Wednesday, December 19, 2007

Today's Headlines

- Credit Suisse Group investment strategists expect the S&P 500 to increase 13% to a record by the end of 2008. Shares are inexpensive relative to bonds, earnings won’t decline and “only one of five preconditions for a bear market is in place,” a bear market in junk bonds, Andrew Garthwaite and Jonathon Morton wrote today. They expect US economic growth of 1-1.5% for the year.
- President Bush today signed legislation aimed at cutting US dependence on overseas energy by setting tougher mandates for carmakers, electric-appliance manufacturers and ethanol producers.

- Short-term borrowing rates fell in Europe, the US and UK as European Central Bank council member Klaus Liebshcer said the bank is ready to provide more cash to restore confidence in money markets.
The Fed’s Lacker sees US growth of 2-2.5% next year.
- The Federal Reserve, European Central Bank and Swiss National Bank loaned $34 billion in 28-day funds through special auctions as part of a global attempt by central banks to restore faith in the money markets.

- Morgan Stanley(MS) Posts Loss, Sells Stake to China.
- MBIA Inc.(MBI) and Ambac Financial Group(ABK) had the outlook on their AAA credit ratings lowered to negative from stable by S&P, while ACA Capital Holdings(ACA) guaranty ranking was cut to CCC from A.
- According to data compiled by RealtyTrac Inc. home foreclosures fell 10% in November from October.

Wall Street Journal:
- Interest Groups Gain In Election Cash Quest.
- Kiddies’ Wired Wish Lists. Forget Dolls, Toy Trains; The Younger Set Wants High-Tech Gadgets.
- Bear Stearns(BSC) CEO James Cayne and other top executives at the No. 2 underwriter of mortgage-backed bonds will forgo bonuses this year.
- Mezzanine Debt Attracts Real-Estate Investors.

- Bear Stearns(BSC) Asset Management plans to enter the “130/30” mutual fund category.

NY Times:
- Officials from Merrill Lynch(MER), Bear Stearns(BSC) and other major banks are in talks to bail out a struggling bond insurance company that has guaranteed $26 billion in mortgage securities.
- Of likely Iowa caucus voters, 33% plan to vote for Barack Obama, 29% Hillary Rodham Clinton and 20% John Edwards, according to a Washington Post-ABC News poll.

Business Week:
- Honda Targets Toyota’s Hybrid Dominance.

- Energy futures rose Wednesday after the government said supplies of crude and heating oil fell sharply last week, while gasoline inventories jumped. Much of the decline was due to a sharp drop in imports, almost a million barrels a day, because fog closed the Houston Ship Channel last week. Freight rates charged by the large tankers that bring oil from the Persian Gulf to the US have jumped recently, a sign that OPEC oil exports continue to rise. Today’s report showed gasoline demand fell by about 61,000 barrels last week and was up only .3% over the past four weeks versus a year ago. Analysts consider demand growth under 1.5% to be low.

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