« Banks Rebounding | Main | Today’s Markets 6/20/08 »
By admin | June 20, 2008
* China lift drops crude. Crude oil futures fell more than 3% Thursday after China raised its gasoline prices by 18%, a move many believe will dampen demand in the country. Voracious Chinese demand is widely seen as the number-one reason for soaring oil prices. On the other hand, it's alos possible the price hike could boost the country's demand for imports, as refiners ramp-up production now that they're entitled to higher prices. After the raise, gas in China should cost about $3.06/gallon - still subsidized, but less so.
* Monolines downgraded, again. After the close, Moody's downgraded bond insurers MBIA (MBI -5.4%) and Ambac (ABK -3%), citing difficulties raising capital and writing new business. Standard & Poor's did the same two weeks ago. MBIA (MBI) says it's baffled and dissapointed with Moody's analysis. "We have more than enough capital to meet obligations to policyholders."
* A 'good' writeoff. After the close, regional bank Huntington Bancshares (HBAN +10.9%) said it expects 2008 charge-offs at the top end of its 'very manageable' 0.6-0.65% guidance - but not more. "Investor skepticism is not surprising," it said, however "our outlook has remained fairly consistent."
* Airlines fly high. Airline stocks soared Thursday on the drop in oil prices. Continental (CAL +16%) and United (UAUA +23.8%) also said they're entering an extensive cooperative agreement, including CAL joining United's Star Alliance. Continental sagged 4.75% AH after it priced an 11M share offer at $14.80 (close: $15.59).
* Mortgage lenders' woes far from done. Lehman analysts say Fannie Mae (FNM) and Freddie Mac (FRE) will post worse-than-expected Q2 losses. U.S. home prices are doomed to fall 20% from their peak, they say, vs. a current 4%. Bloomberg quotes Freddie CEO Richard Syron as saying the firm may still need to raise more capital (Briefing.com).
* Japan bank supports Barclays. Sources say Barclays (BCS -3.3%) may get a $927M cash injection from Japan bank Sumitomo Mitsui, part of a planned £4B fund raise. "Japanese banks are in a safer position than their global peers and have surplus capital to invest," one fund manager said.
* Yahoo: Anyone left? Delicious founder Joshua Shachter is leaving Yahoo (YHOO). Sources say SVP Vish Makhijani, SVP Brad Garlinghouse and EVP Qi Lu are also on their way out. Shachter: "I was largely sidelined by the decisions of my management... It was an incredibly frustrating experience." Yahoo acquired Delicious in Dec. 2005.
* Glaxo probe widens. A DoJ investigation into whether GlaxoSmithKline (GSK) intentionally withheld data about the suicide risks of its antidepressant drug Paxil appears to be widening. Paxil is one of GSK's best-selling drugs. There are also suspicions Glaxo promoted off-label use of the drug for adolescents.
* Rail share could cost Rio. Rio Tinto (RTP) says complying with a recommendation by an Australian commission to open its Pilbara railway to third parties could cost $30B. "The NCC appears to be lining Australia up for a massive exercise in value destruction," iron ore CEO Sam Walsh said.
* More writedowns seen at Citi. Shares of Citigroup (C) fell 1.1% after CFO Gary Crittenden said it faces continuing credit issues - and that substantial writedowns on subprime assets were likely. Also yesterday, Citi confirmed it is buying Brazilian brokerage firm Intra. "This acquisition fits Citi's strategy to invest in emerging markets, where growth rates are higher," Citi's Brazil CEO said.
* Pimco's Gross likes bank debt. Despite the woes of U.S. financial institutions, Pimco's Bill Gross said Thursday he continues to hold the debt of Citigroup (C), Morgan (MS) and Goldman (GS) - because they still offer great value.
* Google, Microsoft gain search share. Nielsen's May U.S. search stats (Y/Y growth/market share): 1) GOOG +15.4% / 59.3%. 2) YHOO -13.8% / 16.9%. 3) MSFT +72.4% / 13.3%. 4) AOL (TWX) -15.6% / 4.1%.
* Mega-star dispute to split Live Nation. Live Nation (LYV) chairman Michael Cohl appears to be on his way out. CEO Michael Rapino wants to slow down the pace of the firm's recent '360 deals' - in which it essentially buys out big-name performers in exchange for a hefty up-front payment. Cohl wants to speed up the deal-making.
* Bear traders charged. Two Bear Stearns fund managers were arrested for securities fraud. In an email four days prior to saying everything was fine, one told the other his fund's market was toast.
* Tresury Secretary Henry Paulson: "We must limit the perception that some institutions are either too big or too interconnected to fail. If we are to do that credibly, we must address the reality that some are." Paulson also pushed for the government to expand the Fed's authority beyond commercial banks, to include broker-dealers. We expect it to avert systemic risk, he said, but have not given it the madate to do so.
* The Conference Board's Leading Indicators rose by 0.1%; economists were expecting it to remain flat. The Philly Fed said manufacturing continues to contact. Current activity fell for the 7th straight month, to -17.1 from -15.6. 72% of manufacturers saw input prices rise, the highest since 1980.
* Indian inflation. India stocks and bonds plunged Friday after government data showed inflation climbed to a 13-year high of 11.05%, up from 8.75% a week ago, and worse than the 9.8% economists expected. The BSE Sensex fell 3.42%.
Topics: Daily Updates |
Comments
You must be logged in to post a comment.