Late Edition September 22 2008 at 02:59 PM Chi-Chu Tschang and Harry Maurer
The Markets Retreat Again
Equity investors, who seemed cheered on Friday by the prospect of a federal bailout of the financial system, turned nervous again today and dumped stocks. At 3 p.m. the Dow was down around 250 points, after Asian markets moved higher but European bourses fell modestly.
Investors seemed to be focusing their fears on the battle over Washington's proposed massive bailout plan and the effects of other financial events, such as the conversion of Goldman Sachs and Morgan Stanley to bank holding companies (see items below). Among other developments, Morgan announced a strategic partnership with Mitsubishi UFJ, Japan's biggest banking group. Mitsubishi will take a 20% stake in Morgan and hold one seat on the board. GE stock slipped on reports of losses at its enormous finance unit, whlle the dollar fell and oil jumped sharply, settling up more than $16 a barrel at about $120 after trading as high as $130.
Source: Associated Press
Microsoft's Big Buyback
The world's No. 1 software maker announced it will repurchase up to $40 billion worth of stock after its price-earnings ratio sank last week to the lowest level ever. Microsoft also boosted its dividend by 18%. Its stock was down 29% for the year through last week. The buyback news boosted the stock, up more than 3% in midafternoon. Hewlett-Packard and Nike also announced major expansions of their buyback programs, of $8 billion and $5 billion respectively.
Source: Bloomberg
Krawchek Leaving Citi?
She's the latest high-ranking executive to leave Citigroup since Vikram Pandit took over as CEO: Sallie Krawchek, head of wealth management, will leave the bank, reports the Wall Street Journal. It isn't clear when she'll depart. Citi is moving her unit under the aegis of the institutional clients group. Krawchek, perhaps the highest-profile woman on Wall Street, will be replaced by Michael Corbat.
Source: Wall Street Journal
Hammering Out the Shape of a Bailout
U.S. Congressional leaders still are negotiating the details of the proposed $700 billion bailout of the country's financial institutions that would raise the legal ceiling on the national debt from $10.6 trillion to $11.3 trillion. The plan to end the turmoil in the financial markets would allow the government to buy toxic assets of any U.S. institution for the next two years, authorizing the Treasury to: "purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States." The White House also has announced a guarantee on all money market mutual funds to curtail crisis in the $3.5 trillion sector. U.S. lawmakers, though, are scrambling to put their mark on the rescue plan, with Democrats looking to add provisions that include increased congressional oversight, aid for individual homeowners, and changes to bankruptcy laws. The Bush administration opposes some of the measure, particularly efforts to require the bailout program's participants to curb what they pay their executives.
Source: Financial Times, Wall Street Journal
Questions Remain Over U.S. Bailout Fund
A host of questions about what negative side effects will be caused by the bailout fund still need to be answered. They include how some of the government programs will work to possible unintended effects the cure may have on the way the markets function and how the economy performs over the longer term.
Source: BusinessWeek
Morgan Stanley, Goldman Sachs End Investment Bank Model
U.S. financial institutions Goldman Sachs and Morgan Stanley were granted approval on Sept. 21 to become bank holding companies regulated by the U.S. Federal Reserve, effectively ending the investment banking model that has dominated Wall Street for more than 20 years. The move allows the banks to take deposits, gain easier access to financing, and gives them more flexibility to buy retail banks.
Source: Reuters
Nomura Buys Lehman's Asian Operations
Japanese bank Nomura has won the battle to acquire the flagship Asian operations of Lehman Brothers, the collapsed U.S. investment bank. According to people familiar with the matter, an agreement was signed on Sept. 22 by senior executives representing the Japanese investment bank and Lehman's Asian operations.
Source: Financial Times
Controversy Continues to Hit Lehman Brothers
The fate of Lehman Brothers' European operations remains clouded by controversy after clients, employees, and others have claimed they are owed money or assets. Questions remain how Lehman transferred corporate funds and client assets from its European operations when the New York-based parent firm in filed for bankruptcy and later agreed to sell its U.S. brokerage and investment-banking operations to Barclays.
Source: Wall Street Journal
Bailout Fund May Hit Strength Of U.S. Dollar
The plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue. While the plan may restore investor confidence in the battered financial markets, currency traders will focus on the twin budget and current-account deficits and negative real U.S. interest rates.
Source: Bloomberg
SEC To Make Short Positions Public
Institutional money managers won't have to disclose their short positions to the public immediately, the U.S. Securities and Exchange Commission said on Sept. 21. Under the SEC's emergency rule, the information will be made public two weeks after it is filed electronically to the commission.
Source: Reuters
Hedge Funds Battered By Market Volatility
U.S. and international hedge funds are on course for their worst year on record after estimates showed the average fund is down nearly 5% so far this year.
Source: New York Times
Shareholders Find Little Solace in Lawsuits
Despite the recent financial volatility, legal rulings have made it harder to press shareholder claims. And since the victims of the current financial carnage include some of the primary defendants themselves, investors may find themselves reaching into empty pockets for redress.
Source: BusinessWeek
Investors Fearful after South African President Quits
The resignation of South African President Thabo Mbeki may further rattle investors contending with the global financial crisis, a growth slowdown in Africa's largest economy, and a near record trade deficit. Mbeki bowed to demands on Sept. 20 to quit after a High Court judge suggested he pressured prosecutors to pursue corruption charges against his political rival Jacob Zuma, who will likely win 2009 elections.
Source: Bloomberg
Conversation of the Day: Sarah Palin, Working Mother
Reader Susan writes: "I could not see myself, with young children, ever wanting a job that would consume me so totally as the Vice-Presidency or Presidency would."
Tell Us: Which Role Is Best Prep for the White House: Mom, Mayor, or Governor?
| This newsletter is a FREE service provided by BusinessWeek. To sign up for other newsletters, cancel delivery, change delivery options or change your e-mail address, please go to our Newsletter Preferences page. If you need other assistance, please contact Customer Service or contact: Wanda Cooper BusinessWeek Customer Rights Communications Data Services 1995 G Avenue Red Oak, IA 51566 Phone: 1-800-635-1200 View our corporate privacy policy . To learn more about how BusinessWeek applies this policy, you can contact our Marketing Department . Copyright 2007, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use | Privacy Notice |
No comments:
Post a Comment
Keep a civil tongue.