Markets fall, Fed fixes. Fed funds futures Thursday implied a 76% chance of a 75 BP cut at the March 18 FOMC meeting, which would bring short-term interest rates to 2.25%. On Wednesday, odds were as little as 44%. Update: After today's weak jobs number, futures now see 32% odds of a 1% cut to 2%, vs. no odds on Thursday.
Subprime: Learn to live with it. The $300B U.S. subprime mess is only half over, but the remaining $150B of writedowns will hurt less than the first half. "The next leg of those losses will not come from major banks and I think the impact on the investor will not be as severe because it will be spread out, it won’t be so concentrated," CIBC economist Benjamin Tal says.
Banks own more homes than people. Homeowners' equity in their homes slipped below 50% for the first time in recorded history. Scary thought.
Workers know best. Despite U.S. unemployment still lingering below 5%, Americans are growing increasingly concerned about job availability, and history shows workers know what's cooking months before the numbers pick it up.
Digg to spark bidding war? Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) are "on the verge" of bidding for social bookmarking website Digg. Sources say Google will come in with a $200-$225M bid, and Microsoft "somewhat lower" than that.
Running out of options. The CBOT, bought last year by CME Group (NASDAQ:CME), rejected the Chicago Board Options Exchange's [CBOE] $900M offer to settle a dispute that is preventing the CBOE from making an IPO. CBOT members would have received $200M-$300M in cash plus 15% of the options exchange. The rejection was accompanied by a counter offer, which was promptly dismissed.
Citi taking resumes. Citigroup (NYSE:C) CEO Vikram Pandit is looking internally and externally for "experienced retail bankers" to lead its U.S. consumer business, Citi's largest unit. Meanwhile, Pandit denied rumors the bank is looking to divest its South Korea unit.
Ouch. Blackstone's (NYSE:BX) Steve Schwartzman has lost more than half his personal fortune since taking his private-equity firm public in June 2007. He even cancelled his traditional $3M birthday bash.
Parts-maker strike hurting GM. GM (NYSE:GM) may be forced to partially shut down another 13 plants as early as Monday if parts supplier American Axle (NYSE:AXL) and the UAL can't reach an agreement. GM has already idled 7 plants. 20 plants on hold would affect 1/3 of its entire workforce. GM component factories may be forced to close even if AXL and the union do settle over the weekend.
Jag, Land Rover sale within two weeks. Ford (NYSE:F) and India's Tata Motors are expected to sign a memorandum of understanding over the latter's purchase of Ford's Jaguar and Land Rover units within the next two weeks. Negotiations are focused on the post-sale relationship of the companies. Jaguar and Land Rover will continue to use Ford engines and parts, and share technology, sources say.
UBS/Pimco deal an exaggeration. A Pimco executive says reports it purchased UBS's (NYSE:UBS) $26B portfolio of Alt-A securities at $0.70 was "an exaggeration." Just how exaggerated? Entirely it seems.
Sliced bread, move over. Apple's (NASDAQ:AAPL) iPhone after yesterday's enhancements: "Bigger than the PC." At yesterday's Roadmap event, AAPL revealed a whopping 71% of mobile browser usage is from Safari, and Apple now owns 28% of the U.S. smartphone market.
Mortgage REITs plunge. Shares of iShares FTSE NAREIT Mortgage REITs Index Fund (FNMR) dropped almost 14% Thursday on mortgage market worries including fresh bad news from Carlyle and Thornburg Mortgage (TMA). ProShares Ultra Real Estate (NYSEARCA:URE) fell 9.8%, iShares Dow Jones U.S. Home Construction (NYSEARCA:ITB) was down 6.2%.
One man's peril... The bond insurer crisis isn't bad news if you're one of the insurers Wall Street still trusts. Financial Security Assurance (FSF) saw its market share jump to 65.5% from just 22% at the end of 2007. Assured Guaranty (NYSE:AGO), previously a low-key player, has moved into second place in muni bond insurance, and recently won a $1B commitment from distressed-asset investor Wilbur Ross.
McCormick looks like a tasty dish. Barron's says shares of spice king McCormick (NYSE:MKC) are ripe for a taste test after falling 12% from recent highs. "It's not a high flyer," one money manager says. "They generate stable earnings growth. There is potential for acquisitions. And it's near a record low multiple." MKC shares should rise amid new products, cost-cutting, acquisitions and growing demand for its products as fewer Americans dine out.
When losing isn't a loss. Activist investor Carl Icahn will tell CBS's (NYSE:CBS) 60 Minutes Sunday that he did fail in his bid to break up Time Warner (NYSE:TWX), but he still made $300M on the deal. Icahn will also say he made $300M on his stake in BEA Systems (BEAS), which ultimately sold itself to Oracle (NYSE:ORCL) after holding out for a higher price.