Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 7:48 AM ET
S&P 500: +5.60; 1,463.50
NASDAQ 100: +6.75; 2,040.25
Dow: +39; 13,199
NIKKEI 225: -1.57%; 15,154.61 (-241.69)
HANG SENG: -3.95%; 27,614.43 (-1,136.78)
SHANGHAI SE COMPOSITE: -0.91%; 5,316.27 (-48.99)
BSE SENSEX 30: -0.44%; 19,698.36 (-86.53)
FTSE 100: -0.17%; 6,335.90 (-23.70)
CAC 40: -0.50%; 5,533.20 (-27.93)
XETRA-DAX: -0.51%; 7,628.30 (-38.73)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.43%; $93.83 (+$0.40)
Gold: +0.36%; $790.10 (+$2.80)
Natural Gas: +1.42%; $7.81 (+$0.11)
Silver: -0.22%; $14.45 (-$0.032)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Goldman Economist Sees $2 Trillion Subprime Impact on Lending
Jan Hatzius, chief economist at Goldman Sachs in New York, wrote an ominous report dated Thursday, saying the subprime-induced deterioration of global credit markets will force financial institutions to cut lending by $2 trillion, in effect bringing the risk of a "substantial recession" in the U.S. Hatzius said a back-of-the-envelope calculation of U.S. home foreclosure related losses could be as high as $400 billion for financial companies. Furthermore, the fallout may be amplified tenfold due to leverage, thus the $2 trillion figure based on a "conservative estimate" of losses of $200B. "The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized. It is easy to see how such a shock could produce a substantial recession [or] a long period of very sluggish growth," said Hatzius. The $2 trillion lending reduction is said to be equal to 7% of total U.S. household, corporate and government debt. Financial companies have already written down over $50B of subprime-related losses. At a banking conference on Thursday, Wells Fargo CEO John Stumpf commented, "We have not seen a nationwide decline in housing like this since the Great Depression." (Full story). Stumpf predicted more losses in 2008, but thinks the recovery will be sharp once the bottom is reached. Hatzius said the risk of recession is highest if the lending reduction happens over one year, but he still expects "very sluggish growth" in the event of a two to four year reduction.
Commentary: Housing Market Tracker - Subprime Review • 10-Year Note's Thursday Drop Signals Recession Worry • Dow Theory Predicts Trouble Ahead for U.S. Economy
Stocks to watch: GS, MS, MER, LEH, C, BAC, JPM, WFC
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Asian Headlines (via Bloomberg.com)
Asian Stocks Fall; Toyota Leads Exporters Lower on Yen, Financials Decline Asian stocks fell for a second week, set for their worst month since September 2001, on concern losses related to defaulting U.S. home loans will erode demand from the region's biggest export market.
Muto, Favorite for Fukui Job, Says Japan May Suffer From U.S. Credit Woes Bank of Japan Deputy Governor Toshiro Muto said the U.S. housing recession and financial- market turmoil could hurt Japan's economy, making it ``difficult'' to decide when to raise interest rates.
Resona Increases Full-Year Profit Forecast on Fees, Lower Bad-Loan Costs Resona Holdings Inc., Japan's fourth-biggest bank, lifted its full-year profit forecast by 9.5 percent on more fee income and lower bad loan costs.
King Joins Trichet, Paulson in Demanding China Defuse `Currency Tensions' Bank of England Governor Mervyn King is joining Jean-Claude Trichet and Henry Paulson to demand that China allow the yuan to strengthen at a faster pace.
Yen Heads for Weekly Gain as Credit Losses Reduce Appeal of Higher Yields The yen headed for a second weekly gain against the euro and the dollar after financial companies reported more credit-market losses, prompting investors to cut holdings of higher-yielding assets funded with loans in Japan.
European Headlines (via Bloomberg.com)
Dexia Third-Quarter Profit Declines 28 Percent on U.S. Unit's Writedowns Dexia SA, Belgium's third-largest financial-services company, reported a 28 percent decline in third-quarter profit, missing analysts' estimates, following investment writedowns.
Ahold Appoints Finance Head John Rishton as New Chief Executive Officer Royal Ahold NV, the Dutch owner of Stop & Shop supermarkets in the U.S., named John Rishton as its permanent chief executive officer, more than six months after he was tapped as a temporary replacement for Anders Moberg.
Europe's Trade Gap With China Widens, Adding to Pressure for Stronger Yuan Europe's trade deficit with China surged 25 percent in the eight months through August, giving European officials more reason to pressure China to let its currency trade freely when they visit Beijing this month.
Richemont First-Half Profit Rises 28 Percent on Asian Luxury Watch Orders Cie. Financiere Richemont SA, the world's second-biggest luxury-goods company, said first-half profit rose 28 percent, more than analysts estimated, after Asian shoppers paid as much as $300,000 for Jaeger-LeCoultre watches.
Altadis Third-Quarter Profit Falls as U.S. Cigar Revenue Crimped by Dollar Altadis SA, the cigarette maker being bought by Imperial Tobacco Group Plc, had a 3.5 percent decline in third-quarter profit after its U.S. cigar revenue was hurt by the weakening dollar.