WSF Headline Roundup - 11/20/08 - Fed to cut rts to 0%?, sees sucky economy thru mid '09; Oil < $53; Russia cutting corp. profits tx; Berkshire plummets; GE talking to sov wealth; Iceland loan; Auto CEOs leave DC empty handed; Chip sales to dive?

• U.S. Stocks Slide to Five-Year Lows as Banks, Carmakers Tumble
• Fed to Cut Rates to Zero on Deflation Risk, JPMorgan Predicts
• Fed Saw Economy Shrinking Through Mid-2009 Last Month
• Alwaleed Plans to Boost His Stake in Citigroup to 5%
• Oil falls below $53 on fears of deep recession
• Russia to Cut Corporate Profit Tax Rate in January
• Buffett's Berkshire Falls Most in at Least 23 Years
• GE in Talks With Four Asian Sovereign Wealth Funds
• Iceland Gets $4.6 Billion Bailout From IMF, Nordics
• Japan's Exports Fell the Most in Almost Seven Years
• GM, Ford, Chrysler Leave Congress Empty-Handed After Hearings
• GM Chief Signals He'd Step Aside If Asked to Resign
• Chrysler hopes to revive GM merger talks
• Housing Starts Sink Again To Lowest Level Since '59
• Chip Sales Are Predicted to Decline
• Intuit cuts outlook, sees small business cautious
• Ackman Says Target REIT IPO Would Raise $5.1 Billion

U.S. Stocks Slide to Five-Year Lows as Banks, Carmakers Tumble - Bloomberg

U.S. stocks sank and benchmark indexes slid to their lowest levels since 2003 on growing concern over the health of the financial system and survival of the nation's car industry. 

Citigroup Inc. tumbled 23 percent to $6.40, a 13-year low, on a plan to buy $17.4 billion of troubled investment-fund assets. General Motors Corp. slid 9.7 percent to its lowest price since the 1940s, while Ford Motor Co. lost 25 percent. Fourteen companies in the Standard & Poor's 500 Index fell 20 percent or more as government data signaled the recession is deepening and expectations grew that insurers will post more investment losses. 

``Hideous day,'' said Bill Stone, who oversees $56 billion as chief investment strategist at PNC Wealth Management in Philadelphia. ``It's hard to put a basement on this thing.''......

Fed to Cut Rates to Zero on Deflation Risk, JPMorgan Predicts - Bloomberg

The U.S. Federal Reserve will probably cut interest rates to zero percent over the next two months to staunch deflation, according to JPMorgan Chase & Co. 

The Fed will lower borrowing costs by 50 basis points at each of the next two policy meetings on Dec. 16 and Jan. 28, JPMorgan economist Michael Feroli wrote in a note to investors yesterday. The central bank will hold rates at zero for the rest of 2009 to prevent prices from spiraling down as companies cut jobs and banks reduce lending, stifling spending, Feroli said. 

The Fed may not be the only central bank to begin offering free money to jolt life into their recessionary economies and keep prices rising as the 15-month credit crisis deepens. The Bank of Japan cut its benchmark rate to 0.3 percent last month, and the European Central Bank has signaled it....

Fed Saw Economy Shrinking Through Mid-2009 Last Month - Bloomberg

Federal Reserve policy makers last month predicted the U.S. economy will contract through the middle of 2009, with some prepared to lower interest rates further in response, a record of their meeting showed. 

``Some suggested that additional policy easing could well be appropriate at future meetings,'' the Fed said in minutes of the Oct. 28-29 Federal Open Market Committee gathering released today. ``In any event, the Committee agreed to take whatever steps were necessary to support the recovery.''....

Alwaleed Plans to Boost His Stake in Citigroup to 5% - Bloomberg

Saudi billionaire Prince Alwaleed bin Talal plans to increase his stake in Citigroup Inc. to 5 percent after the U.S. bank lost almost a quarter of its value yesterday. 

Alwaleed, who now owns less than 4 percent of the New York- based company, said in a statement he's buying shares because he ``strongly believes that they are dramatically undervalued.''...

Oil falls below $53 on fears of deep recession - AP

Oil prices fell below $53 to almost a two-year low Thursday as investors, worried by plummeting stock markets, priced in lower crude demand as the global economic downturn shapes up to be the worst in decades.

Light, sweet crude for December delivery was down $1.23 to $52.39 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract fell 77 cents Wednesday to settle at $53.62, the lowest since January 2007....

Russia to Cut Corporate Profit Tax Rate in January - Bloomberg

Russia's government will cut the corporate profit tax rate to help companies weather the worst financial crisis in a decade, Prime Minister Vladimir Putin said. 

The rate will fall four percentage points in January from the current 24 percent, freeing up 400 billion rubles ($15 billion) for businesses, Putin said today during the ruling United Russia Party's annual congress in Moscow. 

``This money will work for the economy,'' Putin said.....

Buffett's Berkshire Falls Most in at Least 23 Years - Bloomberg

Warren Buffett's Berkshire Hathaway Inc. fell the most in at least 23 years, dropping for the eighth straight day since reporting a 77 percent decline in third- quarter profit. 

The stock plunged $11,550, or 12 percent, to $84,000 in New York Stock Exchange composite trading and has slipped 41 percent this year, compared with the 45 percent drop in the Standard & Poor's 500 Index. Berkshire, based in Omaha, Nebraska, rose in 17 of the past 20 years. 

``There's nothing fundamentally wrong with Berkshire, what's really happening is people are wondering if there's something fundamentally wrong with the economy, and Berkshire is in some ways a bit of a proxy for that,'' said Michael Yoshikami, president of YCMNet Advisors in Walnut Creek, California, which manages $850 million including Berkshire shares.....

GE in Talks With Four Asian Sovereign Wealth Funds - Bloomberg

General Electric Co., down 61 percent this year in New York, is seeking funds from China Investment Corp., Government of Singapore Investment Corp. and at least two other sovereign-wealth funds. 

Talks are also being held with Temasek Holdings Pte of Singapore and China Safe Investments Ltd., Brussels-based spokeswoman Elma Peters said in a phone interview today. China Investment Corp. is the nation's $200 billion sovereign wealth fund. 

Chief Executive Officer Jeffrey Immelt has lowered his 2008 profit target twice and last month he raised an additional $3 billion in the sale of preferred shares to investor Warren Buffett's Berkshire Hathaway Inc. Asian talks follow an $8 billion venture with Abu Dhabi's Mubadala Development Co. as GE taps infrastructure spending outside the U.S., where a recession is deepening. Getting partners to become shareholders has the added advantage of establishing a more stable investor base......

Iceland Gets $4.6 Billion Bailout From IMF, Nordics - Bloomberg

Iceland got a $4.6 billion bailout from the International Monetary Fund and four Nordic countries to help resurrect the island's economy after the failure of its biggest banks and the collapse of its currency. 

The Washington-based IMF approved a $2.1 billion loan late yesterday. Finland, Sweden, Norway and Denmark will provide a further $2.5 billion, the Finnish Finance Ministry said in a statement today....

Japan's Exports Fell the Most in Almost Seven Years - Bloomberg

Japan's exports declined at the fastest pace in almost seven years in October as the intensifying global financial crisis stifled sales of cars and electronics. 

Exports, the main engine of Japan's economic growth in the past six years, fell 7.7 percent from a year earlier, the biggest drop since December 2001, the Finance Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted an 8 percent drop. 

The Nikkei 225 Stock Average dropped 4.1 percent on concern exporters' profits will deteriorate as the global slowdown spreads to Asia, where Japan's shipments dropped last month for the first time in six years. Automakers Isuzu Motors Ltd. and Hino Motors Ltd. said today they plan to cut output in response to weaker overseas sales.....

GM, Ford, Chrysler Leave Congress Empty-Handed After Hearings - Bloomberg

U.S. lawmakers deadlocked on a plan to bail out the Big Three automakers, leaving General Motors Corp. facing the prospect it could run out of cash before a new Congress can come to the rescue next year. 

Democratic congressional leaders disagreed with Republicans and President George W. Bush's administration over how to provide $25 billion in aid to GM, Ford Motor Co. and Chrysler LLC. Only two days remain in a lame-duck session for lawmakers to resurrect a compromise.....

GM Chief Signals He'd Step Aside If Asked to Resign - Bloomberg

General Motors Corp. Chief Executive Rick Wagoner signaled that he would step aside should he be asked to resign as a condition for the biggest U.S. automaker to receive federal aid. 

``I'll always do what's right for the company,'' Wagoner said today in a Bloomberg Television interview. ``But even more critical during a difficult time period is having the best possible management team. We have a good team at GM. That's not what I would recommend.''....

Chrysler hopes to revive GM merger talks - Financial Times

Chrysler hopes to revive merger talks with General Motors once a government bail-out package for Detroit’s carmakers is agreed allowing the two companies to address their immediate liquidity problems. 

Talks between the two companies were “still going on at a very low level” and would be restarted “immediately” once terms of a bail-out were approved, a person familiar with recent discussions told the Financial Times on Wednesday. 

“The talks were suspended while this process played out to see where everyone was,” the person, who requested anonymity, said......

Housing Starts Sink Again To Lowest Level Since '59 - Washington Post

New-home construction tumbled to a record low last month, according to government data released yesterday, further proof that the housing sector's woes keep deepening.

Declining demand and a glut of homes for sale have pushed builders to cut production. Builders have also struggled to secure financing amid rising foreclosure rates and a tight credit market, analysts said. 

Housing starts fell to a seasonally adjusted 791,000 in October, down 4.5 percent from September, according to the Commerce Department. This is the lowest level on government record dating to January 1959. It is down 38 percent compared with October 2007.....

Chip Sales Are Predicted to Decline - Wall Street Journal

A seven-year boom in the chip industry appears all but certain to end resoundingly next year, when semiconductor sales are forecast to decline for the first time since 2001.

World-wide chip sales will drop 5.6% to $246.7 billion in 2009, the Semiconductor Industry Association projected Wednesday. Sales continued to grow through the first three quarters of 2008, but the group projected a 5.9% drop in the fourth period -- normally the industry's strongest.

The gloomy forecast echoes another issued by the market-research firm iSuppli Corp. and recent projections by big chip makers such as Intel Corp. But George Scalise, the group's president, took pains to point out differences between the current situation and prior slumps, particularly the downturn after the Internet bubble's collapse in 2001.....

Intuit cuts outlook, sees small business cautious - Reuters

Intuit Inc, maker of TurboTax tax preparation software, posted a quarterly loss and lowered its full-year outlook, saying small businesses were being unusually cautious.

The company cut its fiscal 2009 forecasts for sales of QuickBooks accounting software and for revenue from payroll and bill payment processing services, as its small business customers get squeezed by the deepening recession.

The software maker noticed there hasn't been an inflow of new QuickBook users, which normally occurs during periods of economic downturn, and its payroll and bill payment processing service was hit by lower merchant transaction volume, said Intuit CEO Brad Smith.....

Ackman Says Target REIT IPO Would Raise $5.1 Billion - Bloomberg

Hedge-fund manager William Ackman said selling part of a real-estate investment trust that he wants spun off of Target Corp. would raise $5.1 billion as the rest of the ``tarnished'' retail industry struggles to procure cash. 

Ackman's Pershing Square Capital Management LP would buy $250 million of stock in an initial public offering of less than a fifth of the REIT, he said at a presentation in New York today. Target, the second-biggest U.S. discount chain, fell 10 percent in New York trading......

Comments

[david english]

11/20/08 Who gave GM a Bridge loan today as the stock swung from 1.70 to 2.98 today?