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BWNR. WLGC. Doing it the "wright" way! ;)
Filling that ask now!!! BOOOYAAA!
WLGC 0.79. HOD 0.94.
Morning Million! Things stirring up today in stone land!
WLGC 0.75. Ask is thin. 0.78 on deck!
WLGC. BWNR. EOM.
WLGC. Popping off +32.81%.
WLGC flying at the bell! 0.84 +31.25%!!
Before the bell: Futures lower ahead of Obama's inauguration as problems mount
Posted Jan 20th 2009 7:35AM by Melly Alazraki
Filed under: Before the bell, International markets, Deals, Market matters, Economic data, Politics, Oil, Financial Crisis
U.S. stock futures were lower Tuesday morning, the day of the inauguration of President-elect Obama. Following Martin Luther King holiday, today's historic inauguration was to be a day that should lift many investors' spirits. But instead, with so much concern over the health of the financial sector and the beaten economy, Obama's burden seems to be similar to that faced by Roosevelt in 1933, at least in scope and intensity, and investors took a wait-and-see attitude, waiting to see how the new president would tackle the plethora of problems awaiting him.
Meanwhile, overseas, Asian markets tumbled as financial stocks took a beating, but European markets seemed more steady ahead of the upbeat inauguration. Still, financials plunged in Europe Monday when U.S. markets were closed.
Oil prices fell below $34 a barrel Tuesday as the forecast for demand continues to be gloomy and excess supply is seen. Apparently, there already is lack of space at a key U.S. storage facility. And finally, Russian natural gas began flowing into Europe on Tuesday after a nearly two-week cutoff during a cold winter spell.
There are no major economic news due out today, but in deal news, Fiat will take a 35% stake in Chrysler as the two have signed on a strategic alliance to make small cars.
BWNR. WLGC. Saddle up!
BWNR and WLGC. Itching to pop this week! Imo.
GM CC! Obama Becomes Banker-in-Chief in Credit Market Freeze (Update1)
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By Ari Levy and Caroline Salas
Jan. 20 (Bloomberg) -- The U.S. economy has little chance of recovering from what may prove to be its worst recession since World War II unless President Barack Obama shows he can get banks to lend money again.
Since the Bush administration and Congress last year approved the $700 billion Troubled Asset Relief Program that injected capital into Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., individuals and companies aren’t getting any of it as fourth-quarter lending by the biggest banks by assets plummeted. The asset-backed market, which is supposed to enable banks to keep lending by transforming loans into tradable securities, remains frozen, leaving would-be lenders unable to package and sell mortgages, credit-card debt and auto loans.
After reporting more than $1 trillion of market losses and writedowns, banks are adding billions of dollars to reserves amid a 16-year high in unemployment and two years of falling home prices. Investor confidence has waned, sending an index of bank stocks to a 13-year low last week. Obama, 47, can’t expect relief from the Federal Reserve, which already cut its main interest rate to as low as zero. All eyes will be on the 44th president today in anticipation that he may unveil a sweeping recovery plan.
“It’s a day-one, minute-one problem for the new administration,” said Stuart Eizenstat, deputy U.S. Treasury secretary from 1999 to 2001 and now a partner at Covington & Burling LLP in Washington. “It’s difficult to understand with the degree of oversight exactly how those banks got into such deep water. The point now is to keep them liquid, get the balance sheets in order and to get them to start lending.”
Real Rates
The mortgage market has contracted even as the Fed reduced interest rates, according to Freddie Mac. While the average 30- year fixed mortgage rate fell below 5 percent this month for the first time since the McLean, Virginia-based company started keeping records in 1971, the real rate that banks charge customers is the highest in more than two decades.
That’s because the spread between 30-year mortgage rates and 10-year Treasury yields is about 2.6 percentage points today, up from 1.6 percentage points in 2003 and 1.5 percentage points in 1993, data compiled by Bloomberg and Freddie Mac show. The difference was about 3.3 percentage points in June 1986.
The failure of banks to pass along savings is hurting a U.S. economy that’s already in the deepest recession since the 1980s, based on the decline in U.S. manufacturing, exports and consumer spending.
‘Economic Pearl Harbor’
Companies slashed payrolls in 2008 by almost 2.6 million, the most since 1945, the Labor Department reported. The unemployment rate climbed to 7.2 percent in December, the highest level in almost 16 years, and the rate may climb to 8.4 percent in the fourth quarter, a survey of economists compiled by Bloomberg shows.
Analysts have been reducing growth forecasts. The economy will contract 1.5 percent this year, a half percentage point more than projected last month, according to the average estimate of economists surveyed by Bloomberg last week.
“We are in the middle of the economic Pearl Harbor right now,” said billionaire investor and Berkshire Hathaway Inc. Chairman Warren Buffett during an interview late last week with Tom Brokaw of Dateline NBC. “Now we have to get mobilized to win the war, which we will.”
With lenders tightening standards, as few as 50 percent of applications are resulting in mortgages this month, compared with an average of about 70 percent during the past 18 months, according to data compiled by analysts at Zurich-based Credit Suisse Group AG.
Request From Treasury
Unfreezing credit “is the single most important thing,” said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, in an interview.
The Treasury is demanding monthly reports from the banks that received the most capital in the government’s rescue program. Neel Kashkari, the official who administers TARP, wrote to Citigroup, Bank of America and 18 other banks on Jan. 16 seeking figures on business and consumer loans. Treasury also wanted details on purchases of mortgage-backed and asset-backed securities, according to documents obtained by Bloomberg News.
Only government-supported programs, with stricter standards than private lenders once required, have kept home-mortgage lending from shutting down in the U.S., according to newsletter Inside MBS & ABS, published in Bethesda, Maryland.
Frozen Markets
The securitization rate, or amount of new mortgage securities relative to new loans, rose to 78 percent in the first nine months of 2008, the newsletter’s data show. Issuance of bonds with government backing accounted for 99 percent of the total. In 2006, lenders such as banks kept 32 percent of loans and private mortgage securities accounted for 56 percent of sales.
Sales of bonds backed by auto-loan and credit-card payments plummeted 40 percent in 2008 as investors fled to the safety of U.S. government debt, New York-based Merrill Lynch & Co. reported. There have been no public sales of such debt in 2009. The gap, or spread, on top-rated credit card-backed debt maturing in three years is about 4.75 percentage points more than one-month Libor, compared with 0.5 percentage point a year ago, Merrill data show.
Banks have been able to raise cash by selling government- backed bonds through the Federal Deposit Insurance Corp.’s Temporary Liquidity Guarantee Program. About $115 billion of such debt has been sold since Nov. 25, according to Bloomberg data.
‘Cheap Capital’
The average yield, or spread, investors demand to own investment-grade company debt has shrunk to 5.6 percentage points from a record 6.56 percentage points on Dec. 5, according to Merrill, the biggest U.S. brokerage, which is now owned by Charlotte, North Carolina-based Bank of America.
“All of these new banks and old banks that are issuing FDIC-backed bonds are getting what I feel is cheapity-cheap capital,” said Marilyn Cohen, president of Envision Capital Management Inc. in Los Angeles, which oversees $175 million in fixed-income assets. “So what are they doing with that money?”
Obama, an Illinois Democrat who spent four years in the U.S. Senate, began proposing policies to restart the economy while campaigning against Republican candidate John McCain in the presidential election.
As the George W. Bush presidency entered its final days earlier this month, Obama unveiled an economic stimulus package calling for corporate tax breaks to encourage hiring, a request that sparked dissent from some Democrats. The president-elect plans to save or create as many as 4 million jobs, in part through investments in alternative energy and infrastructure projects like roads and new schools.
Toxic Clean-Up
“Hopefully that helps in the first two years or so,” Paul Krugman, the Princeton University professor who won the 2008 Nobel Prize for economics, said in a Jan. 14 interview with Bloomberg Radio. “Hopefully, we find some private sector drivers for recovery beyond that.”
Obama probably will back a bank-rescue effort that combines capital injections and steps to deal with toxic assets clogging lenders’ balance sheets, people familiar with the matter said on Jan. 16.
He scored a victory last week in the Senate, gaining access to the $350 billion in bailout funds, the second half of the Troubled Asset Relief Program, designed to ease the foreclosure crisis and support banks. The vote, after the close of trading on Jan. 15, followed a plunge in financial stocks that sent the 24- company KBW Bank Index, already at its lowest since 1995, down another 8 percent.
Bank of America
Obama’s economic team will use some of the $350 billion to help homeowners avoid foreclosure, according to people with knowledge of the plan. He also may assist cash-strapped cities and states that have trouble selling bonds, the people said.
“We’ve started this year in the midst of a crisis unlike any we’ve seen in our lifetimes,” Obama said in a Jan. 16 speech in Ohio. “It’s not too late to change course, but only if we take action as soon as possible.”
Bank of America, the largest U.S. bank by assets, fell to an 18-year low on Jan. 16, after reporting a $1.79 billion fourth- quarter loss. The figures exclude a record $15.3 billion deficit posted by Merrill Lynch, caused by errant mortgage trading before the Bank of America takeover was completed on Jan. 1.
Chief Executive Officer Kenneth Lewis, 61, agreed to buy Merrill on Sept. 15, two months after the purchase of foundering mortgage lender Countrywide Financial Corp. He struck the Merrill Lynch deal the same day New York-based Lehman Brothers Holdings Inc., once the largest underwriter of mortgage-backed bonds, filed the biggest bankruptcy case in U.S. history.
Record Foreclosures
Citigroup reported an $8.29 billion fourth-quarter loss, with more than half coming from writedowns on subprime home loans and related bonds. The New York-based company, which has lost more than 85 percent of its market value in the past year, was forced to obtain $45 billion of government rescue funds and announced last week it will split in two.
Home prices in 20 U.S. cities dropped a record 18 percent in the 12 months through October and have fallen every month on a year-on-year basis since January 2007, according to the S&P/Case- Shiller index. Foreclosure filings reached a record 3.2 million last year, RealtyTrac Inc. of Irvine, California, reported, pushing down property values and increasing the number of borrowers who owe more on their mortgages than their properties are worth.
TED Spread Narrows
“The challenge that no one has really addressed is the fundamental core problem and that’s the declining housing market,” said Gregory Habeeb, who oversees about $7.5 billion in fixed-income assets at Calvert Asset Management Co. in Bethesda, Maryland. “Everybody’s just addressing the casualties of the problem. If there is some more spent on solving the core problem, we might start seeing the end of the decline.”
Obama plans to tackle the problem with the help of his nominee for Treasury secretary, Timothy Geithner, and Lawrence Summers, whom the president picked to direct the National Economic Council.
They also face the task of stimulating credit markets that seized up after the Lehman bankruptcy and have since started to loosen.
The difference between what banks charge each other for three-month loans and the rate that the Treasury pays, the so- called TED spread, has narrowed to about 1 percentage point, the tightest in five months. The spread, a measure of banks willingness to lend, peaked at 4.64 percentage points in October.
The credit market is “sick, but still ambulatory,” said Envision’s Cohen, who has worked in the bond market since 1979. “There are transactions that are being done.”
Bleak Prospect
The financial crisis has seeped into the rest of the economy, forcing companies to slash jobs and lifting unemployment to it highest since 1993. Motorola Inc., the No. 2 U.S. seller of mobile phones, Schlumberger Ltd., the world’s largest oilfield- services company, and drugstore chain Walgreen Co. are among companies that have announced job cuts this year.
Obama faces “problems all across the horizon,” said Nobel laureate economist Robert Solow, 84, a professor emeritus at the Massachusetts Institute of Technology in Cambridge. “His initial focus really has to be on the real economy, on getting the recession turned around as soon as he can manage it, which is not going to be very soon.”
Profit at companies in the Standard & Poor’s 500 Index has dropped for the past five quarters, matching the longest losing streak on record. Declines are forecast for the last three months of 2008 and first three quarters of this year, according to estimates compiled by Bloomberg.
‘Little Blind’
Rebecca Blank, an economist at Brookings Institution in Washington and once a member of former President Bill Clinton’s Council of Economic Advisers, said it all adds up to the worst economy since at least World War II. The only comparable period was the back-to-back recessions of 1980 to 1982, she said. Then, Obama was an undergraduate at Columbia University in New York.
“It’s been 25 years since economists and politicians in the United States have had to engage seriously about what you do when employment collapses and your financial markets collapse and you’re in a full-economy recession,” Blank, 53, said in an interview. “That means you’re flying a little blind on this.”
BWNR. WLGC. With eyes on TNRI. Made some noise last week. Go go soon!
Crude Oil Falls Below $33 a Barrel on Dollar, Contract Expiry
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By Grant Smith
Jan. 20 (Bloomberg) -- Crude oil fell below $33 a barrel in New York as the strengthening dollar reduced the appeal of commodity investments at a time when demand is declining and stockpiles are rising.
At Cushing, Oklahoma, where the benchmark for New York futures is stored, inventories have climbed to 33 million barrels, the highest since records started four years ago. The February contract will cease trading today, so traders have to sell futures or accept the barrels at a time of falling demand.
“Traders are rolling over to the next month to avoid delivery and the dollar is rallying,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “All this against a background of falling demand and easing geopolitical tensions.”
Crude oil for February delivery fell to $32.70, down 10.4 percent from last week’s close and the lowest since Dec. 19, on the New York Mercantile Exchange today. The contract traded at $33.37 a barrel at 10:45 a.m. London time.
Floor trading was closed for the Martin Luther King Jr. holiday yesterday. Trades then will be booked today for settlement. The more-actively traded March contract was at $39.59, down 7 percent.
The U.S. dollar climbed as high as $1.2921 against the euro, the strongest since Dec. 10, and traded for $1.2977 as of 10:25 a.m. London time. Gains in the U.S. currency diminish the appeal of dollar-priced commodities used to hedge against inflation.
‘Weak Sentiment’
“We’re seeing the dollar stronger again and weak demand is still dominating,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “As long as the market ignores the supply side, we’ll have weak sentiment.”
The U.K. government said yesterday it will spend an extra 100 billion pounds ($142 billion) to support the nation’s banks, a second lifeline in three months. The need for the latest package spurred concern that global financial crisis is worsening.
“For the next six months we’ll see awful economic data coming out, banks possibly having to be nationalized and excess inventories in the U.S.,” said Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore. “There is really nothing that can pull this market higher.”
Brent crude oil for March settlement fell as much as $1.54, 3.5 percent, to $42.96 a barrel on London’s ICE Futures Europe exchange. It traded for $43.60 at 10:50 a.m. London time.
Russia Dispute
Russia and Ukraine signed 10-year natural-gas contracts, ending a dispute that’s squeezed supplies to the European Union for almost two weeks. Shipments resumed today.
Rising U.S. stockpiles and forecasts from the International Energy Agency and OPEC on declining world demand contributed to an 11 percent decline in Nymex crude last week. Prices are down 20 percent this year, after tumbling 54 percent in 2008.
Crude-oil inventories at Cushing, Oklahoma, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the Energy Department said this week. It was the highest since at least April 2004, when the department began keeping records for the location.
BWNR still on watch today followed by WLGC. Looking long with that one.
Lol! Fair enough bro. Gl.
Exactly bro! That's the beauty of democracy, anything is possible! Gl buddy!
Morning E Express! Obama Carries Weight of Economic Trauma, Wars Into Inauguration
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By Julianna Goldman and Michael Tackett
Jan. 20 (Bloomberg) -- American democracy has always promoted a central conceit: Any child can grow up to be president.
For 220 years, the reality has been different, a line of 42 white men.
Today, that string will be broken by a most unlikely individual, a black man born of an African father, with a slight political resume who has described himself as a “skinny guy from the South Side of Chicago with a funny name.”
Barack Hussein Obama, 47, will place his left hand on the Bible of Abraham Lincoln to take the oath of office on the steps of the U.S. Capitol, which slaves helped build. The Lincoln Memorial will be within his gaze.
He will immediately inherit an economic mess so grave that it recalls the Great Depression, wars in Iraq and Afghanistan, and the burden of being first. Obama has signaled he will make audacious moves on all fronts.
“He never lets fear of failure prevent him from taking a calculated risk,” says Valerie Jarrett, who will be a senior adviser in the Obama White House and has known him for 18 years.
The new president came to power on the strength of a movement that gathered behind his calls for change and hope. His campaign was underestimated before it became unstoppable.
Today, Obama will try to match the moment with his words. In preparation, he has studied the writings of Lincoln, Franklin Roosevelt and John F. Kennedy.
The Real Battle
The 44th president -- Grover Cleveland’s non-consecutive terms made him both the 22nd and 24th chief executive -- rose in part as a result of his opposition to the war in Iraq. He has said that the real battle will be in Afghanistan, where history shows victory could be elusive.
The president-elect has limited national-security experience and his own vice president, Joe Biden, has said he expects that will be tested early in his term.
Even with those stresses to compound the difficulty of a faltering economy, polls suggest the American people have confidence he will succeed.
As many as 2 million people may gather on the National Mall in Washington today to hear his inaugural address. They will include some who arrived on private jets and others who came by bus from long distances.
One of them will be a man who helped to make Obama’s election plausible: Jesse Jackson, who ran the first credible presidential campaigns by an African-American in 1984 and 1988.
The Long Journey
“Given this journey from the hull of ships as slaves to taking the oath of office on the Capitol steps that slaves built and couldn’t walk up, you have the long journey from degradation to a state of grace,” Jackson said in an interview. “Then there is the great journey and the people who made it possible, the marchers and the martyred.”
Juanita Abernathy, wife of the late civil rights leader Ralph Abernathy and an activist herself, says, “We knew one day that it would happen when we all started off in 1955, but all of us thought we would not see it in our lifetime.”
Then there is Sonny Young, 62, who owns a barbershop in Springfield, Ohio. Young’s uncle tried to persuade him to attend King’s “I Have a Dream” speech in Washington in August 1963, but Young declined. He drove to the Washington area for Obama’s inauguration because he doesn’t want to miss the moment again.
“Just to be part of that dream that he talked about, part of that dream is being fulfilled with the inauguration,” Young says.
Obama, who played no role in the civil rights movement, has played down race. And some historians say that too much has been made of racial identity.
Identity
“Over the course of the last two years and the professional political campaign success that Obama has had, I don’t think his purely racial identity looms that large for a lot of people,” says David Garrow, author of “Bearing the Cross: Martin Luther King Jr. and the Southern Christian Leadership Conference,” which won the 1987 Pulitzer Prize for biography.
“Given the economy, given Iraq, given Afghanistan, given the Middle East, it’s not as if a black presidency is going to transform the lives of any black people,” Garrow says. “It will make people feel good.”
Other scholars see a more exceptional moment. Noting that the Constitution at first didn’t even count blacks as full human beings for census purposes, Lee Baker, a professor of African- American Studies at Duke University in Durham, North Carolina, says, “It’s affirming the genius of the Framers that this could be a possibility, that somebody who would have counted as three- fifths of a person could be president.”
Enormity
The inaugural ceremony, with Obama’s speech, a parade down Pennsylvania Avenue and more than a dozen balls tonight, will soon give way to the enormity of the problems the new president confronts.
The challenges Obama faces on the economy provide him with “one of the greatest tests any president’s had, post-war,” says Mark Gertler, a New York University economics professor who has collaborated on research with Federal Reserve Board Chairman Ben Bernanke.
It is likely to get worse.
“Nothing that Obama can do can undo the damage quickly,” says Columbia University economist and Nobel laureate Joseph Stiglitz. “The downturn will be much deeper than it otherwise would have been” because of the missteps of President George W. Bush’s administration, Stiglitz said in an interview. “And it will take much longer to get out of it.”
Stronger Tools
The economic crisis has been likened to the one that faced Franklin Delano Roosevelt in 1933. Obama comes in with more tools at his disposal, including an assertive Federal Reserve and stabilizers such as food stamps and unemployment insurance, many of them created under Roosevelt, says Seth Glickenhaus, who was a messenger at Salomon Brothers when the stock market crashed in 1929.
“His job isn’t as great as Roosevelt’s was,” says Glickenhaus, 94, who now manages $1.8 billion as chief investment officer of Glickenhaus & Co. in New York. “Roosevelt was creating these things.”
While the challenge of crafting a solution is apparent, the more subtle task of instilling confidence is just as great.
“People are scared, they’re afraid to lend money, they’re afraid to spend and Obama needs to figure out interventions that are going to change the psychology as much as changing the economics,” says George Loewenstein, a professor of psychology and economics at Carnegie Mellon University in Pittsburgh.
Patience
“Obama is at great risk because the American public is less patient than it was in Roosevelt’s day,” he says. “There’s not going to be a rapid turnaround and if people are too optimistic about what Obama can do, they’re going to end up being disappointed and maybe think that he’s failing when he’s only just begun to turn things around.”
While his success will be measured in the U.S., his every move will be watched in government capitals and financial centers around the world.
“There’s been a sense that we’d erred and that the right prescriptions haven’t been applied to our economy and the right proscriptions haven’t been advanced in our foreign policy,” says Jim Leach, a former Republican congressman from Iowa who supported Obama during the campaign.
The good will Obama has generated may get him off to a strong start, suggests Douglas Brinkley, a historian and professor at Rice University in Houston.
Says Brinkley: “While the problems are deep, he’s got a lot of wind at his back to really do the kind of big, bold things that people who aspire to the presidency want to do.”
GM Traders! Good luck trading and enjoy the inauguaration celebrations today!
Rise and shine Forum! Should be an exciting week!
GM SSB and Longers. History in the making today!
Morning Trip ZZZ!
GM GA! Its inauguration day! Gl.
NCEN broke 2 bucks! 2.03 and going!
NXPN 1.17. Ask is super thin!
TRIP ZZZ!!!
NCEN all day +23.33%!
NCEN. 1.85. +23.33%.
Stimulus seems to be the word of 2009! lol.
Nice. Will keep it on the pending pile! lol.
TNRI back on the grid eh? Nice.
Before the bell: Stocks to move higher as government bails B of A
Posted Jan 16th 2009 7:46AM by Melly Alazraki
Filed under: Before the bell, International markets, Earnings reports, Intel (INTC), Market matters, Citigroup Inc. (C), Bank of America (BAC), Economic data, Oil, Financial Crisis
U.S. stock futures were higher this morning, pointing to a second session of gains Friday after the U.S. government gave Bank of America another $20 billion of bailout money. Investors seemed to approve the move despite big losses posted by Bank of America and Citigroup, perhaps because the government also guaranteed losses on over $400 billion in assets of both banks.
Overseas, Asian shares closed the session with gains as tech stocks got some relief following Intel's earnings. European markets rallied Friday as news of the bailout for Bank of America gave investors some relief. Oil producers, mineral extractors and banks posted sharp gains. Meanwhile, oil prices recovered somewhat from an overnight low of $33.20 and traded around $35.50 a barrel.
Investors are also awaiting several economic indicators today:
At 8:30 am EST, December consumer price index is due for release. Economists expect CPI to show inflation dropped 1% in December, or remained flat excluding food and oil.
At 9:15 am, December capacity utilization and industrial production are due out.
Near 10:00 am, Michigan sentiment index for January will be reported.
GM BWNR. 0.011 set to start the day.
GM E EXPRE$$! Before the bell: Stocks to move higher as government bails B of A
Posted Jan 16th 2009 7:46AM by Melly Alazraki
Filed under: Before the bell, International markets, Earnings reports, Intel (INTC), Market matters, Citigroup Inc. (C), Bank of America (BAC), Economic data, Oil, Financial Crisis
U.S. stock futures were higher this morning, pointing to a second session of gains Friday after the U.S. government gave Bank of America another $20 billion of bailout money. Investors seemed to approve the move despite big losses posted by Bank of America and Citigroup, perhaps because the government also guaranteed losses on over $400 billion in assets of both banks.
Overseas, Asian shares closed the session with gains as tech stocks got some relief following Intel's earnings. European markets rallied Friday as news of the bailout for Bank of America gave investors some relief. Oil producers, mineral extractors and banks posted sharp gains. Meanwhile, oil prices recovered somewhat from an overnight low of $33.20 and traded around $35.50 a barrel.
Investors are also awaiting several economic indicators today:
At 8:30 am EST, December consumer price index is due for release. Economists expect CPI to show inflation dropped 1% in December, or remained flat excluding food and oil.
At 9:15 am, December capacity utilization and industrial production are due out.
Near 10:00 am, Michigan sentiment index for January will be reported.
GM MARINE! On The Fly: Asian Markets Wrap-Up for Friday, January 16
Stocks in Asia advanced as markets gained everywhere except in Pakistan and the Philippines...JAPAN: The Nikkei was up 206.84, or 2.6%, to 8,230.15, while the broader Topix index rose 21.90, or 2.8%, to 817.89. A weaker yen fueled speculation that company earnings will benefit. Honda (HMC) increased 8% to Y2,010. Sony (SNE) was up 4.8% to Y2,075. Denso Corp. (DNZOY) rose 8.1% to Y1,654. Sumco jumped 8.7% to Y1,216. Shin-Etsu Chemical Co. was up 7.2% to Y4,340...CHINA: The CSI 300 Index was up 35.34, or 1.8%, to 1,990.21. There's speculation that the government will pass a new stimulus package. Zoomlion Heavy Industry increased 4.3% to 14.13 yuan. Weichai Power Co. was up 2.9% to 22.75 yuan. Citic Securities added 4.1% to 20.57 yuan. Haitong Securities surged 7.2% to 10.91 yuan. Northeast Securities Co. gained 2.6% to 13.84 yuan. China Eastern Airlines Corp. (CEA) jumped 0.47 yuan, or 9.9%, to 5.20. Ningbo Shanshan Co. rose 0.74 yuan, or the 10% daily limit. Orient Group increased 0.47 yuan, or 10%, to 5.13...AUSTRALIA: The S&P/ASX 200 Index gained 21.40, or 0.61%, to 3,550.90...AROUND ASIA: In Hong Kong, the Hang Seng Index advanced 12.55, or 0.09%, to 13,255.51. HSBC Holdings (HBC) fell 2.7% to HK$64.20. Kingboard Chemical Holdings jumped 13% to HK$14.20. :theflyonthewall.com
GM Traders! Good luck for Friday's trading!
Morning Forum! Friday's playlist : NXPN. NCEN. BWNR.
GM CC! Citigroup Reports $8.3 Billion Loss, Split Into Two Businesses
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By Bradley Keoun and Josh Fineman
Jan. 16 (Bloomberg) -- Citigroup Inc. posted an $8.29 billion fourth-quarter loss, completing its worst year, as the credit crisis eroded mortgage-bond prices and customers missed more loan payments. The stock rose after the company announced plans to split in two.
The net loss of $1.72 a share compared with a loss of $9.8 billion, or $1.99, a year earlier, the New York-based company said in a statement today. Excluding a $3.9 billion gain from the sale of a German consumer bank and other results from discontinued operations, the bank’s loss was $2.44 a share. On that basis, the loss was more than twice as wide as the $1.08 average estimate of analysts in a Bloomberg survey.
As Citigroup plunged 77 percent last year in New York trading, the bank was forced to accept $45 billion of U.S. government rescue funds. Chief Executive Officer Vikram Pandit agreed this week to cede control of the Smith Barney brokerage to Morgan Stanley. He also said today he plans to eventually sell the CitiFinancial consumer-lending unit and Tokyo-based Nikko Asset Management Co., after moving them into a new unit called Citi Holdings.
“It looks like a kitchen-sink quarter,” said Peter Sorrentino, who helps manage $16 billion at Huntington Asset Advisors Inc. in Cincinnati, including Citigroup shares. “Sweep it all in there and get this behind us.”
Citigroup climbed to $4.26 in New York from $3.83, after plunging 23 percent yesterday on concern the bank may have to seek more aid from the government.
Spokesman Mike Hanretta declined to comment on whether the bank is in discussions over an additional infusion.
Bank of America
Citigroup’s announcement came as Bank of America Corp., the biggest U.S. bank by assets, received emergency funds from the government to support its acquisition of Merrill Lynch & Co. The Charlotte, North Carolina-based company reported a loss of $1.79 billion and cut its dividend to 1 cent a share.
Citigroup plans to form a new business called Citicorp to hold units it wants to keep. They include branch banking, corporate lending, securities underwriting, transaction processing and private banking.
The bank also will create Citi Holdings for “non-core” businesses including CitiFinancial, Primerica Financial Services, brokerage, retail asset management, and a “special asset pool,” consisting of the assets the U.S. government agreed in November to guarantee.
Capital, Stock Price
A dwindling capital cushion and sinking stock price forced the 52-year-old Pandit to abandon Citigroup’s decade-old strategy of providing investment advice alongside branch banking, stock underwriting and corporate lending. He’s shedding units to free up capital and save the bank from insolvency.
“They are going to try to home in on what’s worth something, and try and sell the pieces that they really can’t value,” Todd Colvin, vice president of MF Global Inc., said in a Bloomberg TV interview.
CitiFinancial and Primerica were both building blocks of the colossus that former CEO Sanford “Sandy” Weill assembled during a 17-year acquisition spree. The company solidified its strategy of serving corporate and individual clients around the world with a range of financial services in 1998, when Weill’s Travelers Group Inc. merged with John Reed’s Citicorp to form Citigroup Inc.
Citigroup plans to put Smith Barney into a $21 billion joint venture and relinquish majority control to Morgan Stanley. The deal, which bolsters Citigroup’s capital base with a $5.8 billion pretax gain, came less than two months after Pandit told employees he didn’t want to sell the business.
‘Non-Core’ Businesses
The plan to cut off “non-core” businesses in a deteriorating economy may put the bank into a deeper hole, Sanford C. Bernstein & Co. analyst John McDonald wrote in a Jan. 14 report.
“It will likely be difficult for Citi to effectively dispose of assets and businesses in the current environment,” McDonald wrote. “Any new solution is likely to need an incremental infusion of common equity, either from the government, private investors or the public markets, any of which is likely to be dilutive to existing Citi shareholders.”
NXPN and NCEN with a BWNR chaser should wrap up the week nicely.
GM LOUNGERS! UAW and creditors may work against GM
Posted Jan 16th 2009 4:09AM by Douglas McIntyre
Filed under: General Motors (GM)
The UAW is not moving at much of a clip in terms of negotiating with GM (NYSE: GM). There has not been a single sign of progress, no news of concessions on wages or benefits. Congress was hoping labor costs would be brought down to the level of what Japanese companies pay US workers.
Creditors also appear to be getting ready to give the US's largest car company a hard time. A successful bailout of GM assumes that bond holders will swap much of what they owe for equity or simply reduce the amount that they are owed or the interest rates on those sums.
According to The Wall Street Journal, "General Motors Corp. bondholders formed a committee to negotiate terms of a debt-for-equity swap, a key requirement of the auto maker's loan from the U.S. government."
The firms holding GM's bonds may simply tell the company that unless they get a good deal for turning in their bonds that there is not deal at all. Creditors may believe it is worth the risk that GM may go into Chapter 11.
The UAW and creditors are probably playing the same game of chicken with GM and the new administration. Can the government allow GM to fail when the stimulus package is set up to increase US employment by three million jobs or more? A bankruptcy could build a big hole if its causes Detroit and its suppliers to lay off over one million employees.
The creation of a creditors committee is bad news for GM.