Late Edition November 04 2008 at 03:01 PM Chi-Chu Tschang and Harry Maurer
Oil Prices Spurt Higher
Oil prices took a big jump today, with crude for December delivery rising more than $6 a barrel to nearly $71 as bullish sentiment prevailed on global markets. Oil futures jumped even more. Stocks rose and the dollar dropped against the euro, which made commodities look more appealing. Besides oil, metals and grain futures rose.
Part of the reason for the leap in oil prices is that OPEC members, including Saudi Arabia, seem to be implementing the production cuts the cartel agreed to. But overall feeling in the markets today was upbeat, as traders focused on companies that reported healthy profits and seemed to anticipate the election of Barack Obama. At 3 p.m. the Dow was up around 175 points, the biggest election-day rally in 24 years.
Source: BusinessWeek, Bloomberg
Google and Yahoo! Try to Rescue Their Deal
The two Net giants have sent the Justice Dept. a revised version of their ad-search agreement in hopes of rescuing the deal, which regulators have expressed misgivings about. Under the new proposal, the companies offer to cap the revenue Yahoo can generate from the deal to 25% of its search revenue, and to shorten the accord's duration to 2 years from 10.
Source: Wall Street Journal
ADM Profits Soar
Archer Daniels Midland, the giant agricultural products company, said that fiscal first-quarter profits more than doubled, a result much better than analysts had expected. It reported strong results from its oilseed processing business and an inventory boost from declining corn prices. The stock, which had dropped more than 50% in 2008, was up more than 14% around 3 p.m.
Source: MarketWatch.com
Auto Sales Plummet
The U.S. Big Three automakers--General Motors, Ford, and Chrysler--reported big double-digit declines in October sales. Ford was down 30%, GM off 45%, and Chrysler down 36%, marking the worst month for the U.S. auto industry since 1983. Even mighty Toyota saw sales fall 23%. "It was like somebody turned the lights off in October," said GM sales and marketing chief Mark LaNeve. The pain isn't limited to U.S. automakers. On Nov. 4, Germany's BMW reported a 63% decline in profits for the third quarter and abandoned its previous guidance for 2008, which had called for record deliveries and 4% operating margins. The company now says it expects vehicle sales to decline for the year.
Source: BusinessWeek, Bloomberg
Factory Slump Puts China on Verge of 'Recession'
The Chinese Manufacturers Purchasing Managers Index showed that factory activity contracted sharply during October, with the index falling to its lowest level since the surveys began in June 2004. As losses mount around the country, China's former confidence is turning to fear over signs of genuine economic distress.
Source: BusinessWeek, Washington Post
Ex-UBS Executive Sentenced to Prison
Mitchel Guttenberg, a former institutional client manager in UBS' equity research department, was sentenced on Nov. 3 by a U.S. judge to 6-1/2 years in prison for his role in what prosecutors called the most pervasive insider trading ring since the 1980s.
Source: Reuters
Swiss Re Posts Unexpected Loss
Swiss Reinsurance, the world's second-largest reinsurer, posted its first loss in six years and suspended a share buyback program. The company said it had made wrong-way bets on credit derivatives, bringing its total 12-month mark-to-market losses to 2.8 billion Swiss francs.
Source: Bloomberg
RBS Unveils More Writedowns, Capital Raising Plan
The Royal Bank of Scotland "regretfully" laid out plans to raise up to $32 billion from capital markets to bolster its balance sheet, only four months after it completed a $20 billion rights issue. The bank announced a further $336 million in third-quarter writedowns, bringing its 9-month total to $10 billion.
Source: Times of London
Pressure Mounts in Europe for Central Bank Rate Cuts
With growing signs of economic distress, the Bank of England and European Central Bank are facing growing cries to lower lending rates when they both meet this Thursday.
Source: BusinessWeek
Election 2.0: An Online Guide for Political Junkies
New Web sites and blogs, as well as expanded cable coverage, offer viewers more ways than ever to dissect and obsess over the vote. Here's where to go tonight to get your fill.
Source: BusinessWeek
Conversation of the Day: GM-Chrysler Layoffs?
Reader Dan writes: "The destruction of GM and Chrysler does not mean the end of the U.S. auto industry. Destroying innovation will. Break up the companies and support the best parts (like pruning the vine)."
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Hot Topic on the Business Exchange: 2008 Election
The 2008 U.S. Presidential Election is already historic. John A. Byrne and others are sharing their insights.
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