Monday, September 15, 2008

Today's Headlines

- Stock-market losses may spur investors to buy shares and stop holding cash, which has become “the crowded trade,” according to Thomas J. Lee, JPMorgan Chase’s(JPM) chief US equity strategist in NY. Net cash balances in margin accounts at the NYSE member firms are the highest in at least 50 years, Lee wrote. Lee, citing AMG Data Services, noted that $932 billion has poured into money funds since August 2007. The inflow exceeds a $562 billion jump in the three years ended in March 2003, when the last bull market for US stocks began in earnest.
American International Group Inc.,(AIG) the largest U.S. insurer by assets, has been given special permission to access $20 billion of capital in its subsidiaries to free up liquidity, New York Governor David Paterson said.
- Chris Edmonds, an analyst at FIG Partners, says oil could be at $90 this week. (video)

- Lehman Brothers Holdings Inc.(LEH), the fourth-largest U.S. investment bank, was suspended from energy and commodities trading in London after Europe's biggest clearing house declared the company a defaulter. ``Lehman is an important counterparty in the commodity markets,'' Robin Bhar, a metals strategist at Calyon in London, said by phone. Lehman has suspended almost all market activity, PricewaterhouseCoopers said today at a press conference in London.
- Zinc fell the most in almost 10 months, leading industrial metals lower in London, as the collapse of Lehman Brothers Holdings Inc. curbed demand for commodities. The S&P GSCI Index of 24 commodities fell 5 percent, extending its slide from July's record to 31 percent. Crude oil traded at a seven-month low. ``It's largely a stampede out of commodities,'' Dan Smith, a metals analyst at Standard Chartered Plc in London, said by phone.
- 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. GE, which received about half its revenue and profit from financial units last year, lost $1.41, or 5 percent, to $26.75 at 4:02 p.m. in New York Stock Exchange composite trading.

- Morgan Stanley(MS) and Goldman Sachs Group Inc.(GS) led a record surge in the cost of default protection and a slump in bank bond prices after Lehman Brothers Holdings Inc. filed for bankruptcy.
- Emerging-market bonds, stocks and currencies tumbled from Moscow to Mexico City as the bankruptcy of Lehman Brothers Holdings Inc. drove investors to sell all but the safest assets. The extra yield investors demand to own developing nations' bonds instead of U.S. Treasuries swelled 30 basis points to 3.64 percentage points, the widest spread in more than three years, according to JPMorgan Chase & Co.'s EMBI+ index.
- The U.S. Securities and Exchange Commission will likely stiffen rules targeting manipulative short selling after a stock-market rout triggered the bankruptcy of Lehman Brothers Holdings Inc., a person familiar with the matter said. The changes the SEC may issue as early as this week target naked short-selling, in which traders never borrow shares. The agency is concerned manipulative investors may use the sales, which are legal in some circumstances, to drive down prices by flooding the market with orders to sell shares they don't have.

Wall Street Journal:
The new Census Bureau data on income and poverty reveal that many of the economic trends in this country are a lot more favorable than America's detractors seems to think. In 2007, overall real median family income increased to $50,233, up $600 from 2006. The real median income for intact families -- mother and father in the home -- rose to $78,000, an all-time high.

LA Times:
- Ballot measure to decriminalize prostitution divides liberal San Francisco. Sex workers, the county Democratic committee and a health official support Proposition K as a boon to prostitutes’ and the public’s safety. The mayor, the D.A. and the business community oppose it.

San Francisco Chronicle:
- The FBI says violent crime is on the downswing. Data released Monday show violent crime dipped slightly nationwide in 2007. An estimated 1.4 million violent crimes were reported across the country last year — a 0.7 percent drop from 2006. The number of burglaries, car thefts, arsons and other property crimes also dropped by 1.4 percent. That marked the fifth year of property crime decreases, the FBI said.

Insurance Insider:
- Billionaire investor Warren Buffett’s Berkshire Hathaway Inc.(BRK/A) “is thought to be in talks” with American International Group(AIG) about a possible investment. AIG’s talks with potential investors, including buyout firms, are “advanced.”

- Software AG, Germany’s second-largest software maker, said US revenue will increase “at least” 10% per year between 2009 and 2011, citing CEO Streibich.

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