Wall Street Breakfast: Must-Know News

U.S. Markets

• U.S. markets continued their decline Tuesday, with the DJIA falling 2.17%, the Nasdaq 2.45% and the S&P 500 2.49%. Oil pulled back by $2.30 to $91.90 and the dollar fell to a 2.5-year low against the yen on recession fears. Gold shed $0.90 to $902.50. The yield on 10-year Treasurys declined to 3.638%. (News That Moved Tuesday's Market)
• Wholesale prices skyrocketed 6.3% in 2007, their steepest rise in 26 years.
• S&P raises subprime loan-loss projections. Standard & Poor's elevated its loss estimate for subprime mortgages made in 2006 to 19% from 14%, suggesting that more downgrades of subprime mortgage securities might be in the offing.
• Retail sales surprised analysts by falling 0.4% in December, their worst performance in six months.
• U.S. producer prices dropped unexpectedly by 0.1% in December because of a temporary decline in energy costs.
• The Supreme Court has dramatically curtailed the ability of investors who were victimized by corporate fraud to file securities class-action suits.

Global Markets

• Asia: Asian markets plunged. The Nikkei fell 3.4%, while the Hang Seng declined 5.4% -- its worst one-day drop since 9/11. Asian banks hit a four-month low, with the Bank of China down 4% and Hong Kong-listed shares of HSBC Holdings (HBC) down 3.2% -- its worst day in over six years. Taipei shares retreated 2.96%.
• Europe: European shares hit 16-month lows Tuesday. The FTSE closed down 3.06%, the DAX 0.37%, and the CAC 2.8%. Dutch chip equipment maker ASML (ASML) declined 7.4% while STMircroelectronics NV fell 3.6% to hit a near 10-year low in Paris. The MSCI World Index has lost 6.9% so far this year, erasing $2.1 trillion from its collective market cap.

Must-Know News for Wednesday

• Bank of America scales back investment banking. BofA (BAC) is eliminating 650 more jobs from its investment banking operation following heavy trading losses, further to the 500 layoffs announced in October. The bank also plans to sell its prime brokerage unit.
• Apple unveils ultrathin notebook, movie rental service. At the MacWorld Expo Tuesday, Apple (AAPL) CEO Steve Jobs demonstrated the "world's thinnest notebook," the MacBook Air ultralight. He also announced that iTunes will now offer movies for rent, and gave details of upcoming iPhone and iPod upgrades. Shares fell 5.5%. (Apple's Post MacWorld Drop - More to Come or Buying Op.? • Air: All That's Left In Your Wallet After You Buy Apple’s New Laptop)
• Intel reports Q4 profit surge, but shares sink on cautious forecast. The chip giant (INTC) posted Q4 net income of $2.27 billion ($0.38/share), a 51% increase from last year, and revenue of $10.71 billion. Analysts were expecting EPS of $0.40 on $10.84 billion. The company's Q1 forecast indicates a 10% decline in revenue from Q4. Intel shares fell 14.2% after hours. (Is Intel's 15% Post-Earnings Decline Really Warranted?)
• Citi reports biggest loss ever, cuts dividend, receives capital infusion. Citigroup (C) posted a $9.83 billion Q4 loss Tuesday -- the worst loss in its 196-year history -- and announced an $18.1 billion write-down on the value of its investment portfolio. It also cut the dividend 41%. The Government of Singapore Investment Corp. is taking a 4% stake in the bank for $6.9 billion. Citi shares sank 7.6% to $26.85 Tuesday, a five-year low. (Tough Times Ahead for Citigroup)
• Rio Tinto reports record output. The mining company (RTP) posted all-time high production levels of iron ore, bauxite, alumina, aluminum, refined gold and refined copper in 2007.
• Boeing might delay Dreamliner again. The aircraft manufacturer (BA) said the 787's maiden flight -- which was already pushed from last August to late March -- could be delayed until June. Shares fell 4.7%
• IndyMac to cut a quarter of its workforce. The mortgage bank (IMB) said it will eliminate 2,403 jobs, or 24% of its workforce, and that more layoffs are likely. Shares fell 5.67% to $4.49.
• Applied Materials to cut 7% of global staff. The semiconductor company (AMAT) announced a global cost reduction plan on Tuesday that will involve laying off about 1,000 people.
• MetLife OK's buyback. The board of the insurance provider (MET) has authorized the repurchase of $1 billion in stock, further to an earlier $1 billion authorization.
• MGM Mirage, Dubai World add to tender offer. MGM Mirage (MGM) and Dubai World are boosting their tender offer to 15 million shares, a 50% increase, at $80 each, a 20% premium to Tuesday's close.
• Florida regulators throw book at Allstate. Regulators shut down a hearing to discuss Allstate's (ALL) request for property-insurance rate increases of up to 42% and accused the company of failing to comply with a subpoena. Consequences could include fines, suspension or revocation of Allstate's license to sell policies in Florida.
• Mitsubishi UFJ announces subprime-linked writeoffs. Mitsubishi UFJ Financial Group (MTU) will write off 50 billion yen ($470.52 million) on investments linked to U.S sub-prime mortgages, almost twice its earlier forecast.

• Blockbuster, Netflix fall on iTunes movie rental news
• Check-Cashing Chain Is Takeover Target
• A Battered MoneyGram To Sell Stake
• Subprime Provisions Damp State Street's Earnings
• Batteries Hamper AT&T TV Effort

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Comments

[Long-Short Guy:]

The combination of higher wholesale prices and weak retail sales is really bad: it shows that in real term (inflation adjusted), sales were even weaker.

2008 Jan 16 06:57 AM

[Cris Ericson:]

As a poor political candidate in the state of Vermont,
I see layoffs as a possible source of a person to become
my campaign chairperson.

I have been on the official election ballot in Vermont
in 2002, 2004 and 2006 and expect to be on the ballot
in 2008. I have NEVER received enough campaign
contributions to be required to file a financial report
with the FEC.

I figure by now, there must be some pretty hungry
laid off financial types who might perk up reading this.

Please go to www.fec.gov
after seeing some of my past and truly pathetic
election results:

www.nytimes.com/ref/el...
I was on the ballot for both Governor and U.S. Senate
and came in 3rd out of 6 candidates for each office in 2006.

www.times.com/ref/elec...
I was on the ballot for both Governor and U.S. Senate
and came in 3rd out of 6 candidates for each office in 2004.

Now, WHY would ANYONE with half a brain in their head
want anything to do with my campaign?

All of the people listed as campaign chairpersons at the
FEC www.fec.gov are the MOST trusted
financial advisors in the U.S.A. because, not only
will about half of them have winners, but the
campaign chairperson holds the checkbook once
the candidate receives over about $5,000. in donations
triggering the reporting requirement,
and the chairperson has VETO power over expenses
and can just say 'no' to the candidate when the
candidate requests a check for an expense.

The winning chairpersons, about half the flock
after the primaries, (Independents like me
go to the primaries anyway),
have proven, worldwide, on an easy access
website at the FEC, that they had excellent
financial judgment.

Any change of chairperson by quicky divorce
at the FEC is bad news for the candidate
because it proves the candidate made a poor
choice of chairperson and couldn't get along.

So, a chairperson gets worldwide easy access
name recognition at the FEC website,
a chairperson is one of the top known financial
advisors in the U.S.A. and after primaries,
half are winners,
the chairperson has veto power over expenses
and holds the checkbook.
So, how does that sound for a RESUME item?
Pretty good?

Apparently a lot of you out there will be needing a Resume!

Keep in mind, for candidates like me, the Chairperson is
generally the first person who shows up with the skills
to bring in enough donations to trigger requiring reporting,
and it is an entirely voluntary position until the campaign
receives enough funds to pay for workers' comp. insurance
and salaries.

Now, for lunch, go to www.fec.gov and
learn about your new job!

2008 Jan 16 12:31 PM

[akshunnet:]

Thanks for the useful content...very interesting

2008 Jan 16 04:54 PM

[Stewart Gordon:]

Florida regulators have to be kidding! They are already having to back-fill homeowners insurance with a state insurance that is going to kill tax-payers when another bad year comes along. Failing to allow increases was just part of their tactics to woo insurance companies. Now credit-worthy, longtime customers are being axed with non-renewal; are they now going to do the same to auto insurance? Seems to me that some of the things they were asking for were populist harassment not solid negotiating. What a joke they are.

2008 Jan 16 10:07 PM