Late Edition October 29 2008 at 03:06 PM Chi-Chu Tschang and Harry Maurer
The Fed Cuts Its Benchmark to 1%
It came as no surprise, and Wall Street had already celebrated in advance, but the Fed cut its benchmark rate from 1.5% to 1% in a bid to alleviate the economic slowdown. It also indicated that more cuts may be in the offing despite the now rock-bottom level, noting that "downside risks to growth remain." The Big Board, which saw the Dow rocket up nearly 11% yesterday, barely budged on the news, remaining flat at 3 p.m., where it has been most of the day.
The benchmark rate not stands at a level last seen about a year after the 2001 recession ended, and if rates go even lower they could hit levels not seen since the 1950s. Earlier today, China cut rates for the third time in six weeks, Norway also cut, and Japan, the European Central Bank, and the Bank of England are expected to follow suit soon.
Source: Wall Street Journal
GM's Bumpy Third Quarter
The troubled carmaker saw global sales drop by 11% in the third quarter, an indication that its ability to offset the disastrous U.S. market with sales overseas may be ending. Sales sank in three of GM's four global regions, including 19% in the U.S. and 12% in Europe. Even the Asia-Pacific area, until recently a found of strong growth, fell 3%. The global slowdown as the financial crisis bits raises fears that GM, which is burning through cash at $1 billion a month, could be forced into bankruptcy.
Source: CNNMoney.com
Qwest's Profit Plummets
The latest company to announced major layoffs: telco Qwest Communications, which announced that third-quarter earnings dropped 93%. It added that sales for the full year would probably fall near the low end of its forecast of a 2.4% drop. So it plans to lay off as many as 1200 workers, or 3% of its staff. Qwest is the main local carrier in 14 Western states, and like other such companies has been watching customers defect for years.
Source: MarketWatch.com
Nikkei Jumps Despite Toshiba, Sony Profit Plunge
Japan's Nikkei index rose 7.7% on hopes of interest rate cuts in Japan and the U.S. Investors were upbeat despite Toshiba's announcement quarterly profits plunged 99% to just $7.1 million. Sony announced earnings for the quarter fell 90%.
Source: Reuters
Indonesian Government Launches Rescue Plan
The government of Indonesia late yesterday unveiled a package of emergency measures to prop up the country's embattled stock market and currency. Slammed by the global credit crisis, Indonesian shares have dropped 60% this year and the country's currency has fallen sharply this month.
Source: Financial Times
Next Crisis: Credit Cards
After writing off some $21 billion in bad credit card debt in the first half of the year, big lenders like Citigroup and Bank of America are cutting back on issuances of new credit cards. The level of bad credit card loans, currently 5.5% of total card debt, is likely to rise and could top the 7.9% peak from the dot-com collapse.
Source: New York Times
Motorola to Focus on Android, Cut Jobs
Sanya Jha, the new CEO of Motorola's handset division, is planning to shift the company's focus to Google's Android operating system, cutting four other platforms. Jha is also likely to cut thousands of jobs at the struggling company as early as tomorrow, when Motorola is scheduled to report its quarterly results.
Source: Wall Street Journal
World Series Start Pushed Back for Obama Infomercial
The Obama campaign is airing a 30-minute commercial on CBS, NBC, Fox and Univision tonight, with News Corp.-owned Fox joining in after Major League Baseball agreed to delay the start of tonight's World Series game. Walt Disney-owned ABC is the only holdout after initially citing scheduling conflicts. ABC later said the slot was available but the Obama campaign declined to buy it.
Source: Los Angeles Times
In Your Face: A Brawny Labor Law?
Reader Mark writes: "If a company/industry doesn't need a union at the table, a union will most likely never form. Regulating the choice seems absurd."
Tell Us: Should Unionizing Be Easier?
Hot Topic on the Business Exchange: Global Auto Industry
The auto industry is facing significant changes in the next several years with the emergence of the Chinese consumer, new manufacturers, the introduction of the $2,500 car, and a weakened U.S. consumer. Charles Dubow and others are sharing their insights.
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