Wednesday, March 19, 2008

Today's Headlines

- Gold futures plunged the most since June 2006 after the Fed cut US borrowing costs less than investors expected. Silver plunged 8%.
- Crude oil fell more than $4 a barrel in NY, the most since August, after an Energy Dept. report showed that US demand dropped. Total implied fuel demand averaged 20.3 million barrels a day in the past four weeks, down 3.2% from a year earlier. “The commodity bubble is bursting,” said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. “There is demand destruction occurring and it’s going to be hard to prop up oil prices,” Flynn said. “We can expect huge inventory builds in the weeks ahead and the economic slowdown is already affecting fuel demand,” said Rick Mueller, director of oil practice at Energy Security Analysis.
- Subprime Eyed by Blackstone(BX), Goldman(GS) for Contrarian Hedge Funds.
- Investor pessimism remained at the highest since September 1998 last week after Bear Stearns(BSC) required a bailout from the Fed and JPMorgan(JPM). The proportion of newsletter writers who were bearish increased to 44.7% from 43.3%, which was also a nine-year high, the prior week, Investors Intelligence said. Optimism fell to 30.9% from 31.1%, according to the survey.
- A record number of fund managers have pushed their cash holdings above benchmarks in March. Forty-two percent of managers worldwide said they had moved more money into cash than their funds stipulated, according to a survey released today by Merrill Lynch(MER). The number of managers who believe that the global economy is already in recession tripled to 22% from Merrill’s January survey.

- JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether, lost 24% in its $1 billion fixed-income hedge fund this year through March 14.
- UK regulators are investigating whether traders have been trying to manipulate financial company stocks by spreading “false rumors.”

- Mortgage bonds have fallen to prices that offer buyers “hedge fund-like returns” because of the flight or disappearance of most traditional purchasers of the securities, according to UBS AG analysts. Without leverage, the securities offer returns of 8% to 12%, assuming “reasonable scenarios” for losses on the underlying home loans, they wrote.
- The risk of companies defaulting on their debt fell for a third day after securities firm Morgan Stanley said its profit fell less than analysts estimated and regulators said they will allow Fannie Mae and Freddie Mac to buy more home loans to help revive the mortgage market.

Wall Street Journal:
- The European Central Bank put an extra $39 billion into money markets yesterday in countries that use the euro to ease concerns that European banks won’t lend to one another.
- Walgreen(WAG) Converts Itself Into Health-Care Provider.

NY Times:
- Dermatology, Cosmetic Surgery Studies in High Demand. For Top Medical Students, an Attractive Field.

- Witney Museum to Receive $131 Million Gift from Leonard A. Lauder, the Cosmetics Executive.
- US Secretary of Education Margaret Spellings said provisions of the “No Child Left Behind” law will be eased to reduce the number of schools being labeled as failures.

- Ten Technologically Advanced Green Cars.

National Post:
- Mark-to-Market Rules Spurred Big Losses.

USA Today:
- Hillary Clinton would lose the votes of a significant number of Democrats if she wins the presidential nomination based on the backing of superdelegates instead of delegates allocated by elections.

NY Post:
- Cayne, Lewis Try to Arrange Counter-Bid for Bear.

Financial Times:
- America Must Be a Good Role Model by John McCain.

- Finland’s Finance Minister Jyrki Katainen said Europeans must prepare for a slowdown in economic growth.

- Brazil’s ethanol consumption will surpass gasoline by April, for the first time since the 1980s, citing the country’s national petroleum, gas and fuel agency.

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