business magazines and weekly news publications have been hit especially hard this year. The internet has put them at a distinct disadvantage. Their content relies to a large extent on timeliness. Magazines have little chance of competing with the internet because it takes days just for the printing and mailing. This growing problem is forcing the owners to consider how much money the large business magazines lose on their print editions and whether their online products can make up for that.

Through the third week in October, BusinessWeek, owned by McGraw-Hill (MHP), has lost over 17% of its ad pages since last year. Forbes is down almost 16%. Fortune, owned by Time Warner (TWX) is up just over 2%. Online audience measurement firm Quantcast shows BusinessWeek.com with seven million unique visitors and Forbes with four million. That means they at least have an opportunity to do well bringing in large sums of internet ad dollars even as a recession diminishes some of the growth in that medium.

In the weekly news category the three large publications, Time, Newsweek (part of The Washington Post (WPO), and US News, have lost an average of 27% of their ad pages. US News, which is privately held, is going through a particularly brutal period with ad pages off 32% year-to-date. Quantcast estimates that USN has only 2.3 million visitors online, probably not enough to make up for the fall-off in the print product.

Magazine executives are likely to make the same case that newspaper management did last year. In a better environment, print revenue will come back. That view now appears naive. Magazines do have the advantage of having watched newspapers wait too long to move online. If they take advantage of the benefit of that history they may find themselves in relatively good shape.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 8:17 am

Stocks gain 0.73% at open (AFP)

AFP - London's FTSE 100 index of top shares rose 0.73 percent in opening trading on Tuesday, after earlier gains in Asia, but investors remained on edge about a looming global recession, dealers said.

Source: Yahoo! News: Business | 28 Oct 2008 | 8:15 am

High oil prices lift BP's profits

BP sees its profits for the July to September period more than double to $10bn (£6.4bn), buoyed by record high oil prices.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 8:07 am

Europe Markets: Europe stocks rally on BP results, bargain hunting

European shares strengthened in early trading on Tuesday, helped by oil giant BP’s stronger-than-forecast profit and by bargain hunting after a 22% drop since the start of October.

Source: MarketWatch.com - Top Stories | 28 Oct 2008 | 7:52 am

Sharp fall in profits for Honda

Japanese carmaker Honda Motor reports a 41% fall in profits as it struggles with falling demand and a strengthening yen.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 7:49 am

BP profits soar 148% on record oil prices

BP reported third-quarter profits up 148 per cent to $10 billion ($£6.4 billion) amid growing concern that oil companies are not passing on the benefits of lower oil prices to consumers.
Source: Latest Business News from Times Online | 28 Oct 2008 | 7:49 am

Media Digest 10/28/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, GM (GM) and Chrysler have asked the government for $10 billion to close their merger.

Reuters reports that Boeing (BA) and its machinists have entered into a tentative labor agreement.

Reuters reports that Honda (HMC) cuts its sales forecasts due to the financial crisis.

Reuters writes that Avis cut 700 jobs and had a $1 billion loss.

Reuters reports that Mastercard (MA) and Visa (V) will settle a suit with Discover (DFS) for $2.75 billion.

Reuters reports that Wal-Mart (WMT) will cut capital spending and slow building new stores.

Reuters reports that Google (GOOG) plans to invest in the energy sector.

Reuters reports that Microsoft (MSFT) will rent its "cloud computing space.

The Wall Street Journal reports that BP's (BP) profits rose 83% on higher oil prices.

The Wall Street Journal reports that GM may get $5 billion from the Energy Department for its Chrysler deal.

The Wall Street Journal reports that "Google, Yahoo (YHOO) and Microsoft agreed to a set of principles for how to do business in nations that restrict free speech and expression."

The Wall Street Journal reports that bargain hunters are beginning to shrink the glut of homes.

The Wall Street Journal reports that the government rescue plan is slowing due to slow hiring of asset managers.

The Wall Street Journal reports that oil earnings are likely to drop on the falling price of oil.

The Wall Street Journal reports that much of the US capital being put into regional banks will not go to customer loans.

The Wall Street Journal writes that a slowdown in China's recovery may keep metal prices low.

The Wall Street Journal reports that more car dealers are closing.

The Wall Street Journal reports that hedge funds are trying to push out the head of Dillard's.

The Wall Street Journal reports that CenturyTel (CTL) plans to buy Embarq (EQ) to save costs.

The FT writes that GE (GE) will test the government's new commercial paper facility.

Bloomberg reports that Nomura posted a large loss due to problems in the Japanese market.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 7:46 am

BG secures £2bn deal to buy Queensland Gas

BG Group, which was last month spurned in its attempt to buy Australia's Origin Energy, has struck a friendly deal to buy Australia's Queensland Gas for £2 billion.
Source: Latest Business News from Times Online | 28 Oct 2008 | 7:34 am

BA and Qantas fined millions for price-fixing

British Airways and Qantas have been fined millions of pounds for their part in an international freight price fixing cartel.
Source: Latest Business News from Times Online | 28 Oct 2008 | 7:32 am

Tokyo Leads as Asian Stocks Make Gains

Asian stock markets had a respite Tuesday from the major sell-offs that have hammered equities in recent sessions, making up some lost ground during afternoon trading.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:23 am

Asia Markets 10/28/2008 Big Move Up (HMC)(HBC)

Markets in Asia rose sharply.

The Nikkei was up 6.4% to 7,622. Honda (HMC) was up on a falling yen. Mitsubishi UFJ Financial due to concerns it will raise over $10 billion diluting current shareholders.

The Hang Seng rallied 11.5% to 12,280. HSBC (HBC) rose sharply.

The Shanghai Composite was up 2.8% to 1,772.

Data from Reuters.

Douglas A. McIntyre

Source: 24/7 Wall St. | 28 Oct 2008 | 7:19 am

Australian Stocks: Market claws back early losses

MELBOURNE - The Australian share market has clawed back substantial early losses to close marginally weaker. A strong rally on Japan's Nikkei index and the odd bright spot among company announcements helped the local market to...
Source: New Zealand Herald - Business | 28 Oct 2008 | 7:18 am

NZ stocks: Market down over three per cent

The New Zealand sharemarket fell again today, sliding another 3.3 per cent after the Labour Day holiday on Monday buffered it from the big falls in Asian markets. Early gains by some individual stocks evaporated amid continuing...
Source: New Zealand Herald - Business | 28 Oct 2008 | 7:00 am

Loss-laden CalPERS relies on bear market lessons to get through downturn

The giant, loss-laden pension fund learned lessons in the dot-com crash, president says.

The president of California's huge public pension fund, the nation's largest, expressed confidence Monday that the fund would see its way through the deepening global financial crisis -- even though it has lost $54 billion since July 1.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

ATM and bounced check fees rise again, survey finds

A bounced check costs an average of $28.95, up 2.5% from a year ago, a survey finds. You could be in for higher...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Loss-laden CalPERS relies on bear market lessons to get through downturn

The giant, loss-laden pension fund learned lessons in the dot-com crash, president says. The president of California's...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Gasoline prices continue to plunge

The national average falls to $2.65 a gallon. Rumors of a further OPEC production cut fail to halt the slide in oil futures, now edging toward $60 a barrel.

As oil edged closer to $60 a barrel in New York futures trading Monday, the Energy Department said that pump prices continued an unprecedented free fall from their all-time highs recorded this past summer.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

Wal-Mart scales back store growth

Wal-Mart cuts store growth

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

Canadian dollar's loss could be Hollywood's gain

Canadian executives hope a favorable exchange rate will help entice more U.S. filmmakers to come north.

When the Canadian dollar dropped to a three-year low last week, Judy Ranan wasted no time getting the message out to Hollywood.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

A revived grocery union aims at Fresh & Easy

The resurgent United Food and Commercial Workers is scoring bargaining and organizing gains throughout California. Unionizing workers at the growing chain would be a high-profile win.

Five years ago, the union representing Southern California supermarket workers was a mess.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

The end of the road for U.S. carmakers?

Some analysts suggest failure may not be such a bad thing for Detroit's Big Three. Others, especially Michigan politicians, warn of calamity.

Are the Big Three worth saving?

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

Gasoline prices continue to plunge

The national average falls to $2.65 a gallon. Rumors of a further OPEC production cut fail to halt the slide in oil futures, now edging toward $60 a barrel. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Bailout divides regional banks into haves and have-nots

The Treasury Department invests in stronger banks, leaving others vulnerable to hard times or takeovers.

With the U.S. Treasury injecting $35 billion into about 20 regional banks, attention is likely to shift to rivals that may not be strong enough to qualify for such assistance.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

Bailout divides regional banks into haves and have-nots

The Treasury Department invests in stronger banks, leaving others vulnerable to hard times or takeovers. With...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Stocks slide sharply as recession worries continue

The Dow closes 203 points lower after a burst of late selling. Investors are rattled after steep drops in overseas markets, especially in Asia, where Japan's Nikkei 225 index falls to a 26-year low.

Stocks closed lower Monday after a burst of late selling drove major market indexes into the red as investors fretted about the risks of a global recession.

Source: L.A. Times - Business | 28 Oct 2008 | 7:00 am

Sales of new homes unexpectedly rise in September

Experts doubt the market has hit bottom. The U.S. median price declines 9.1%. Sales of new homes recorded an unexpected...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

The end of the road for U.S. carmakers?

Some analysts suggest failure may not be such a bad thing for Detroit's Big Three. Others, especially Michigan politicians, warn of calamity. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Canadian dollar's loss could be Hollywood's gain

Canadian executives hope a favorable exchange rate will help entice more U.S. filmmakers to come north. When the...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Wal-Mart scales back store growth

Wal-Mart cuts store growth
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Capital One, Key among 15 banks getting $34 billion

Fifteen regional U.S. banks, including SunTrust Banks Inc. and Capital One Financial Corp., accepted at least $34 billion in government cash as the Treasury rolled out the second half of its $250 billion...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 28 Oct 2008 | 7:00 am

Boeing unions reach strike deal

US planemaker Boeing has reached a tentative deal to end a strike by assembly workers, unions and management say.
Source: BBC News | Business | World Edition | 28 Oct 2008 | 5:55 am

Currency: Dollar finds support above 54c

The New Zealand dollar consolidated against the American greenback today, following its Labour weekend hammering. At 4pm today the New Zealand dollar was buying US54.38c and ANZ head of foreign exchange trading Tony Allen said...
Source: New Zealand Herald - Business | 28 Oct 2008 | 5:19 am

Boeing reaches deal with machinists' union

Boeing struck a four-year agreement with machinists' union leaders that should enable the world's second-biggest aircraft-maker to resume commercial aircraft production after more than seven weeks of shutdown.
Source: FT.com - US homepage | 28 Oct 2008 | 4:56 am

Oil companies pour on charm before posting fat profits

Ads tout their people-friendly efforts. But spending data show the focus remains the bottom line.

African children smile for the camera, a youngster sips pink medicine from a spoon and a doctor explains his part in a venture to fight malaria, the No. 1 killer on the continent. It's an effort, he says, that will help save hundreds of thousands of lives.

Source: L.A. Times - Business | 28 Oct 2008 | 4:54 am

AXA NZ freezes funds-5000 investors with $225m on ice

AXA New Zealand has suspended redemptions from three mortgage funds for 30 days because of uncertainty in the wake of the government's deposit guarantee scheme, which covers banks and finance companies but not mortgage trust and mortgage...
Source: New Zealand Herald - Business | 28 Oct 2008 | 4:00 am

From Pain to Profits

A manager with an ace track record says recovery is two years away.

Source: SmartMoney.com | 28 Oct 2008 | 4:00 am

NZ dollar firms - support above US54c

Tips for savers, as another Fed rate cut looms

Source: L.A. Times - Business | 28 Oct 2008 | 2:19 am

Telecom pulls out of Fly Buys

Telecom says it is pulling out of the Fly Buys consumer rewards programme at the end of the year. Company general manager of marketing David Craig says the decision is based on a range of factors - and is not a reflection on the...
Source: New Zealand Herald - Business | 28 Oct 2008 | 2:14 am

After The Close - Monday

PAREXEL (PRXL), a provider of clinical research services, said Q1 EPS rose 35% to 23 cents, a cent above views. Sales grew 26% to $263 mil, below...

Source: Investor's Business Daily: BUSINESS | 28 Oct 2008 | 12:37 am

Trends & Innovations - Monday

Software determines body shape

Source: Investor's Business Daily: BUSINESS | 28 Oct 2008 | 12:37 am

Tully Deal Should Give Coffee Maker's West Coast Push A Nice Jolt

Business at Green Mountain Coffee Roasters has stayed piping hot, even as the rough economy has cooled sales in many corporate quarters.

Source: Investor's Business Daily: BUSINESS | 28 Oct 2008 | 12:37 am

Business Briefs - Monday

Buffalo Wild Wings falls on miss. The restaurant chain said after hours that its Q3 EPS rose 4% to 25 cents, missing views by 6 cents. Revenue...

Source: Investor's Business Daily: BUSINESS | 28 Oct 2008 | 12:37 am

In Brief - Monday

Alberto-Culver (ACV), a maker of consumer products, said Q4 EPS fell 14% to 31 cents ex items, meeting views. Revenue gained 7% to $386 mil....

Source: Investor's Business Daily: BUSINESS | 28 Oct 2008 | 12:37 am

GE tests Fed's new commercial-paper facility

General Electric tested the Federal Reserve's latest effort to restore confidence and liquidity to the US credit markets, borrowing less than $5bn from the government through a new short-term loan facility
Source: FT.com - US homepage | 28 Oct 2008 | 12:29 am

Microsoft offers ‘cloud computing' with Windows Azure

Microsoft, the world’s biggest computer company, yesterday unveiled a platform called Windows Azure that will allow customers to access the group’s products over the internet, rather than installing them on to their own machines.
Source: Latest Business News from Times Online | 28 Oct 2008 | 12:12 am

IMF prepares $10bn bailout as Hungary teeters$

Hungary's battered currency strengthened yesterday after the IMF announced that it had reached broad agreement with the Government on a rescue package to stabilise the economy. The forint has lost almost 20 per cent in the past month against the euro and the dollar.
Source: Latest Business News from Times Online | 28 Oct 2008 | 12:00 am

Still in the woods but there are signs

It may be hard to believe in the face of gyrating currency markets, collapsing share prices and the howls of struggling business leaders, but the early signs are that the flurry of measures two weeks ago to stabilise the banks are starting to work.
Source: Latest Business News from Times Online | 28 Oct 2008 | 12:00 am

IMF package: converts lost in transition

Lights flashing, sirens blaring, the IMF ambulance has arrived at the scene of the accident. Dressed in their natty Washington uniform of blue suits and button-down shirts, the IMF paramedics are hopping from one stretcher to another applying financial sticking plasters to small countries affected by the recent carnage in the lending markets.
Source: Latest Business News from Times Online | 28 Oct 2008 | 12:00 am

Fears grow over yen's rise

The possibility that Japan could be forced to intervene to slow the currency's rise grew after investors ignored a warning from the Group of Seven about "excessive volatility"
Source: FT.com - US homepage | 27 Oct 2008 | 11:42 pm

NZX down 2.4pc after overnight Wall St slump

The New Zealand sharemarket is down more than 2 per cent this morning, following the lead of overseas markets. On Friday before the long Labour weekend break, the benchmark NZX-50 index closed down 28.793 points, or 1.026 per cent,...
Source: New Zealand Herald - Business | 27 Oct 2008 | 11:30 pm

NZOG says Kupe debt all paid, moves into Cantab oil exploration

New Zealand Oil & Gas has fully paid its debt on the Kupe gas project but retained the $125 million debt facility to ensure ready access to funds, if wanted. In its report for the September quarter, released today, the company...
Source: New Zealand Herald - Business | 27 Oct 2008 | 11:00 pm

Kiwi plunges as yen's leap sparks G7 alert

The kiwi dollar hit a fresh 5 1/2-year low of US54.35c last night as fears for the Japanese economy prompted currency speculators there to bring cash home - causing the yen to surge. The dramatic rise in the yen drew a warning...
Source: New Zealand Herald - Business | 27 Oct 2008 | 10:30 pm

Bouncing high

How basketball star LeBron James came to be worth $270m
Source: BBC News | Business | World Edition | 27 Oct 2008 | 10:29 pm

Wal-Mart's new footprint for US namesake units (AP)

AP - Wal-Mart Stores Inc., the world's largest retailer, is benefiting from shoppers turning to less-expensive stores to save money. Still, the company is scaling back its U.S. store growth for its namesake stores as it adjusts to a challenging economic environment.
Source: Yahoo! News: Business | 27 Oct 2008 | 10:11 pm

VIX Index of U.S. Stock Option Prices Advances 1.2% to 80.06

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 9:44 pm

Outsiders pay most to House campaigns

The presidential race isn't the only election next week. More than 400 members of the House are running, and most incumbents will likely cruise to easy victories. One reason is an overwhelming cash advantage. Steve Henn reports.
Source: Marketplace | 27 Oct 2008 | 9:29 pm

Author Kostigen Says Recycling Should Be `Last Resort'

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 9:19 pm

Gelvin Sees Competition for Oil from Emerging Markets

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 9:04 pm

US stocks end down after turbulent day

US stocks swung violently between losses and gains in another volatile session although heightened fears of global recession ultimately trumped relatively upbeat housing market data
Source: FT.com - US homepage | 27 Oct 2008 | 9:02 pm

Last-gasp slump after mad day on Wall St

NEW YORK - Wall Street has ended another highly volatile session with a big last-minute loss as the market's stubborn worries about a protracted downturn in the economy and tight credit markets erased the bulk of the financial sector's...
Source: New Zealand Herald - Business | 27 Oct 2008 | 9:00 pm

Holy New Testament! A Bible with edge

A glossy, edgy, full-color version of the New Testament has celebrities standing in for biblical characters and post-Katrina New Orleans in Revelations. The idea is to get young hipsters to read it. Stacey Vanek-Smith reports.
Source: Marketplace | 27 Oct 2008 | 8:54 pm

With Sirius Up 30%, Can Chatter Be True? (SIRI)

Sirius XM Radio (NASDAQ: SIRI) did something rather unusual if you consider its recent downward trend. Its shares rallied close to 30% today. Sure, you have to consider how low shares had gotten and take into consideration how little this means in raw dollar gains. But you also have to consider the meat here and why this would happen.

Last week we discussed how lucky the company is that NASDAQ has pulled its $1.00 ejection button from the listing requirements. Everyone, and that includes us, has commented how the company is drowning in debt. But its debt financing that looked so high when it was made actually looks pretty cheap considering the levels we have seen investment grade and "AAA-rated" issuers have accepted in recent weeks.

We have refrained from printing some of the crazy rumors out there about the company. But when we see gains of this percentage (even in a penny stock) on a bad market day, it makes us wonder if there might finally be some meat to the gossip. There are two issues which could come into play and both have been subject of chatter.

The first such market talk has Mel Karmazin leading a "go-private" MBO. Karmazin has bought shares in recent months when he could. We have yet to find a single shred of proof that this would occur, and we have not found anyone credible who actually believes this is in the works. Even after the massive sell-off in share prices, Karmazin might not be able to raise the cash in today's no-credit environment. Can you imagine the debt assumption on top of the existing debt and on top of the existing capital needs that it faces in the near future?

The other possibility here is that the company would consider a reverse stock split. Karmazin has said that Sirius would consider anything in response to a David Faber question about a reverse stock split, and at current share prices he might not have much choice. The problem is that we believe most traders and investors would join the trend of recent reverse stock splits with the cheers of "Yeah! We get to short sell this stock all over again!"...

An issue to consider here is that there have been more rumors over the last 6 or 7 years with many technology and media companies being rumored as possible suitors of either Sirius or XM. None have ever materialized. The only reason to even mention it today is that the current price would allow some buyers to snap this up for a song if they have ample capital or if they can easily access capital needed to fund the operations.

If Karmazin has something special up his sleeve, we'll know sooner rather than later. The things that may have been responsible for driving this up seem hard to fathom, but we have always believed that the market speaks louder than personal opinion.

A 30% gain to $0.38 doesn't even come close to recapturing the personal fortunes which have been lost by investors in this cult stock. But for many, this may be the first round of hope in a while.

You can join our open distribution list to hear about other similar situations and previews for our newsletters of special situations or stocks under $10.00.

Jon C. Ogg
October 27, 2008

Source: 24/7 Wall St. | 27 Oct 2008 | 8:51 pm

Here's what I'm doing: Simon Johnson

As a professor at MIT's Sloan School of Management and a former Director of the Research at IMF, Simon Johnson has this financial crisis on his mind every day. In fact, he says, he's losing sleep over it.
Source: Marketplace | 27 Oct 2008 | 8:34 pm

Russian power and dropping oil prices

As oil prices increased, so did Russia's stock and status. Now that oil is slumping, Russia's position and power on the international stage are diminishing. Stephen Beard has the story.
Source: Marketplace | 27 Oct 2008 | 8:08 pm

Stricter enforcement for carry-on bags

Continental and other airlines will no longer allow carry-on luggage any bigger than the regulation size. Too many passengers were cramming the overhead bin space to avoid fees for checked bags. Ashley Milne-Tyte reports.
Source: Marketplace | 27 Oct 2008 | 8:00 pm

EPA's controversial power plant rules

The EPA is changing the way it measures pollution from power plants and making it easier for older facilities to upgrade without installing new emission control equipment. Sarah Gardner has the story.
Source: Marketplace | 27 Oct 2008 | 7:40 pm

MUFG plans $10.5bn boost

Mitsubishi UFJ has unveiled plans to raise up to Y990bn ($10.5bn) in new capital to bolster its balance sheet
Source: FT.com - US homepage | 27 Oct 2008 | 7:34 pm

Checking in on the bailout package

Three weeks after the $700 billion bailout package seems a good time to find out how it's going. To chat about the bailout and who's lining up to get their share, Kai Ryssdal called economist Doug Elmendorf at the Brookings Institution.
Source: Marketplace | 27 Oct 2008 | 7:28 pm

Gartman Sees Baby Boomers Looming as `Large Sellers of Stock'

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 7:14 pm

US regional banks eye deals with Tarp cash

American regional banks accepted more than $30bn of fresh capital from the US Treasury's Troubled Asset Relief Programme, in a move that is likely to spur a consolidation of the US banking sector
Source: FT.com - US homepage | 27 Oct 2008 | 7:08 pm

Economic Diary on FOMC Meeting, New Home Sales, GDP

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 6:58 pm

How the global crisis boosted the yen

The Japanese yen has long been a source of low-interest capital for big borrowers from around the world. Then the global financial crisis hit. Senior Business Correspondent Bob Moon explains what happened next.
Source: Marketplace | 27 Oct 2008 | 6:25 pm

KPMG's Lobo Sees Fraud Cases Increasing in Gulf States

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 6:08 pm

NYU's Roubini Sees `Significant Downside Risk' for Equities

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 6:01 pm

UBS Cuts U.S. Steel to `Sell' on Low Earnings Outlook

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 5:18 pm

Standard Chartered's Maratheftis Sees Global Slowdown in 2009

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 4:21 pm

The Smell of Money

During a time of economic crisis, it would be nice to have a gadget that could sniff out money.

Such a device may literally be coming in a few years, thanks to a breakthrough announced a few days ago by researchers at the Massachusetts Institute of Technology. They are developing an artificial nose.

Called the RealNose project, the scientists have perfected a method that could allow them to create the olfactory equivalent of Mr. Spock's tricorder—the portable sensor used by characters on the sci-fi TV series Star Trek.

The M.I.T. team has worked out a way to isolate and purify certain proteins that bind to specific smells and act like tags that can be read to identify the scent of bacon cooking, or perfume—or the distinctive, but difficult to detect, odor of a person experiencing the early stages of diabetes or certain cancers.

Even more important, the scientists figured out a method to mass-produce the proteins, a prerequisite to developing a useful gizmo for detecting scents.

Imagine having your doctor run a device over your skin that can reveal the presence of a dreaded disease.

Commercial applications are years away, but the group's next step is to create a portable microfluidic device that could be used by everyone from customs agents in airports to environmental officials trying to detect levels of a pollutant in the air.

For years, scientists have tried to separate and manipulate smell proteins, known as olfactory receptors, with limited success. Until now.

"Smell is perhaps one of the oldest and most primitive senses, but nobody really understands how it works," said M.I.T. biomedical engineer Shuguang Zhang, whose team made the breakthrough on the RealNose project. "It still remains a tantalizing enigma."

Humans have a smell system that includes close to 400 functional genes, far more than sight, hearing, or any other sense. This nose machinery allows people to smell tens of thousands of scents, which are picked up by the special proteins and processed by the brain.

Animals known for their sensitive snouts, such as dogs and mice, have around 1,000 smell genes.

The researchers did not mention if their futuristic device can smell dollars, euros, or pounds. However, if the RealNose ever does become a product, its inventors are likely to have plenty of cash to experiment on.Related Links
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Source: Portfolio.com: Top 5 | 27 Oct 2008 | 4:00 pm

SG Hambros's Popper Says Stocks in `Phase of Capitulation'

Source: Bloomberg - All Podcasts | 27 Oct 2008 | 3:40 pm

Down, Not Out

The U.S. stock market resisted joining a wave of global selling today until the final minutes of trading, when it quickly tumbled.

The Dow Jones industrial average, up more than 100 points this afternoon, closed down 203.18 points, or 2.4 percent. The Standard & Poor's 500 index closed down 3.2 percent, while the Nasdaq composite index fell 3 percent.

Shares of producers of oil and raw materials were lower amid evidence of a global economic slowdown. Regional bank shares were strong on the back of a second wave of capital infusions from the Treasury Department. A report showing a September rise in sales of new homes appeared to buoy the market

In the end, however, was the recognition that none of the factors that have been driving the sell-off in global stocks this month has changed. Investors around the world have been dumping stocks. Hedge funds in particular are liquidating as the yen carry trade, borrowing in low-interest yen and investing in higher-yield markets, is being unwound. In Tokyo, stocks fell 6.4 percent to its lowest close since October 1982. Hong Kong stocks tumbled 12.7 percent; Shanghai ended down 6.3 percent. Stocks in Europe were down.

More governments, including Japan's and Belgium's, are moving to help shore up banks. Finance ministers of the Group of Seven nations expressed concern about the volatility of the yen, and the International Monetary Fund announced rescue plans for Hungary and Ukraine just days after detailing one for Iceland.

Investors may be focused this week on what governments do and on economic data coming out: The Federal Reserve is expected to cut its benchmark interest rate on Wednesday, and the first estimate of the U.S. economy's gross domestic product is released on Thursday. But there is also a pressure to sell in this market that will not be eased by any good news on the macroeconomic front.

The Financial Times' Alphaville blog points to a bearish note from Nomura Securities this morning:

"With markets behaving the way they are, rationalizing such extreme movements with economic or corporate fundamentals is virtually impossible. Risky financial assets have effectively ceased to be discounters of likely future economic events."

Source: Portfolio.com: Top 5 | 27 Oct 2008 | 12:00 pm

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