Bond Report: Treasurys trade higher in wake of GDP data, fresh Fed moves

Treasury prices rally and their yields retreat, as data show the U.S. economy shrank more than previously estimated in the third quarter. Bond investors also digest Federal Reserve's latest actions to stimulate lending.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:14 pm

Metals Stocks: Gold rises for fifth day on falling dollar, GDP data

NEW YORK (MarketWatch) -- Gold futures erased earlier losses Tuesday, rising for a fifth straight session as a falling U.S. dollar raised the metal's appeal as an alternative investment and as new data increased economic worries.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:14 pm

Government announces new loan programs (AP)

AP - The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy.

Source: Yahoo! News: Business | 25 Nov 2008 | 3:12 pm

London Markets: London shares extend previous session's rally; Rio Tinto sinks

Shares in London advanced on Tuesday to extend massive gains made in the previous session, as investors continued to welcome a government plan to support the ailing British economy.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:12 pm

Home prices plunge in September (Reuters)

Reuters - Prices of single-family homes in September plunged a record 17.4 percent from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices issued on Tuesday.

Source: Yahoo! News: Business | 25 Nov 2008 | 3:11 pm

E*TRADE's TARP Dilemma (ETFC)

Source: 24/7 Wall St. | 25 Nov 2008 | 3:09 pm

Market Snapshot: U.S. stocks up for a third day as Fed backs consumer lending

U.S. stocks extend the market’s biggest two-day jump in two decades, after the government says it is readying a program to help resurrect dormant consumer loans to help revive the economy.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:06 pm

Europe Markets: Stocks in Europe advance again though Rio Tinto, AXA fall

Stocks in Europe Tuesday built on outsized gains made in the previous session, after the U.S. Federal Reserve outlined a $200 billion plan to buttress consumer lending.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:05 pm

Futures Movers: Crude price slips after big Monday gains; energy broadly lower

Crude-oil futures pare some of the strong gains that the benchmark contract generated in the previous session, as concerns over a slowdown in energy demand undercut Monday's bullish sentiment.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 3:04 pm

Rio shares plunge as BHP walks away

Global miner BHP Billiton called off its bid for rival Rio Tinto, citing worsening market conditions and demands for asset sales from European regulators
Source: Financial Times - US homepage | 25 Nov 2008 | 3:03 pm

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 | 25 Nov 2008 | 3:01 pm

Home prices plunge in September

NEW YORK (Reuters) - Prices of single-family homes in September plunged a record 17.4 percent from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices issued on Tuesday.
Source: Reuters: Business News | 25 Nov 2008 | 2:57 pm

D.R. Horton loss wider, but shares up in broad rally

NEW YORK (Reuters) - D.R. Horton, the largest U.S. homebuilder, reported a wider quarterly loss on Tuesday but shares rose as homebuilders and the broader market extended rallies spurred by further government intervention in the financial sector.
Source: Reuters: Business News | 25 Nov 2008 | 2:56 pm

Growth figure points to US gloom

The US economy shrank at an annual pace of 0.5% from July to September, against an initial contraction estimate of 0.3%.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 2:54 pm

Currencies: Dollar slides after Fed announces $200 billion boost

The Japanese yen and the U.S. dollar rebound as worries about the impact of a global economic slowdown resurface.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 2:54 pm

Home prices in record decline

The home price plunge stayed on a record pace this summer, according to a widely watched gauge of national real estate markets released Tuesday.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:53 pm

Fed announces new plan to support mortgages

WASHINGTON (Reuters) - The Federal Reserve, in another massive life-support intervention for the U.S. financial system, on Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to support consumer debt securities.
Source: Reuters: Business News | 25 Nov 2008 | 2:53 pm

Fed announces new plan to support mortgages (Reuters)

Reuters - The Federal Reserve, in another massive life-support intervention for the U.S. financial system, on Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to support consumer debt securities.

Source: Yahoo! News: Business | 25 Nov 2008 | 2:53 pm

GDP contraction deeper than first thought

WASHINGTON (Reuters) - The economy shrank more severely during the third quarter than first estimated as consumers cut spending at the steepest rate in 28 years, according to a Commerce Department report on Tuesday that underlined how rapidly activity was slowing.
Source: Reuters: Business News | 25 Nov 2008 | 2:52 pm

Economy's tumble even worse than expected in 3Q

WASHINGTON -- The economy shrank more than expected in the third quarter and home prices fell to levels not seen since early 2004 as the government announced new plans to provide $800 billion to boost consumer spending and home buying.

Source: L.A. Times - Business | 25 Nov 2008 | 2:52 pm

Fed, Treasury expand aid to credit markets (AFP)

AFP - The Federal Reserve announced plans Tuesday to pump up to 800 billion dollars into the financial system in purchases of mortgage- and asset-backed securities.

Source: Yahoo! News: Business | 25 Nov 2008 | 2:51 pm

Stocks rise on plan to aid credit issuers

NEW YORK -- Wall Street extended its advance to a third day today after the government announced it is readying a program to aid companies that issue credit cards, make student loans and finance car purchases.

Source: L.A. Times - Business | 25 Nov 2008 | 2:51 pm

Stocks jump in early trading

Stocks gained Tuesday morning after the government said it was preparing to buy billions in bad mortgage debt and also set up a program to help companies that provide consumer loans.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:48 pm

Qantas lowers outlook; cites slowdown, fuel costs

Australian carrier Qantas Airways Ltd. has become the latest Asian carrier to be hit by slowing demand and fuel hedges gone awry.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 2:45 pm

Government plans new credit, mortgage programs

WASHINGTON -- The government introduced a pair of new programs today that will provide $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.

Source: L.A. Times - Business | 25 Nov 2008 | 2:45 pm

US Fed unveils new $800bn rescue

The Federal Reserve is to pump an additional $800bn ($526.8bn) into the markets in another bid to deal with the financial crisis.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 2:42 pm

Coca-Cola Bottling Files To Raise Cash (COKE)

Source: 24/7 Wall St. | 25 Nov 2008 | 2:41 pm

Treasury, Fed act to boost lending

The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy to try to jump start lending by the nation's banks for mortgages and consumer debt.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:41 pm

Ackman's Pershing Square Takes Large Stake in Embattled REIT General Growth Properties (GGP)

After the close yesterday, Bill Ackman's Pershing Square Capital hedge fund disclosed a 7.5% stake (20,080,690 shares) in embattled REIT General Growth Properties Inc. (GGP).

Pershing Square purchased the subject shares and the swaps, for a total consideration of $9,261,789. Trading data reveled with the filing, showed the firm was buying common stock in the $0.35-$0.51 range in November. Shares of GGP closed at $1.00 yesterday, with a 52-week low recently set at $0.24.

Read more...

Source: 24/7 Wall St. | 25 Nov 2008 | 2:41 pm

Venezuela welcomes Russian ships

Russian warships arrive for joint exercises in Venezuela as President Dmitry Medvedev tours Latin America to boost ties.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 2:40 pm

Fed's consumer lending boosts Wall Street (Reuters)

Reuters - Stocks opened sharply higher on Tuesday after the Federal Reserve announced a program to bolster consumer lending, adding to optimism about government efforts aimed at averting a deep economic slump.

Source: Yahoo! News: Business | 25 Nov 2008 | 2:38 pm

Fed's consumer lending boosts Wall Street

NEW YORK (Reuters) - Stocks opened sharply higher on Tuesday after the Federal Reserve announced a program to bolster consumer lending, adding to optimism about government efforts aimed at averting a deep economic slump.
Source: Reuters: Business News | 25 Nov 2008 | 2:38 pm

Like It or Not, This Is Obama's Stock Market

Source: 24/7 Wall St. | 25 Nov 2008 | 2:37 pm

Fed moves to boost consumer lending

US officials opened a new front to fight the financial crisis with two new programmes aimed at boosting lending to consumers and small businesses and supporting the market for mortgage-backed securities
Source: Financial Times - US homepage | 25 Nov 2008 | 2:30 pm

Talbots, Chico's post weaker results

ATLANTA (Reuters) - Apparel retailers Talbots Inc and Chico's FAS , which cater to women aged 35 and over, reported weaker quarterly results on Tuesday as their customers cut spending in the softening economy.
Source: Reuters: Business News | 25 Nov 2008 | 2:30 pm

Economic Report: Home prices off record 17.4% in past year, Case-Shiller says

Home prices in 20 major U.S. cities drop by 1.8% in September from the prior month and by a record 17.4% on a year-over-year basis, according to the Case-Shiller data compiled by Standard & Poor's.

Source: MarketWatch.com - Top Stories | 25 Nov 2008 | 2:30 pm

BHP dumps Rio mining mega-bid as downturn bites

SYDNEY/LONDON (Reuters) - Global miner BHP Billiton abandoned its hostile takeover bid for rival Rio Tinto, blaming sliding metals prices and the threat of global recession for scuppering the mega-merger.
Source: Reuters: Business News | 25 Nov 2008 | 2:29 pm

Paragon resumes investor payout

Paragon, the buy-to-let mortgage lender, reported a 23 per cent fall in full-year profits but today pledged to reinstate its dividend despite rising funding costs.
Source: Latest Business News from Times Online | 25 Nov 2008 | 2:25 pm

Oil pares losses, back above $53 after Fed action

LONDON (Reuters) - Oil pared its initial losses on Tuesday to climb back above $53 a barrel, after the U.S. Federal Reserve acted to support mortgage markets and U.S. GDP turned out to be no worse than forecast.
Source: Reuters: Business News | 25 Nov 2008 | 2:23 pm

Oil pares losses, back above $53 after Fed action (Reuters)

Reuters - Oil pared its initial losses on Tuesday to climb back above $53 a barrel, after the U.S. Federal Reserve acted to support mortgage markets and U.S. GDP turned out to be no worse than forecast.

Source: Yahoo! News: Business | 25 Nov 2008 | 2:23 pm

Economy contracting, slow recovery seen: OECD (Reuters)

Reuters - The economy has probably slipped into a recession that will last through the middle of 2009, and recovery will be slow as consumers cut spending to rebuild lost wealth, the OECD said on Tuesday.

Source: Yahoo! News: Business | 25 Nov 2008 | 2:17 pm

Economy contracting, slow recovery seen: OECD

WASHINGTON (Reuters) - The economy has probably slipped into a recession that will last through the middle of 2009, and recovery will be slow as consumers cut spending to rebuild lost wealth, the OECD said on Tuesday.
Source: Reuters: Business News | 25 Nov 2008 | 2:17 pm

Topps Tiles axes dividend on 27% profit fall

Topps Tiles, the retail group, today has announced it will scrap its dividend after profits fell 27 per cent and warned of "dire" trading.
Source: Latest Business News from Times Online | 25 Nov 2008 | 2:11 pm

US stocks set for boost from new Fed loan move

US stock futures pointed to a sharply higher start to trading as investors looked set to react positively to details of the latest round of government intervention in the financial markets in spite of a lower reading on GDP in the third quarter.
Source: Financial Times - US homepage | 25 Nov 2008 | 2:11 pm

4 ways to bet on emerging markets

The last time we wrote about investing in emerging markets, we took a broad look at major indexes around the globe. Readers wanted to know more, namely possible ways to enhance returns by drilling down into particular companies, regions, or industries.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:08 pm

Economy: Biggest GDP drop in 7 years

The troubled U.S. economy posted its biggest drop in seven years, according to a government report Tuesday.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:06 pm

Oil gives back gains

The price of oil fell Tuesday, after a big rally in the previous session, as investors looked past the government's latest economic intervention to focus on the long-term economic outlook and waning energy demand.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 2:01 pm

Iron Meh

The credit crunch is so powerful that it has now crushed what would have been one of the biggest takeovers of all time.

BHP Billiton, the world’s largest mining company, has abandoned its year-long pursuit of Rio Tinto, the No. 3 miner, blaming deteriorating credit markets and a slide in commodity prices.

When BHP announced its unsolicited offer, prices for iron ore, steel, and other hard commodities were soaring on demand from China, India, and other quickly industrializing nations. Rio Tinto’s iron ore operations were the main prize for BHP.

At the time, the offer from BHP Billiton was valued at $147 billion – greater than the price of the 2000 America Online-Timer Warner merger and second only to Vodafone's acquisition of Mannesmann in 1999.

But both commodity prices and stocks have retreated sharply since then as economies around the world have been hurt by the financial crisis. Copper prices, for one, have fallen by 50 percent in the last year.  The BHP offer, which was rejected by Rio Tinto in February, was worth less than half its original value.

"We have previously said that similar cultures and the overlap of key assets and infrastructure make this a compelling combination, BHP’s chief executive, Marius Kloppers, said today. “Recent global events and associated falls in commodity prices have, however, altered risk dimensions.”

The current unforgiving state of the markets was another concern. BHP said it was willing to sell assets to gain approval for a deal from European Union regulators, but it would have had trouble finding a buyer willing to pay an adequate price given the difficulty in lining up financing.

And the huge debt held by Rio must have been given pause. Rio has some $38 billion of debt, most of it a result of its acquisition of Alcan last year. BHP has $6 billion in debt.

The prospect of refinancing is enough to terrify an iron giant.

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Source: Portfolio.com: Top 5 | 25 Nov 2008 | 2:00 pm

Lost its sparkle?

Why is popular lager Cobra Beer up for sale?
Source: BBC News | Business | World Edition | 25 Nov 2008 | 1:59 pm

Google feels pain with cuts to contractors

Google is slashing the number of contract workers it employs, suggesting that even the most successful of businesses face a torrid time as a global slowdown begins to bite.
Source: Latest Business News from Times Online | 25 Nov 2008 | 1:56 pm

Black Gold Doesn't Help Black Hills (BKH)

Long after the market closed yesterday, Black Hills Corporation (NYSE:BKH) seriously reduced its guidance for 2008 and its outlook for 2009. Full-year EPS is now expected to come in at $2.00-$2.10, about 7.5% lower than earlier EPS guidance of $2.15-$2.25. For 2009, the company lowered its sights from EPS of $2.40-$2.65 to $1.95-$2.25, a drop of of more than 18%. Both estimates were made on a non-GAAP basis.

Black Hills lowered its guidance and outlook in September as well. EPS had been charted at $2.43 for 2008 and $2.69 for 2009. And that was before the credit market collapse was fully appreciated.

The company generally blamed low natural gas and crude oil prices, financial sector weakness, and generally lousy economic conditions. Back in September, Black Hills has also been trying to convert a $383 million short-term credit facility that expires in February 2009 to a long-term loan. In its announcement last night, the company said it was working to "extend" the loan and that it expects "to obtain the financing we need." Right, but on what terms?

And the bad news just keeps on coming. Black Hills got whipsawed by its purchase of $250 million in interest rate swaps. The company revealed that the long-term financing it anticipated is "no longer probable." The mark-to-market value of the swaps as of November 21st is -$69.5 million pre-tax. That amounts to a charge against after tax earnings for the full 2008 year of $1.17/share. It's no wonder Black Hills saved this announcement til 9 p.m. last night.

The company is holding a conference call this morning at 11 a.m. ET to try to explain all this to investors and analysts. What can they say? We screwed up. We borrowed short to make an acquisition when things were good--how were we to know that things would go bad so quickly and we wouldn't be able to borrow long to finance the acquisition?

Every energy company is facing the same difficulties that Black Hills is dealing with. The value of a company's assets is simply unknown. What is known is that those values are dropping every day as the global economy worsens. No matter how valuable a company's assets are, if there is no way to finance growth, asset values will decline. These days, not losing value is the new growth. And even that's damned hard to do.

Black Hills's share price closed up about 2% yesterday, at $24.99 and within range of its 52-week low of $23.84. The stock should have no trouble setting a new low today.

Paul Ausick
November 25, 2008

Source: 24/7 Wall St. | 25 Nov 2008 | 1:54 pm

It's Official: DRAM, The World's Worst Commodity Business (MU)

Source: 24/7 Wall St. | 25 Nov 2008 | 1:50 pm

BHP dumps Rio mining mega-bid as downturn bites (Reuters)

Reuters - Global miner BHP Billiton abandoned its hostile takeover bid for rival Rio Tinto, blaming sliding metals prices and the threat of global recession for scuppering the mega-merger.

Source: Yahoo! News: Business | 25 Nov 2008 | 1:49 pm

Matthew Williamson to design collection for H&M (AP)

AP - Swedish fashion retailer H&M AB on Tuesday said Britain's Matthew Williamson will design its summer guest collection.
Source: Yahoo! News: Business | 25 Nov 2008 | 1:48 pm

Fed announces new mortgage-support program

WASHINGTON (Reuters) - The Federal Reserve, in another massive life-support intervention for the U.S. financial system, on Tuesday announced a $600 billion program to buy mortgage-related...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 1:38 pm

Sony's online card trick

Most adults still think you have to go to Target for a deck of trading cards if you want to play a hit game like "Magic: The Gathering." Their kids know better.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 1:12 pm

Warner Music profit beats Wall Street view

NEW YORK (Reuters) - Warner Music Group Corp posted fiscal-fourth quarter earnings that beat Wall Street estimates even as its revenue fell slightly from a year ago.
Source: Reuters: Business News | 25 Nov 2008 | 1:08 pm

BHP, Rio Tinto: The Deal is Still Dead (BHP, RTP)

We've already conducted the post-mortem on the failed bid by Australia's BHP Billiton (NYSE:BHP) for Britain's Rio Tinto (NYSE:RTP). There are just a couple of details worth noting.

First, there was no chance the deal would have made it past European regulators unless BHP was willing to sell off some of its aluminum and iron ore assets. BHP was willing to do that, but had determined that it was unlikely to find buyers in today's tough credit market. Nobody was likely to pay cash, and shares in some other company were not attractive either.

Second, at its peak, the deal was worth about $147 billion. Today it's valued at $62 billion. Why buy something that is dropping in value everyday? This deal was never [http://www.247wallst.com/2008/08/australian-mine.html] a winner.

Paul Ausick
November 25, 2008

Source: 24/7 Wall St. | 25 Nov 2008 | 1:07 pm

GM: Death of an American dream

Back in 2004, when it was still relatively flush, General Motors invited automotive journalists to the South of France for a three-day "global product seminar." The idea was that writers like me would drive new cars, consume loads of free food and wine, pal around with executives, and develop favorable opinions about GM.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 1:05 pm

The Lending Net

Fresh off another huge rescue of Wall Street, Washington is turning its attention to that oft-neglected place where most of the country lives: Main Street.

The Federal Reserve has announced the creation of a program that will provide financing for new loans to investors for securities backed by credit cards, auto loans, student loans, and loans guaranteed by the Small Business Administration. The plan is intended to revive a moribund consumer-finance market.

Under the new program, the Federal Reserve Bank of New York will lend as much as $200 billion to holders of triple-A-rated asset-backed securities. The Fed will lend an amount equal to the market value of the security “less a haircut.” The Treasury is using $20 billion of the TARP money to backstop the Fed on the lending program.

The Fed in a statement noted that new issuance of asset-backed securities “declined precipitously in September and came to a halt in October.”

“Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity.”

Treasury Secretary Hank Paulson may provide new details at a news conference today, Bloomberg News says. Paulson has previously indicated that he wants to give a jump-start for car loans and student loans.

Deborah Solomon of the Wall Street Journal says, “While the initial focus will be on consumer loans, the facility could eventually be expanded to cover all manner of assets, including mortgages.”

Yves Smith of Naked Capitalism is dismissive of the plan. Writing a post with the headline “Fed and Treasury Want You to Have a Nice Christmas,” she says:

"Consumer debt and consumer spending were at unsustainable levels. They need to fall. Trying to shore up consumers is a wrongheaded way to stimulate the economy. Fiscal expenditures, including a broadening of safety nets, is a much better way to go."

The Fed also announced a separate program to buy as much as $600 billion worth of the direct obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, as well as and mortgage-backed securities backed by such government-sponsored enterprises.

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.”

With these new plans, and Sunday's agreement to backstop some $306 billion of Citigroup's portfolio, the government is turning back to the original plan for TARP. The $700 billion rescue plan was sold  to Congress as a way to buy up troubled securities. Almost immediately after its passage, the money was used instead to take stakes in financial institutions. Perhaps TARP 1.0 was the superior version all along.

 

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Source: Portfolio.com: Top 5 | 25 Nov 2008 | 1:00 pm

VeraSun: Who is that White Knight? (VSUNQ, CHSCP)

Source: 24/7 Wall St. | 25 Nov 2008 | 12:59 pm

Top Pre-Market Analyst Upgrades (AWK, BDK, ERII, FRED, LEN, PSA, WMT)

These are some of the positive analyst calls and upgrades we are seeing early this Tuesday morning:

• American Water Works (AWK) Started as Buy at Societe General.
• Black & Decker (BDK) Raised to Buy at UBS.
• Energy Recovery (ERII) Started as Buy at Piper Jaffray.
• Fred’s (FRED) Raised to Outperform at William Blair.
• Lennar (LEN) Raised to Buy at UBS.
• Public Storage (PSA) Raised to Buy at Goldman Sachs.
• Wal-Mart (WMT) Raised to Outperform at William Blair.

Jon C. Ogg
November 25, 2008

Source: 24/7 Wall St. | 25 Nov 2008 | 12:55 pm

Hormel 4Q profit falls 33 percent but tops view

Hormel Foods says its fiscal fourth-quarter profit fell 33 percent as it continued to grapple with higher costs for key commodity ingredients, but still topped Wall Street expectations. ...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:54 pm

Chesapeake closes $3.37 billion Marcellus sale

Chesapeake Energy has closed a $3.37 billion sale on rights to the massive Marcellus Shale natural gas deposits in Appalachian region, the company said Tuesday. The nation's largest...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:54 pm

ArcelorMittal will cut 2,400 jobs in the United States

The world's biggest steelmaker ArcelorMittal said on Tuesday it would slash about 2,400 jobs at its factory in the US state of Indiana by mid-January because of a drop in orders.
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:53 pm

Top Pre-Market Analyst Downgrades (DDR, FII, LM, PIR, SPLS, ULTA, WFMI)

These are some of the top downgrades and negative calls we are seeing from Wall Street analysts this Tuesday morning:

• Developers Diversified (DDR) Cut to Neutral at Goldman Sachs.
• Federated Investors (FII) Cut to Neutral at JPMorgan.
• Legg Mason (LM) Cut to Underperform at FBR.
• Pier 1 Imports (PIR) Cut to Neutral at UBS.
• Regency Centers (REG) Cut to Sell at Goldman Sachs.
• Staples (SPLS) Cut to Underperform at RBC.
• Ulta Salon (ULTA) Cut to Neutral at Baird.
• Whole Foods (WFMI) Cut to Market Perform at William Blair.

Jon C. Ogg
November 25, 2008

Source: 24/7 Wall St. | 25 Nov 2008 | 12:51 pm

D.R. Horton loss balloons as sales fall

*NEW YORK (Reuters) - D.R. Horton, the largest U.S. homebuilder, on Tuesday reported a wider quarterly loss of $2.53 per share, or $799.9 million, compared with 16 cents per share, or $50.1
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:50 pm

Warner Music profit beats Wall Street view

NEW YORK (Reuters) - Warner Music Group Corp posted fiscal-fourth quarter earnings that beat Wall Street estimates even as its revenue fell slightly from a year ago.
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:49 pm

Greenland votes on expanding its autonomy

Polling stations in Greenland have opened in a referendum on expanding home rule in the vast but sparsely populated Arctic island. Greenland is a semiautonomous Danish territory. The...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:46 pm

Government plans new program to aid credit issuers

The government is working on a new loan facility to help companies that issue credit cards, make student loans and finance car purchases. The Treasury Department and the Federal Reserve...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:43 pm

GDP, confidence numbers expected to show decline

More economic data on the GDP, home prices and consumer confidence are due out today. Wall Street expects that economic activity contracted for the July-September quarter at a faster...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:43 pm

Israel unveils plan to boost economy

The Israeli government on Tuesday unveiled a multibillion-dollar plan to cushion the country's economy from the financial storm walloping world markets. The government presented the...
Source: Infocious RSS raw feed - channel BNewsBusiness | 25 Nov 2008 | 12:41 pm

King warns of 'steep recession'

Mervyn King warns the UK economy will go into "a steep recession" if the banks don't increase lending levels.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 12:33 pm

Top car safety picks for 2009

The IIHS says the number of vehicles that win its top award has doubled in the past year.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 12:20 pm

UK will not recover 'until the end of 2009'

Britain's economy may not begin to grow again until the end of next year, according to a leading international think tank, in a blow for Alistair Darling just a day after the Chancellor gave his big-spend Pre-Budget Report aimed at tackling the crisis.
Source: Latest Business News from Times Online | 25 Nov 2008 | 12:05 pm

UK to suffer 'severe' recession

The OECD says that the UK will suffer a deeper recession than any other major economy in 2009.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 11:50 am

Insurer Axa cuts profit forecast

Shares in Axa, Europe's second-biggest insurer, sink 15% after the firm cuts its profit forecasts.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 11:41 am

Why Citi got Big 3's money

Poor Detroit. The heads of the Big Three automakers had to subject themselves to two days of Congressional grilling last week while they begged for a $25 billion loan.
Source: Business and financial news - CNNMoney.com | 25 Nov 2008 | 11:32 am

China warns on foreign toy design

Chinese toy makers should avoid using unsafe foreign designs, China's foreign ministry spokesman has said.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 11:24 am

Consumer confidence up in Germany

German consumer sentiment rises slightly for the third month in a row despite the country being in a recession, a survey says.
Source: BBC News | Business | World Edition | 25 Nov 2008 | 11:16 am

OECD forecasts four quarters of contraction

The US and eurozone are poised to suffer four consecutive quarters of contracting output that will not end until the middle of 2009, according to the Organisation of Economic Co-operation and Development's latest forecast
Source: Financial Times - US homepage | 25 Nov 2008 | 11:13 am

Bank chief hints at more interest rate cuts

Mervyn King, Governor of the Bank of England, said today that the lack of lending by banks to consumers and businesses was the most pressing issue facing the economy and hinted that interest rates would need to be cut further.
Source: Latest Business News from Times Online | 25 Nov 2008 | 11:12 am

Skanska's workforce slashed by 6%

Swedish construction firm Skanska says it will cut 3,400 jobs, or 6% of its workforce, because of an "extremely sharp decline in residential markets".
Source: BBC News | Business | World Edition | 25 Nov 2008 | 10:51 am

New mortgages fall 52% amid homeloan warning

Mortgage lending slipped back towards a record low in October, as consumers turned to their deposits to fund other spending.
Source: Latest Business News from Times Online | 25 Nov 2008 | 10:36 am

Asian stock markets rise after Wall Street rally

TOKYO -- Asian markets rose robustly Tuesday as investors regained some confidence on Wall Street's second straight day of day of strong gains, spurred by a U.S. government bailout of banking giant Citigroup...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 9:55 am

World Bank says crisis will slow China

In its latest update on the Chinese economy, the bank lowered its outlook for 2009 gross domestic product growth to 7.5% from 9.2% – a forecast it had made in June before the international financial crisis worsened
Source: Financial Times - US homepage | 25 Nov 2008 | 8:51 am

No lines, no fears in Downey takeover

U.S. Bancorp had been lined up in advance as a buyer. The deal unfolded without disrupting operations or causing panic among customers. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

Stocks jump after government bailout of Citigroup

Financial stocks lead the broad advance as investors welcome Washington's effort to rescue the giant banking company. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

U.S. households watch more than 8 hours of TV a day

Television viewing is on the rise despite competition from video games, iPods and the Internet.

The U.S. is a nation of even bigger couch potatoes than previously realized.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Obama assigns centrists to make radical economic moves

The team led by Lawrence Summers, Timothy Geithner and Christina Romer will have to strike a balance between extraordinary government intervention and the nation's commitment to free markets.

The economic team that President-elect Barack Obama unveiled Monday, led by Lawrence Summers, Timothy F. Geithner and Christina D. Romer, comprises widely respected, centrist economists who until recently advocated cautious, sensible-shoe policies to do such things as boost savings, reduce deficits and allow markets maximum feasible rein.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Without bailout, carmakers' road ahead is full of potholes

The Big Three have few prospects for asset sales and may keep shrinking payrolls and operations.

The Big Three carmakers got no bailout money from Congress last week. If the same thing happens again in two weeks, when they return with concrete plans to spend the $25 billion they're requesting, General Motors Corp., Ford Motor Co. and Chrysler will be forced to make hard decisions about how to stay solvent.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Economic winds blowing Hong Kong's way

The lightly regulated Chinese territory stands to benefit from a forecast flight of capital to the East.

The jetliners serving this financial hub arrive with more empty seats these days, and lately it's easier to get a table at Harlan's oyster bar in the International Finance Center.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Detroit auto industry plans car caravan to Washington

The workers, suppliers and dealers want Congress to see how many people depend on the automakers for their livelihoods. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

U.S. average gasoline price drops below $2 a gallon

Pump prices fall to their lowest level in 46 months. California's average may drop below $2 a gallon soon.

Long-awaited relief at the pump continued over the last week with the nation's average retail gasoline price falling below $2 a gallon to its lowest level in 46 months, the Energy Department said Monday.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Economic winds blowing Hong Kong's way

The lightly regulated Chinese territory stands to benefit from a forecast flight of capital to the East. The jetliners...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

Median home resale prices drop 11% in October from a year earlier

The National Assn. of Realtors says the nationwide median price fell to $183,000 last month. It blames foreclosures and distressed properties for a 'significant downward distortion' of prices. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

Obama assigns centrists to make radical economic moves

The team led by Lawrence Summers, Timothy Geithner and Christina Romer will have to strike a balance between extraordinary government intervention and the nation's commitment to free markets. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

U.S. households watch more than 8 hours of TV a day

Television viewing is on the rise despite competition from video games, iPods and the Internet. The U.S. is a...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

No lines, no fears in Downey takeover

U.S. Bancorp had been lined up in advance as a buyer. The deal unfolded without disrupting operations or causing panic among customers.

U.S. Bancorp's weekend takeovers of failed Downey Savings & Loan and PFF Bank appear to have gone smoothly for customers and bank employees, a contrast to July's collapse of IndyMac Bank.

Source: L.A. Times - Business | 25 Nov 2008 | 8:00 am

Hewlett-Packard earnings fall 2% but beat estimates

Strong laptop sales help to offset falling printer orders. Revenue increases 19%, helped by the acquisition of Electronic Data Systems. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

Without bailout, carmakers' road ahead is full of potholes

The Big Three have few prospects for asset sales and may keep shrinking payrolls and operations. The Big Three...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 25 Nov 2008 | 8:00 am

Rio Tinto plunges as BHP Billiton scraps $66bn bid$

Shares in Rio Tinto plunged more than 36 per cent this morning after rival BHP Billiton scrapped its $66 billion hostile bid for the mining giant.$
Source: Latest Business News from Times Online | 25 Nov 2008 | 7:35 am

NZ stocks: Market soars on Wall St rally

The sharemarket jumped more than 2 per cent today, but was unable to sustain the massive relief rally seen on Wall Street after the US government bailout of Citigroup. Wall Street capped its best two-day run since the aftermath...
Source: New Zealand Herald - Business | 25 Nov 2008 | 6:08 am

Currency: Dollar eases after strong early gains

The New Zealand dollar held on to some of its earlier gains, but was unable to make further headway when a massive relief rally on Wall Street petered out today. By 5pm, the kiwi was at US54.13c, up from US53.20c late yesterday...
Source: New Zealand Herald - Business | 25 Nov 2008 | 5:32 am

Qantas retrenches as credit crunch bites

SYDNEY - Australian airline Qantas has lowered its annual profit forecast and will again cut capacity, as the global financial crisis continues to hurt demand for air travel. Qantas now expects a pre-tax profit of around A$500...
Source: New Zealand Herald - Business | 25 Nov 2008 | 2:30 am

Australian business urged to come clean on carbon cuts

Australia's Climate Institute is calling on the business community there to reveal its position on carbon pollution reduction targets. Campaigners say business leaders should announce how much they think Australia should reduce...
Source: New Zealand Herald - Business | 25 Nov 2008 | 2:30 am

Failed finance co directors banned

Directors of failed vehicle hire-purchase finance company National Finance 2000 Ltd have been banned from acting as company directors. Deputy registrar of companies Peter Barker ruled that Trevor Allan Ludlow, Carol Anne Braithwaite...
Source: New Zealand Herald - Business | 25 Nov 2008 | 2:00 am

Telstra likely to bid on Aust broadband network

CANBERRA - Telstra has given the clearest indication yet it will make a bid to build Australia's national broadband network. The telco has been holding out on confirming a bid as it seeks government assurances its retail and...
Source: New Zealand Herald - Business | 25 Nov 2008 | 1:46 am

Citi soars as $300bn bail-out is agreed

Global stock markets rebounded on Monday after the US government moved to stave off a crisis in confidence in Citigroup by providing the beleaguered bank with $20bn in additional capital and arranging $306bn in credit guarantees.
Source: Financial Times - US homepage | 25 Nov 2008 | 1:42 am

Fletchers faces $40m lawsuit in US

Fletcher Building, New Zealand's third-largest listed company, is in a US$21 million ($39.4m) fight over its $1 billion purchase of giant United States manufacturer Formica Corporation. Fletcher, with a $2.8 billion market capitalisation...
Source: New Zealand Herald - Business | 25 Nov 2008 | 1:00 am

Linguist says US intelligence spied on Blair

David Faulk, a former employee of the National Security Agency, alleges that Washington eavesdropped on the former UK prime minister and Ghazi al-Yawer, the first Iraqi president
Source: Financial Times - US homepage | 25 Nov 2008 | 12:31 am

Comvita sales up, but warns it may miss profit targets

Natural health product maker Comvita has warned it is not confident of meeting its full year profit target, while posting sharply higher first half sales and profit figures. The company today said sales for the six months to September...
Source: New Zealand Herald - Business | 25 Nov 2008 | 12:30 am

In Brief - Monday

Science Applications Int'l (SAI), a defense contractor, was downgraded to underweight from neutral by JPMorgan Chase, which cited a great deal of...

Source: Investor's Business Daily: BUSINESS | 25 Nov 2008 | 12:29 am

Business Briefs - Monday

Bernstein bearish on Web firms. Web search king Google, No. 2 Yahoo and 3 other Internet...

Source: Investor's Business Daily: BUSINESS | 25 Nov 2008 | 12:29 am

After The Close - Monday

DONALDSON (DCI), an air and liquid filtration systems maker, said its Q1 EPS rose 13% to 60 cents, topping views by 6 cents. Sales rose 9% to $573...

Source: Investor's Business Daily: BUSINESS | 25 Nov 2008 | 12:29 am

Trends & Innovations - Monday

Gift cards for basics get popular

Source: Investor's Business Daily: BUSINESS | 25 Nov 2008 | 12:29 am

IPO Market May Be Even Sicker Than It Looks, Says Industry Vet

After the brief respite of Grand Canyon Education's (LOPE) debut last week, the IPO market is going back to doing what it did before: absolutely...

Source: Investor's Business Daily: BUSINESS | 25 Nov 2008 | 12:29 am

Standard Chartered sends a signal of the icy winds

All the money ploughed into the global banking system in the past few months looks more and more like a mere downpayment. The final bill could be much, much bigger.
Source: Latest Business News from Times Online | 25 Nov 2008 | 12:00 am

Investor fury over high cost of Barclays' deal

He was clearly furious. Claiming that he had been denied the opportunity to speak, he stormed to the front of the conference hall, intent on telling the City heavyweights in his sights what he thought of them, only to be restrained by a posse of security staff. For this investor, certainly, Barclays’ decision to turn to the Middle East for funds was a step too far.
Source: Latest Business News from Times Online | 25 Nov 2008 | 12:00 am

Global brewer Anheuser-Busch InBev revives $9.8bn rights issue$

Anheuser-Busch InBev, the newly merged global brewer, has revived its $9.8 billion ($£6.5 billion) rights issue after offering shares at a 69 percent discount to Friday's close.
Source: Latest Business News from Times Online | 25 Nov 2008 | 12:00 am

Big fall in numbers for Air NZ

Passenger numbers on Air New Zealand's Tasman and Pacific routes were almost 10 per cent down last month, compared to October 2007. The passenger load factor on the routes also fell, dropping 7.3 percentage points to 76.2 per cent,...
Source: New Zealand Herald - Business | 25 Nov 2008 | 12:00 am

Tax hit to fund £20bn fiscal stimulus

Taxpayers face six years of austerity, paying for the consequences of recession and a £20bn fiscal stimulus unveiled by Alistair Darling as he detailed the most dismal Budget outlook since 1993
Source: Financial Times - US homepage | 24 Nov 2008 | 11:27 pm

US house prices suffer record fall

The price of previously owned homes fell in October by the biggest amount in at least 40 years and the volume of sales also dropped, in a sign of the still mounting problems in the sector
Source: Financial Times - US homepage | 24 Nov 2008 | 11:09 pm

Author Lewis Sees Total Overhaul of Financial Industry

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 11:05 pm

Loss of home equity is the crux of crisis

Little noticed in the day's headlines is this little tidbit: Existing home sales fell another 3% last month. The average house today is worth about what it was in early 2004. Commentator Dean Baker says attention must be paid.
Source: Marketplace | 24 Nov 2008 | 11:04 pm

More retail customers paying with cash

We've been a nation of borrowers for a while now. What might be surprising is the news that we're changing those habits. Retailers are starting to see a preference for cash on the barrelhead. Jeremy Hobson reports.
Source: Marketplace | 24 Nov 2008 | 11:03 pm

French firms turn to poor areas for help

France's largely immigrant suburbs have long faced high unemployment, in some areas at double the national average. But large companies have now begun recruiting from these neighborhoods because it's good for business. Anita Elash report.
Source: Marketplace | 24 Nov 2008 | 11:03 pm

What I'm Doing: Economist Ryan Brecht

Ryan Brecht, an economist who forecasts economic data for the U.S., tells how he's looking past the numbers and thinking about the people hurt by lost jobs and higher prices.
Source: Marketplace | 24 Nov 2008 | 11:03 pm

Obama pledges to shore up economy

Barack Obama said his proposed stimulus package would be as big as necessary to shore up the economy and lay the foundations for renewed growth, amid predictions it could match the government's $700bn financial sector bail-out for size.
Source: Financial Times - US homepage | 24 Nov 2008 | 11:02 pm

Interest rates tumble in face of financial crisis

Reserve Bank Governor Alan Bollard is expected to hack more than 1 per cent off the official cash rate next week in an attempt to bring down interest rates and revive the flagging economy. Market commentators are picking Dr Bollard...
Source: New Zealand Herald - Business | 24 Nov 2008 | 11:00 pm

Laszlo Birinyi Says Inverse ETFs Hold Unintended Consequences

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 10:18 pm

Lindsey's Adams Says Obama Economic Team Is `Outstanding'

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:58 pm

Corner Office: Macy's Terry Lundgren

Retailers are facing grim predictions for meager Christmas-sales growth. So Kai Ryssdal spoke with Macy's CEO Terry Lundgren about how one of the biggest retail chains is dealing with the downturn.
Source: Marketplace | 24 Nov 2008 | 9:40 pm

Obama unveils team, but few details

President-elect Obama announced his economic team today, but he was short on specifics for his economic stimulus plan. Washington bureau chief John Dimsdale reports.
Source: Marketplace | 24 Nov 2008 | 9:40 pm

Citi bailout shows depth of toxic assets

In the federal government's bailout of Citigroup, the bank gets another $20 billion of fresh capital, and taxpayers are on the hook for most of the losses from Citi's toxic assets. Kai Ryssdal talks with John Carney of Clusterstock.com about the details.
Source: Marketplace | 24 Nov 2008 | 9:40 pm

Read Up on Bond Offerings to Know What You Own: Commentary

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:37 pm

UAW's Gettelfinger, Obama's Cabinet and Transition Team

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:33 pm

VIX Index of U.S. Stock Option Prices Retreats 11% to 64.70

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:33 pm

Cunningham's `Ocean,' Bach by Dinnerstein, RCA Fundraiser

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:17 pm

Niall Ferguson Says U.S. Losing Focus in Crisis Response

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 9:06 pm

Bogdanovich Says American Films Have Lost Family Appeal

Source: Bloomberg - All Podcasts | 24 Nov 2008 | 8:59 pm

Sin Citi

Citigroup is being bailed out as I write these words. Now, let's be clear: This is a good thing. But it also stinks, in a very deep, ingrained, infuriating way.

Bailing out Citi is a bit like putting out a fire in the house of a very irresponsible fellow down the street who lets his kids play with matches while he's sleeping in a hammock out back. You'd be very happy to see his house burn down, preferably with him in it, but you're afraid that the flames will spread through his unraked leaves to engulf the entire neighborhood.

At the very least, after the flames are put out, you want an investigation. You want arrests. You want to see someone held accountable. You want to see, pardon the expression, justice.

I say "pardon the expression" because I am speaking in an alien tongue here, at least as far as the recent spate of bailouts is concerned. The basic principle of equity, which is that the guilty will be punished and that he who causes pain will feel pain, is simply not a part of the equation in any of the bailouts of the big banks that have taken place this year.

In fact, I fear that the way things are going, nobody is going to be held responsible for any of the bank failures that are littering the landscape. I'm not talking about criminal action or anything like that, but simply the rather self-evident requirement that the responsible executives be punished, financially or otherwise, and that the shareholders get absolutely nothing. Zippo. Zilch.

The markets are celebrating the Citi bailout, which is good for all of our 401ks, but it is time for the public to feel a greater sense that justice is actually taking place. And no, restricting the dividend to a penny, a pledge to "comply with enhanced executive compensation restrictions," and tossing the taxpayers a few billion in preferred stock at 8 percent is not what I am talking about. That's a pinprick.

What's needed is more of a Saudi-style justice. A hand-chopping, not a wrist-slapping.

The government should make an example of Citigroup. It isn't, and it won't, but it should. So, this being pure fantasy mind you, let's consider what the elements of that would be:

Vikram Pandit
He should be given two weeks severance and sent on his way. Oh, and he needs to cough back the ridiculous, we're-buying-a-hedge-fund-to-buy-the-people pay package that he received when he was brought into Citi in 2007. Nothing personal—I've met the man and find him to be thoroughly engaging—but Citi's descended into glorified panhandling on his watch. Why should he not suffer while thousands of people under him are being laid off? And lest one be put off by such a populist equation, how about this: Why should Pandit keep his job when John Thain, who avoided a bailout, loses his?

Citi's board of directors, including (especially) Robert Rubin
Fired, and must repay every cent they received while Citi was mismanaged. This is almost too obvious to mention, as is this: Can someone please explain to Barack Obama that one of his top economic advisers was in a responsible position at Citi—including chairman of its executive committee—during a period in which it was grievously mismanaged by people he supported?

Citi's shareholders
One of the most dismaying things I've seen is how Citi's common shares rallied 50 percent today after the bailout was announced. Citi's common equity should be reduced to zero, lest we abdicate the principle that bad investment judgments result in proportional losses. And believe me, when your company needs to be bailed out, lest it drag down the whole financial system, your common shares should not be worth squat.  
 
Now, I know that this is not a complete package, as some culprits (such as ex-C.E.O. Chuck Prince) are not covered, but it's a start. I also realize that this may be viewed as unduly vindictive by some. I can't see why that is.

Homeowners who made similarly bad judgments, by taking on mortgages that they could not afford, are being thrown out on the street. Thousands of Citi employees will be gracing the unemployment lines this holiday season, not because of anything they did but because the people who run their company are, and were, incompetent.

As I said, this is all, most likely, fantasy. The public is becoming accustomed to a two-tier system of equity, played out during each of the recent bailouts, in which the most egregious scoundrels escape scot-free.

Still, there's a slim chance that Obama will disregard the advice that I presume he is getting from Rubin, and give the public a small measure of justice. 

Even a tiny amount will do.
Related Links
The Next Shoe: Credit Cards
Can Anyone Lead Citi?
Why Citigroup Imploded


Source: Portfolio.com: Top 5 | 24 Nov 2008 | 8:00 pm

The E Team

As expected, President-elect Barack Obama today announced his appointment of Timothy Geithner as Treasury secretary and Lawrence Summers as director of his National Economic Council. He also tapped Christina Romer as head of the Council of Economic Advisers and Melody Barnes for director of Domestic Policy Council.

They all have impressive résumés. Geithner has been running the New York Federal Reserve during the credit crisis and held positions in the Treasury Department during the Clinton administration. Summers, of course, was Geithner's boss as Clinton's Treasury secretary before going on to run Harvard University. Barnes is a lawyer at the Center for American Progress, who served as chief counsel to Senator Edward Kennedy for years. Romer is a respected professor of economics at University of California, Berkeley.

That's a lot of experience for a group of economic policymakers. But what will they actually do?

Geithner's role as Treasury secretary is well known, thanks to the high profile that position has garnered during the past year. Few Treasury secretaries have made the front page of newspapers as often as Hank Paulson has recently. Geithner will step in to that challenging position as the "Fixer of the Problems" at hand, which are plentiful. Good luck, Mr. Geithner.

The National Economic Council and the Council of Economic Advisers sound awfully similar in title, but in execution they are quite different. It's worth noting that what they have in common is a consistently brief tenure of their directors.

The National Economic Council was created by Bill Clinton, and its chief responsibility is to coordinate the president's economic policy across all sectors of the executive branch. Much like the National Security Council is responsible for coordination among agencies like the Department of Defense, the State Department and the Treasury Department, the National Economic Council ensures that the administration's economic policies are being consistently applied in all agencies, including the Departments of Agriculture, Labor, Housing, Transportation, and Commerce. Three directors filled this slot under Clinton, and four under Bush.

The Council of Economic Advisers, meanwhile, is responsible for setting that economic policy that the N.E.C. coordinates across the rest of the executive branch. Its economists and statisticians crunch the numbers to provide economic forecasts and policy decisions on behalf of the president. Bush has had five economists in this advisory role, while Clinton had four.

As for the role that Barnes will fill, as director of the Domestic Policy Council, it's easiest to think of this position as being responsible for all domestic policy outside of economics, which will be handled by Summers at the N.E.C. It's almost a misnomer to call this position a part of the White House's economic team.
 
Related Links
Obama's Economic Team
When Stabilization Isn't Stimulus
Incentives for Inflation


Source: Portfolio.com: Top 5 | 24 Nov 2008 | 6:00 pm

Bush says Citigroup deal needed to protect system

WASHINGTON -- President Bush argued today that the government's dramatic rescue of Citigroup was necessary to "safeguard the financial system" and help the economy recover, and he said there could be more such moves if other institutions need help.

Source: L.A. Times - Business | 24 Nov 2008 | 4:41 pm

Blockade Somalia, or Attack It?

With pirates continuing to roam the seas off of the Horn of Africa, shipping companies are talking aloud about all kinds of extreme solutions. Some are eying mercenary help. Two of the biggest firms will avoid the region altogether. The International Association of Independent Tanker Owners wants the UN to step up a naval blockade of the pirates' home bases in Somalia. A second shipping group wants ever more dramatic action -- attacks of the Somali mainland. 

The pirate-infested waters off of east Africa are huge -- more than 1.1 million square miles. So rather than trying to patrol that whole, enormous area, tanker owners' association president Peter Swift suggests "putting a blockade around Somalia and introducing the idea of intercepting vessels leaving Somalia rather than to try to protect the whole of the Gulf of Aden."

Alfons Guinier, secretary general of the European Community Shipowners Association, wants to go even farther, the Guardian notes. "We’re asking not just for more escorts but for repressive action."

The demand comes after the International Maritime Organization asked the UN security council to sanction dispatch of as many warships and aircraft as possible to "disrupt" pirate operations, secure shipping lanes in the Gulf of Aden, and escort vessels, including those bringing food relief to war-torn Somalia.

Russia apparently suggested a similar idea. And so did one Islamic militant leader. "Ships belonging to Muslim countries should not be seized," Abdelghafar Musa, a fighter with the Islamist group al-Shabab, told the Associated Press.

UPDATE: Bloomberg looks at the rationale for paying pirate ransoms. And be sure to check out this Chicago Tribune story on "America's hidden war in Somalia."

Related Links
Why Airstrikes Don't Move Markets
Letters to the Editor
Ted's Pledge Hedge


Source: Portfolio.com: Top 5 | 24 Nov 2008 | 4:00 pm

Not So Tweet

The hotness of Twitter, the microblogging site (140 characters or less), has been confirmed: The previous hot thing, Facebook, wants it.

Or at least wanted it. The oft-rumored mating dance between Facebook and Twitter ended three weeks ago, Kara Swisher reports on All Things Digital.

The negotiations ended over price, Swisher says. Facebook was offering $500 million of its private stock at the most disputed valuation of $15 billion.

But price wasn’t everything, Swisher says. There was also “a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues—there are none right now—as well as it had done at building its growth.” Twitter recently reshuffled its top management, with Evan Williams, a co-founder taking over from Jack Dorsey as chief executive

TechCrunch notes that “serial entrepreneur and angel investor” Marc Andreessen is both an early investor in Twitter and a member of Facebook’s board.

Facebook’s valuation was established by Microsoft’s $240 million investment in 2007, and it has arguably come down quite a bit. In a round of fundraising last summer, Twitter was valued at around $100 million.

A public valuation of Facebook might have been soon forthcoming had not the company has received an exception from the Securities and Exchange Commission from the requirement that a company with more than 500 stockholders must publicly disclose financial results, BusinessWeek reports. It was that requirement that contributed to Google’s decision to go public in 2004.


Related Links
Twitter Tops List of Fastest Growing Social Networks
First Bytes: Wink, Reunion, Kindle, Facebook, Circuit City, Tesla
Rumors of a Facebook Music Store


Source: Portfolio.com: Top 5 | 24 Nov 2008 | 2:00 pm