Monday, September 22, 2008

Today's Headlines


- Microsoft Corp.(MSFT), Hewlett-Packard Co.(HPQ) and Nike Inc.(NKE) said they will buy back a combined $53 billion of shares after the stock market's 16 percent decline this year pushed down valuations and companies sought ways to invest growing piles of cash.

- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken. The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.

- Morgan Stanley(MS) plans to sell as much as a 20 percent stake for $8.4 billion to Mitsubishi UFJ Financial Group Inc., Japan's largest bank, to shore up capital as it prepares to convert from a securities firm to a bank.
- The US dollar weakened the most against the euro since January 2001 and fell versus the yen on concern a U.S. proposal to buy $700 billion of troubled assets from financial firms will deepen the budget deficit.

- The U.S. Treasury may purchase 10 percent, or $1 trillion, of non-agency residential and commercial mortgages at distressed prices under plans to revive capital markets, Merrill Lynch & Co. analysts said. The government is likely to buy the assets at above the prices financial firms could sell to private-sector buyers, New York-based Merrill strategists Akiva Dickstein, Roger Lehman and Kamal Abdullah wrote in a report today.

- Baoshan Iron & Steel Co., China’s biggest steelmaker, will cut prices for the second time in two months as an economic slowdown prompts carmakers and builders to slash orders. Prices of cold-rolled products, used to make cars, will drop 13%, starting November, according to a statement by the company. Hot-rolled products will fall as much as 14%. The company is facing dwindling orders, Xu Lejiang, chairman of Baoshan and parent Baosteel Group Corp. said.

- Crude oil climbed more than $10 a barrel on speculation that a proposed $700 billion U.S. government rescue plan for the finance industry may bolster the economy and shore up demand. Oil has risen 26 percent since Sept. 16, the biggest four- day gain since at least June 1998, as lawmakers pledged fast consideration of the Treasury's plan to buy devalued mortgage- related securities. The dollar fell to a three-week low against the euro, increasing the appeal of commodities as a hedge.

- Sovereign wealth funds may increase investment in commercial real estate to a net $725 billion by 2015 as they diversify their holdings from stocks and bonds, according to CB Richard Ellis Group Inc(CBG).

- Lehman Brothers Holdings Inc.(LEH) will take ``considerable time'' before returning assets stranded by the world's largest bankruptcy to hundreds of hedge fund clients, according to PricewaterhouseCoopers.

Wall Street Journal:
- Steel prices in India may decline 5 to 10% by the end of October, citing Essar Steel Ltd. CFO Banerjee. Prices have fallen 15% over the past month.

Market Watch:

- Google(GOOG) US search share rose 3.1% in August, Yahoo! share fell 16.5% and MSN/Windows search share fell 23.8%.

NY Post:

- Having been whipsawed by a history-making credit crisis, publicly traded asset manager Legg Mason(LM) is considering a way to take itself private, The Post has learned.

Lloyd’s List:
- The “party is over in all respects” for the shipping industry because of turmoil in financial markets, German shipowner Bertram Rickmers said. Financing costs have increased “substantially” for the industry. Container shipping is facing reduced demand from the US and Europe and shipyard orders will fall, he said.

Toledo Blade:

- In the battle for Ohio’s 20 electoral votes, Republican presidential nominee John McCain holds a 48 percent to 42 percent lead over Democratic opponent Barack Obama, according to the first Ohio Newspaper Poll.

Boston Globe:

- Hedge funds usually thrive when markets turn volatile. But even these fast-money investors are struggling to cope with the wild swings in the markets, raising concern that some may not survive. While it is too early to know for sure, interviews with industry experts and investors suggest that few hedge funds had the foresight, dexterity, and most of all the courage to counter conventional wisdom and go long on financial stocks last week. On the other side of the equation, various large funds - no names have yet surfaced - appear to have been hit hard by betting against financial stocks.

USA Today:

- Ratings for ABC’s Emmy Awards Reach Record Low.

- On a conference call with reporters an hour or so ago, Republican presidential nominee John McCain's top strategist took a couple minutes to roundly criticize the news media -- and specifically The New York Times -- for what he believes has been biased coverage.


- Boutique-founder Charles Montanaro has told Citywire he thinks there is to be a major shift in asset allocation as investors prepare for the next bull market, with the long-only manager poised to benefit from the demise of the hedge fund. He draws comparisons between the problems faced today with the problems caused by junk bonds in 1990, a time when Montanaro was working at Drexel Burnham- a firm which was at the forefront of the controversy. 'Winding the clock forward 18 years, the finger of blame for the disarray in financial markets is not the junk bond trader it is the equity hedge fund manager,' he says. 'It may be that we may be about to witness a fundamental shift in asset allocation,' he says. 'It will be far harder for hedge funds to generate “alpha” where their hands are tied: banks are already less keen to provide the essential leverage; stock lending has become far more expensive and less readily available as institutions face up to considerable counter party risk and there are fewer prime brokers these days; and short-selling has been banned in the US and restricted in the UK.' The A-rated manager of the Montanaro European Smaller Companies fund thinks hedge fund managers can expect even more bad news to come.

- German executives expect the economy to cool following the global financial-market turmoil, citing a Psephos survey. 67% of 391 German executives said they expect a slight cooling of the economy, while 26% project a marked downturn, the survey showed.

- Deliveries of winter tires in Germany fell 42% as of August because of high inventory levels, citing data from the European Rubber Manufacturers’ Conference.

China Customs Office:
- Chinese exports to the US are rising at the slowest pace since 2002.

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