Weakness at GMAC also hurts results, but overseas vehicle sales help company top analysts' forecasts.
The nation's largest automaker, General Motors Corp., announced a large first-quarter loss Wednesday, due in large part to struggles from its former finance wing GMAC and slumping U.S. car sales.
But the loss was narrower than expected and sales topped forecasts, helping to lift shares of GM (GM, Fortune 500) 3.8% to $22 in pre-market trading.
GM posted a net loss of $3.3 billion, or $5.74 per share, which was wider than the $42 million, or 7-cent-a-share loss from continuing operations in the same period last year.
Excluding one-time losses from GMAC and $731 million in bankruptcy support for auto parts manufacturer Delphi, GM lost $350 million, or 62 cents per share. Analysts polled by Thomson Financial - who generally exclude one-time events from their forecasts - were looking for a deeper loss of $1.60 per share.
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Wednesday, April 30, 2008
Housing prices post record declines
Las Vegas, Miami and Phoenix all saw prices plummet by at least 20%. And so far, there is no sign of a bottom.
Home prices have posted another record decline, as most of the nation's largest markets suffered double-digit drops over last year, a survey released Tuesday shows.
The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That's the biggest fall since the index began tracking prices in 2000.
Of those 20 metro areas, 17 posted their largest year-over-year declines ever. Ten of the 20 cities posted double-digit dips.
The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since its launch in 1987.
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Home prices have posted another record decline, as most of the nation's largest markets suffered double-digit drops over last year, a survey released Tuesday shows.
The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That's the biggest fall since the index began tracking prices in 2000.
Of those 20 metro areas, 17 posted their largest year-over-year declines ever. Ten of the 20 cities posted double-digit dips.
The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since its launch in 1987.
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No Cushion Against Hubris
"The first panacea for a mismanaged nation is inflation of the currency; the second is war."
Not today, and not tomorrow: You can still spend your dollars and get value, as long as you are not traveling much in Europe or Japan.
It will not come next month, or next quarter: There is still time to covet and honor the American greenback as the strongest link of stability in the international financial system. You can still rely on your money, your banker and probably your broker, though you definitely want to keep an eye on your hedge fund manager.
But this is changing under our feet. The "golden moment" that enveloped the global economy for most of this decade is fading -- at least psychologically if not materially -- as we reach the end of an era of hubris in global affairs.
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Not today, and not tomorrow: You can still spend your dollars and get value, as long as you are not traveling much in Europe or Japan.
It will not come next month, or next quarter: There is still time to covet and honor the American greenback as the strongest link of stability in the international financial system. You can still rely on your money, your banker and probably your broker, though you definitely want to keep an eye on your hedge fund manager.
But this is changing under our feet. The "golden moment" that enveloped the global economy for most of this decade is fading -- at least psychologically if not materially -- as we reach the end of an era of hubris in global affairs.
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Friday, April 18, 2008
Infosys scouting for buys in Europe, US
Owing to economic slowdown and consequently lower valuations, Infosys Technologies is eyeing acquisitions in Europe or US. Speaking to Business Line, Mr T.V. Mohandas Pai, Member of Board and Director- Human Resources, Education and Research and Administration, Infosys, said the company was looking at acquiring firms in the BFSI, communication or manufacturing space. “We are focusing on adding vertical expertise, and not capacity building,” he said, without sharing any other details. For the year ended March 2008, the company had Rs 6,429 crore as cash and bank balance.
Infosys’ first acquisition was in Australia where it bought 100 per cent stake in Expert Information Services for about $22.9 million (Rs 92 crore). The company was renamed Infosys Technologies (Australia) Pvt Ltd. The company signed a $250 million seven-year deal to acquired three captive BPOs from the Netherlands-based Philips NV, including three shared centres in India, Poland and Thailand.
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Infosys’ first acquisition was in Australia where it bought 100 per cent stake in Expert Information Services for about $22.9 million (Rs 92 crore). The company was renamed Infosys Technologies (Australia) Pvt Ltd. The company signed a $250 million seven-year deal to acquired three captive BPOs from the Netherlands-based Philips NV, including three shared centres in India, Poland and Thailand.
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Colombia Trade Accord
Re “Time for the Colombian Trade Pact” (editorial, April 12):
It is not yet time for Congress to ratify the United States-Colombia Free Trade Agreement.
As you note, in response to American pressure, last year Colombia established a specialized group of prosecutors to focus on thousands of unsolved killings of trade unionists, and this group is making some headway.
But it is naïve to assume that real progress will continue without sustained pressure. Once the trade pact is ratified, the main incentive for President Álvaro Uribe’s administration — which has stigmatized unionists as terrorists — to support these investigations will vanish.
Your proposal to keep the pressure on through the “powerful tool” of conditions on military aid won’t do the trick: American administrations from both parties have consistently failed to enforce existing human rights conditions on such assistance.
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It is not yet time for Congress to ratify the United States-Colombia Free Trade Agreement.
As you note, in response to American pressure, last year Colombia established a specialized group of prosecutors to focus on thousands of unsolved killings of trade unionists, and this group is making some headway.
But it is naïve to assume that real progress will continue without sustained pressure. Once the trade pact is ratified, the main incentive for President Álvaro Uribe’s administration — which has stigmatized unionists as terrorists — to support these investigations will vanish.
Your proposal to keep the pressure on through the “powerful tool” of conditions on military aid won’t do the trick: American administrations from both parties have consistently failed to enforce existing human rights conditions on such assistance.
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Citi posts loss, cuts 9,000 more jobs
Financial services giant records $5.1 billion loss and more than $15 billion in writedowns, and says it will eliminate more positions.
Citigroup delivered yet another quarter of devastating results Friday, this time losing more than $5 billion due to troubles in its fixed-income business and higher consumer credit costs, adding it would cut an additional 9,000 jobs.
The New York-based company also recorded more than $15 billion in writedowns, with the lion's share coming from subprime-related direct exposures.
But investors cheered the news, sending shares of Citigroup (C, Fortune 500) more than 6% in early trading, as the results were not as bad as some had feared.
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Citigroup delivered yet another quarter of devastating results Friday, this time losing more than $5 billion due to troubles in its fixed-income business and higher consumer credit costs, adding it would cut an additional 9,000 jobs.
The New York-based company also recorded more than $15 billion in writedowns, with the lion's share coming from subprime-related direct exposures.
But investors cheered the news, sending shares of Citigroup (C, Fortune 500) more than 6% in early trading, as the results were not as bad as some had feared.
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As the FBI steps in, the subprime witch hunt begins
The FBI says that deceptive practices at hedge funds and some banks may have made the subprime disaster worse. According to Reuters, the head of the agency said the bureau's investigation of potential fraud in the U.S. home mortgage industry now encompasses 19 companies in "cases that may have a substantial impact on the marketplace."
While insider trading and accounting fraud may be part of any charges which emerge, one of the biggest single issues may be the sales practices of the firms which sold subprime paper to their clients. The subprime instruments were often presented as having high credit ratings and safe risk profiles. Of course, it didn't work out that way. Another problem may be whether mortgage banks were completely honest in what they told home-buyers about how their loans would work as their interest rates increased over time.
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While insider trading and accounting fraud may be part of any charges which emerge, one of the biggest single issues may be the sales practices of the firms which sold subprime paper to their clients. The subprime instruments were often presented as having high credit ratings and safe risk profiles. Of course, it didn't work out that way. Another problem may be whether mortgage banks were completely honest in what they told home-buyers about how their loans would work as their interest rates increased over time.
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Economy: The bad news is there is no good news
Higher unemployment claims and weak readings from two economic indexes reinforced recession worries Thursday.
The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
Separately, the New York-based Conference Board's gauge of future economic activity rose 0.1 percent for March, reversing five months of decline. But the private business group's indicator has shown a 3.3 percent annual rate of decline since March 2007.
That's ''the kind of result, that whenever we've seen it in the past, the U.S. economy has been heading into a recession,'' Michael Gregory, senior economist for BMO Nesbitt Burns, a Toronto investment bank. ''The recession signal here is clear and unequivocal.''
The Conference Board index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.
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The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
Separately, the New York-based Conference Board's gauge of future economic activity rose 0.1 percent for March, reversing five months of decline. But the private business group's indicator has shown a 3.3 percent annual rate of decline since March 2007.
That's ''the kind of result, that whenever we've seen it in the past, the U.S. economy has been heading into a recession,'' Michael Gregory, senior economist for BMO Nesbitt Burns, a Toronto investment bank. ''The recession signal here is clear and unequivocal.''
The Conference Board index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.
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Shooting Ourselves in the Foot
In a stunning decision, the U.S. Air Force awarded its biggest-ever military order to a foreign supplier at the end of February. The $40 billion deal, conferred to a partnership led by the European Aeronautic Defense and Space Co. (eads), was a blow to U.S.-based rival Boeing, which was the odds-on favorite to win. More importantly, this contract to supply the military with new airborne refueling tankers confirms what analysts have called a “major shift” in U.S. procurement policy.
The contract, currently one of the largest at the Pentagon, has the potential to ratchet up to a massive $100 billion. It breaks a multi-decade relationship with Boeing, the company that built the bulk of America’s existing fleet. The 179 planes on order will be based on the European Airbus 330 design, and although the final assembly of the craft will take place in Alabama, components will be engineered and manufactured around the globe.
“This isn’t an upset,” Loren Thompson, a military analyst at Washington’s Lexington Institute, said. “It’s an earthquake” (International Herald Tribune, March 1).
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The contract, currently one of the largest at the Pentagon, has the potential to ratchet up to a massive $100 billion. It breaks a multi-decade relationship with Boeing, the company that built the bulk of America’s existing fleet. The 179 planes on order will be based on the European Airbus 330 design, and although the final assembly of the craft will take place in Alabama, components will be engineered and manufactured around the globe.
“This isn’t an upset,” Loren Thompson, a military analyst at Washington’s Lexington Institute, said. “It’s an earthquake” (International Herald Tribune, March 1).
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Thursday, April 17, 2008
Prudential on the look out for US acquisitions
Prudential, the UK insurer, is on the hunt for bolt-on acquisitions in the US as the American market begins a cut-throat price war.
Delivering a 13 per cent rise in first quarter worldwide new business sales, Mark Tucker, the chief executive of Prudential, said that much of the current pricing of American insurance products by rivals was "unsustainable".
First quarter new business sales at Jackson, Prudential's US arm, fell 7 per cent to £165 million in large part because of general fears felt by American consumers about taking out the sort of equity-backed products the insurer sells.
The sales decline was also the result of what Mr Tucker said was "price competition which is unsustainable".
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Delivering a 13 per cent rise in first quarter worldwide new business sales, Mark Tucker, the chief executive of Prudential, said that much of the current pricing of American insurance products by rivals was "unsustainable".
First quarter new business sales at Jackson, Prudential's US arm, fell 7 per cent to £165 million in large part because of general fears felt by American consumers about taking out the sort of equity-backed products the insurer sells.
The sales decline was also the result of what Mr Tucker said was "price competition which is unsustainable".
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New jobless claims surge
Government says the number of people applying for unemployment benefits increased; claims filed exceed economists' expectations.
The number of newly laid off workers filing claims for unemployment benefits increased last week after a big decline in the previous week.
The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
The four-week average for claims was 376,000, down only slightly from 376,750, the previous week. Aside from the period in the fall of 2005 after Hurricane Katrina hit, the four-week average for claims has risen to levels last seen in 2003 when the country was mired in a long jobless recovery after the 2001 recession.
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The number of newly laid off workers filing claims for unemployment benefits increased last week after a big decline in the previous week.
The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
The four-week average for claims was 376,000, down only slightly from 376,750, the previous week. Aside from the period in the fall of 2005 after Hurricane Katrina hit, the four-week average for claims has risen to levels last seen in 2003 when the country was mired in a long jobless recovery after the 2001 recession.
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CIT Group Posts Loss on Bad Loans, Cuts Dividend
CIT Group Inc., the commercial finance company trying to escape a cash squeeze, said it was unprofitable for a fourth straight quarter and cut its dividend after failing to staunch losses on home and student loans.
The first quarter's $249.7 million loss before preferred dividends, or $1.35 a share, compares with a profit of $208.1 million, or $1.01 fully diluted, in the same period a year earlier, according to a statement. The stock rose as much as 6.9 percent as CIT said it will return to profitability in future quarters.
Chief Executive Officer Jeffrey Peek cut 500 jobs and reduced the dividend 60 percent at CIT, the biggest independent lender to U.S. firms. He's selling units and trying to raise $7 billion to quell concerns about the New York-based firm's health after CIT drew on $7.3 billion of emergency credit last month. Analysts have said the company may be a takeover target.
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The first quarter's $249.7 million loss before preferred dividends, or $1.35 a share, compares with a profit of $208.1 million, or $1.01 fully diluted, in the same period a year earlier, according to a statement. The stock rose as much as 6.9 percent as CIT said it will return to profitability in future quarters.
Chief Executive Officer Jeffrey Peek cut 500 jobs and reduced the dividend 60 percent at CIT, the biggest independent lender to U.S. firms. He's selling units and trying to raise $7 billion to quell concerns about the New York-based firm's health after CIT drew on $7.3 billion of emergency credit last month. Analysts have said the company may be a takeover target.
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CIT Group Posts Loss on Bad Loans, Cuts Dividend
CIT Group Inc., the commercial finance company trying to escape a cash squeeze, said it was unprofitable for a fourth straight quarter and cut its dividend after failing to staunch losses on home and student loans.
The first quarter's $249.7 million loss before preferred dividends, or $1.35 a share, compares with a profit of $208.1 million, or $1.01 fully diluted, in the same period a year earlier, according to a statement. The stock rose as much as 6.9 percent as CIT said it will return to profitability in future quarters.
Chief Executive Officer Jeffrey Peek cut 500 jobs and reduced the dividend 60 percent at CIT, the biggest independent lender to U.S. firms. He's selling units and trying to raise $7 billion to quell concerns about the New York-based firm's health after CIT drew on $7.3 billion of emergency credit last month. Analysts have said the company may be a takeover target.
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The first quarter's $249.7 million loss before preferred dividends, or $1.35 a share, compares with a profit of $208.1 million, or $1.01 fully diluted, in the same period a year earlier, according to a statement. The stock rose as much as 6.9 percent as CIT said it will return to profitability in future quarters.
Chief Executive Officer Jeffrey Peek cut 500 jobs and reduced the dividend 60 percent at CIT, the biggest independent lender to U.S. firms. He's selling units and trying to raise $7 billion to quell concerns about the New York-based firm's health after CIT drew on $7.3 billion of emergency credit last month. Analysts have said the company may be a takeover target.
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Merrill Posts Loss on Mortgage Writedowns, Cuts Jobs
Merrill Lynch & Co. posted its third straight quarterly loss and said it will cut about 3,000 more jobs after the credit seizure forced the investment bank to write down at least $6.5 billion of debt.
The first-quarter net loss of $1.96 billion, or $2.19 a share, compared with earnings of $2.16 billion, or $2.26, a year earlier, the third-biggest U.S. securities firm by market value said today in a statement. Analysts had predicted a loss of $1.72 billion, based on estimates compiled by Bloomberg. Merrill rose in New York trading.
Chief Executive Officer John Thain said today he expects ``more difficult'' months ahead. Since taking the job in December, he has sold more than $12 billion of equity to bolster capital and overhauled risk-management after the company booked more than $20 billion of credit-market losses. Merrill's stock has fallen 50 percent in the past 12 months, trailing larger New York-based rivals Goldman Sachs Group Inc. and Morgan Stanley.
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The first-quarter net loss of $1.96 billion, or $2.19 a share, compared with earnings of $2.16 billion, or $2.26, a year earlier, the third-biggest U.S. securities firm by market value said today in a statement. Analysts had predicted a loss of $1.72 billion, based on estimates compiled by Bloomberg. Merrill rose in New York trading.
Chief Executive Officer John Thain said today he expects ``more difficult'' months ahead. Since taking the job in December, he has sold more than $12 billion of equity to bolster capital and overhauled risk-management after the company booked more than $20 billion of credit-market losses. Merrill's stock has fallen 50 percent in the past 12 months, trailing larger New York-based rivals Goldman Sachs Group Inc. and Morgan Stanley.
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Inflation Everywhere
Falling interest rates and rising demand for basic materials and foodstuffs is an almost guaranteed recipe for inflation, and price pressures were evident around the world on Wednesday.
In the United States, the March Consumer Price Index showed a 4.0% year-on-year rise, reflecting soaring food and energy costs, while inflation statistics in the European Union and China also showed serious increases.
In Washington, the U.S. Labor Department said the CPI, which measures the prices of a mix of consumer goods and services such as transportation, energy, food and medical care, resumed its rise in March after a flat reading in February. (See: "February's Pleasant CPI Surprise") Overall, prices rose 0.3%, while core inflation, which strips out volatile food and energy prices, rose 0.2%, in line with forecasts of economists polled by Thomson Financial.
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In the United States, the March Consumer Price Index showed a 4.0% year-on-year rise, reflecting soaring food and energy costs, while inflation statistics in the European Union and China also showed serious increases.
In Washington, the U.S. Labor Department said the CPI, which measures the prices of a mix of consumer goods and services such as transportation, energy, food and medical care, resumed its rise in March after a flat reading in February. (See: "February's Pleasant CPI Surprise") Overall, prices rose 0.3%, while core inflation, which strips out volatile food and energy prices, rose 0.2%, in line with forecasts of economists polled by Thomson Financial.
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Inflation Everywhere
Falling interest rates and rising demand for basic materials and foodstuffs is an almost guaranteed recipe for inflation, and price pressures were evident around the world on Wednesday.
In the United States, the March Consumer Price Index showed a 4.0% year-on-year rise, reflecting soaring food and energy costs, while inflation statistics in the European Union and China also showed serious increases.
In Washington, the U.S. Labor Department said the CPI, which measures the prices of a mix of consumer goods and services such as transportation, energy, food and medical care, resumed its rise in March after a flat reading in February. (See: "February's Pleasant CPI Surprise") Overall, prices rose 0.3%, while core inflation, which strips out volatile food and energy prices, rose 0.2%, in line with forecasts of economists polled by Thomson Financial.
Read Complete Story
In the United States, the March Consumer Price Index showed a 4.0% year-on-year rise, reflecting soaring food and energy costs, while inflation statistics in the European Union and China also showed serious increases.
In Washington, the U.S. Labor Department said the CPI, which measures the prices of a mix of consumer goods and services such as transportation, energy, food and medical care, resumed its rise in March after a flat reading in February. (See: "February's Pleasant CPI Surprise") Overall, prices rose 0.3%, while core inflation, which strips out volatile food and energy prices, rose 0.2%, in line with forecasts of economists polled by Thomson Financial.
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The Las Vegas Economic Downturn Has Started
The spillover effect from our national economic downturn has finally started to impact Las Vegas, and casino layoffs have officially begun (as I’ve been forecasting for some time):
MGM Mirage layoffs blamed on penny-pinching vacationers:
MGM Mirage Inc., the largest casino operator on the Las Vegas Strip, told more than 400 middle management employees they would be terminated immediately in a cost-saving move, the company said.
The decision will save $75 million annually and came after the company saw weakness since August at its properties, which include Bellagio, MGM Grand, Mirage and Mandalay Bay, spokesman Alan Feldman told The Associated Press on Monday.
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MGM Mirage layoffs blamed on penny-pinching vacationers:
MGM Mirage Inc., the largest casino operator on the Las Vegas Strip, told more than 400 middle management employees they would be terminated immediately in a cost-saving move, the company said.
The decision will save $75 million annually and came after the company saw weakness since August at its properties, which include Bellagio, MGM Grand, Mirage and Mandalay Bay, spokesman Alan Feldman told The Associated Press on Monday.
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Tuesday, April 15, 2008
Scotiabank looks to U.S. acquisition
Bank of Nova Scotia, Canada's most international bank, is considering diving in to the lucrative but troubled U.S. banking sector.
Scotiabank has long focused on building its network in Mexico, Central America and the Caribbean, and more recently in Asia. Now it is sticking its neck out to take a look at National City Corp., a Cleveland-based bank that's been stung by the U.S. housing crisis. It has a network that stretches through Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri and Pennsylvania.
Analysts were cautiously optimistic about the prospect.
"If there were ever a time to do it, now would be the time," CIBC World Markets analyst Darko Mihelic said.
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Scotiabank has long focused on building its network in Mexico, Central America and the Caribbean, and more recently in Asia. Now it is sticking its neck out to take a look at National City Corp., a Cleveland-based bank that's been stung by the U.S. housing crisis. It has a network that stretches through Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri and Pennsylvania.
Analysts were cautiously optimistic about the prospect.
"If there were ever a time to do it, now would be the time," CIBC World Markets analyst Darko Mihelic said.
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Brownback continues to oppose Airbus tanker deal
Former Republican presidential candidate Sam Brownback says the controversy stemming from the Air Force's decision to award a lucrative tanker deal to France-based Airbus instead of Boeing is not over.
The Government Accountability Office (GAO) is expected to issue a decision in June on Boeing's protest of a $35 billion contract the Pentagon awarded to the parent company of Airbus to replace an aging fleet of Boeing KC-135 aerial refueling tankers. Senator Sam Brownback (R-Kansas), a vocal critic of the deal, says the U.S. should not be awarding a contract to a European company it is currently pursuing a trade complaint against.
Brownback argues that the contract award initiates a trend the U.S. should avoid. "I continue to believe we should not outsource production of this crucial platform. We shouldn't outsource our defense needs or our food needs, and this starts and moves us along that road," he says.
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The Government Accountability Office (GAO) is expected to issue a decision in June on Boeing's protest of a $35 billion contract the Pentagon awarded to the parent company of Airbus to replace an aging fleet of Boeing KC-135 aerial refueling tankers. Senator Sam Brownback (R-Kansas), a vocal critic of the deal, says the U.S. should not be awarding a contract to a European company it is currently pursuing a trade complaint against.
Brownback argues that the contract award initiates a trend the U.S. should avoid. "I continue to believe we should not outsource production of this crucial platform. We shouldn't outsource our defense needs or our food needs, and this starts and moves us along that road," he says.
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Fuel prices strike fresh records
Nationwide average price for a gallon of regular gasoline hits all-time high of $3.386, AAA survey shows; diesel rises to record $4.119 a gallon.
The average prices of gasoline and diesel fuel have reached new record highs, a AAA survey showed Tuesday.
The average price of regular unleaded gasoline rose more than a penny to $3.386 a gallon from $3.373.
Gas prices are up 18.5% from where they were last year. A month ago, the nationwide average was $3.285 a gallon.
Gasoline prices normally rise during the spring as people travel more. However, record fuel prices have also been supported by high crude prices as shrinking profit margins have caused refiners to pull back on production.
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The average prices of gasoline and diesel fuel have reached new record highs, a AAA survey showed Tuesday.
The average price of regular unleaded gasoline rose more than a penny to $3.386 a gallon from $3.373.
Gas prices are up 18.5% from where they were last year. A month ago, the nationwide average was $3.285 a gallon.
Gasoline prices normally rise during the spring as people travel more. However, record fuel prices have also been supported by high crude prices as shrinking profit margins have caused refiners to pull back on production.
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Foreclosures jump 57% in March
The housing bust continues to take its toll, with over 50,000 homes lost to foreclosure. Nevada once again leads the nation in defaults.
Foreclosure filings jumped 57% in March compared with the same month last year and rose 5% versus February, as the nation's housing market continues to deteriorate.
RealtyTrac, an online marketer of foreclosure properties, said Tuesday that 234,685 homes were hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. Of those, 51,393 homes were lost to foreclosure - a 10% increase over
the number of homes lost in February.
"What this report shows us is that the housing market correction is ongoing and we shouldn't expect the subprime problem to vanish anytime soon," said Jared Bernstein, a senior economist with the Economic Policy Institute.
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Foreclosure filings jumped 57% in March compared with the same month last year and rose 5% versus February, as the nation's housing market continues to deteriorate.
RealtyTrac, an online marketer of foreclosure properties, said Tuesday that 234,685 homes were hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. Of those, 51,393 homes were lost to foreclosure - a 10% increase over
the number of homes lost in February.
"What this report shows us is that the housing market correction is ongoing and we shouldn't expect the subprime problem to vanish anytime soon," said Jared Bernstein, a senior economist with the Economic Policy Institute.
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Exploring reasons why NAFTA has been bad for U.S.
Nearly 15 years after passage of the controversial North American Free Trade Agreement (NAFTA), the Democratic presidential primary race has pushed the debate about trade back to center stage. Polls show that growing numbers of Americans, including Republicans, think NAFTA has been a loser for them and the nation, and many politicians agree.
What does the record actually show? When Congress voted on NAFTA, critics and proponents agreed that the deal should be measured by whether the U.S. trade deficit rises or falls, which would affect the composition of jobs in the economy. Further, economists have long known that the main impact of exposing the blue-collar workforce to low-wage competition would be stagnation in U.S. workers' wages overall, not just in manufacturing.
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What does the record actually show? When Congress voted on NAFTA, critics and proponents agreed that the deal should be measured by whether the U.S. trade deficit rises or falls, which would affect the composition of jobs in the economy. Further, economists have long known that the main impact of exposing the blue-collar workforce to low-wage competition would be stagnation in U.S. workers' wages overall, not just in manufacturing.
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Wholesale prices soar in March
High energy and food prices drive a 1.1% increase in wholesale inflation.
Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly.
The Labor Department reported Tuesday that wholesale prices rose 1.1% last month, the largest increase since a 2.6% rise last November, which had been the biggest one-month jump in 33 years. Analysts had been expecting a much more moderate 0.4% rise in wholesale prices for the month.
Core inflation, which excludes energy and food, was better behaved last month, rising by just 0.2%, down from a worrisome 0.5% rise in February.
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Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly.
The Labor Department reported Tuesday that wholesale prices rose 1.1% last month, the largest increase since a 2.6% rise last November, which had been the biggest one-month jump in 33 years. Analysts had been expecting a much more moderate 0.4% rise in wholesale prices for the month.
Core inflation, which excludes energy and food, was better behaved last month, rising by just 0.2%, down from a worrisome 0.5% rise in February.
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Monday, April 14, 2008
India's Biocon to buy US firm for $400 mn
Mumbai: After gaining a foothold in the European market with the acquisition of German drug marketing firm AxiCorp GmbH in February, India’s Biocon Ltd now has set its sights on the US pharma distribution market with a deal valued at about $400 million(Rs1,595 crore).
The Bangalore-based biotech firm has been scouting for an acquisition in the US that will sell its pharmaceutical products such as generics, biosimilars and biologics in the world’s largest drug market.
“The deal, if signed, will be Biocon’s second and the largest overseas acquisition in the marketing space,” said a person familiar with the development who did not wish to be identified.
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The Bangalore-based biotech firm has been scouting for an acquisition in the US that will sell its pharmaceutical products such as generics, biosimilars and biologics in the world’s largest drug market.
“The deal, if signed, will be Biocon’s second and the largest overseas acquisition in the marketing space,” said a person familiar with the development who did not wish to be identified.
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March Retail Sales Up 0.2% on Gasoline Sales
U.S. retail sales unexpectedly rose in March as consumers had to dig deep to cover record high gasoline costs, according to a government report on Monday that did little to dispel the gloom hanging over the economy.
Retail sales rose 0.2 percent in March, pushed up by a jump in gasoline sales, a Commerce Department report showed. Analysts polled by Reuters were expecting retail sales to be unchanged from the previous month.
Sales at gasoline stations rose 1.1 percent. Gasoline prices hit records in March and have continued to rise since then, according to government data.
Excluding gasoline sales, retail sales were flat last month. In another sign of rising prices for commodities pressed by strong global demand, sales at food and beverage stores also rose. Retail sales data are not inflation-adjusted.
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Retail sales rose 0.2 percent in March, pushed up by a jump in gasoline sales, a Commerce Department report showed. Analysts polled by Reuters were expecting retail sales to be unchanged from the previous month.
Sales at gasoline stations rose 1.1 percent. Gasoline prices hit records in March and have continued to rise since then, according to government data.
Excluding gasoline sales, retail sales were flat last month. In another sign of rising prices for commodities pressed by strong global demand, sales at food and beverage stores also rose. Retail sales data are not inflation-adjusted.
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Wachovia 1Q loss, to raise $7B capital
CHARLOTTE, N.C. - Wachovia Corp. will slash its dividend and raise $7 billion in a share sale after reporting a surprising first-quarter loss on Monday of $393 million.
"I'm deeply disappointed with our first quarter results," Chief Executive Ken Thompson told analysts on a conference call. "I know these actions aren't without cost. I wish they weren't necessary, but they are."
The first-quarter loss for the Charlotte-based bank works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier.
Excluding merger-related and restructuring charges, the bank lost $270 million, or 14 cents a share.
Revenue fell 4.5 percent to $7.89 billion from $8.27 billion last year.
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"I'm deeply disappointed with our first quarter results," Chief Executive Ken Thompson told analysts on a conference call. "I know these actions aren't without cost. I wish they weren't necessary, but they are."
The first-quarter loss for the Charlotte-based bank works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier.
Excluding merger-related and restructuring charges, the bank lost $270 million, or 14 cents a share.
Revenue fell 4.5 percent to $7.89 billion from $8.27 billion last year.
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Gas, oil surges on weak dollar
Gas within striking distance of $3.50 -- forecast to peak at $3.65 -- as oil rises within a dollar of $112.21 record.
Gas prices fluctuated over the weekend but appear poised to resume their relentless trek toward a record high milestone of $3.50 a gallon. Forecasts call for gas to peak as high as $3.65 within a month.
Oil prices, meanwhile, rose to within a dollar of last week's record of $112.21 a barrel as the dollar fell and oil supplies were disrupted in the U.S. and overseas.
At the pump, the national average price of a gallon of gas edged lower overnight to $3.373 a gallon, 0.1 cent shy of a new record set Sunday, according to a survey of stations by AAA and the Oil Price Information Service. Still, prices are 0.8 cent higher than Friday, and almost 53 cents higher than a year ago.
The incredible shrinking city
Youngstown, Ohio, has long been on the decline and now is being hit by the foreclosure crisis. Its answer: Razing abandoned buildings and tearing up streets.
Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods.
Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings, tearing up blighted streets and converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far.
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Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods.
Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings, tearing up blighted streets and converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far.
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US - China: Approaching Economic Divorce?
Has the trade imbalance reached its limit as China stops buying US treasuries?
One of the features of our style at the Fleet Street Letter is the top-down approach to factors that influence our prosperity. The enduring theme at the moment is the fall-out from reckless lending to Americans with poor credit histories. These toxic loans were repackaged with good quality instruments and sold on throughout the world. Like some financial virus it has brought some credit markets to a halt. The different reactions of policy makers around the world had got me thinking. Why is it that the Federal Reserve and the White House are prepared to slash interest rates aggressively, flood the markets with the liquidity and engage in tax cuts, while the Bank of England and European Central Bank are much more wary of loosening monetary policy because of worries about inflation and concerns about moral hazard? Are the European authorities being too complacent? Or does the US have an insight into the specific dangers it faces?
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One of the features of our style at the Fleet Street Letter is the top-down approach to factors that influence our prosperity. The enduring theme at the moment is the fall-out from reckless lending to Americans with poor credit histories. These toxic loans were repackaged with good quality instruments and sold on throughout the world. Like some financial virus it has brought some credit markets to a halt. The different reactions of policy makers around the world had got me thinking. Why is it that the Federal Reserve and the White House are prepared to slash interest rates aggressively, flood the markets with the liquidity and engage in tax cuts, while the Bank of England and European Central Bank are much more wary of loosening monetary policy because of worries about inflation and concerns about moral hazard? Are the European authorities being too complacent? Or does the US have an insight into the specific dangers it faces?
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Friday, April 11, 2008
Democrats reject Bush trade bid
House Democrats handed the White House a stinging defeat yesterday over a free-trade agreement with Colombia, rejecting President Bush's bid to force a vote on the deal before the end of the year.
But even as they did this, the Democrats held out an olive branch of sorts, telling the administration that they were ready to find ways to ease the economic pain caused by free trade and the economic downturn before they took up the agreement. Republicans were skeptical, saying Democrats were pandering to protectionist sentiments.
A rule change lifted the requirement, known as "fast track," which would have forced Congress to vote on the deal within 90 legislative calendar days. In a mostly partisan vote, the rule change was approved 224-195. Only 10 Democrats joined 185 Republicans in voting against the change.
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But even as they did this, the Democrats held out an olive branch of sorts, telling the administration that they were ready to find ways to ease the economic pain caused by free trade and the economic downturn before they took up the agreement. Republicans were skeptical, saying Democrats were pandering to protectionist sentiments.
A rule change lifted the requirement, known as "fast track," which would have forced Congress to vote on the deal within 90 legislative calendar days. In a mostly partisan vote, the rule change was approved 224-195. Only 10 Democrats joined 185 Republicans in voting against the change.
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U.S. Consumer Confidence Index Falls to 26-Year Low
Confidence among U.S. consumers sank to a 26-year low in April as the labor market continued to deteriorate and gasoline prices rose.
The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2from 69.5 in March. The reading was below the lowest forecast in a Bloomberg News survey and the weakest since March 1982.
Americans are confronting the loss of 232,000 jobs so far this year, along with higher food and energy costs and overall weakening in the economy. Consumer spending in the first half will advance at the slowest rate in 17 years, according to economists surveyed by Bloomberg News.
``The consumer's feeling increasingly hemmed in,'' said Brian Bethune, director of financial economics at Global Insight Inc. in Lexington, Massachusetts. ``They've got higher energy bills, higher gasoline bills, higher food bills and obviously the employment markets are nowhere near as strong as they were. The economy is in a recession.''
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With US in crisis, global economy in peril: IMF
The global economic outlook is increasingly grim with the United States mired in a recession from a housing meltdown whose effects are still spreading, the IMF said Wednesday.
Global expansion is set to slow to 3.7 percent in 2008 amid an unfolding crisis that began in the United States, the International Monetary Fund said in its semiannual World Economic Outlook (WEO) report.
The growth estimate is a half point lower than its January WEO update.
The US economy, the world's biggest, is likely in a "mild recession" and will stagnate through much of 2009 as housing prices slide further and credit conditions remain difficult.
For the world economy, there is a 25 percent chance of dropping below three percent growth in 2008 and 2009, which according to the IMF would be the equivalent of a global recession.
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Global expansion is set to slow to 3.7 percent in 2008 amid an unfolding crisis that began in the United States, the International Monetary Fund said in its semiannual World Economic Outlook (WEO) report.
The growth estimate is a half point lower than its January WEO update.
The US economy, the world's biggest, is likely in a "mild recession" and will stagnate through much of 2009 as housing prices slide further and credit conditions remain difficult.
For the world economy, there is a 25 percent chance of dropping below three percent growth in 2008 and 2009, which according to the IMF would be the equivalent of a global recession.
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General Electric delivers a shock
Shares of the conglomerate - a symbol for the nation's economy - tumble on a surprise decline in earnings and lowered forecasts.
General Electric - widely viewed as a proxy for the U.S. economy - posted a surprising first-quarter earnings miss Friday, deflating investors' hopes that the conglomerate could rise above a continued economic slowdown.
Shares of GE (GE, Fortune 500) - a Dow Jones industrial average component - tumbled about 12% in Friday trading, and the results sent the stock market tumbling.
GE reported net income fell 6% to $4.3 billion after reporting income of $4.6 billion in the first quarter of 2007.
Earnings from continuing operations were 44 cents per share, down from 48 cents per share a year earlier and well below the 51-cent-a-share consensus forecast of analysts polled by Thomson Financial.
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General Electric - widely viewed as a proxy for the U.S. economy - posted a surprising first-quarter earnings miss Friday, deflating investors' hopes that the conglomerate could rise above a continued economic slowdown.
Shares of GE (GE, Fortune 500) - a Dow Jones industrial average component - tumbled about 12% in Friday trading, and the results sent the stock market tumbling.
GE reported net income fell 6% to $4.3 billion after reporting income of $4.6 billion in the first quarter of 2007.
Earnings from continuing operations were 44 cents per share, down from 48 cents per share a year earlier and well below the 51-cent-a-share consensus forecast of analysts polled by Thomson Financial.
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Meltdown: how it could happen
As the IMF meets in Washington this weekend, the economist Jacques Attali imagines a worst-case scenario unfolding for the global economy.
In April 2008, at a meeting of the interim committee of the International Monetary Fund in Washington, all of the world's financial and banking executives seem reassured. World markets have not collapsed. The banks seem to be withstanding the shock. World growth remains greater than 4 per cent. The executive director of the IMF summarises the world's frame of mind in his closing speech.
Admittedly, he explains, the financial system is somewhat more fragile than before the subprime crisis, but the crisis is under control. He explains that CDS - credit default swaps, or contracts between sellers and buyers that protect the buyers from credit risk - are very useful tools, despite the excesses of the preceding months. He declares reassuringly that this system has enabled, and will enable, enormous expansion of the worldwide economy.
Read Complete StoryThursday, April 10, 2008
Millennium To Be Bought By Takeda For $8.8 Bln Cash
Millennium Pharmaceuticals, Inc. (MLNM) announced the signing of a definitive agreement to be acquired by Japan's Takeda Pharmaceutical Co. Ltd. (TKPHY.PK, TKPHF.PK) for about $8.8 billion through a cash tender offer of $25 per share. The transaction is expected to close in the second-quarter of 2008. The deal is projected to accelerate Takeda's vision of becoming a global leader in oncology. Separately, Millennium said its first-quarter US net sales of its flagship product VELCADE surged 42%, significantly above Wall Street analysts' consensus estimate.
Takeda's per share bid price represents 52.9% premium on $16.35, Millennium's closing share price on Wednesday.
Millennium, the Cambridge, Massachusetts-based biopharmaceutical company, noted that the transaction is structured as an all-cash tender offer for all of Millennium common stock, followed by a merger in which remaining shares of Millennium would be converted into the right to receive the same US$25 cash per share price paid in the tender offer. There is no financing condition to the tender offer or second step merger.
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Takeda's per share bid price represents 52.9% premium on $16.35, Millennium's closing share price on Wednesday.
Millennium, the Cambridge, Massachusetts-based biopharmaceutical company, noted that the transaction is structured as an all-cash tender offer for all of Millennium common stock, followed by a merger in which remaining shares of Millennium would be converted into the right to receive the same US$25 cash per share price paid in the tender offer. There is no financing condition to the tender offer or second step merger.
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U.S. Trade Deficit Unexpectedly Widened on Imports
The U.S. trade deficit unexpectedly widened in February, reflecting a jump in imports of automobiles and machinery that swamped record exports.
The gap grew 5.7 percent to $62.3 billion, the highest since November, from a revised $59 billion in January, the Commerce Department said today in Washington. The 3.1 percent gain in imports was the biggest in almost a year, even as purchases of petroleum and goods from China dropped.
The increase in demand for products from overseas may be short lived as more recent evidence showed U.S. consumer and business spending has slowed. Exports rose for the 12th consecutive month, representing one of the few bright spots helping the economy avoid a deeper and longer recession.
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The gap grew 5.7 percent to $62.3 billion, the highest since November, from a revised $59 billion in January, the Commerce Department said today in Washington. The 3.1 percent gain in imports was the biggest in almost a year, even as purchases of petroleum and goods from China dropped.
The increase in demand for products from overseas may be short lived as more recent evidence showed U.S. consumer and business spending has slowed. Exports rose for the 12th consecutive month, representing one of the few bright spots helping the economy avoid a deeper and longer recession.
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Manufacturing job losses cripple growth in Pennsylvania
The American Manufacturing Trade Action Coalition (AMTAC) has analyzed job gain/loss in Pennsylvania in a report prepared by Dr. Charles W. McMillion, president and chief economist of MBG Information Services, titled, Pennsylvania’s Jobs Market 2001-2008: Trading Down in A Debt-Driven, Weak Economy.
Reacting to the report, Peter McKernan, CEO of Herculite Products Inc. of Emigsville, Pa., said, "Pennsylvania can’t keep trading good manufacturing jobs for lower paying service sector jobs and expect to grow its economy. Americans haven't stopped buying manufactured goods; they just aren’t buying as many from Pennsylvania as before. That’s what has got to change if Pennsylvania is to recover the more than 207,000 manufacturing jobs it has lost since 2001 and recharge its economy.”
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Reacting to the report, Peter McKernan, CEO of Herculite Products Inc. of Emigsville, Pa., said, "Pennsylvania can’t keep trading good manufacturing jobs for lower paying service sector jobs and expect to grow its economy. Americans haven't stopped buying manufactured goods; they just aren’t buying as many from Pennsylvania as before. That’s what has got to change if Pennsylvania is to recover the more than 207,000 manufacturing jobs it has lost since 2001 and recharge its economy.”
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As income gap widens, recession fears grow
Incomes fell for poor and stagnated for middle-class families since late 1990s, making it tougher for them to weather economic downturn.
Poor and middle-class families are entering the recession in a precarious situation due in part to declining or stagnant income growth, a study released Wednesday has found.
Incomes, on average, have declined by 2.5% among the bottom fifth of families since the late 1990s, while inching up by just 1.3% for those in the middle fifth of households, according to an analysis by the Center on Budget and Policy Priorities and the Economic Policy Institute, two
liberal think tanks.
The wealthiest slice of Americans, however, saw their incomes rise by 9%.
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Poor and middle-class families are entering the recession in a precarious situation due in part to declining or stagnant income growth, a study released Wednesday has found.
Incomes, on average, have declined by 2.5% among the bottom fifth of families since the late 1990s, while inching up by just 1.3% for those in the middle fifth of households, according to an analysis by the Center on Budget and Policy Priorities and the Economic Policy Institute, two
liberal think tanks.
The wealthiest slice of Americans, however, saw their incomes rise by 9%.
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Restaurants' triple serving of recession
Not only do they have to cope with a drop in business, but fuel surcharges and soaring food costs as well.
Jeannie Felts Buckner is caught in a recession triple squeeze.
As owner of the Hunter's Run Pub and Grill in Camden, Ala., she's seen a 30% drop in business recently - a drop she attributes to consumers pulling back in the face of rising gas prices and a looming recession.
But Jeannie's troubles don't end there. As a business in a rural area, most of her food and other supplies are trucked in, and she says the delivery companies have tacked on additional fuel charges over the last few months.
Plus, prices for basic foodstuffs have soared along with other commodities - in just one year the cost of flour has nearly doubled.
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Jeannie Felts Buckner is caught in a recession triple squeeze.
As owner of the Hunter's Run Pub and Grill in Camden, Ala., she's seen a 30% drop in business recently - a drop she attributes to consumers pulling back in the face of rising gas prices and a looming recession.
But Jeannie's troubles don't end there. As a business in a rural area, most of her food and other supplies are trucked in, and she says the delivery companies have tacked on additional fuel charges over the last few months.
Plus, prices for basic foodstuffs have soared along with other commodities - in just one year the cost of flour has nearly doubled.
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Wednesday, April 9, 2008
EADS says looking to U.S. for acquisitions, opportunities
Louis Gallois, chief executive of European aerospace giant EADS, said Monday the company would look to United States for acquisitions and other opportunities throughout the Americas.
EADS 'is looking carefully at medium-sized American companies to see if they could be a target for us,' allowing the company to limit the impact of a strong euro on exports and boost its defence business, Gallois said.
'Pushed by the (weak) dollar, we are going to increase our purchases in the dollar zone -- in the United States but also in other countries such as Mexico,' Gallois told a meeting organised by groups promoting Franco-U.S. ties.
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EADS 'is looking carefully at medium-sized American companies to see if they could be a target for us,' allowing the company to limit the impact of a strong euro on exports and boost its defence business, Gallois said.
'Pushed by the (weak) dollar, we are going to increase our purchases in the dollar zone -- in the United States but also in other countries such as Mexico,' Gallois told a meeting organised by groups promoting Franco-U.S. ties.
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For Many, a Boom That Wasn’t
How has the United States economy gotten to this point?
It’s not just the apparent recession. Recessions happen. If you tried to build an economy immune to the human emotions that produce boom and bust, you would end up with something that looked like East Germany.
The bigger problem is that the now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500.
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It’s not just the apparent recession. Recessions happen. If you tried to build an economy immune to the human emotions that produce boom and bust, you would end up with something that looked like East Germany.
The bigger problem is that the now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500.
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The Fading American Economy
According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers.
Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.
Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.
Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.
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Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.
Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.
Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.
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Tuesday, April 8, 2008
Sovereign wealth funds to reach $10tr by 2015
Dubai:"Total funds under sovereign wealth fund management will be $10 to $12 trillion by 2015," said Steve Ellis, worldwide managing director of Bain and Company. Today the six GCC states are home to $2 trillion of the present global total $3 trillion of money in sovereign wealth funds.
"This is a tectonic shift in sources of capital for the world's markets," said Ellis, talking to Gulf News explaining why Bain and Company, one of the world's leading management consultancies, formally opened its Middle East office in Dubai yesterday.
The partnership has been busy in the region since 1993 and has taken on 60 projects. Today it has 30 staff in the region, and is headed by Jean-Marie Pean, managing partner of Bain Middle East.
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"This is a tectonic shift in sources of capital for the world's markets," said Ellis, talking to Gulf News explaining why Bain and Company, one of the world's leading management consultancies, formally opened its Middle East office in Dubai yesterday.
The partnership has been busy in the region since 1993 and has taken on 60 projects. Today it has 30 staff in the region, and is headed by Jean-Marie Pean, managing partner of Bain Middle East.
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A.M.D., Citing a Slowdown, to Cut 1,650 Jobs
Advanced Micro Devices said it would cut about 1,650 workers — about 10 percent of its work force — because of deteriorating business conditions across its units around the globe.
The layoffs may be one of the first signs in Silicon Valley of an economic slowdown that has already affected other industries in the United States. As recently as December, many Silicon Valley executives were stating that they believed that high technology industries would be saved from a downturn.
Several analysts said that A.M.D., based in Sunnyvale, Calif., was facing problems largely because of a resurgent Intel, the world’s largest chip maker. A.M.D. lost market share to Intel last year and has also delayed shipping a new line of microprocessors, though it has said it has worked out those problems.
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The layoffs may be one of the first signs in Silicon Valley of an economic slowdown that has already affected other industries in the United States. As recently as December, many Silicon Valley executives were stating that they believed that high technology industries would be saved from a downturn.
Several analysts said that A.M.D., based in Sunnyvale, Calif., was facing problems largely because of a resurgent Intel, the world’s largest chip maker. A.M.D. lost market share to Intel last year and has also delayed shipping a new line of microprocessors, though it has said it has worked out those problems.
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Best ways to fix the subprime mess
How do we stop the boom in foreclosures from doing more damage? Bureaucrats, consumer advocates, presidential candidates and plenty of others have plans. Here are 4 that, each for its own reason, offer particularly noteworthy fixes.
Tweak the bankruptcy code
Judges already have the power to shrink or vaporize many debts, like credit card balances and mortgages on investment properties. This idea, supported by Sens. Richard Durbin (D-Ill.) and Christopher Dodd (D-Conn.), would let judges reduce primary home loans as well.
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Tweak the bankruptcy code
Judges already have the power to shrink or vaporize many debts, like credit card balances and mortgages on investment properties. This idea, supported by Sens. Richard Durbin (D-Ill.) and Christopher Dodd (D-Conn.), would let judges reduce primary home loans as well.
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IMF Says Financial Losses May Swell to $945 Billion
The International Monetary Fund said losses stemming from the U.S. mortgage crisis may approach $1 trillion, citing a ``collective failure'' to predict the breadth of the crisis.
Falling U.S. house prices and rising delinquencies may lead to $565 billion in mortgage-market losses, the IMF said in its annual Global Financial Stability report, released today in Washington. Total losses, including the securities tied to commercial real estate and loans to consumers and companies, may reach $945 billion, the fund said.
The forecast signals the worst of the credit crunch may be yet to come, because banks and securities firms so far have posted $232 billion in asset writedowns and credit losses. Policy makers, concerned that lenders' deteriorating balance sheets will hobble economic growth, are pushing companies to raise capital.
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Falling U.S. house prices and rising delinquencies may lead to $565 billion in mortgage-market losses, the IMF said in its annual Global Financial Stability report, released today in Washington. Total losses, including the securities tied to commercial real estate and loans to consumers and companies, may reach $945 billion, the fund said.
The forecast signals the worst of the credit crunch may be yet to come, because banks and securities firms so far have posted $232 billion in asset writedowns and credit losses. Policy makers, concerned that lenders' deteriorating balance sheets will hobble economic growth, are pushing companies to raise capital.
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Pending home sales at all-time low
Realtors' group says its index of homes under contract to sell fell sharply in February.
An index of homes under contract for sale fell more than expected in February, reaching the lowest level since the index's 2001 debut, according to a report released Tuesday.
The National Association of Realtors' (NAR) Pending Home Sales Index fell to 84.6 in February, down 1.9% from a revised reading of 86.2 in January and down 21.4% versus the same period last year.
Economists were expecting the index to decline to 85.2 for the month, according to a consensus estimate compiled by Briefing.com.
"The slip in pending home sales implies we're not out of the woods yet," said Lawrence Yun, NAR chief economist, in a statement.
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An index of homes under contract for sale fell more than expected in February, reaching the lowest level since the index's 2001 debut, according to a report released Tuesday.
The National Association of Realtors' (NAR) Pending Home Sales Index fell to 84.6 in February, down 1.9% from a revised reading of 86.2 in January and down 21.4% versus the same period last year.
Economists were expecting the index to decline to 85.2 for the month, according to a consensus estimate compiled by Briefing.com.
"The slip in pending home sales implies we're not out of the woods yet," said Lawrence Yun, NAR chief economist, in a statement.
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Credit Default Swaps: Next Leg of Crisis - Soros
George Soros, the legendary hedge fund manger, is now 78-years-old and as active as a man half his age, using his multi-billion dollar fortune to purse interests in philanthropy, political activism and writing (eight books and dozens of articles/speeches). On Saturday, he released his ninth book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.
He wrote in the Financial Times of London Friday that there are more shoes to drop in the credit crisis if authorities don’t prepare to head them off. One area is credit default swaps:
“Instead of reshuffling regulatory agencies, the authorities ought to prepare for the next shoes to drop …. There is an esoteric financial instrument called credit default swaps.
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He wrote in the Financial Times of London Friday that there are more shoes to drop in the credit crisis if authorities don’t prepare to head them off. One area is credit default swaps:
“Instead of reshuffling regulatory agencies, the authorities ought to prepare for the next shoes to drop …. There is an esoteric financial instrument called credit default swaps.
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Monday, April 7, 2008
The flight to save Detroit
Aboard the 'distress bus' with the consultants making the weekly commute to Motor City.
Every Monday morning at 7:29 A.M. Northwest flight 533 from LaGuardia to Detroit pulls out of the gate, its first-class cabin filled with bankers, consultants, and lawyers who work with beleaguered auto companies. These days some of them have become such regulars that they've given the DC-9 its own moniker - the Distress Bus.
The situation in Detroit has been bad for a while, but now it's really bad - and not just for the Big Three. Hundreds of auto parts suppliers are even worse off, having spent more than $500 million in the past year in fees to advisors to help them find cash, negotiate with lenders, and plan cutbacks. And while under normal circumstances those advisory firms might send operations experts from their offices on the ground in Detroit, as the crisis has worsened they've been shuttling in the heavy-hitters from New York.
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Every Monday morning at 7:29 A.M. Northwest flight 533 from LaGuardia to Detroit pulls out of the gate, its first-class cabin filled with bankers, consultants, and lawyers who work with beleaguered auto companies. These days some of them have become such regulars that they've given the DC-9 its own moniker - the Distress Bus.
The situation in Detroit has been bad for a while, but now it's really bad - and not just for the Big Three. Hundreds of auto parts suppliers are even worse off, having spent more than $500 million in the past year in fees to advisors to help them find cash, negotiate with lenders, and plan cutbacks. And while under normal circumstances those advisory firms might send operations experts from their offices on the ground in Detroit, as the crisis has worsened they've been shuttling in the heavy-hitters from New York.
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Gas sets second straight record high
Nationwide average price of regular unleaded sets another all-time high of $3.303 a gallon, according to AAA survey.
The average price of regular gasoline hit another record high overnight, a AAA survey showed Friday.
The average price of regular unleaded jumped more than a penny to a national average of $3.303 a gallon, exceeding the record set the previous day, according to AAA's Web site.
Gas prices are up more than 22% from where they were last year. A month ago, the nationwide
average was at $3.178 a gallon.
Pump prices have been on a record-setting run, supported by high crude prices.
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The average price of regular gasoline hit another record high overnight, a AAA survey showed Friday.
The average price of regular unleaded jumped more than a penny to a national average of $3.303 a gallon, exceeding the record set the previous day, according to AAA's Web site.
Gas prices are up more than 22% from where they were last year. A month ago, the nationwide
average was at $3.178 a gallon.
Pump prices have been on a record-setting run, supported by high crude prices.
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China Voice Holding Corp. Announces Acquisition
CVC International, Inc. Subsidiary Projects Revenues To Reach Over $8 Million Annually
China Voice Holding Corporation (CHVC) (OTC:CHVC), announced today that its U.S. Subsidiary, CVC International, Inc. (CVC) has acquired the assets of a Dallas, Texas-based VoIP telecommunications carrier. The acquisition doubles the size of the Company’s network infrastructure as well as its customer base and also provides new profitable international routes for CVC’s wholesale termination business.
Jose Ferrer, CHVC’s Chief Operating Officer, said, “Since CVC was established, it has grown organically in a safe and controlled manner. This acquisition is the perfect vehicle to take us to the next level without leveraging or unnecessarily exposing the Company’s resources. We are very excited about integrating our newly acquired Nextone switch, proprietary billing and system automation technology and other carrier grade equipment into our existing network architecture as it will automate many functions and make our operations even more efficient.
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China Voice Holding Corporation (CHVC) (OTC:CHVC), announced today that its U.S. Subsidiary, CVC International, Inc. (CVC) has acquired the assets of a Dallas, Texas-based VoIP telecommunications carrier. The acquisition doubles the size of the Company’s network infrastructure as well as its customer base and also provides new profitable international routes for CVC’s wholesale termination business.
Jose Ferrer, CHVC’s Chief Operating Officer, said, “Since CVC was established, it has grown organically in a safe and controlled manner. This acquisition is the perfect vehicle to take us to the next level without leveraging or unnecessarily exposing the Company’s resources. We are very excited about integrating our newly acquired Nextone switch, proprietary billing and system automation technology and other carrier grade equipment into our existing network architecture as it will automate many functions and make our operations even more efficient.
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Bankruptcies: The No. 1 Growth Area For 2008
The St. Louis Post Dispatch is writing Bankruptcy filings expected to soar as economy slides
The law that drastically changed the Bankruptcy Code in October 2005 was supposed make it tougher to escape debts and reduce the number of filings. It worked, for a time.
Although the law made filing for bankruptcy more complex and expensive, the number of cases locally and nationally is rising again. Experts predict a big hike later this year, triggered by the nation's wobbling economy and heavy levels of consumer debt.
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The law that drastically changed the Bankruptcy Code in October 2005 was supposed make it tougher to escape debts and reduce the number of filings. It worked, for a time.
Although the law made filing for bankruptcy more complex and expensive, the number of cases locally and nationally is rising again. Experts predict a big hike later this year, triggered by the nation's wobbling economy and heavy levels of consumer debt.
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What job woes mean to you
Even if your job is safe, problems in housing, Wall Street and the auto sector hint at widespread pain and a deeper downturn ahead.
You may think your job is safe. But you still may not be spared the pain resulting from the weak labor market.
The loss of nearly a quarter-million jobs so far this year and a jump in the unemployment rate means the debate over whether there is a recession is pretty much over.
"There is a recession. The question now is how deep and how long," said Lakshman Achuthan, the managing director of the Economic Cycle Research Institute. And he thinks the economy could get worse.
Here's a look at how a deteriorating job market could lead to a worse recession than many are predicting.
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You may think your job is safe. But you still may not be spared the pain resulting from the weak labor market.
The loss of nearly a quarter-million jobs so far this year and a jump in the unemployment rate means the debate over whether there is a recession is pretty much over.
"There is a recession. The question now is how deep and how long," said Lakshman Achuthan, the managing director of the Economic Cycle Research Institute. And he thinks the economy could get worse.
Here's a look at how a deteriorating job market could lead to a worse recession than many are predicting.
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Friday, April 4, 2008
Vossloh plans acquisitions in U.S., Asia; has 400 million euros war chest - CEO
Vossloh AG. said it plans to make acquisitions in the United States and Asia and to that end has a war chest of 400 million euros that could be spent this year, chief executive Werner Andree told Thomson Financial News partner dpa-AFX.
The German transportation solutions company last year spent 90 million euros on acquisitions, including two U.S.-based switch manufacturers.
Andree said an acquisition must live up to the company's target of a return on capital employed (ROCE) of 15 percent within two to three years.
He said he does not expect an acquisition before the second half of the year. 'Acquisition prices are currently sliding, because financial investors are less active. We can wait,' he said.
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The German transportation solutions company last year spent 90 million euros on acquisitions, including two U.S.-based switch manufacturers.
Andree said an acquisition must live up to the company's target of a return on capital employed (ROCE) of 15 percent within two to three years.
He said he does not expect an acquisition before the second half of the year. 'Acquisition prices are currently sliding, because financial investors are less active. We can wait,' he said.
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Investment firms tap Fed for billions
Wall Street banks take advantage of Fed's emergency loan program, borrowing an average of $38.1 billion a day last week.
Big Wall Street investment companies are stepping up their borrowing a bit from the Federal Reserve's unprecedented emergency lending program.
The Federal Reserve reported Thursday that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.
The program, which began on March 17, is part of the Fed's effort to aid the financial system.
The Fed, for the first time, agreed to let big investment houses temporarily get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, will continue for at least six months. It was the broadest use of the Fed's lending authority since the 1930s.
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Big Wall Street investment companies are stepping up their borrowing a bit from the Federal Reserve's unprecedented emergency lending program.
The Federal Reserve reported Thursday that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.
The program, which began on March 17, is part of the Fed's effort to aid the financial system.
The Fed, for the first time, agreed to let big investment houses temporarily get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, will continue for at least six months. It was the broadest use of the Fed's lending authority since the 1930s.
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Builders: No full recovery until 2010
Head of National Association of Home Builders said it could be several years before demand for homes returns to typical levels.
Demand for new homes may not return to normal levels until next decade, according to the latest outlook from the National Association of Home Builders.
"Traditionally when housing has been in a recession, it recovers very quickly. We don't see that happening this time," said Jerry Howard, CEO of the builders' trade group. "It could be 2010 before we see sustainable, long-term stability in the home building sector."
As recently as the end of 2007, the trade group was forecasting a pick-up in the demand for new homes in the second half of this year.
But Howard said the best case scenario now calls for stabilization in the market in early summer, with no signs of improvement until early next year.
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Demand for new homes may not return to normal levels until next decade, according to the latest outlook from the National Association of Home Builders.
"Traditionally when housing has been in a recession, it recovers very quickly. We don't see that happening this time," said Jerry Howard, CEO of the builders' trade group. "It could be 2010 before we see sustainable, long-term stability in the home building sector."
As recently as the end of 2007, the trade group was forecasting a pick-up in the demand for new homes in the second half of this year.
But Howard said the best case scenario now calls for stabilization in the market in early summer, with no signs of improvement until early next year.
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Corn Hits $6 a Bushel on Tight Supplies
Corn Prices Jump to Record $6 a Bushel, Driving Up Costs for Food, Alternative Energy
Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.
Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol. Prices are poised to go even higher after the U.S. government this week predicted that American farmers -- the world's biggest corn producers -- will plant sharply less of the crop in 2008 compared to last year.
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Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.
Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol. Prices are poised to go even higher after the U.S. government this week predicted that American farmers -- the world's biggest corn producers -- will plant sharply less of the crop in 2008 compared to last year.
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Tanker Deal, McCain Betray U.S. Workers
Facing a stumbling Wall Street and a collapsing housing market, politicians have scrambled not only to stave off a brewing recession, but to also save their hides in the coming elections. But the government's plan to hand out one-time checks to families making less than $80,000 and individuals making less than $43,000 a year is unlikely to have the kind of long-term effect workers in Connecticut and across the United States desperately need.
For the 28,000 manufacturing workers who lost their jobs in January (nearly 270,000 have lost factory jobs in the last year), a single check isn't going to turn things around. We need to encourage companies to invest locally, and we need trade agreements that level the playing field.
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For the 28,000 manufacturing workers who lost their jobs in January (nearly 270,000 have lost factory jobs in the last year), a single check isn't going to turn things around. We need to encourage companies to invest locally, and we need trade agreements that level the playing field.
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Soros calls financial crisis worst since Great Depression, sees more market declines
Billionaire investor George Soros believes the current financial crisis is the worst since the Great Depression, and said stocks have not bottomed yet, Bloomberg News reported Thursday.
Soros said the most recent market bottom "will probably not prove to be the final bottom," adding that the current stock rebound will last six weeks to three months as the United States moves closer to recession, Bloomberg News reported.
Further, Soros, in an op-editorial column in The Financial Times, argued that the cause of the market's current problems is a flawed premise: the belief that markets are self-correcting and tend toward equilibrium. They aren't and don't, Soros argues, and the laissez-faire policy creates bubbles, including the most-recent housing bubble, which, in turn, when it started to burst, led to the current credit crunch.
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Soros said the most recent market bottom "will probably not prove to be the final bottom," adding that the current stock rebound will last six weeks to three months as the United States moves closer to recession, Bloomberg News reported.
Further, Soros, in an op-editorial column in The Financial Times, argued that the cause of the market's current problems is a flawed premise: the belief that markets are self-correcting and tend toward equilibrium. They aren't and don't, Soros argues, and the laissez-faire policy creates bubbles, including the most-recent housing bubble, which, in turn, when it started to burst, led to the current credit crunch.
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Thursday, April 3, 2008
IMF: 25% chance of world recession this year
(MENAFN) This year, the International Monetary Fund reduced there forecast for global growth and said there is a 25 percent chance of a world recession, Bloomberg reported.
The world economy is expected to expand at 3.7 percent in the current year which is the slowest pace seen in six years. The world's biggest financial companies have reported about $232 billion in credit losses and write-downs since the start of 2007.
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The world economy is expected to expand at 3.7 percent in the current year which is the slowest pace seen in six years. The world's biggest financial companies have reported about $232 billion in credit losses and write-downs since the start of 2007.
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US manufacturing contracts again in March
U.S. factory activity contracted for a second straight month in March, according to a report on Tuesday that also renewed worries about inflation, even as the economy appeared gripped by recession.
The Institute for Supply Management said its index of national factory activity edged up to 48.6 in March from 48.3 in February, but was still below the level of 50 which separates growth from contraction. It was the third time in four months the gauge has shown contraction.
Meanwhile, the survey's measure of inflation jumped to its highest since the immediate aftermath of Hurricane Katrina in 2005, when energy prices soared.
"The ISM manufacturing index gave a choppy sideways picture of manufacturing which is better than might have been feared but doesn't give conclusive indication whether export strength will sustain overall activity in the face of domestic spending," said Pierre Ellis, senior economist at Decision Economics in New York.
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The Institute for Supply Management said its index of national factory activity edged up to 48.6 in March from 48.3 in February, but was still below the level of 50 which separates growth from contraction. It was the third time in four months the gauge has shown contraction.
Meanwhile, the survey's measure of inflation jumped to its highest since the immediate aftermath of Hurricane Katrina in 2005, when energy prices soared.
"The ISM manufacturing index gave a choppy sideways picture of manufacturing which is better than might have been feared but doesn't give conclusive indication whether export strength will sustain overall activity in the face of domestic spending," said Pierre Ellis, senior economist at Decision Economics in New York.
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An Insider's Look at the Subprime Mortgage Collapse
A few days ago, I finished reading Richard Bitner's new book - the story of his personal experience in the business of subprime lending:
Greed, Fraud, & Ignorance
A Subprime Insider's Look at the Mortgage Collapse
It's also available at Amazon here.
A 14-year veteran of the mortgage industry, Richard owned a subprime mortgage company for the first half of the decade and, at the height of the speculative fervor in 2005, he saw the handwriting on the wall and sold the business.
Eighteen months later, it showed up as #43 on the Mortgage Lender Implode-O-Meter.
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US sub-prime crisis to claim 200,000 bank jobs
Commercial banks will cut a record 200,000 US jobs in the next 12 to 18 months to reduce costs as the credit crunch continues to wreak havoc on the bottom lines of some of the world’s most prestigious financial institutions.
Celent, the financial research firm, said that one in 10 jobs in the US commercial banking industry will be lost as the write-downs from sub-prime investments pollute the entire banking system.
Octavio Marenzi, head of Celent’s financial consultancy unit, said: "The banking industry over the past 40 years has never seen a downturn in its revenue growth. In 2008, it looks like it will decrease for the first time in living memory. They’re going to have to respond with severe cost cutting. It’s not an environment they’re entirely used to."
The expected future job cuts compare to the record 153,000 redundancies implemented across the US financial services industry in 2007, more than half of them relating to mortgages.
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Celent, the financial research firm, said that one in 10 jobs in the US commercial banking industry will be lost as the write-downs from sub-prime investments pollute the entire banking system.
Octavio Marenzi, head of Celent’s financial consultancy unit, said: "The banking industry over the past 40 years has never seen a downturn in its revenue growth. In 2008, it looks like it will decrease for the first time in living memory. They’re going to have to respond with severe cost cutting. It’s not an environment they’re entirely used to."
The expected future job cuts compare to the record 153,000 redundancies implemented across the US financial services industry in 2007, more than half of them relating to mortgages.
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Jobless claims: Highest since Katrina
Labor Department says number of claims surges to 407,000 - the highest level since September 2005.
New filings for unemployment claims surged in the latest week to the highest level since September 2005, according to a government report released Thursday.
The Labor Department said applications for unemployment benefits rose to 407,000 in the week ended March 29, up from a revised 369,000 claims in the previous week.
The last time claims were this high was in the week ended Sept. 17, 2005, just after Hurricane Katrina hit the Gulf Coast.
A consensus of economists polled by Briefing.com had expected initial jobless claims to fall to 365,000 from the originally reported 366,000.
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New filings for unemployment claims surged in the latest week to the highest level since September 2005, according to a government report released Thursday.
The Labor Department said applications for unemployment benefits rose to 407,000 in the week ended March 29, up from a revised 369,000 claims in the previous week.
The last time claims were this high was in the week ended Sept. 17, 2005, just after Hurricane Katrina hit the Gulf Coast.
A consensus of economists polled by Briefing.com had expected initial jobless claims to fall to 365,000 from the originally reported 366,000.
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The great inflation cover-up
If the price of dinner is pinching us, why don't the CPI numbers acknowledge it?
My friend Dana, a former real estate investment banker who got out of investment banking comfortably before subprime mortgages hit the fan, has a personal inflation index. It's pegged entirely to the price of filet mignon at the Palm Too, his favorite steak house on the East Side of Manhattan. If the filet mignon is reasonable, all is right with the world. If it seems unduly expensive, Dana gets worried that inflation is spinning out of control. So a couple of months ago he returned from a month in Paris to find that the price of pricey steak had jumped to $38, up from $36. To hear him tell it, not since the Last Supper has an evening meal emanated so pervasive a sense of impending doom.
To be fair, Dana's professional background lends itself to price scrutiny of nearly everything, and being able to afford high-end steak at all puts you in that segment of the population that isn't relying on inflation-sensitive Social Security checks. But it's a little frightening when a guy who just spent several weeks spending euros (now 1.58 to the dollar and climbing) comes back to New York, switches to dollars, and finds himself "aghast" that everything's so expensive.
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My friend Dana, a former real estate investment banker who got out of investment banking comfortably before subprime mortgages hit the fan, has a personal inflation index. It's pegged entirely to the price of filet mignon at the Palm Too, his favorite steak house on the East Side of Manhattan. If the filet mignon is reasonable, all is right with the world. If it seems unduly expensive, Dana gets worried that inflation is spinning out of control. So a couple of months ago he returned from a month in Paris to find that the price of pricey steak had jumped to $38, up from $36. To hear him tell it, not since the Last Supper has an evening meal emanated so pervasive a sense of impending doom.
To be fair, Dana's professional background lends itself to price scrutiny of nearly everything, and being able to afford high-end steak at all puts you in that segment of the population that isn't relying on inflation-sensitive Social Security checks. But it's a little frightening when a guy who just spent several weeks spending euros (now 1.58 to the dollar and climbing) comes back to New York, switches to dollars, and finds himself "aghast" that everything's so expensive.
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Wednesday, April 2, 2008
New mortgage applications fall 29%
Mortgage Bankers Association's survey reveals that application volume declined in latest week as rates for fixed-rate loans increased.
Mortgage application volume tumbled 28.7% during the week ending March 28, according to the Mortgage Bankers Association's weekly survey.
After a 41.1% jump in volume the previous week, the MBA's application index fell back in line with where it had been the previous three weeks. The index fell to 688.3 from 965.9 the previous week. Two weeks earlier the index stood at 652.
Refinance volume plunges. Refinance volume fell 38.1%, while purchase volume declined 11.8%. Refinance applications accounted for 53.4 % of total applications during the week ending March 28.
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Mortgage application volume tumbled 28.7% during the week ending March 28, according to the Mortgage Bankers Association's weekly survey.
After a 41.1% jump in volume the previous week, the MBA's application index fell back in line with where it had been the previous three weeks. The index fell to 688.3 from 965.9 the previous week. Two weeks earlier the index stood at 652.
Refinance volume plunges. Refinance volume fell 38.1%, while purchase volume declined 11.8%. Refinance applications accounted for 53.4 % of total applications during the week ending March 28.
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HSBC eyes US acquisitions amid subprime woes-paper
Europe's largest lender, may make acquisitions in the United States and has no plans to pull out of that market despite the subprime mortgage woes, a newspaper reported on Wednesday.
"We may consider acquiring banks linked to Spanish and Asian communities," the South China Morning Post quoted the lender's chief executive, Michael Geoghegan, as saying.
"This will not be a large regional bank."
Geoghegan said the lender would continue to pursue the consumer finance business in the U.S. and expand its portfolio, and would also increase investment in fast-growing, emerging markets in Asia and Latin America.
The bank had taken measures to address the subprime problem by way of business restructuring, tightening mortgage underwriting criteria, and reducing assets through sales and write downs, he added.
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"We may consider acquiring banks linked to Spanish and Asian communities," the South China Morning Post quoted the lender's chief executive, Michael Geoghegan, as saying.
"This will not be a large regional bank."
Geoghegan said the lender would continue to pursue the consumer finance business in the U.S. and expand its portfolio, and would also increase investment in fast-growing, emerging markets in Asia and Latin America.
The bank had taken measures to address the subprime problem by way of business restructuring, tightening mortgage underwriting criteria, and reducing assets through sales and write downs, he added.
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Bernanke sees recession risk
Fed chairman says economy may shrink - the closest he has come to proclaiming recession. He defends Bear Stearns rescue as not a bailout.
Federal Reserve Chairman Ben Bernanke, in his most pessimistic and blunt assessment to date, said Wednesday that a "recession is possible" for the U.S. economy.
Bernanke, speaking before a congressional committee, said he wasn't yet prepared to declare that the economy has fallen into a recession. Instead, he said that he believed the economy is still "slightly growing at the moment." But he added that he believed it is possible that the economy could shrink over the first half of this year.
In his opening remarks to the Joint Economic Committee of Congress, Bernanke he also said he expects further rises in unemployment and says the economic outlook has worsened since the Fed's economic outlook was released in January.
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Federal Reserve Chairman Ben Bernanke, in his most pessimistic and blunt assessment to date, said Wednesday that a "recession is possible" for the U.S. economy.
Bernanke, speaking before a congressional committee, said he wasn't yet prepared to declare that the economy has fallen into a recession. Instead, he said that he believed the economy is still "slightly growing at the moment." But he added that he believed it is possible that the economy could shrink over the first half of this year.
In his opening remarks to the Joint Economic Committee of Congress, Bernanke he also said he expects further rises in unemployment and says the economic outlook has worsened since the Fed's economic outlook was released in January.
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Paulson Meets China's Trade Envoy
U.S. Treasury Secretary Henry Paulson met Wednesday with Beijing's new point man on strained trade ties with Washington amid Chinese alarm about the U.S. credit crisis and its possible impact on China's banks and economy.
Vice Premier Wang Qishan, a former star banker whom Paulson calls a friend, expressed sympathy with the secretary's struggle to calm U.S. markets.
"You looked very tired and worn out on TV. As an old friend, I would say that I was concerned," Wang said as reporters were allowed to watch the last few minutes of their talks at the Great Hall of the People, the seat of China's legislature. "But now I see you here this morning and you are glowing and robust."
Details of the meeting were not immediately released.
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Vice Premier Wang Qishan, a former star banker whom Paulson calls a friend, expressed sympathy with the secretary's struggle to calm U.S. markets.
"You looked very tired and worn out on TV. As an old friend, I would say that I was concerned," Wang said as reporters were allowed to watch the last few minutes of their talks at the Great Hall of the People, the seat of China's legislature. "But now I see you here this morning and you are glowing and robust."
Details of the meeting were not immediately released.
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Bernanke Offers Bleaker View on U.S. Economy
Ben S. Bernanke, the chairman of the Federal Reserve, presented his bleakest assessment yet of the economy on Wednesday morning, warning a Congressional committee that economic growth was likely to stagnate — and perhaps even contract — over the first half of the year.
In his first public remarks since the Fed orchestrated an unprecedented bailout of the brokerage firm Bear Stearns, Mr. Bernanke acknowledged that while the Fed’s actions had “helped stabilize” the credit markets, banks and other financial institutions remained hesitant to lend, causing problems for the broader economy.
“Financial markets remain under considerable stress,” Mr. Bernanke said, in remarks prepared for delivery Wednesday morning to the Joint Economic Committee. “The capacity and willingness of some large institutions to extend new credit remains limited.”
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In his first public remarks since the Fed orchestrated an unprecedented bailout of the brokerage firm Bear Stearns, Mr. Bernanke acknowledged that while the Fed’s actions had “helped stabilize” the credit markets, banks and other financial institutions remained hesitant to lend, causing problems for the broader economy.
“Financial markets remain under considerable stress,” Mr. Bernanke said, in remarks prepared for delivery Wednesday morning to the Joint Economic Committee. “The capacity and willingness of some large institutions to extend new credit remains limited.”
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The underemployment rate is rising
Don't be fooled by the relatively low 4.8% unemployment rate. Other measures, such as the number of people only working part-time, are a sign of recession.
An unemployment rate at 5% used to be called full employment. Today it's considered the sign of a recession.
When the Labor Department gives its March employment report this Friday, it's important to keep in mind that the relatively low unemployment rate isn't telling the whole story about the weakness of the U.S. labor market.
Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation's payrolls in the month. That would mark the third straight month of job declines.
The unemployment rate is expected to jump to 5.0% from 4.8% in February.
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An unemployment rate at 5% used to be called full employment. Today it's considered the sign of a recession.
When the Labor Department gives its March employment report this Friday, it's important to keep in mind that the relatively low unemployment rate isn't telling the whole story about the weakness of the U.S. labor market.
Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation's payrolls in the month. That would mark the third straight month of job declines.
The unemployment rate is expected to jump to 5.0% from 4.8% in February.
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Tuesday, April 1, 2008
Oil drops as dollar gains trigger commodities sell-off
Oil fell toward $100 on Tuesday, extending losses from the previous session as a strengthening U.S. dollar triggered a wide sell-off across commodity markets.
U.S. crude dropped US$1.55 to US$100.03 a barrel by 1435 GMT after briefly dipping below US$100, following Monday's US$4.04 decline on end-of-quarter selling by funds locking in their profits in commodities to offset losses in other asset classes.
London Brent fell US99 cents to US$99.31 a barrel.
Gas oil futures were especially weak, dropping nearly 5% to US$921 a tonne as the heating oil season draws to a close.
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U.S. crude dropped US$1.55 to US$100.03 a barrel by 1435 GMT after briefly dipping below US$100, following Monday's US$4.04 decline on end-of-quarter selling by funds locking in their profits in commodities to offset losses in other asset classes.
London Brent fell US99 cents to US$99.31 a barrel.
Gas oil futures were especially weak, dropping nearly 5% to US$921 a tonne as the heating oil season draws to a close.
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Gold remains lower pressured by firmer dollar, ahead of U.S. ISM
Gold continued to come under pressure from a firmer U.S. dollar on fears of a global slowdown, and ahead of Tuesday's release of the United States' ISM manufacturing index.
The U.S. currency has bounced up against the euro on fears that the economic troubles in the world's largest economy have spread into the wider global economy, raising concerns that demand for commodities will be weakened.
'The rebound in the U.S. dollar has significantly destabilised the metals complex,' said Michael Jansen, analyst at JP Morgan.
At 1.02 p.m., spot gold was trading at $897.30 an ounce against the $917.00 in late New York trades yesterday, having touched an intraday low of $888.10 earlier this morning.
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The U.S. currency has bounced up against the euro on fears that the economic troubles in the world's largest economy have spread into the wider global economy, raising concerns that demand for commodities will be weakened.
'The rebound in the U.S. dollar has significantly destabilised the metals complex,' said Michael Jansen, analyst at JP Morgan.
At 1.02 p.m., spot gold was trading at $897.30 an ounce against the $917.00 in late New York trades yesterday, having touched an intraday low of $888.10 earlier this morning.
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US manufacturing shrinks again
US factories activity eased in March amid the US downturn and financial market turmoil, an industry survey showed today.
The closely watched Institute for Supply Management report on US manufacturing in March inched up to 48.6 from February's 48.3 but remained below the 50 level, which separates growth from contraction.
A weak reading on new orders pointed to sluggish demand as the economy teeters on the brink of recession.
The report also showed a rise in inflation.
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The closely watched Institute for Supply Management report on US manufacturing in March inched up to 48.6 from February's 48.3 but remained below the 50 level, which separates growth from contraction.
A weak reading on new orders pointed to sluggish demand as the economy teeters on the brink of recession.
The report also showed a rise in inflation.
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Can the Gulf weather the storm of US recession?
The US economic downturn is already taking its toll on global markets. In this issue of The Middle East three specialist commentators give their opinions on where the crisis in America will leave the oil-producing Gulf states. Skilled economic analyst, Moin Siddiqi, looks at the run-up to the crisis which has resulted in a scale of credit losses unparalleled in modern banking history. Jeff Black examines the Gulf’s exposure to a US downturn; while international financial expert analyst, Pamela Ann Smith, presents the case for why the oil-producing GCC states, while not immune, will be protected from the worst effects of the downturn
The US subprime meltdown and ensuing wider credit squeeze (i.e. the amount of money circulating in the banking system) has hit the balance-sheets of banks worldwide, thereby hurting companies and consumers alike. “Financial market strains originating in the US subprime sector – and associated losses on bank balance sheets – have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty,” the International Monetary Fund (IMF) stated.
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The US subprime meltdown and ensuing wider credit squeeze (i.e. the amount of money circulating in the banking system) has hit the balance-sheets of banks worldwide, thereby hurting companies and consumers alike. “Financial market strains originating in the US subprime sector – and associated losses on bank balance sheets – have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty,” the International Monetary Fund (IMF) stated.
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Put Money Away For Rainy Days Ahead And Brace Yourself For The Turbulence To Come
Unless you've been living in a cave for the last few months you can't really have failed to notice that things don't look great for the British economy. You've probably even heard the dreaded word "recession" bandied about. Indeed, the nation is bracing itself for its first recession in a decade.
You cannot have escaped the current focus on the emergency rescue of US investment bank Bear Stearns and the problems the US is encountering in its fight with recession.
Ever since the Northern Rock crisis and the signs of a troubled economy, a quarter of all UK consumers have become more concerned about their finances and, understandably, their confidence has been shaken. But this latest development is an opportunity. The trick is to harness this heightened awareness and to do something positive, like overhauling your finances, budgeting effectively, and investing your money in a way that makes it work smarter for your needs
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You cannot have escaped the current focus on the emergency rescue of US investment bank Bear Stearns and the problems the US is encountering in its fight with recession.
Ever since the Northern Rock crisis and the signs of a troubled economy, a quarter of all UK consumers have become more concerned about their finances and, understandably, their confidence has been shaken. But this latest development is an opportunity. The trick is to harness this heightened awareness and to do something positive, like overhauling your finances, budgeting effectively, and investing your money in a way that makes it work smarter for your needs
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