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Bernanke signals that US rates will be cut below 1%Ben Bernanke, the Chairman of the Federal Reserve, paved the way last night for US interest rates to be cut to an unprecedented low of under 1 per cent this month, and sought to reassure markets that the Fed could deploy other weapons from its arsenal even if it were forced to cut rates to zero.Source: Latest Business News from Times Online | 2 Dec 2008 | 9:04 pm Financial Stocks: Banks, brokers see modest recovery after Monday routShares of U.S. financial stocks rise in morning trading, posting a modest rebound following the group’s biggest-ever single-session percentage drop in the previous session.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:25 pm Movers & Shakers: Tuesday's biggest gaining and declining stocksStocks expected to move significantly in trading on Tuesday include the major industrial groups as well as Boeing, GE, Goldman Sachs, Monsanto, Palm, Sears Holdings, Titan Pharma, UAL, Walgreen and Zoltek.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:25 pm High-stakes Big Three plans due on Capitol HillMaking a second pitch for $25 billion in emergency loans, the Big Three U.S. automakers will send restructuring plans to Capitol Hill emphasizing cost-cutting, the development of fuel-efficient technologies and downsizing, reports said.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:24 pm Energy Stocks: Oil stocks lead partial recovery after big lossesEnergy shares recovered from crushing losses in the previous session, as oil prices remained under $50 a barrel.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:22 pm Ford sees at least breakeven in 2011 (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 3:19 pm Airline Stocks: UAL, Delta executives present plans to stay viableAirline stocks are mixed as major-carrier executives at an analyst meeting in New York reiterate the benefits of falling oil prices and recommit themselves to cutting more seat capacity as needed.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:17 pm BA exploring merger with QantasBritish Airways announces that it is discussing a potential merger with the Australian flag-carrier Qantas Airways.Source: BBC News | Business | World Edition | 2 Dec 2008 | 3:16 pm GE rallies as it vows to maintain dividendGeneral Electric Co. expects fourth-quarter net income of 50 cents to 52 cents a share, the low end of its previously announced range of 50 cents to 56 cents a share, as the conglomerate weathers the credit crisis and the economic downturn.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:15 pm Europe Markets: European shares steady, Tesco, British Airways soarEuropean shares traded in a tight range on Tuesday, as a turnaround for oil majors, strong gains from U.K. supermarket giant Tesco and a possible merger for British Airways countered more losses for mineral extractors.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:11 pm Stocks rise after big drop a day earlierNEW YORK -- Wall Street advanced cautiously today, as investors waded back into the market in search of bargains after Monday's big selloff, ever mindful of the health of the financial, retail and auto sectors.Source: L.A. Times - Business | 2 Dec 2008 | 3:11 pm Market Snapshot: U.S. stocks rise at the open after Monday slideU.S. stocks rise at the opening bell, a day after the Dow Jones Industrial Average saw their fourth-biggest point drop on record, as investors turned to prospects for a bailout of the ailing auto industry.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:10 pm GE cuts forecast but commits to finance armGeneral Electric (GE), the American conglomerate, cut its four-quarter earnings guidance but insisted that it was committed to its financial services business despite the turmoil in global financial markets.Source: Latest Business News from Times Online | 2 Dec 2008 | 3:08 pm Retail Stocks: Staples gains in mixed retail sectorRetail shares zigzagged in early trading Tuesday while Staples Inc. shares gained after the office-supplies specialist reported a third-quarter profit that exceeded Wall Street estimates.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:03 pm Earnings Watch: Updates, advisories and surprisesA roundup of the latest corporate earnings reports and what companies are saying about future quarters.Source: MarketWatch.com - Top Stories | 2 Dec 2008 | 3:01 pm US carmakers in new bail-out pleaUS carmakers General Motors, Ford and Chrysler will present their new cost-cutting plans to Congress.Source: BBC News | Business | World Edition | 2 Dec 2008 | 2:59 pm Sterling rebound after sharp fallThe pound claws back against the US dollar after suffering the largest percentage drop since 1992 on Monday.Source: BBC News | Business | World Edition | 2 Dec 2008 | 2:52 pm British Airways in merger talks with QantasLONDON (Reuters) - British Airways is in merger talks with Australia's Qantas, it said on Tuesday, adding to various attempts at consolidation in an industry desperate to cut costs in the global economic downturn.Source: Reuters: Business News | 2 Dec 2008 | 2:52 pm What About OPEC? Some Members Big Winners, Other Lose Big
What this means for US consumers is also difficult to judge. OPEC supplied about 45% of US oil imports in September 2008, the most recent month for which EIA figures are available (total production figures come from OPEC's Monthly Oil Market report for October 2008). Here's the chart for September: US Imports Total Production Total OPEC production for September was down about 309,000 b/d from August. US imports of 5.13 million b/d from OPEC nations is at its lowest point since 2005. Venezuela, whose president is calling the loudest for cutting production, sells nearly half its production to the US. Most of the rest is refined in Venezuela because only the US and Venezuela have refineries designed to process the goo that is pumped from the Orinoco Basin. Some 90% of the country's export earnings, about 50% of the government budget, and 30% of GDP come from oil. Any production cuts by Venezuela will almost certainly need to come at the expense of domestic supplies because the country needs the export income from the US. That will not sit well with the local population. The Iranians export virtually all their crude production and then purchase refined product from neighboring countries because Iran does not have the refining capacity to meet its needs. Iran is so desperate for export income that it is looking to build nuclear power generation plants to replace the oil-fired plants it now has. Cutting production may be the politically preferred policy, but the strain on Iran's economy would be enormous. About 85% of government revenue comes from oil. High unemployment and inflation have curbed Iran's growth, even as its foreign exchange balance has risen. As for the Saudis, about 90% of export revenue and 45% of GDP comes from oil. The government faces a significant demographic problem that oil revenues help meet: about 40% of the country's population is under 15 years old, and as these kids hit the job market, they have little training and no prospects. The Saudi government needs to keep spending to fix this problem, and to encourage private sector growth in the country. Neither will respond well to lower oil revenues. In the short term, OPEC may want to boost prices, but cutting production is not in the best interests of many of the members. Thus, a serious effort to prop up prices by cutting production just doesn't seem to be in the cards. In the longer term, production cuts may be forced on OPEC as consumption continues to fall. While this may appear to be a case of "what goes around, comes around," long-term instability in the Middle East and South America is not in anyone's best interest. Paul Ausick Source: 24/7 Wall St. | 2 Dec 2008 | 2:50 pm Leadership Role Rewarded, as Robinson & Maites Promotes Ryan Jarol to Vice PresidentCHICAGO, Dec. 2 /PRNewswire/ -- Today Chicago-based marketing agency Robinson & Maites confirmed account director Ryan Jarol's leadership role by promoting him...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:48 pm 5 tips for keeping your jobThe numbers just keep getting scarier. So how do you hold on to your job when it seems like no one is safe?Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:46 pm $567m loss by GM is America's worst$Source: Latest Business News from Times Online | 2 Dec 2008 | 2:45 pm Guaranteed Home Mortgage Company Announces New Survival Package for Struggling Mortgage CompaniesWHITE PLAINS, N.Y., Dec. 2 /PRNewswire/ -- Guaranteed Home Mortgage Company, Inc. (Guaranteed, href="http://www.ghmc.com/">www.ghmc.com ), a White Plains, New York-based...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:45 pm 24/7 Wall St. Day Trade Alerts (XNPT)(SOLF)(TSRA)
SolarFun (SOLF) is getting hurt on sub-par earnings. Details. Tessara (TSRA) got some bad news from the ITC. Details. Douglas A. McIntyre Source: 24/7 Wall St. | 2 Dec 2008 | 2:44 pm Wall Street opens higher after Monday's lossesNEW YORK (Reuters) - Stocks rose 1 percent at the open on Tuesday as investors snapped up beaten-down shares after Monday's losses, while renewed hopes for the auto industry tempered worry about the recession.Source: Reuters: Business News | 2 Dec 2008 | 2:43 pm Wall Street opens higher after Monday's losses (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 2:43 pm What's on the chopping blockHere's what may wind up on the block for Detroit's struggling auto brands as GM, Ford and Chrysler look for cuts.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:43 pm Stocks in bounceback modeStocks bounced Tuesday morning, as investors scooped up shares hit in the previous session's big selloff, when the Dow industrials plunged 680 points.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:42 pm Automakers rush to finish plans for CongressDETROIT/WASHINGTON (Reuters) - U.S. automakers rushed to submit restructuring plans demanded by Congress before lawmakers reopen debate on a $25 billion bailout the industry says it needs to survive.Source: Reuters: Business News | 2 Dec 2008 | 2:42 pm BullMarket.com Publishes Special High Yield Stock Report; Examines Penn West, Annaly, OthersPRINCETON, N.J., Dec. 2 /PRNewswire/ -- BullMarket.com ( href="http://www.bullmarket.com">http://www.bullmarket.com ), an online investment newsletter focused on ...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:41 pm BA explores merger with QantasThe UK carrier is exploring a potential merger with its Australian rival via a dual-listed company structure, the boldest move yet considered to accelerate the consolidation of the global airline industrySource: Financial Times - US homepage | 2 Dec 2008 | 2:39 pm Aerospace and Defense Manufacturers Launch Outreach CampaignARLINGTON, Va., Dec. 2 /PRNewswire-USNewswire/ -- The Aerospace Industries Association is launching an outreach campaign to underscore the value of the aerospace and defense...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:39 pm Citigroup Slashes Estimates and Price Target on Bank of America (BAC)Analysts continue to slash estimates on bank stocks. Today it was Bank of America's (BAC) turn. Citigroup lowered its estimates and price target on Bank of America due to marks and higher credit costs. The firm lowered their Q4 EPS estimates by $0.40 to $0.02 per share (consensus is $0.41). The firm lowered the Q4 estimates to reflect $1.5 billion in mark-to-market losses, $2.7 billion of reserve additions for credit card, residential mortgage/home equity and corporate lending in the GCIB Source: 24/7 Wall St. | 2 Dec 2008 | 2:38 pm Christmas Shopping and the Consumption MythBy John Tamny RealClearMarkets In the days leading up to last week's Black Friday, the post-Thanksgiving shopping day when many retailers become profitable for the year, Americans were inundated with lots of media commentary about their Christmas-shopping plans. Various accounts suggested that with the economy needing a boost, prodigious spending on Black Friday would stimulate an economy that's presently not firing on all cylinders. Source: 24/7 Wall St. | 2 Dec 2008 | 2:36 pm Seven Summits Research Releases Alerts on T, PBR, MET, AGU, and RMBSCHICAGO, Dec. 2 /PRNewswire/ -- Seven Summits Research issues PriceWatch Alerts for key stocks. Seven Summits Strategic Investments' PriceWatch Alerts...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:31 pm Seven Summits Research Releases Alerts on WFC, COP, SBUX, CF, and EQRCHICAGO, Dec. 2 /PRNewswire/ -- Seven Summits Research issues PriceWatch Alerts for key stocks. Seven Summits Strategic Investments' PriceWatch Alerts...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:31 pm GE sees fourth-quarter earnings toward low end of rangeBOSTON (Reuters) - General Electric Co expects fourth-quarter profit toward the low end of its prior forecast and is looking for ways to reduce costs, including job cuts at its finance and industrial units, executives said on Tuesday.Source: Reuters: Business News | 2 Dec 2008 | 2:30 pm Tri-Artisan Capital Partners, LLC Names David J. Boemo Managing Director and Chief Financial OfficerSeasoned Financial and Banking Executive to Oversee Finance Function at Growing Merchant Bank NEW YORK, Dec. 2 /PRNewswire/ -- Tri-Artisan Capital Partners, LLC,...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:30 pm EASi Supports Cliff Vested Performance Awards Using Multiplier ModelPLEASANTON, Calif., Dec. 2 /PRNewswire/ -- Equity Administration Solutions, Inc. (EASi), the leading independent stock plan management software company, today announced...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:30 pm Madison Capital Funding LLC Closes Four Leveraged Finance TransactionsCHICAGO, Dec. 2 /PRNewswire/ -- Madison Capital Funding LLC ("Madison Capital") announced that it has closed four leveraged finance transactions during the challenging...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:30 pm LeClairRyan Hires Senior Thelen Partner - Plans Hartford ExpansionRICHMOND, Va., Dec. 2 /PRNewswire/ -- To further support its client-driven business strategy, the law firm of LeClairRyan has announced plans to open an office in Hartford,...Source: Infocious RSS raw feed - channel BNewsBusiness | 2 Dec 2008 | 2:30 pm A European-style tax? Get ready for itIt's highly possible, if not inevitable, that Americans will soon live under a radically different tax system - one that the pundits and politicians aren't talking about.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:28 pm Staples posts higher-than-expected quarterly profit (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 2:26 pm Staples posts higher-than-expected quarterly profitNEW YORK (Reuters) - Staples , the world's largest office products retailer, posted a slightly higher-than-expected quarterly profit, aided by sales from the acquisition of Dutch peer Corporate Express.Source: Reuters: Business News | 2 Dec 2008 | 2:26 pm Beazer Homes 4Q loss balloons as revenue plunges (AP)AP - Struggling homebuilder Beazer Homes USA Inc. said Tuesday its fiscal fourth-quarter loss more than tripled as revenue plunged and its income tax provision ballooned.Source: Yahoo! News: Business | 2 Dec 2008 | 2:25 pm The $700 billion auditThe federal government's $700 billion financial rescue plan will get its first official review Tuesday.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:20 pm Sears Holdings posts loss, sets store closuresATLANTA (Reuters) - Sears Holdings Corp reported a wider-than-expected quarterly loss on Tuesday as the weak economy hurt sales at its U.S. Kmart and Sears, Roebuck divisions, and said it may close additional stores.Source: Reuters: Business News | 2 Dec 2008 | 2:19 pm GE sees fourth-quarter earnings toward low end of range (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 2:17 pm Delta Air Lines to cut 2009 capacity 6-8 percentCHICAGO (Reuters) - Delta Air Lines will cut its systemwide capacity by 6 percent to 8 percent in 2009 because of weaker travel demand, the world's largest carrier said on Tuesday.Source: Reuters: Business News | 2 Dec 2008 | 2:15 pm Delta plans to cut capacity, hints at jobsRead full story for latest details.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 2:14 pm Cholera outbreak kills 484 in ZimbabweThe outbreak of cholera in Zimbabwe has killed 484 people since August, according figures released by the World Health OrganisationSource: Financial Times - US homepage | 2 Dec 2008 | 2:14 pm With Oil Prices Dropping Are Airline Mergers Smart?
Given the costs and risks of a consolidation, the endless lines of angry customers, the strikes by unions, and the broken computer systems, Delta (DAL) may rue the decision to buy Northwest. Now another merger may be in the offing, this one between British Airways and Qantas. It is hard to imagine where the big savings would be. At least both managements speak English. Douglas A. McIntyre Source: 24/7 Wall St. | 2 Dec 2008 | 2:06 pm EU wants banks to boost lendingThe EU competition commissioner says she expects banks that receive state aid to promise to lend to the real economy.Source: BBC News | Business | World Edition | 2 Dec 2008 | 2:04 pm Gee, G.E.General Electric has outlined its battle plan to fight the financial crisis, seeking to preserve its triple-A rating and its dividend.The conglomerate—whose businesses range from NBC to turbines—said it expected to report fourth-quarter earnings at the low range of its previous forecast. It sees earnings of 50 to 52 cents per share. Analysts have been expecting a profit of 51 cents per share. Nervous investors have been focusing on G.E.'s giant finance unit, G.E. Capital, amid concerns that it could become the next casualty of the financial crisis. Shares of G.E. have slumped 58 percent this year. The company today detailed how it will shrink G.E. Capital and reduce its leverage. Jobs will be cut and the unit will depend less on the commercial paper market and seek some $80 billion in alternative funding. G.E. will take a charge of as much as $1.4 billion to pay for cost cuts and restructuring. "We are taking a number of tough but prudent actions to make G.E. Capital safer, stronger, and more secure during this financial crisis," said Keith Sherin, the company's chief financial officer. "We are committed to being a Triple-A company. These actions include a funding plan that reflects the current market, and we are lowering our leverage ratio and commercial-paper balance. Our forecast anticipates a challenging loss environment. We are also reorganizing the business to reduce costs and allocate capital more efficiently." G.E. Capital made clear that it would not tap the $700 billion TARP program (which could spark fears of share dilution among investors), but it is taking advantage of two other federal programs: the Federal Reserve's facility to backstop commercial paper and the Federal Deposit Insurance Corp. Related Links Will $700 Billion Be Enough? Fed Economists Duel Over Crisis 'Myths' Sign of a Bottom? Source: Portfolio.com: Top 5 | 2 Dec 2008 | 2:00 pm Goldman shares fall on fear of $2 billion fourth-quarter loss (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 1:59 pm Goldman shares fall on fear of $2 billion fourth-quarter lossNEW YORK (Reuters) - Goldman Sachs Group Inc shares fell Tuesday on speculation the bank's fourth-quarter loss could be much larger than expected -- as much as $2 billion -- fueled by the plunging value of many Goldman investments.Source: Reuters: Business News | 2 Dec 2008 | 1:59 pm IBM drools over infrastructure boom"We've been given this on a silver platter," says Sam Palmisano, CEO of IBM. "We might as well use it as an opportunity."Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 1:59 pm GE lowers the bar on guidanceConglomerate General Electric lowered its fourth-quarter earnings guidance range Tuesday and provided details on restructuring plans.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 1:52 pm GE sees profits at low end of forecastsGeneral Electric expects to report profits at the low end of its forecasts and to see "headcount reductions", the US conglomerate said in a conference call on Tuesday. The company cut earnings forecasts for its troubled GE Capital divisionSource: Financial Times - US homepage | 2 Dec 2008 | 1:52 pm Wall Street set for mixed openWall Street stocks were set for a mixed start as investors weighed mounting hopes of a bailout for the car industry with continued fears in the financial sectorSource: Financial Times - US homepage | 2 Dec 2008 | 1:50 pm Middle-class tax cut may come soonRemember all the talk during the presidential campaign about a middle-class tax cut? It could be showing up in your paycheck early next year.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 1:43 pm GE's Update Lacks Nasty Surprises Compared To Peers (GE)
GE Capital will earn $8 billion in 2008 and due to shrinking its portfolio and taking its leverage down will give it a framework for $5 billion in 2009 earnings. It does expect a return to double-digit earnings in 2010. So there is a drop expected in 2009, but this is still earnings and the drop is actually better than many peers who are now operating at losses or very low profits. GE also said that the entire company will earn over $19 billion in 2008 before charges and over $18 billion after charges. GE's CFO Keith Sherin said that the company is committed to maintaining its Triple-A rating and is taking actions to reflect the current market. Sherin said, "Our plans reflect a very difficult environment. However, GE Capital expects to deliver exceptional relative performance in 2008. For 2009, we are targeting to reduce leverage to 6:1, lower outstanding commercial paper balance to $50 billion and reduce our overall funding needs." GE was down yesterday after an analyst report warned that the company could use today to bring down expectations. While that is somewhat the case, these numbers are probably better than many were bracing for. Again, this will be a glass half-full versus a glass half-empty presentation for you depending upon how you view the world and depending on your relative expectations. While this would be a glass half-empty to us in normal times, we are not in normal times and the company is still holding up much better than peers on the operations side. Shares are up over 2.5% at $15.91 in pre-market trading with an hour to the open. UPDATE (8:45 AM EST) MOODY's has already just said GE financial policies are permanent and supportive of ratings and that the ratings for units were affirmed as AAA and the outlook is stable.
Jon C. Ogg Source: 24/7 Wall St. | 2 Dec 2008 | 1:42 pm Unicredit offers mortgage relief in Italy (AP)AP - Italy's largest bank Unicredit said Tuesday it will suspend mortgage payment requirements for 12 months without penalties for homeowners in financial difficulty.Source: Yahoo! News: Business | 2 Dec 2008 | 1:35 pm Chevron: Claim for Environmental Damages in Ecuador Rises to $27 Billion (CVX)
Recent materials provided to the court have increased the damage claim from $16 billion to $27 billion. The increase, according to the Amazon Defense Coalition, includes an additional $9.5 billion in compensation for 1,401 deaths related to the dumping of toxic waste, about $3.2 billion to clean up groundwater, and about $1 billion to remediate contaminated soil at Texaco waste pits. Chevron disputes the original claim for $16 billion, claiming that the damage reports are not binding, were incorrectly prepared, and violated the court's orders. The company has made no estimate of potential losses in this case nor has it reserved any funds to pay damages, so it had better win.
Paul Ausick Source: 24/7 Wall St. | 2 Dec 2008 | 1:22 pm Governors to ask Obama for helpPlagued by rising unemployment, falling tax revenue and increased demand for state services, governors from across the country will meet with President-elect Barack Obama on Tuesday to press for federal money to ease their fiscal strain.Source: Business and financial news - CNNMoney.com | 2 Dec 2008 | 1:19 pm Electricity Use Falling--So Are Share Prices (DUK, DYN, AEP)
The delivery system for electric power in the US is old and needs to be upgraded or replaced. Electricity suppliers had been planning on spending the capital to replace a lot of the aging infrastructure, such as transmission and distribution lines, as well as build new generation facilities to keep pace with expected demand. Suppliers were also looking at getting a start on using alternatives to burning coal and natural gas in an effort to address climate change issues. Electricity generation and distribution were down about 3% in the third quarter compared with the 2007 third quarter. Natural gas distribution was down about 5%. Duke's sales in the Midwest were off by nearly 6%, and AEP sales were off more than 3%. Dynegy has had two unexplained shutdowns of two 512-MW combined cycle generators at its plant in Moss Landing, California. That's about 3% of Dynegy's total generating capacity. The good news is that electric companies can always go to regulators for rate increases, and this provides the companies with excellent credit ratings. The better news might be that a New Deal-style public works program could be coming with the Obama administration, and the electricity grid is a perfect place to spend some money. After all, when the recession ends, demand for electricity will only increase (think of all those electric cars!). In the short term, though, electricity generation is taking a beating. Dynegy closed at $2.05 yesterday, near the bottom of its 52-week trading range of $1.50-$9.92. Duke closed at $14.74, again near the bottom of its range of $13.50-$20.78. AEP did a little better, closing at $30.42/share, further from the bottom of its trading range of $25.54-$49.49.
Paul Ausick Source: 24/7 Wall St. | 2 Dec 2008 | 1:18 pm BA in merger talks with QantasBritish Airways (BA), the UK flag carrier, announced today that it is in merger talks with Qantas Airways, Australia's national airline.Source: Latest Business News from Times Online | 2 Dec 2008 | 1:16 pm Oil back above $49 after early diveLONDON (Reuters) - Oil pared losses on Tuesday after an earlier fall to a new 3-1/2-year low below $48 a barrel, weighed down by heavy losses in global stock markets after confirmation that the United States was in recession.Source: Reuters: Business News | 2 Dec 2008 | 1:13 pm Thai squeezeAirport protests have damaged Thailand's economySource: BBC News | Business | World Edition | 2 Dec 2008 | 1:05 pm Goldman's StrugglesIt is obvious that the business of Wall Street has changed utterly. Goldman Sachs, which had been so clever to profit handsomely last year from the collapse in the subprime mortgage market, has yet to figure how to make money in this new era.The firm could report a loss of as much as $2 billion, or $5 per share, when it reports fourth-quarter results next week, the Wall Street Journal reports, citing "industry insiders." Such a loss—which would be the firm's first since it went public in 1999—would top even the most pessimistic of the analysts covering Goldman. On Monday, Susan Roth Katzke of Credit Suisse said she expected Goldman to report a loss of $4 per share for the quarter, which ended on November 28. Her report helped send shares of Goldman tumbling 17 percent on Monday. "October was a difficult month; November—though we were hopeful—was really no better, with asset prices for equities, credit, and real estate only coming under more pressure," she wrote. The firm's stake in Industrial and Commercial Bank of China Ltd. and some private equity investments have declined in value in recent months. The Journal points to problems in Goldman's distressed investments—like golf courses in Japan and troubled auto loans in Thailand—that had been a big profit center. Other analysts see a more modest loss for the quarter. Prashant Bhatia of Citigroup has forecast a loss of $1.60 per share, while Michael Mayo of Deutsche Bank estimates a loss of 65 cents per share. The consensus estimate, according to analysts surveyed by Thomson Reuters, is a loss of 62 cents per share for the quarter. It is not as if Goldman has not been responding to the challenge of the financial crisis. The firm has converted to a bank holding company and it has bolstered its capital: selling $5 billion of preferred stock to Warren Buffett, $6 billion of stock in a public offering, and $10 billion of preferred stock to the Treasury. And it has been cutting jobs and shedding assets. In a speech last month, Lloyd Blankfein, the chief executive of Goldman, acknowledged the new challenges. "We are in the midst of a historically significant and uncertain time for business and the global economy," he said. Yet he was confident that Goldman would survive and prosper: "I have not lost sight of the fact that many of the most important opportunities in Goldman Sachs's history came about during times of stress. Our firm has proven its ability to adapt time and again, and, more than any other factor, our culture has given us the wherewithal to embrace change." It has usually not been a good idea to bet against Goldman. But a huge headline loss next week—especially if Morgan Stanley's results look better in comparison—might go a long way toward puncturing the last of Wall Street's myths: that Goldman is a firm of the best and brightest whose unique culture allows it to find and pursue profitable opportunities in any environment. Perhaps Goldman is not so special after all? Related Links Wall Street Huddles for Safety Wall Street's New Realities Saving Wall Street From Itself Source: Portfolio.com: Top 5 | 2 Dec 2008 | 1:00 pm Sales growth slows down at TescoGrowth in UK sales, excluding new stores and petrol sales, slows down to 2% as Tesco pays the price for its discount brands.Source: BBC News | Business | World Edition | 2 Dec 2008 | 12:59 pm Greene King brewer profits fallProfits at brewer Greene King fall by more than 15%, while rival JD Wetherspoons creates hundreds of new jobs.Source: BBC News | Business | World Edition | 2 Dec 2008 | 12:52 pm Thai protesters end siege as PM ejectedAnti-government protesters announced they would end the blockade of Thailand's two main airports after the constitutional court banned prime minister Somchai Wongsawat from office and dissolved three parties in the ruling coalitionSource: Financial Times - US homepage | 2 Dec 2008 | 12:52 pm Top Pre-Market Analyst Upgrades & Downgrades (NGG, QGEN, RGC, WSM, GPN, GFI, QSFT, TSRA)
Jon C. Ogg Source: 24/7 Wall St. | 2 Dec 2008 | 12:27 pm Asian markets fall on new worriesAsian stocks dropped on Tuesday, following the global trend amid worries about deepening worldwide recession.Source: BBC News | Business | World Edition | 2 Dec 2008 | 12:08 pm Henry Ford and Detroit-style pokerSource: Latest Business News from Times Online | 2 Dec 2008 | 12:00 pm UK deals plunge as banking crisis takes tollThe huge appetite for UK companies from foreign buyers slumped during July, August and September, according to official statistics, as the global financial crisis deterred companies from multi-million pound acquisitions.Source: Latest Business News from Times Online | 2 Dec 2008 | 11:57 am Producer prices fall in eurozoneEurozone producer prices fell 0.8% during October, raising hopes for an interest rate cut by the European Central Bank (ECB).Source: BBC News | Business | World Edition | 2 Dec 2008 | 11:54 am Chrysler may need huge n ew loans to avert bankruptcyThe situation at Chrysler, according to informed sources, is desperateSource: Latest Business News from Times Online | 2 Dec 2008 | 11:40 am Construction shrinks at fastest pace in 11 yearsBritain’s construction sector contracted at the fastest pace in more than a decade during November, as the rate of new houses being built continue to plunge.Source: Latest Business News from Times Online | 2 Dec 2008 | 11:38 am Sears (SHLD): The Real Face Of Retail
For the quarter ending the retailer had a a net loss of $146 million, or $1.16 per share, compared with net income of $4 million, or $0.03 per share, in the prior year. Revenue declined approximately $0.9 billion to $10.7 billion. Same-store sales were off almost 9%. For reasons that will be lost on almost any rational person, Sears will buy back as much as $500 million of its own stock. Sears' cash position keeps falling and is now only $1.2 billion. Over the last three months, Wal-Mart shares are off 10%. Sears is down 65%, which makes it more representative of the industry as a whole. Sears has done so badly in the market because it is deviled by the intractable problems which face most retailers. It has high fixed costs of inventory and labor. It can only lower prices on merchandise so low, and it competes with another half-dozen chains which offer many of the same products at the same prices. In a robust economy, there is enough milk in the sow to feed all the piglets. That is no longer true, Wal-Mart uses its purchasing power and logistics expertise to trump the competition. The next tier of retailers are left fighting over what is left in the consumer's wallet. Sears is in trouble, perhaps more that its share prices tells. If its same-store sales drop another 10% next year, it has no exit. Douglas A. McIntyre Source: 24/7 Wall St. | 2 Dec 2008 | 11:27 am California 'faces budget crisis'California Governor Arnold Schwarzenegger declares a fiscal emergency, ordering lawmakers to fix a huge budget gap.Source: BBC News | Business | World Edition | 2 Dec 2008 | 11:24 am European shares tread waterEuropean shares trod water on Tuesday, turning flat after an early fall as investors awaited more central bank action to boost sliding economies.Source: Financial Times - US homepage | 2 Dec 2008 | 11:21 am Bargain-hunters fail to save retail sales (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 10:10 am Bargain-hunters fail to save retail salesCHICAGO (Reuters) - Bargain-hunting holiday shoppers did not save U.S. retail sales in November, which will likely represent a second straight month of declines for the industry.Source: Reuters: Business News | 2 Dec 2008 | 10:10 am India demands Pakistan hand over suspectsIndia appeared to take a military strike in response to the attacks on Mumbai off the table after it served Pakistan with a request to hand over 20 hardened militantsSource: Financial Times - US homepage | 2 Dec 2008 | 10:05 am Global stocks tumble (Reuters)
Source: Yahoo! News: Business | 2 Dec 2008 | 9:35 am Greene King holds dividend despite profit fallGreene King, the pubs operator, unveiled a 15.2 per cent slump in interim profits this morning as it warned of a worsening economic climate in 2009.Source: Latest Business News from Times Online | 2 Dec 2008 | 8:03 am Judge declines to unseal all files in Nicholas drug caseSome documents should remain secret because they might prejudice a grand jury inquiry, jurist says. The Times had requested that the files in the Broadcom co-founder's prosecution be made public.A federal judge on Monday granted a Los Angeles Times request to unseal some documents in the drug prosecution of Newport Beach billionaire Henry T. Nicholas III but kept others secret on grounds they might prejudice an ongoing grand jury investigation that could produce additional charges in the case. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am At Showtime, bad is goodEntertainment chief Robert Greenblatt has turned around the underdog cable channel with a slate that plays on aberrant behavior -- with shows including 'Dexter,' 'Californication' and 'Weeds.'A drug dealer, a serial killer, a sex addict and a king with a penchant for beheading his comely wives -- bad sorts are doing a lot of good for Showtime. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am Edison's rooftop solar project powers upThe utility's ratepayer-financed plan to outfit 150 buildings with the panels is cheered by business owners but criticized by consumer activists.Southern California Edison on Monday unveiled its newest power plant: 33,700 solar panels atop a warehouse in Fontana that will feed green energy directly into the grid. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am At Showtime, bad is goodEntertainment chief Robert Greenblatt has turned around the underdog cable channel with a slate that plays on aberrant behavior -- with shows including 'Dexter,' 'Californication' and 'Weeds.' ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Big Three automakers try again for a bailoutGeneral Motors, Ford and Chrysler will give lawmakers detailed plans on how they would use federal money to ensure their long-term survival and not just dodge an immediate collapse.Their first attempt was a lemon, but the Big Three U.S. automakers get a second chance this week to convince Congress that it should give them a $25-billion bailout -- or as they call it, a bridge loan to the future. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am Cyber Monday kicks off holiday shopping season onlineMany retailers slash prices and offer Web-only promotions to boost business after healthy in-store sales and foot traffic on Black Friday dropped off as the weekend progressed.It may have been Monday, but the Thanksgiving shopping marathon continued as virtual crowds swarmed online merchants in search of Web-only specials, discounts and free shipping. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am U.S. recession could last into 2010The group charged with making the official declaration says recession began in December 2007.The economy's yearlong downturn, officially declared a recession Monday, could last well into next year or even beyond, challenging the government to devise new responses as traditional methods show limited results. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am Sumner Redstone dumps Midway GamesThe media mogul sells his majority stake in the failing video game maker for a pittance after pouring in cash. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Ford weighs selling Volvo amid industry downturnDETROIT -- Ford Motor Co. is considering selling Volvo Car Corp. as the beleaguered U.S. automaker seeks to raise cash and weather a global automotive sales crisis.Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Sumner Redstone dumps Midway GamesThe media mogul sells his majority stake in the failing video game maker for a pittance after pouring in cash.Sumner Redstone and his holding companies have sold their shares in Midway Games Inc. for less than a penny each, capping the media mogul's aggressive investment in the troubled video game maker that ended up costing him hundreds of millions of dollars. Source: L.A. Times - Business | 2 Dec 2008 | 8:00 am Johnson & Johnson to buy breast implant maker Mentor for $1.07 billionIn paying a premium for the maker of liposuction equipment and skin repair products, the healthcare products giant is looking to their long-term value for an aging population. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Big Three automakers try again for a bailoutGeneral Motors, Ford and Chrysler will give lawmakers detailed plans on how they would use federal money to ensure their long-term survival and not just dodge an immediate collapse. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Edison's rooftop solar project powers upThe utility's ratepayer-financed plan to outfit 150 buildings with the panels is cheered by business owners but criticized by consumer activists. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Chicken producer Pilgrim's Pride seeks bankruptcy protectionPilgrim's Pride Corp., the nation's largest chicken producer, filed for Chapter 11 bankruptcy protection Monday, hobbled by its debt load and volatile feed prices.Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am David Gregory to host 'Meet the Press,' report saysNBC declines to confirm the move. The White House correspondent has long been rumored for the job. Speculation...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Stocks fall sharply on consumer spending worriesNew evidence of a softening global economy sends the Dow tumbling. Manufacturing activity hits a 26-year low, and construction spending drops more than expected. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Big Three automakers try again to win Congress over on a bailout packageGeneral Motors, Ford and Chrysler will give lawmakers detailed plans on how they would use federal money to ensure their long-term survival and not just dodge an immediate collapse. ...Source: Infocious RSS raw feed - channel BNPaperBusiness | 2 Dec 2008 | 8:00 am Tesco discount drive fails to lift UK salesTempus analysis on TescoSource: Latest Business News from Times Online | 2 Dec 2008 | 7:34 am Australian stocks: Market closes four per cent lowerPERTH - A rate cut by the central bank failed to stem falls on the Australian share market, which closed four per cent lower after taking its cue from weaker global bourses. The benchmark S&P/ASX200 index was down 153 points, or...Source: New Zealand Herald - Business | 2 Dec 2008 | 7:02 am Australia's central bank slashes interest ratesSYDNEY - Australia's central bank slashed interest rates by one percentage point Tuesday in the latest bold move by the country's top finance officials to stave off a recession. The reduction is the fourth in a row by the Reserve...Source: New Zealand Herald - Business | 2 Dec 2008 | 6:21 am NZ stocks: Shares fall by 1 per centNew Zealand shares fell 1 per cent as they took the hint from sharp losses in markets overnight, but they resisted the heavy declines in markets closer to home. The benchmark NZSX-50 index closed down 31.78 points, or 1.2 per cent,...Source: New Zealand Herald - Business | 2 Dec 2008 | 6:13 am Gasoline is cheap, but we're still saving itHabits acquired when gas was more than $4 a gallon are still with us, held fast by job insecurity and the belief that prices will rise again.Not since January 2005 have California drivers had it this good: The state's average retail price for gasoline tumbled 15.7 cents in the last week to puncture the $2-a-gallon barrier, the Energy Department said Monday. Source: L.A. Times - Business | 2 Dec 2008 | 5:49 am Currency: Dollar tumbles as RBA slashes ratesThe New Zealand dollar dipped only slightly today on the news of the Reserve Bank of Australia (RBA)'s 100 basis points cash rate cut. The RBA cut the cash rate to 4.24 per cent, its lowest level in six and a half years. It...Source: New Zealand Herald - Business | 2 Dec 2008 | 5:29 am Reserve Bank of Australia cuts rates 1 pc to 4.25pcSYDNEY - Australian central bank has cut its key interest rate by 1 full percentage point to 4.25 per cent to fight the economic slump. The Reserve Bank of New Zealand is setting the Official Cash Rate this Thursday, December 04....Source: New Zealand Herald - Business | 2 Dec 2008 | 4:47 am Car finance next to feel the freeze, says new reportFinance company collapses over the last year have hit the property development industry, but it is vehicle dealerships that will suffer in the future with the withdrawal of their financiers, a report said today. At least 10 finance...Source: New Zealand Herald - Business | 2 Dec 2008 | 3:00 am Investors approve North South moratoriumInvestors have approved a moratorium proposal for North South Finance by an 83 per cent majority at an investor meeting. Investors should get an initial payout of 5c in the dollar this year. Whether they will see the rest of their...Source: New Zealand Herald - Business | 2 Dec 2008 | 2:30 am Agriculture to be hit hard by global crisis, new Govt toldNew Zealand's agricultural industries will be hit hard by the financial crisis and some farms with existing debt could go under, according to a ministerial briefing paper to the in-coming Government. The paper from the Ministry...Source: New Zealand Herald - Business | 2 Dec 2008 | 2:30 am Telecom gets $797m bid for AAPTTelecom has received a $797 million bid for its troubled Australian investment AAPT. Privately-held Asian telco Pacnet is offering US$420 million ($797.1 million) for AAPT, Australia's number three phone company, as it looks to...Source: New Zealand Herald - Business | 2 Dec 2008 | 2:00 am US newspaper ad spend falls 18pc, online down 3pcUS newspaper advertising revenue collapsed by nearly $2 billion, or 18 per cent, in the third quarter, according to the Newspaper Association of America, an industry group. Even online ad revenue made a small U-turn for the second...Source: New Zealand Herald - Business | 2 Dec 2008 | 1:30 am Cancelled M&As close to eclipsing takeoversRate of deals collapsing has increased since September. Announced M&A activity is down 27%in the year to date compared with 2007, and the quarterly rate of withdrawn deals has hit a two-year highSource: Financial Times - US homepage | 2 Dec 2008 | 12:56 am Trump faces Deutsche suit over Chicago towerThe gaming industry slump and real estate slowdown is threatening to hit Donald Trump in the wallet as he faces a lawsuit from Deutsche Bank over a 92-storey Chicago tower developmentSource: Financial Times - US homepage | 2 Dec 2008 | 12:38 am Despite 401k, maybe you should spendAs many of us see our retirement savings dwindling from the stock market's decline, a natural reaction is to close our wallets. Economist Dan Ariely tells Kai Ryssdal we may want to rethink that notion.Source: Marketplace | 2 Dec 2008 | 12:26 am In Brief - MondayEBIX, which sells software to insurers, closed purchase of rival ConfirmNet. Ebix (EBIX) is expected to pay up to to $11 mil from cash reserves to...Source: Investor's Business Daily: BUSINESS | 2 Dec 2008 | 12:23 am Business Briefs - MondayHP touts lowered IT expenses. The PC maker outlined the results of a 3-year overhaul of its information technology operations, saying the effort...Source: Investor's Business Daily: BUSINESS | 2 Dec 2008 | 12:23 am After The Close - MondaySHANDA INTERACTIVE (SNDA), a China-based online games company, said Q3 EPS rose 55% to 68 cents, beating views by 28%. Sales grew 43% to $137 mil,...Source: Investor's Business Daily: BUSINESS | 2 Dec 2008 | 12:23 am Trends & Innovations - MondayCancer may vanish on its ownSource: Investor's Business Daily: BUSINESS | 2 Dec 2008 | 12:23 am Pacemaker Battery Maker Keeps Steady Beat By Branching OutIt takes some doing to steer a 38-year-old company in a new direction.Source: Investor's Business Daily: BUSINESS | 2 Dec 2008 | 12:23 am Ford weighs selling Volvo amid industry downturnDETROIT -- Ford Motor Co. is considering selling Volvo Car Corp. as the beleaguered U.S. automaker seeks to raise cash and weather a global automotive sales crisis.Source: L.A. Times - Business | 1 Dec 2008 | 11:16 pm VIX Index of U.S. Stock Option Prices Advances 23.9% to 68.51Source: Bloomberg - All Podcasts | 1 Dec 2008 | 11:10 pm Raymond James's McMahon Says ETFs Offer Flexible StrategiesSource: Bloomberg - All Podcasts | 1 Dec 2008 | 11:08 pm UC's Hamilton Says Global Economy Is `Deteriorating Quickly'Source: Bloomberg - All Podcasts | 1 Dec 2008 | 11:05 pm High court hears nuke power plant caseThe Supreme Court is taking up a challenge by an environmental group that alleges a New York power plant is polluting the Hudson River and should not be exempt by Clean Water Act rules for newer plants. Sam Eaton reports.Source: Marketplace | 1 Dec 2008 | 10:52 pm CNN makes a play on AP's turfCNN is launching its own news wire service to compete with the long-established Associated Press. It's been in a beta trial run for a month. Stacey Vanek-Smith reports.Source: Marketplace | 1 Dec 2008 | 10:48 pm Ford studying possible sale of VolvoFord Motor said it was re-evaluating its options for Volvo, including the possible sale of the lossmaking Swedish brand, ahead of its appearance in Congress to appeal for federal emergency aidSource: Financial Times - US homepage | 1 Dec 2008 | 10:42 pm Israelis, Palestinians join in start-upIsraeli and Palestinian techies are creating a new business that allows computer users to store all their data on the Internet. Daniel Estrin reports.Source: Marketplace | 1 Dec 2008 | 10:28 pm A big day ahead for the Big 3On Tuesday, the Big Three automakers are expected to present their bailout proposal to Congress. But in the face of sobering November sales figures, can they keep a united front? Alisa Roth reports.Source: Marketplace | 1 Dec 2008 | 10:21 pm Dover's Cliggott Says Market Is All About Capital PreservationSource: Bloomberg - All Podcasts | 1 Dec 2008 | 10:17 pm Podesta On Obama Transition, Economic Policy PrioritiesSource: Bloomberg - All Podcasts | 1 Dec 2008 | 10:08 pm Black Friday not looking so blackRetail experts are predicting the weakest holiday shopping season in decades, and consumers' spending on Black Friday isn't changing that view. Today, retail stocks were down. Janet Babin reports.Source: Marketplace | 1 Dec 2008 | 9:54 pm When Will It End?As if you didn't know yet, the United States is in a recession. Worst of Times The Fed on Deck How Economic Turmoil Breeds Innovation Source: Portfolio.com: Top 5 | 1 Dec 2008 | 9:00 pm Woertz Sees Gulf Economies Focusing on Domestic SpendingSource: Bloomberg - All Podcasts | 1 Dec 2008 | 8:14 pm Weinberg of High Frequency Sees U.S. Deficit of $1 TrillionSource: Bloomberg - All Podcasts | 1 Dec 2008 | 8:08 pm A brand new city in a troubled economyFor the first part of our series "Close to Home," Steven Cuevas went to a town in the Temecula Valley that just won the right to incorporate in the midst of the failing economy. Steven Cuevas reports on how it's going so far.Source: Marketplace | 1 Dec 2008 | 6:47 pm Donovan of UBS Says ECB Has 'Messed Things Up'Source: Bloomberg - All Podcasts | 1 Dec 2008 | 6:28 pm Levitt Sees Boutique Investment Banks Replacing `Giants'Source: Bloomberg - All Podcasts | 1 Dec 2008 | 6:26 pm BNY Mellon's Grohowski Sees Stock Market `Bottoming Process'Source: Bloomberg - All Podcasts | 1 Dec 2008 | 6:24 pm A Cracked TudorPaul Tudor Jones tripled his money by predicting the stock-market crash of 1987. The crash of 2008 hasn't treated him quite so well.Just as troubled banks have floated proposals to split into two, with a "good bank/bad bank structure," Jones' Tudor Investment Corp. is splitting off the bad investments made by its $10 billion Tudor BVI Global Fund into a separate fund. The Legacy Fund will have lower fees and illiquid assets such as corporate credit from emerging markets in Eastern Europe, Latin America, and Asia. The remaining BVI Global Fund will continue to invest in international stocks, bonds, and other securities. Jones also told investors that redemptions from the fund would be temporarily suspended, with the expectation they could resume by the end of next March. The fund had received requests for $1.4 billion, or about 14 percent of net assets, which would have left remaining assets holding too much of the illiquid assets. This news is yet another blow to the embattled hedge fund industry. Jones has long been known as one of the industry's top traders, with his Tudor BVI Global fund returning 22 percent on average annually since it launched in 1986. "I recognize that a restructuring is an unwelcome, but I believe necessary, step against the backdrop of Tudor BVI's 22-year history of unbroken profitable years," Jones wrote in a letter to investors. "I believe it is but a brief step, however, on the road to important long-term changes for the benefit of all investors." The news is also troubling because the fund was forced to take these steps despite the fact that it is far outperforming its peers. The Tudor Global Fund is down just 5 percent year-to-date, while the composite index of global funds tracked by Hedge Fund Research is down 22 percent year-to-date. If investors are that eager to withdraw their money from one of the better-performing funds out there, there's no telling how ugly it has become for the less fortunate managers. Related Links The Pirate Pose When a Publicly-Listed Hedge Fund Blows Up Sign of a Bottom? Source: Portfolio.com: Top 5 | 1 Dec 2008 | 2:30 pm Drastic PlasticThe Federal Reserve is trying to get consumer finance flowing again. The Fed announced a program last week that would provide as much as $200 billion in loans for securities backed by credit cards, auto loans, student loans, and loans guaranteed by the Small Business Administration.At the same time, however, financial institutions are scrambling to turn off the taps. Meredith Whitney, the banking analyst with Oppenheimer & Co., estimates that more than $2 trillion of credit-card lines will be pulled over the next 18 months. Such a retrenchment would be devastating to consumer spending, as credit cards are second only to jobs in their importance to consumer liquidity. "We are now beginning to see evidence of broad-based declines in overall consumer liquidity," she wrote, estimating a decline of 45 percent, according to Reuters. The credit-card market is lagging the mortgage market by 18 months and will begin to shrink by mid-2010, Whitney said. Many big lenders have been trying to cut their exposure to credit cards, closing accounts, lowering limits, and instituting higher rates or stricter terms. Some $21 billion in bad credit-card debt was written off in the first half of 2008 and tens of billions of dollars more in losses are expected. Capital One, the largest independent card issuer, said in its earnings call in October that it had begun to reduce credit lines. The chill in the air is consumer spending being frozen solid. Related Links Should the Fed Go Long? Bernanke's Speech Baby Steps Source: Portfolio.com: Top 5 | 1 Dec 2008 | 2:30 pm Jump-Starting a BailoutThe only thing that is certain is that Detroit cannot do much worse in Washington than it did before.Tomorrow is the deadline when General Motors, Ford Motor, and Chrysler must tell Congress how they intend to overhaul their companies and how they would use $25 billion in federal loans. There will be hearings on Thursday and Friday, and Congress could reconvene to vote on aid next week. Winning aid would be a huge turnaround from last month. Then, in two days of congressional hearings, the executives of the Big Three appeared utterly clueless. They had trouble articulating the health of their companies or explaining how they would use federal aid. The executives were mocked by lawmakers for flying to Washington in private jets. In its overhaul plan, G.M. is expected to unveil a significant downsizing. Bill Vlasic of the New York Times says that will include shutting more factories and winnowing brands. Christine Tierney and David Shepardson of the Detroit News say it could mean that as many as four of G.M.'s eight brands get the ax. Saturn and Pontiac are among the most likely candidates for elimination. Chrysler's salvation may rest only in a merger, if not with G.M. then perhaps with a foreign automaker. Ford Motor is in the best position to survive over the next few months. That's not the case for either G.M. or Chrysler if there is no federal support. Both are burning cash at alarming rates. John Stoll of the Wall Street Journal says the G.M. board is considering all alternatives, including a filing for Chapter 11 bankruptcy protection, even though the company's chief executive, Rick Wagoner, has said publicly that bankruptcy is not an option. It is widely believed that consumers would shun an automaker in bankruptcy out of concern that warranties would be meaningless and parts would be more difficult to obtain. G.M. and Ford are also turning to another place for government help: Sweden. John Reed of the Financial Times says that both automakers have approached the Swedish government about aid for their Saab and Volvo units. The plight of Detroit will also be underscored on Tuesday, when automakers report U.S. sales for the month. November sales are expected to come in at a 25-year low. Related Links Detroit Needs a Miracle AMI Chief Asks Employees to Back Auto Bailout The Drive to Save Detroit Source: Portfolio.com: Top 5 | 1 Dec 2008 | 1:30 pm
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