Early Edition July 25 2008 at 05:35 AM Edited by Chi-Chu Tschang and Harry Maurer
U.S. Financial Stocks Take a Battering
U.S. financial stocks suffered their worst one-day fall since 2000 on July 24 after investors renewed their fears over the future of Washington Mutual and weak housing figures. The fall comes after several days of optimism in the markets and was instigated by data showing sharp drops in U.S. home sales and house prices. The news was compounded when research firm Gimme Credit suggested creditors and customers were cutting their exposure to WaMu, which prompted a defiant response from the lender.
Investors sought the safety of government debt, pushing yields on two-year Treasury notes down 22 basis points to 2.6%. The S&P 500 fell 2.3% to 1,252.54, its worst one-day slide in a month.
Source: Financial Times
Banks attract attention of private equity, hedge funds
Private equity firms and hedge funds are on the lookout for capital-hungry banks. According to people familiar with the matter, at least two private equity firms are considering investments in Florida's BankUnited Financial. MatlinPatterson Global Advisers and Kelso & Co are rumored to be conducting due diligence on BankUnited and are consulting with regulators.
Source: Wall Street Journal
Foreign companies target U.S. assets
American companies are on sale and foreign buyers are circling, taking advantage of a weak U.S. dollar and a depressed stock market to snap up U.S. companies at discounted prices. Deal activity in 2008 has slowed slightly due to the global slowdown in merger-and-acquisition activity, yet foreign acquisitions could still match the record number of deals of 2006.
Source: BusinessWeek
U.S. regional bank posts $1.76 billion loss
Large U.S. regional bank National City posted a $1.76 billion loss on July 24 due to soaring losses on mortgage and real estate construction loans and a writedown for acquisitions. The results included $1.59 billion for loan losses and net charge-offs totaled $740 million. Pretax operating profit rose 19% to $610 million, the bank said.
Source: New York Times
Samsung faces tough second half of 2008
Samsung Electronics announced a lower-than-expected quarterly profit on July 25 and said it faces a tough second half of the year due to a sluggish memory chip market and lower margins in flatscreen televisions and mobile phones. Next year also looks equally daunting for the company as the global economic slowdown will impact all consumer electronics.
Source: Reuters
BP's Dudley Flees Russia
The battle surrounding BP's Russian oil joint venture took another turn on July 24 when its beleaguered Chief Executive Officer Robert Dudley left the country citing mounting uncertainties over his visa and 'sustained harassment.' BP said it would launch arbitration proceedings against its Russian partners in TNK-BP to recover 'any and all losses' incurred as a result of a battle for control of the joint venture.
Source: Financial Times
U.S. politicians squabble over gas prices
Republicans in the U.S. House of Representatives scuttled a bill on July 24 that Democrats had hoped would lower gas prices by forcing the country's Energy Department to release 70 million barrels of oil -- about a three-day supply -- from the national stockpile. Despite winning a clear 268-157 majority, the measure still lost because Democratic leaders had brought the proposal up for debate under rules requiring a two-thirds vote to pass.
Source: Wall Street Journal
Honda posts strong results, cautions over future growth
Honda reported a surprise 8% increase in quarterly net profit after it raised car prices and cut costs, helping to overcome a stronger yen, crumbling U.S. auto market, and higher commodity prices. Despite the strong performance, Honda -- Japan's second largest automaker and the world's top motorcycle maker -- maintained its forecast for an 18% drop in full-year net profits.
Source: Reuters
Automakers hit by overstock of lease vehicles
As leases for millions of cars come to an end, automakers have had to take back the vehicles -- many of them the gas-guzzling SUVs, pickups, and luxury models -- that people don't want anymore. That's left companies with an oversupply of cars with limited value -- resale values on large SUVs have fallen 13% from March through May and some pickups have dropped more than 20%, according to Manheim, the nation's largest used-vehicle wholesaler.
Source: BusinessWeek
Microsoft signs search agreement with Facebook
Microsoft announced on July 24 that it would begin providing Internet search services and associated advertisements on social-networking site Facebook by the end of the year. The agreement extends an existing advertising deal that the companies struck in 2006 and later expanded globally.
Source: New York Times
European Central Bank mulls rate hike
European Central Bank council member Klaus Liebscher believes the bank has room to raise interest rates again even as the continent's economic growth falters. 'We haven't exhausted our room for maneuver,' Liebscher, who also heads Austria's central bank, said. 'I'm not that surprised' by the latest economic data, he continued. 'We expected a weaker second and maybe third quarter.'
Source: Bloomberg
Conversation of the Day: The Frozen Economy
Reader Mike Bendzela Writes: "Remember the following as we slouch toward depression: In 1930, the U.S. still had 200 billion barrels of oil under its landscape. Today, that has dwindled to 20 billion."
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