- The cost of protecting corporate bonds from default surged to records around the world as the prospect of U.S. automakers filing for bankruptcy protection fueled concern of more bank losses and a deeper recession.
- Representative Henry Waxman, an advocate for pollution controls, won the chairmanship of the House Energy and Commerce Committee, ousting auto-industry ally John Dingell of Michigan. “The champion of the environment has replaced the champion of the automotive industry,” said Daniel Becker, an environmental lawyer and director of the Safe Climate Campaign. House Democrats voted 137-122 for Waxman in a secret ballot, lawmakers said. The Energy and Commerce Committee has jurisdiction over energy, health care and telecommunications and will have a central role in passing several of Obama’s highest legislative priorities when Congress reconvenes next year.
- Democratic congressional leaders said they will delay action at least until next month on a compromise plan to help cash-strapped domestic automakers. “Unless they can show us the plan, we can’t show them the money,” House Speaker Nancy Pelosi said. “They have a bipartisan agreement, but it’s their agreement,” Reid said. Congress is in a stalemate over how to pay for the $25 billion the Big Three automakers are seeking. Republicans and the Bush administration want to use money already approved by Congress that is intended to help carmakers develop fuel-efficient vehicles.
- U.S. Senator Barbara Boxer said today she will introduce President-elect Barack Obama’s 10-year $150 billion plan to curb climate change early in the new Congress next year. There will be two bills, with one seeking to authorize a $150 billion grant program for technologies that promote energy efficiency or harness the wind and sun. The second is a scaled- back version of a climate bill she attempted to pass in the Senate last summer, the California Democrat told reporters at a news conference today in Washington.
- Citigroup Inc.(C), Goldman Sachs Group Inc.(GS) and the biggest U.S. banks tumbled in New York trading on concern the nation's deepening recession will generate more losses and weaken demand for financial services. Citi, which lost a quarter of its market value yesterday, dropped a further 21 percent even after Saudi billionaire Prince Alwaleed bin Talal said he would boost his stake in the New York- based bank. Goldman Sachs Group Inc., once the biggest U.S. securities firm, fell below its initial public offering price of $53, wiping out 10 years of gains.
- Japan is sliding back into deflation as slumping global demand cuts exports, prompting companies to cut jobs and reduce spending, said Kyohei Morita, chief Japan economist at Barclays Capital in Tokyo. ``Japan will go back to deflation'' that plagued the country for 10 years until 2007, Morita said in an interview. ``The global financial crisis is forcing companies to cut jobs and keep a lid on investment.''
- Crude oil fell to the lowest since May 2005 as a recession in the U.S., Europe and Japan cut global energy demand. Oil has dropped nearly $100 from its July record as the world economic crisis reduced global demand growth to its weakest in 23 years. “Oil at $147 was purely a speculative bubble,” Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London, said before prices breached $50. “It was cheap money chasing opportunities that were evaporating in other asset classes. What would bring it down further is any indication of demand growth being weaker than already dampened expectations.” Prices may fall as low as $40 a barrel by April, Deutsche Bank AG said in a report yesterday. The Organization of Petroleum Exporting Countries potentially needs to cut production by 2.5 million barrels a day to reduce output in an oversupplied market, the note said. OPEC, supplier of more than 40 percent of the world’s crude, has lost $700 billion in revenue because of falling prices, the British Broadcasting Corp. reported, citing Chakib Khelil, the group’s president.
Wall Street Journal:
- Investors withdrew $40 billion from hedge funds in October as the industry suffers record losses, Hedge Fund Research said Thursday. Funds of hedge funds, which allocate money to a range of underlying managers, saw the most redemptions at $22 billion last month, HFR reported.
- As shares of Citigroup(C), Blackstone(BX) and other heavyweights of the finance industry slumped to new lows on Thursday, a prominent law firm passionately repeated its call for the reinstatement of the “uptick rule.”
- Perry Capital’s difficulties mounted in October, as the firm’s flagship shed another 13.6%, leaving it down in excess of 20% for the year. The US$10 billion fund suffered from both the short-selling bans and concurrent deleveraging, according to Financial News. It is down about 21% year-to-date.
- Despite the bad economy, U.S. Internet advertising revenue rose in the third quarter, according to an analysis released Thursday. The report from the Interactive Advertising Bureau and PricewaterhouseCoopers LLP said that online advertising revenue totaled almost $5.9 billion in the third quarter, up 11 percent from the same period last year. It marked a 2 percent rise from the second quarter.
- With weekly jobless claims benefits at a 16-year high, the White House said Thursday that President George W. Bush would quickly sign legislation pending in Congress to provide further unemployment benefits.
- Citigroup Inc (C), JPMorgan Chase & Co (JPM) and Capital One Financial Corp (COF) are among the final bidders for Chevy Chase Bank, a Bethesda, Maryland, lender, sources familiar with the matter said.
- Emerging market currencies in Asia came under renewed pressure on Thursday, with the South Korean won and the Indonesian rupiah falling to their lowest levels since the Asian financial crisis of 1998. Analysts said that fears over a sharp slowdown in global growth prompted a renewed downward shift in risk appetite. This drove wary foreign investors into repatriating funds from the region, piling pressure on local currencies.
- General Electric Co.(GE) is talking to sovereign wealth funds in Singapore and China to win them as investors, citing an interview with GE International head Ferdinando Beccalli-Falco. The funds include Temasek and GIC of Singapore as well as CIC Safe of China.