Friday, September 12, 2008

Today's Headlines

- Citigroup Inc.(C) analyst Prashant Bhatia reiterated his “buy” rating on Merrill Lynch(MER) shares, saying the firm has “ample liquidity” and the stock is worth $40. Bhatia said NY-based Merrill’s stake in BlackRock Inc.(BLK) is worth $9 a share, its wealth-management business has $16 in value and the rest of the third-largest US securities firm is worth $15.
- Micron(MU) Slump Shows Sign of Bottom, End to Chip Glut.
The cost of protecting bank bonds from default fell for the first day in four on speculation Lehman Brothers Holdings Inc. will be bought by one or more of its Wall Street rivals. Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers dropped 5 basis points to 88, according to JPMorgan Chase & Co. prices at 10:35 a.m. in London.
- Copper and aluminum may decline by as much as 29 percent in 12 months as slower global growth saps demand for metals, according to Ebullio Capital Management LLP, a U.K. money manager that has returned 63 percent this year. ``The markets can go lower than what a lot of people thought,'' said Steffensen, who has traded industrial and precious metals for 22 years including at companies such as Gerald Metals Inc. Slower global economic growth will likely means fewer Chinese exports, which in turn should curb the nation's growth in demand for metals, he said.
- Russia's ruble fell against its dollar-euro basket for a third week as oil and stocks declined. The currency slipped for a third week versus the dollar as oil extended losses from a record high in July and Russian equities slid 8.3 percent in the past five days, their fourth weekly drop. Investors have withdrawn more than $20 billion out of Russia since the start of the five-day war with Georgia Aug. 8, says UniCredit SpA analyst Vladimir Osakovsky. Investor sentiment toward Russia is worsening amid concern economic growth may falter, Credit Suisse equities analysts led by Hugo Swann in London wrote in a research note today. ``Further ruble weakening could amplify concerns of individuals and investors regarding its standing as a currency,'' he wrote in a client note today.
- Oil dropped below $100 a barrel in New York today for the first time since April amid forecasts that a slowing global economy will curtail energy demand. Futures traded as low as $99.99 a barrel and have erased almost a third of their value since reaching a record $147.27 on July 11. Traders have shrugged off forecasts that Hurricane Ike will hit the Texas coast later today, an OPEC call for reduced supplies and a decline in U.S. inventories. Demand for fuels averaged over the past four weeks declined 3.8 percent, the Energy Department report showed Sept. 10. OPEC's call for members to honor production quotas ``may be the most bearish signal to date in the oil market rout,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York. ``The ministers appear genuinely concerned that the bottom is falling out of global demand and that once-depleted stocks are rebounding with a vengeance,'' he said in a Sept. 10 report. ``Their panic is a testament to how soft the market has become. It is likely to grow even softer.''
World wheat production this year will be higher than expected a month ago as bigger crops in Europe, Russia and Ukraine offset smaller output in Argentina and Australia, according to the US Dept. of Agriculture. Global output will be a record 676.3 million metric tons, up 5.5 million from last month’s estimate and up 11% from last year’s crop of 610 million tons, the USDA said. Unsold supplies at the end of the year will total 139.9 million tons, up 2.7% from the August estimate, and up 18% from last year. Wheat futures on the Chicago Board of Trade have plunged 46% from a record $13.49 a bushel in late February.
- Cemex SAB(CX), the largest cement maker in the Americas, fell the most since listing its shares in New York after reducing its 2008 operating cash-flow forecast for a second time this year amid slumping demand.
- General Electric Co.(GE) fell the most in New York trading since cutting its annual forecast five months ago, dragged down by financial stocks including American International Group Inc. and Lehman Brothers Holdings Inc.

Wall Street Journal:
- Carlyle Group L.P. continues to have big ambitions for its financial services group, despite the departures of four members of the team in the past few months, including two former co-heads. The Washington-based firm told investors at its annual meeting on Monday and Tuesday that it plans to raise $3 billion to $5 billion for its first financial services fund, according to three prospective investors.

American Banker:
- JPMorgan Chase(JPM) is in “advanced talks” to buy Washington Mutual(WM), the biggest US Negotiations are being conducted “at the highest levels of both companies” and include JPMorgan CEO Dimon and WaMu CEO Fishman, citing sources. The government isn’t involved. savings and loan.

- Treasury Secretary Henry Paulson is "adamant" that no government money be used in any deal that resolves the crisis at Wall Street investment bank Lehman Brothers, a source familiar with his thinking said on Friday.

Financial Times:
- Bank of America (BAC) , JC Flowers & Co, the financial investor, and China Investment Co., the Chinese sovereign wealth fund, are considering a possible joint bid for Lehman Brothers (LEH) , the embattled Wall Street bank.

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