Late Edition August 25 2008 at 02:54 PM Chi-Chu Tschang and Harry Maurer
Freddie Shows Some Muscle
While the rest of the market sank sharply, with the Dow down about 200 points at 2:45 p.m., Freddie Mac and Fannie Mae showed signs of life. Investors were encouraged that Freddie sold $2 billion worth of debt with no difficulty, indicating that the mortgage-finance giant can still raise money, though at higher rates of interest than before. In midafternoon, Freddie's stock stood up 22% and Fannie's, 14%.
The broader market was spooked by ongoing trouble in the financial sector. Lehman Brothers dropped because Korean regulators expressed skepticism about a Korean bank buying a major share in the firm. And after Credit Suisse predicted that AIG will take another massive loss in the third quarter, shares in the insurance behemoth fell more than 4%.
Source: MarketWatch
Housing Sales Tick Up
Deals for previously existing homes rose 3.1% in July, to an annual rate of 5 million, slightly above the 4.9 million rate analysts had expected. But the uptick concealed more discouraging news: The median price tumbled 7.1% from a year ago, and the backlog of homes for sale hit a record. The huge number of houses on the market probably means that prices will keep dropping for a time.
Source: Bloomberg
Another Deal in the Oil Patch
Canada's Precision Drilling Trust agreed to buy Houston-based natural-gas driller Gray Wolf for just over $2 billion. Gray Wolf had previously rejected a bid from Basic Energy Services.
Source: CNNMoney.com
Is Boeing Headed for a Strike?
Rejecting the company's latest offer as "insulting," the union representing 27,000 Boeing workers threatened to strike after the current contract expires on Sept. 3. The International Association of Machinists and Aerospace Workers said no to Boeing's proposed 2.5% increase for the first year and 2% increases for the second and third years of the contract. The union is expected to make a counter-proposal soon but given the poor track record between labor and management, people who follow the aerospace industry don't expect the two sides to reach a deal before a strike. Boeing workers last went on strike in 2005, staying out for 28 days. A strike this time could cost the company $3 billion a month.
Source: Reuters
Russia's Achilles' Heel: Oil
The post-mortems have begun to roll in from big-thinkers on Russia. The prescriptions advised in order to bring about status-quo ante in Georgia - ejecting Russia from G-8, distancing Moscow further from global trade treaties - add up to a consensus of "Oh Dear, Oh My." However the U.S. has one real lever - Russia's very strength. Russia's Achilles Heel is its petro-power. It's a message that both Barack Obama and John McCain should keep in mind as they prepare to deal with Russia.
Source: BusinessWeek
Failed Kansas Bank Ninth to Go Under This Year
The nine branches of Columbian Bank and Trust, seized by banking regulators on Friday after a silent run on deposits, will re-open today as Citizens Bank and Trust. It's the second bank failure in the Kansas City area this year and ninth nationwide.
Source: Kansas City Star
Chinese Oil Companies to Halt Buying Spree
Over the past nine months, Chinese oil companies have been importing huge amounts of diesel and gasoline. Now, with the Olympics over and with them fears of a shortfall in fuel supply, the Chinese companies are likely to stop the imports, says the chairman of Taiwan's Formosa Petrochemical.
Source: Financial Times
Online Olympics Viewers Boost NBC and Yahoo
Sports fans tuning in to NBC's Olympics website saw over 1.2 billion pages and 72 million video streams during the Beijing Games. Among the other media covering the Games, Yahoo's collection of news stories and slide shows also was a big winner.
Source: New York Times
Obama Heads to Denver after Biden Pick
A day before the opening of the Democratic National Convention, Barack Obama took a populist turn, deriding GOP rival John McCain as an out-of-touch country-club Republican. On Saturday, Obama appeared in Springfield, Ill. with his new running mate, former primary rival Joe Biden. The Delaware Senator and his aides successfully outmaneuvered rivals to win the spot on Obama's ticket by neutralizing a potential negative - Biden's long tenure in the Senate.
Source: Politico, Wall Street Journal
Uninsured Americans to Spend $30 Billion on Health Care
With health care an important issue in the race between Obama and McCain, a new study by researchers at George Mason University finds uninsured Americans will pay $30 billion out-of-pocket on health care costs, with government and others paying an additional $56 billion. Providing them with insurance would cost an additional $122.6 billion, since people with coverage usually spend more on health care.
Source: Wall Street Journal
Dollar Strengthens on Lower Oil Prices
The dollar was near a seven-month high against the yen and rose against other Asian and European currencies on Monday thanks to increased speculation the U.S economy will get a boost from lower oil prices. Standing in the way of the dollar's rise this week, though, are data likely to show further weakness in the U.S. housing market.
Source: Bloomberg
Conversation of the Day: United Airlines' Turbulence
Reader Greg writes: "Airline management appears to have taken from BOTH the employee AND customer and rewarded themselves handsomely for their 'successful cost reduction.'"
Tell Us: Should U.A. Be Permanently Grounded?
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