Tuesday, November 18, 2008

Today's Headlines

- Hewlett-Packard Co.(HPQ), the world’s biggest personal-computer maker, posted a fourth-quarter profit that topped analysts’ estimates, sending the shares up the most in six years in New York trading.

- Prices paid to U.S. producers plunged in October by the most on record as the faltering global economy caused demand for commodities to dry up. The larger-than-forecast 2.8 percent drop followed a 0.4 percent decline in September, the Labor Department said today in Washington.

- China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries, as foreign investors sought the relative safety of government debt as stocks plunged 9.1 percent that month. Total net purchases of long-term equities, notes and bonds increased a net $66.2 billion in September from $21 billion the previous month, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $143.4 billion, compared with net buying of $21.4 billion the month before.

- Treasury Secretary Henry Paulson rejected using the government's financial-rescue program as a ``panacea'' for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners. ``The rescue package was not intended to be an economic stimulus or an economic recovery package,'' Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and ``is not a panacea for all our economic difficulties.''

- Soros-Funded Democratic Idea Factory Becomes Obama Policy Font. Thanks in part to funding from benefactors such as billionaire George Soros, the Center for American Progress has become in just five years an intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the new Obama administration. CAP's president and founder, John Podesta, 59, former chief of staff to President Bill Clinton, is one of three people running the transition team for president-elect Barack Obama, 47. A squadron of CAP experts is working with them. To help promote its ideas, CAP employs 11 full-time bloggers who contribute to two Web sites, ThinkProgress and the Wonk Room; others prepare daily feeds for radio stations. The center's policy briefings are standing-room only, packed with lobbyists, advocacy-group representatives and reporters looking for insights on where the Obama administration is headed. CAP, which has 180 staffers and a $27 million budget, devotes as much as half of its resources to promoting its ideas through blogs, events, publications and media outreach.

- China’s stocks plunged, dragging the benchmark index to its biggest decline since June, as slumping commodity prices heightened concern the global recession will hurt the world’s fastest-growing major economy. Shanghai Pudong Development Bank Co., the Chinese partner of Citigroup Inc., and China Shipping Development Co., the nation’s biggest oil carrier, were among more than 120 shares that slumped by the daily 10 percent limit.

- Harbinger Capital Partners, the New York-based hedge-fund firm run by Philip Falcone, has almost $200 million in potential losses on bets that Navistar International Corp.’s stock price would rise.

- China Substitutes ‘Spin’ for Suppression as Web Weakens Control.

Wall Street Journal:

- Treasury Secretary Henry Paulson said he is unlikely to use what remains of the $700 billion rescue fund to launch any substantial new programs, preferring instead to keep some money in reserve and preserve flexibility for the incoming administration.

- Steelmakers are suspending and renegotiating contracts with raw material suppliers after demand for the metal declined. ArcelorMittal, the world’s largest steelmaker, has told its German scrap-metal suppliers that it will suspend contracts from the end of October.

NY Times:
- A Bridge Loan? US Should Guide GM in a Chapter 11.

- There’s more bad news for Kenneth C. Griffin’s Citadel Investment Group: The counterparty credit ratings for two of its hedge funds were cut Tuesday by Standard & Poor’s because of market losses.

Business Week:

- GM: The Case Against a Bailout. How about this instead: The boards of Chrysler and General Motors (GM) put their companies into bankruptcy with the clear intent of reorganization and merger. As radical as that sounds, it's the best road we can see to a viable future for the industry. And yes, the U.S. car industry does belong in the future.


- The Iraqi government said it will hold provincial elections Jan. 31, a key step in the effort to promote reconciliation between the country’s warring ethnic and religious groups.

Globe and Mail:

- Canadian banks get go-ahead to issue both Visa(V), MasterCard(MA).

Financial Times Deutschland:
- VMWare Inc.(VMW), the world’s largest maker of software that lets computers run on multiple operating systems, sees growth slowing from an “astronomical” to a “healthy” level, citing an interview with CEO Paul Maritz. Maritz said VMWare predicts “fantastic opportunities” in the next few years because its products cut companies’ capital and energy costs.

Russian Newsweek:

- Russia’s ruble will be allowed to weaken to 35 per dollar by the start of May after the government made a political decision to let it fall.

Ekonomicheskie Izvestia:

- The Ukrainian government expects the economy to shrink and the hryvnia to decline versus the dollar in 2009, citing government economic parameters for the 2009 state budget. The government forecasts gross domestic product will shrink by 7% while the hryvnia falls to 7 per dollar next year.

RIA Novosti:

- Russia’s economy may expand by less than 2% next year as energy prices drop and growth flows. The Economy Ministry has prepared forecasts including growth of 2% and less. The Economy Ministry earlier forecast growth of 6.7% next year.

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Folha de S. Paulo:
- General Motors Corp.’s(GM) Brazilian unit cut its revenue forecast for this year by 14% to $9.5 billion from $11 billion, citing the subsidiary’s president, Jaime Ardila. Car sales in the first two weeks of November fell 18% form the same period in October and 24% from a year earlier.


- OPEC Secretary-General Abdalla el-Badri said it may be too early to cut oil production at the group’s ministerial meeting in Cairo on Nov. 29. World oil markets are oversupplied and crude prices are declining because of the global financial crisis, el-Badri said yesterday.

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