Late-Night Headlines
Bloomberg:
- Saudi Arabia Saudi Arabia “In a shrinking market, the disparate nature of the group means that any further cuts could have a diminishing effect,” John Hall, managing director of John Hall Assoc. Ltd., said. “Initial estimates reveal that compliance with the October cut is put at between half and three-quarters at best.”
- Ford Motor Co.(F), the second-biggest U.S. automaker, said it won’t seek a short-term bridge loan from the government because it doesn’t face a “near-term liquidity issue.” “As we told Congress, Ford is in a different position,” the Dearborn, Michigan-based company said in a statement.
- The cost of protecting investors in Japanese and Australian corporate bonds against default declined, according to traders of credit-default swaps. The Markit iTraxx Japan index of credit-default swaps fell 22.5 basis points to 332.5 at 10:29 a.m. in Tokyo, according to prices from Credit Suisse Group AG. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 20 basis points to 375, BNP Paribas SA prices show. The Markit iTraxx Australia index was quoted 25 basis points lower at 360, according to Credit Suisse.
- Hong Kong’s luxury home sales fell in both quantity and value in November from a month earlier, as the slowing economy hurt the purchasing power of the wealthy. Transactions of apartments and houses valued at more than HK$10 million ($1.3 million) fell 34 percent to 92 last month, with the deal value tumbling 62 percent to HK$2.08 billion, according to figures compiled by realtor Centaline Property Agency Ltd. Both numbers are the lowest since September 2003, the agency said in a press release yesterday.
- BHP Billiton Ltd.(BHP), the world’s biggest mining company, shipped the least amount of iron ore from Australia in nine months amid plunging demand from China. “They are getting treated the same as everyone else and the customers don’t want their product,” Peter Arden, an analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co., said from Melbourne. “Demand has seemingly collapsed.” Vale, based in Rio de Janiero, halted output at two iron ore pellet plants in Brazil yesterday, citing an “unprecedented contraction” in demand. Pellets are the first product buyers cut because they are more expensive than alternatives, Gilberto Cardoso, an analyst at Banif Securities in Rio de Janeiro, said.
- China, the world’s biggest copper consumer, asked BHP Billiton Ltd.(BHP) and other mining companies to accept a 74 percent increase in copper processing fees next year, two industry officials involved with the negotiations said. Chinese smelters are asking for the first increase in fees, also called TC/RCs, since 2006 as an oversupply of ore weakens the bargaining power of BHP and other mining companies.
- The Treasury sold $27 billion in three-month bills at the lowest rate since it starting auctioning the securities in 1929. “It’s all about capital preservation,” said John Canavan, a fixed-income analyst in Princeton, New Jersey, at Stone & McCarthy Research Associates. “People are afraid to put their money anywhere else so they aren’t terribly concerned about returns.” The rate on three-month bills peaked at 16.75 percent in May 1981, according to Federal Reserve data.
- North Korea, plagued by years of famine, will “urgently” need food aid for 40 percent of its population, the United Nations’ Food and Agriculture Organization and the World Food Programme said in a report yesterday.
- Top executives at Morgan Stanley(MS) and Merrill Lynch & Co.(MER) will give up their bonuses this year.
- FedEx Corp.(FDX) fell 12 percent in late trading after the second-biggest U.S. package-shipping company said annual profit may be as much as one-third lower than analysts expected because of a “significantly weaker” economy. Earnings for the fiscal year ending in May will be in a range of $3.50 to $4.75 a share, down from an earlier projection of $4.75 to $5.25, the Memphis, Tennessee-based company said in a statement today.
- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, reduced its profit and sales forecasts as the economic slump cut into demand for electronics.
Wall Street Journal:
- Restore the Uptick Rule, Restore Confidence by Charles Schwab.
- A violent market downturn and the government's decision to impose wide-ranging restrictions on short selling in September were just too much for Copper River Management. After losing more than half of its value in the last couple of months, the Larkspur, Calif., fund is liquidating and returning funds to its investors. The fund had originally been considering its options, including shutting down some offices and continuing on as a smaller entity. But the enormity of its losses might have been too much from which to rebound.
- Congress and the White House inched toward a financial rescue of the Big Three auto makers, negotiating legislation that would give the U.S. government a substantial ownership stake in the industry and a central role in its restructuring. Under terms of the draft legislation, which continued to evolve Monday evening, the government would receive warrants for stock equivalent to at least 20% of the loans any company receives. The company also would have to agree to limits on executive compensation and dividend payments, much like those contained in the government's $700 billion rescue of the financial industry.
NY Times: Hopes that Russia and other emerging markets could help support the automotive industry despite a slumping performance in the United States and Europe dimmed on Monday as the Ford Motor Company followed Volkswagen and Renault in suspending production at its Russian assembly line.
CNNMoney.com: Two co-heads of Goldman Sachs' special situations group, the bank's vast and secretive principal investment arm, have left. Nick Weber, 36 years old, co-head of the European special situations group in London, left at the end of last month. He previously worked for Mark McGoldrick, the group's former global head who was dubbed "Goldfinger" for his stellar record. Weber intends to spend time with his family but may look at other opportunities next year, according to a source familiar with his plans. Weber confirmed his retirement but declined to comment further. Alan Waxman, global co-head of the group in New York and a partner, also retired at the end of last month. He could not be reached for comment.
USA Today.com:
- The average retail price for gasoline dropped 11 cents in the last week to $1.70 a gallon, the cheapest price since February 2004, the Energy Information Administration said Monday. The national price for regular unleaded gasoline is down $1.30 from a year ago, the EIA said in its weekly survey of service stations.
Nikkei:
- Japan to Cut Inheritance Tax on Family Businesses.
China Daily:
- As top Chinese policymakers ponder ways to ensure GDP growth of at least 8 percent next year, the government is "very likely" to initiate cuts in business taxes to add impetus to the slowing economy.
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Earnings of Note
Company/EPS Estimate
- (MTN)/-.83
- (AZO)/2.19
- (JW/A)/.62
- (TTC)/.05
- (ADCT)/.12
- (COO)/.57
- (PLL)/.37
- (KR)/.39
- (GIII)/1.61
Economic Releases
10:00 am EST
- Pending Home Sales for October are estimated to fall 3.0% versus a 4.6% decline in September.
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BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and shipping stocks in the region. I expect US
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