Under the Radar News - Monday

U.S. recession will dwarf dotcom drop. Morgan Stanley's Stephen Roach, one of the world's leading economists, says the oncoming U.S. recession will dwarf the dotcom slump in its magnitude.

Fed watch. Despite a surprise 0.75% rate cut last week, Wall Street still expects the Fed's target rate to drop 0.5% to 3% this Wednesday.

Rogue trader was offered massive bonus. Jerome Kerviel, the trader at the centre of SocGen’s (SOCGP.PK) €4.9B in trading losses, told police he was guaranteed a €300,000 bonus for his record year in 2007, while he asked for double that. This makes SocGen's position that Kerviel was a junior trader with no directional trading permission increasingly shaky.

IPOs postponed. A global market selloff prompted 24 companies to put off IPO plans in January, the most in at least a decade.

Yahoo: Drastic layoffs in store. A source close to Yahoo (YHOO) says the company will go forward with aggressive layoffs, likely to be in the 1,500-2,500 range suggested by some, and not the hundreds reported by the NY Times.

What will Apple do with $18B? In the company's (AAPL) earnings conference call last week, CFO Peter Oppenheimer said acquisitions were high on Apple's to-do list: "Stock buyback programs and other forms of returning the cash are discussed with the Board from time to time, but our preference continues to be to maintain a strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions."

Credit Suisse may get $3B from SWF. Investment entities affiliated with the Qatar Investment Authority are considering a $3B/5% stake in Credit Suisse (CS).

Books are best online item. More internet shoppers (40%) bought books online than any other product, according to a global survey by Nielsen Online. Clothing (36%) was next, followed by airplane tickets (24%) and music (19%).

Corporate bonds on the cheap. U.S. Treasury bonds have outperformed high-grade corporate bonds due to fears of a U.S. recession and subprime mortgage fallout. Now some money managers say the trend may soon reverse, as Treasurys look pricey and corporates cheap. Then again, maybe munis are the way to go.

Solar shortfall. The solar industry is exposed to a fundamental raw material shortage, including polysilicon; production facilities and chemicals are in short supply.

Shell joins peak oil crowd? In an email written by Royal Dutch Shell (RDS.A) CEO Jeroen van der Veer, Shell estimates that easy-to-access oil and gas will cease to satisfy global demand as early as 2015. Society will have to look toward renewables, nuclear power, and unconventional fossil fuels such as oil sands.

Traders bet on $80 oil. Investors are betting oil prices will recede to $80/barrel in the face of a U.S. slowdown. Outstanding $80 June put options have quadrupled over the last 2 1/2 months.

Banks look to make LBO inroads. Barclays (BCS) and HSBC (HBC) have been attempting to build up their leveraged financing businesses by taking loans off the hands of the largest LBO lenders who find themselves stuck with massive loan and bond commitments. But some analysts are skeptical about the chances of second-tier financiers to break into the big leagues given the market's current lack of love for LBOs.

Universal not-yet ready to let go of DRM. Amazon (AMZN) plans to go global with its DRM-free music store this year, but number-one global music label Universal Music Group says it is still "strongly attached" to DRM, although it is keeping a close eye on the developments of DRM-free music sales.

New Old Navy. Gap's (GPS) Old Navy is shedding its family image in order to target the 'twentysomething crowd' with "big fashion ideas."

Sears looks at India. Troubled retailer Sears (SHLD) is looking into launching cash-and-carry stores in India. Once retail restrictions are lifted in India, international retailers "will be in a prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets," an intelligence firm says.

BofA may sidestep Countrywide's bonds. It's not clear that Countrywide (CFC) acquirer Bank of America (BAC) will back CFC's $25B in bond obligations, nor is there any guarantee that the proposed deal will close.

Rio lines up $50B for Xstrata. Companhia Vale do Rio Doce (RIO) is lining up $50B from a "powerful group" of global banks in its bid for Xstrata.

Shareholders push for big buyback at Unilever. Some shareholders want Unilever (UN, UL) to substantially boost its buyback program when the company reports earnings next week.

WaMu to expand retail banking. WaMu's (WM) retail banking unit is still going strong. WaMu plans to open 150 new branches this year, vs. 78 in 2007.

Grace's last stand. Pushed into bankruptcy, chemical company W.R. Grace (GRA) is petitioning a bankruptcy judge to declare many of the 100,000 asbestos claims it faces invalid. For Grace, the decision could mean the difference between life and death.

Comments

[william L.soodul]

AGAIN no bailout for the countrywide band of hoodlums...let the go down into the depths of hell ...for creating this problem...evil men should go to an evil place..Countrywide, Mozilo their agents and brokers who swindled the honest people out of their hard earned dollars...with that swindle mortgage called the pay option arm...VOMIT

[Tom B]

"Morgan Stanley's Stephen Roach, one of the world's leading economists, says the oncoming U.S. recession will dwarf the dotcom slump in its magnitude."

I'm not an economist; just a small time investor, but I hope it weighs in smaller than the tech crash. There's more inherent value here--houses and land have some inherent value-- than we saw with the excesses of the dot com era.

"AGAIN no bailout for the countrywide band of hoodlums"

The crook CEO of Countrywide reaped 100 Million instead of a well-deserved prison term. In China, he would have been executed, probably. I blame the GOP. It happened under their watch; they are the guys who are always looking the other way when it comes to oversight or regulation. Happened before-- the Keating 5.

[Long-ShortGuy]

"Morgan Stanley's Stephen Roach, one of the world's leading economists, says the oncoming U.S. recession will dwarf the dotcom slump in its magnitude."

At the same time, the people who run the middle east sovereign wealth funds are saying in Davos that US financials and real estate are at bargain basement prices. Real estate is a real asset, and inflation is rising, so it's hard to see how it can keep falling in price.