Goldman Sachs (GS) says U.S. economy slipping into recession. It expects the Fed to respond by slashing interest rates to 2.5% by the end of the year. On CNBC, Goldman's chief economist said unemployment has risen more than 1/3% on a 3-month average basis, which has 10/10 historical correlation with recession. He thinks the Fed will cut rates by 0.5% in January.
Berkshire Hathaway (BRK.A) tiptoes into bond insurance. On Tuesday, Buffet's new bond insurance company, Berkshire Hathaway Assurance Corp., sold its first insurance on a $10M bond. Separately, BRK.A also took in $2B in a private placement.
Most PCs ship sans Vista (MSFT). While Bill Gates recently boasted about the more-than 100M copies of Vista Microsoft sold in 2007, he failed to note that while Windows XP captured 67% of the new PC market in 2002, Windows Vista is only shipping on 39% of all new PCs.
Iraq in talks with Total SA (TOT), Royal Dutch Shell (RDS.A). The Iraqi government is in talks with Total and Shell to develop its huge Akkas gas field. Akkas can produce up to 50 million cubic feet of gas per day, or 450 million if developed. Iraq may also consider a partnership with an oil services company like Halliburton (HAL) or Schlumberger (SLB).
Harrah's (HET) debt sale delayed. Harrah's banks, including Bank of America (BAC) and Deutsche Bank (DB), were going to begin marketing $9B of loans for Harrah's $17B LBO this week. The sale has now been put on ice until next week; no reason for the delay was given.
Bear Stearns (BSC) to stay independent. New CEO Alan Schwartz said he won't wait for a takeover bid to determine Bear's future. "Being acquired is not a strategy," Schwartz said, vowing to return the firm to strong profitability.
New Blackberry (RIMM) to mimic iPhone (AAPL). A Vodafone (VOD) document leaked on the web shows a photo of a yet-to-be released BlackBerry that retains the BlackBerry's traditional look (full-sized keyboard and smaller screen) but adopts the iPhone's sleek black and steel motif. The new smartphone will be "BlackBerry's new flagship device targeted at senior execs," when it goes on sale in May.
Amgen's (AMGN) itchy fingers? Two former salespeople accuse AMGN of aggressive and "possibly improper" marketing practices for its psoriasis treatment, Enbrel, including requiring salespeople to access medical information of patients in doctors' offices.
Goldman Sachs (GS) to back China fund. Goldman plans to invest $300M in a new private-equity fund created by its China partner, Fang Fenglei, as a number of new Chinese deal-maker firms hope to compete with incumbents Carlyle Group and TPG.
Arbitrage spreads speak of skepticism on takeovers. Spreads on yet-unclosed LBO deals are growing. Blackstone's (BX) delayed $6B takeover of Alliance Data Systems (ADS) now carries a 10% spread. How Clear Channel's (CCU) buyout by a private-equity group goes could say a lot about what 2008 holds in store for LBOs.
Siemens (SI) drops on profit fears. Shares fell as much as 6.7% in Germany amid speculation the firm would reduce its earnings outlook. A spokesman denied the rumors. Analyst James Stettler notes the company's Nov. forecast of a 2007 earnings gain fails to include all potential charges relating to a bribery investigation, and says there could be some downside to the outlook.