Others   

Pension : Wall Street News.

Wall Street's terrible Tuesday

Stocks sink again extending rough start to 2008, as major gauges fall 10 percent off recent highs - the technical definition of a market "correction."

 

Countrywide slammed on shady document claim

The nation's largest mortgage lender 'recreated' letters claiming a borrower under bankruptcy protection owed the company money, according to the New York Times.

 

Home sales sink, outlook darkens

Pace of pending sales slows again; Realtors now see biggest drop in home values at start of '08; forecast for price rebound pushed back to '09.

 

Stocks give up gains

Wall Street can't sustain an early advance as investors eye weak housing news, rising oil and gold prices, comments from Fed officials

NEW YORK (CNNMoney.com) -- Stocks erased early gains, turning lower near midday Tuesday, as investors mulled cautious comments from a pair of Fed officials about the economic outlook and more bad news for the housing sector.

The Dow Jones industrial average (INDU) lost 0.4 percent more than 2 hours into the session. The broader S&P 500 (INX) index and the Nasdaq (COMPX) composite were also lower.

Stocks rose Tuesday morning as investors welcomed reports of executive changes at Bear Stearns and Starbucks. But gains petered out as the morning wore on amid spiking oil and gold prices, the housing market news, and comments from Fed officials that seemed to downplay the chances of a big interest rate cut at the next policy meeting.

A mid-morning report from a realtors group showed that contracts to sell existing homes fell in November by a steeper-than-expected margin. The group also pushed back its forecast for a price rebound to 2009.

Homebuilding stocks slumped on the report and some mortgage stocks were under pressure as well.

Additionally, Boston Fed president Eric Rosengren, speaking Tuesday morning, said that if forecasts pan out, the United States will see the longest housing investment decline in 50 years, according to Briefing.com. Rosengren was a voting member of the Fed's policy committee in 2007.

With worries that the economy could be heading into recession, Wall Streeters have been looking to the Federal Reserve to cut short-term interest rates by as much as a half-percentage point at the next policy meeting at the end of January.

Philadelphia Fed President Charles Plosser, speaking Tuesday morning, said that policy decisions are getting harder to make because inflationary pressures are rising and slow economic growth is no longer sufficient to take the edge off pricing pressures. However, he said he wouldn't be opposed to more cuts. Plosser will be a voting member of the Fed's 2008 policy-setting committee, starting with the January meeting

Meanwhile, oil prices jumped back above $97 a barrel and gold prices flirted with record highs.

Treasury prices slumped, raising the yield on the 10-year note to 3.86 percent from 3.83 percent late Monday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and gained against the yen.

Among stock movers, Bear Stearns (BSC, Fortune 500) initially rose after the Wall Street Journal reported that its chief executive is stepping down amid the investment bank's big subprime losses. He will be replaced by the company's current president. However, the stock turned negative as the session wore on.

Starbucks (SBUX, Fortune 500) rallied after it said late Monday that it was replacing its CEO with its chairman and former chief executive, as well as closing under-performing stores.

The news followed Monday's announcement that McDonald's (MCD, Fortune 500) will unveil its own coffee bars, complete with baristas, at its nearly 14,000 U.S. locations, taking on Starbucks' dominance in the area.

In other news, builder KB Home (KBH, Fortune 500) reported a steeper-than-expected quarterly loss, reflecting the ongoing problems in the housing sector.

U.S. light crude oil for February delivery rose $1.61 to $96.70 a barrel on the New York Mercantile Exchange Tuesday.

 

Market Focus Tuesday: ICSC and Redbook will be covering the post-holiday period, putting the focus squarely on pending home sales and the latest clues on housing.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Monday  Jan  7  Tuesday  Jan  8  Wednesday  Jan  9  Thursday  Jan  10  Friday  Jan  11  4-Week Bill Announcement 11:00ET 10-Year TIPS Announcement 11:00ET 3-Month Bill Auction 1:00ET 6-Month Bill Auction 1:00ET Treasury STRIPS  3:00 ET  ICSC-UBS Store Sales   7:45 ET  Redbook   8:55 ET  Pending Home Sales Index   10:00 ET  4-Week Bill Auction 1:00ET Consumer Credit   3:00 ET  MBA Purchase Applications   7:00 ET  EIA Petroleum Status Report   10:30 ET  Weekly Bill Settlement Chain Store Sales   BOE Announcement   7:00 ET  ECB Announcement   7:45 ET  Jobless Claims   8:30 ET  Wholesale Trade   10:00 ET  EIA Natural Gas Report   10:30 ET  3-Month Bill Announcement 11:00ET 6-Month Bill Announcement 11:00ET 10-Year TIPS Auction 1:00ET Money Supply   4:30 ET  International Trade   8:30 ET  Import and Export Prices   8:30 ET  RBC CASH Index   9:00 ET  Treasury Budget   2:00 ET  Equity Settlement 01 -10 -2008 Equity Settlement 01 -11 -2008 Equity Settlement 01 -14 -2008 Equity Settlement 01 -15 -2008 Equity Settlement 01 -16 -2008 Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such info may change without notice. Econoday does not provide investment advice, and does not represent that any of the information or related analysis is accurate or complete at any time.  Legal Notices | © 1998-2008 Econoday, Inc. All Rights Reserved. Actual Data Source: Haver Analytics | Consensus Data Source: Market News International  Market Moving Indicator    Other Key Indicator    Consensus Available     Final Data and Analysis Available Econoday Suggestion Box:  We welcome your ideas on how we can serve you better.

 

Wall Street looks to the Fed

As economic anxiety grows, investors await speeches from central bank officials; futures head higher on CEO shake-ups.

 

Global Stocks, U.S. Futures Gain; BHP Billiton, NTT DoCoMo Rise


By Sarah Jones

Jan. 8 (Bloomberg) -- Global stocks rebounded as metal producers rose on higher copper prices and cheap valuations lured investors to shares of telephone companies. U.S. index futures increased.

BHP Billiton Ltd. and Anglo American Plc, the world's biggest mining companies, gained for the first time in three days. NTT DoCoMo Inc. led a rally by Japanese stocks with dividend yields topping those of government bonds. Bear Stearns Cos. and Starbucks Corp. of the U.S. advanced in German trading.

The MSCI World Index added 0.2 percent to 1,539.98 as of 11:25 a.m. in London, while futures on the Standard & Poor's 500 Index climbed 0.5 percent. The global measure lost 3.3 percent in this year's first four days of trading amid signs the U.S. economy may slip into recession. That spurred investors to increase bets that the Federal Reserve will reduce interest rates this month to shore up global growth.

``Buyers will start to step back in,'' said James Buckley, a London-based director at Baring Asset Management, which oversees about $48 billion. ``Cyclicals have suffered the brunt of the selling. Expectations for further rate cuts provide significant support for the market.''

Treasury notes dropped as lower money market rates signaled efforts to ease a logjam in credit markets are working. The risk of European companies defaulting on their debt fell, according to traders of credit-default swaps.

Raising Bets

Traders increased their bets that the Federal Reserve will cut borrowing costs by 50 basis points this month. Fed funds futures show that 68 percent of investors now expect the central bank to cut its benchmark lending rate by a half-percentage point, up from zero a week ago.

Policy makers at the European Central Bank and the Bank of England are expected to keep rates steady at their Jan. 10 meetings.

Europe's Dow Jones Stoxx 600 Index added 0.5 percent, advancing for the first time in five days. Germany's DAX also climbed 0.5 percent, while the U.K.'s FTSE 100 increased 0.6 percent. France's CAC 40 gained 0.8 percent.

The MSCI Asia Pacific Index advanced 0.1 percent. Japan's Nikkei 225 Stock Average rose 0.2 percent, and Taiwan's Taiex Index increased 1 percent.

BHP Billiton, the world's biggest mining company, rallied 2.2 percent to 1,523 pence. Anglo American, the second-largest, gained 1.5 percent to 2,943 pence. Rio Tinto Group, the third- biggest, advanced 2.3 percent to 5,147 pence.

Copper prices climbed in Asia as investors deemed yesterday's decline excessive on signs of sustained demand in China, the largest consumer of the metal. Base metals also climbed in London.

NTT DoCoMo

NTT DoCoMo, Japan's largest mobile-phone operator, added 3.4 percent to 182,000 yen. DoCoMo's shares have a dividend yield of 2.6 percent, higher than the 1.46 percent yield on Japanese 10- year government bonds.

Phone stocks last month traded at an average 6.56 times the cash they generate, a 31 percent discount to the MSCI World and the cheapest among the 10 industries included in the benchmark, according to data compiled by Bloomberg.

Fubon Financial Holding Co., Taiwan's second-largest financial-services company, jumped 6.9 percent to NT$31.10. Cathay Financial Holdings Co., its larger rival, gained 3.3 percent to NT$69.30.

Taiwan may let financial holding companies use their Hong Kong units to buy stakes of less than 20 percent in Chinese banks, the Economic Daily News reported, citing unidentified government officials.

Bear Stearns, Starbucks

Bear Stearns, the second-largest U.S. mortgage-bond underwriter, added 76 cents to $78.01 in Frankfurt. A person with direct knowledge of the matter said Chief Executive Officer James ``Jimmy'' Cayne plans to resign. He's expected to be succeeded by President Alan Schwartz, 57, and an announcement may be made as soon as today, the person said. Bear Stearns spokesman Russell Sherman declined to comment.

Starbucks advanced $1.70 to $20.08 in Frankfurt after the world's largest chain of coffee shops replaced its chief executive officer with former CEO and Chairman Howard Schultz.

Banc of America raised its recommendation on the stock to ``neutral'' from ``sell'' in a report published today.

``This could be the first step to Starbucks more consistently returning cash to shareholders,'' analysts including Andrew M. Barish wrote.

Michael Page International Plc rallied 6.5 percent to 264 pence. The U.K.'s second-largest recruitment company said fourth- quarter gross profit rose 38 percent to 128.2 million pounds ($253 million) as sales in continental Europe increased. That beat the 125.2 million-pound median estimate of six analysts surveyed by Bloomberg News.

TF1, M6

Societe Television Francaise 1 and M6-Metropole Television SA climbed after French President Nicolas Sarkozy proposed to eliminate advertising on public television, which competes with TF1 and M6 for ad budgets.

TF1, owner of France's most-watched TV channel, rallied 9.3 percent to 18.26 euros. M6, based in the Paris suburb of Neuilly-sur-Seine, increased 6.8 percent to 17.59 euros.

EasyJet Plc dropped 12 percent to 468.25 pence after Europe's second-largest discount airline said it filled a smaller proportion of seats in December.

The carrier's load factor, or proportion of seats filled, declined 2.2 percentage points to 78.9 percent last month.

Atos Origin SA climbed 3.3 percent to 32.48 euros after Deutsche Bank AG raised its recommendation for France's second- biggest computer-services provider to ``buy'' from ``hold.''

The brokerage cited the company's potential for cost savings and the likelihood that current revenue will be sustainable.

Fast Search & Transfer ASA surged 42 percent to 18.9 kroner after Microsoft Corp. offered to buy the Norwegian Web-search software maker for 6.6 billion kroner ($1.23 billion).

 

sharethebest, if wall street closed red tonight, sti will open red and closed red. look at the trading pattern, when sti hit 3323, the japanese fund manager will come in and buy becos they felt the share price for some potential counter is cheap and share rebound. there are twice over few weeks, sti went below the 3323 mark and hit 3300 mark. once it hit 3300 mark, the support is very strong and it push sti above 3560. if sti hit 3300 and went further down, the whole market will panic.

 

 

 

 

Cayne to Step Down as Bear Stearns CEO, Person Says (Update2)


By Yalman Onaran and Bradley Keoun

Jan. 8 (Bloomberg) -- Bear Stearns Cos. Chief Executive Officer James ``Jimmy'' Cayne plans to resign as the securities firm's shares languish following unprecedented losses from the collapse of the subprime mortgage market, a person with direct knowledge of the matter said.

Cayne, 73, has begun notifying members of his board that he will step down as CEO and remain chairman of the New York-based company, according to the person, who declined to be identified because the decision isn't public. He's expected to be succeeded by President Alan Schwartz, 57, and an announcement may be made as soon as today, the person said.

Cayne would join former Citigroup Inc. CEO Charles Prince and his counterpart at Merrill Lynch & Co., Stan O'Neal, who were forced out after the sinking value of assets tied to mortgages eroded earnings. Bear Stearns's fourth-quarter loss of $854 million was the first in its history and the company's stock dropped 53 percent in New York trading during the past year, more than any Wall Street rival.

``Jimmy's been so engaged with the company for a long time, he and Ace have been the personification of the company,'' Bear Stearns board member Henry Bienen said yesterday in an interview, referring to Cayne's predecessor, Alan ``Ace'' Greenberg. ``Jimmy's still a huge shareholder. It's the board's view that Jimmy would stay very involved.''

Bear Stearns spokesman Russell Sherman declined to comment. The Wall Street Journal reported Cayne's plan to resign on its Web site yesterday, citing people familiar with the matter. Bear Stearns rose 2.2 percent to $77.95 in German trading today.

Shuttered Funds

Cayne, who joined Bear Stearns in 1969 and was named CEO in 1993, faces the prospect of losing his job to a crisis his firm helped create. The fifth-largest U.S. securities firm by market value spurred last year's crash in the market for home loans to people with poor credit when two of its hedge funds, which invested in securities tied to the mortgages, collapsed in July, prompting investors to shun the debts.

About 30 percent of Bear Stearns's fixed-income revenue comes from mortgages and related securities, according to estimates from Sanford C. Bernstein & Co. analyst Brad Hintz. The company's $1.9 billion mortgage writedown wiped out revenue in the three months ended Nov. 30.

Bear Stearns shuttered the two failed hedge funds and Cayne ousted his co-president, Warren Spector, whom investors considered the heir-apparent. Ralph Cioffi, the manager of the two funds, left last month amid probes by the U.S. Securities and Exchange Commission and the U.S. Attorney in Brooklyn. The government investigators haven't accused Cioffi or Bear Stearns of any wrongdoing.

December Meeting

Cayne told board members at a meeting in December that he was considering stepping down, and the board didn't push him, said Bienen, who is president of Northwestern University in Evanston, Illinois. Cayne holds 4.9 percent of Bear Stearns shares, making him the firm's second-largest individual investor after billionaire Joseph Lewis, data compiled by Bloomberg show. Bear Stearns said in October that China's government-controlled Citic Securities Co. paid $1 billion for a 6 percent stake.

``It's a different situation from what there was at Merrill and some other places, where clearly there was some pressure for them to step down,'' Bienen said. ``Part of it may be the culture of the company. It's been a place where there hasn't been a lot of turnover in leadership.''

Schwartz ``was a natural choice'' to become the next CEO, Bienen said. ``He's a very experienced guy and obviously respected by the board.''

Cincinnati Reds

A Brooklyn native and 1972 graduate of Duke University in Durham, North Carolina, Schwartz was drafted as a pitcher by the Cincinnati Reds baseball club but injured his elbow and never reported to the team. He started at Bear Stearns's Dallas office in 1976 as an institutional stock salesman.

Greenberg, who became Bear Stearns CEO in 1978, took notice after Schwartz called him with ideas for improving the stock- research department. Schwartz moved to New York and in 1979 became head of research and investment strategy. He was named executive vice president in 1985 and charged with running the firm's fledgling investment-banking division. He was promoted to co-president, with Spector, six years later.

Cayne said last month that he and his senior managers agreed to forgo bonuses for 2007 after producing ``unacceptable results.'' In addition to the mortgage-related losses, fourth- quarter revenue from equity sales and trading dropped 11 percent to $384 million. Investment-banking fees during the quarter fell 44 percent to $205 million.

Lehman Brothers Holdings Inc., Morgan Stanley and Goldman Sachs Group Inc. posted gains for the quarter from trading stocks and advising on mergers. All the firms are based in New York.

Avoid `Headlines'

``Cayne stepping down will help keep Bear out of the headlines, and that's what the firm needs to rebuild,'' said Bruce Foerster, president of Miami-based South Beach Capital Markets. ``He was under pressure and the only way to ease the pressure on the firm is for the CEO to step down.''

Cayne ranks as Wall Street's richest CEO, with $1.3 billion of assets, according to Forbes magazine's 2007 billionaire survey. Cayne left Purdue University before graduating to join the U.S. Army and was hired 38 years ago by Bear Stearns. A world-class bridge player, Cayne was promoted to president by Greenberg in 1988 and then to CEO five years later.

Bear Stearns's return on equity dropped to 1.8 percent for 2007 from 19 percent the year before. Morgan Stanley reported a 7.8 percent return; Lehman generated 21 percent. Goldman delivered 33 percent for the year.

Mounting Writedowns

The world's largest banks and securities firms have reported at least $97 billion of writedowns and credit losses stemming from the collapse of the subprime mortgage market and ensuing credit-market contraction, according to Bloomberg data.

``People realize that clearly mistakes have been made at the world's financial institutions, a tsunami, and I'm not sure you'd blame the individual,'' Bienen said. ``One person didn't get you into these difficult situations, and one person's not going to get you out.''

 

Thank you Pension for your info, really a lot of info.

How abt tmrw, ask for your favour again to predict tmrw, is STI & Dow green or red.

Will SGX go up or down tmrw??

Thanks in advance.   

 

 

US mulls fresh steps to ease housing slump: Paulson

 

AFP - Tuesday, January 8

WASHINGTON (AFP) - - US Treasury Secretary Henry Paulson said Monday that the housing market's woes are far from over, and that the government was studying fresh measures to minimize economic harm.

Paulson said a housing correction had been "inevitable" following years of rocketing property prices, but that the government wanted to provide effective remedies to offset the housing downturn rather than providing quick fixes.

The US housing market has been in a decline for almost two years as property sales have slumped and prices have tumbled amid tightening credit, triggering wider economic uncertainty.

"Our most immediate goal is to minimize the impact on the real economy," Paulson said in a speech to securities analysts in New York.

"This will require patience as we thoughtfully evaluate next steps. Working through the current situation and getting the policy right is more important than getting the policy announced quickly," Paulson said.

Some economists are speculating that the administration of US President George W. Bush may soon unveil a package of economic policies aimed at bolstering the US economy which is facing one of the worst housing meltdowns in decades.

Bush, in a separate speech delivered in Chicago, said officials are "working on policies to reform our mortgage markets," while acknowledging many Americans had become nervous about declining home values.

Rising energy costs, tighter credit markets, falling bank profits and concerns about job growth have led some economists to predict the country could be on the cusp of a recession.

"After years of unsustainable price appreciation and lax lending practices, a housing correction was inevitable and necessary," Paulson said, adding that the housing slump is the biggest threat facing the world's biggest economy.

The Treasury secretary underlined that interest rates on 1.8 million subprime mortgage loans are due to reset higher in the next two years, heightening the risk of further home foreclosures.

Spiking home foreclosures, especially related to subprime loans held by Americans with patchy credit records, have worsened the housing malaise.

Paulson's hint that the government is considering fresh remedies to bolster the economy comes after the administration brokered a vast mortgage relief plan last month aimed at helping up to 1.2 million distressed homeowners at risk of foreclosure.

The plan devised by Treasury officials with major lenders and investors helps some struggling homeowners to refinance subprime adjustable-rate home loans or freeze a loan's current interest rates for five years.

Paulson said the Treasury was paying close attention to how the relief plan was working, but he cautioned that the market and homeowners will likely have to weather ongoing pain for a little longer.

"Let me be clear that no single policy action will undo the excesses of the last few years. President Bush and his administration recognize the risks we face, and the primary importance of keeping the economy as strong as possible as we weather this housing correction," Paulson said.

 

Global economic growth 'robust', inflation risks remain, says ECB chief

AFP - Tuesday, January 8

BASEL, Switzerland (AFP) - - Global economic growth is "robust" but inflation risks remain as markets absorb the impact of the US subprime home loan crisis and higher food prices, European Central Bank chief Jean-Claude Trichet said Monday.

 

"Food is a very big problem" stoking inflationary pressures, along with higher energy costs, stock market corrections and the risks of protectionist trade policies, Trichet said in his role as spokesman for the G10 group of central bankers meeting here.

The ECB meets on Thursday to decide whether or not to raise interest rates.

Trichet had said on Saturday that the bank was ready to act to curb inflation, adding that this was expected to remain "significantly above" 2.0 percent in the eurozone in the near future.

The ECB has an inflation target of slightly below 2.0 percent.

The bank chief also said on Monday that "we have to look very carefully at the business model of banks" in the wake of the billions of dollars in losses incurred by some of the world's leading financial institutions due to their exposure to the US high-risk mortgage sector.

Banks and investment funds have made losses on trading in mortgage-backed securities, complicated financial instruments whose value is linked to US home loans.

When large numbers of US home owners began defaulting, the value of these securities plummeted and global money markets dried up as banks became nervous about lending to each other.

Switzerland's UBS, one of the most prestigious names in Swiss and European banking, last month announced a record write-off of about 10 billion dollars (6.8 billion euros) linked to its subprime exposure.

In Britain, mortgage lender Northern Rock suffered the first run on a bank in more than a century due to its subprime exposure, after it was forced to apply to the Bank of England for emergency funding in September.

Despite the downside risks, "at the global level we see confirmation that growth is continuing at a pace that is quite robust," Trichet said.

The ECB head said that coordinated actions by central banks such as his own, the US Federal Reserve, the Swiss National Bank and the Bank of England to inject much-needed liquidity into the financial markets had been "efficient."

"We have seen that the measures that have been taken by central banks proved efficient, we are reassured that the year-end has passed relatively smoothly," Trichet said.

His comments came as a European Union survey showed that confidence in the European economy fell in December to the lowest level in nearly two years but not by as much as economists had expected.

The European Commission's eurozone economic sentiment indicator slipped in December to 104.7 points in the single currency bloc -- the lowest level since March 2006 -- from 104.8 points from November.

The decline was not as sharp as the 104.0 points economists had forecast, as polled by Thomson Financial News.

Trichet stressed that the booming economies of developing nations such as China and India have proved thus far resilient in the face of the US subprime crisis.

"The emerging world is not touched," he said.

"Emerging markets have very impressive dynamics. There is no evidence that there is significant influence from the market correction which has been observed in the industrial world," Trichet said.

The World Bank said in November it expects China's economy to grow 10.8 percent this year, just down from a projected 11.3 percent in 2007.

 

Japanese Stocks Drop for a Fifth Day After Oil Price Tumbles


By Patrick Rial

Jan. 8 (Bloomberg) -- Japanese stocks fell for a fifth day, led by commodities-related shares, after the price of oil slumped by the most in almost six weeks.

Mitsui & Co., which derives more than half of its profit from commodities dealing, slid 2 percent to the lowest since August.

The Nikkei 225 Stock Average dropped 116.15, or 0.8 percent, to 14,384.40 as of 9:38 a.m. in Tokyo. The broader Topix index fell 6.67, or 0.5 percent, to 1,386.04.

Mitsui O.S.K. Lines Ltd. led marine transport companies higher after the Baltic Dry Index climbed for the first time in three weeks and Deutsche Bank AG recommended investors ``buy'' shares of the three largest companies.

Mitsui & Co., Japan's second-largest trading company, lost 35 yen, or 1.6 percent, to 2,185. Inpex Holdings Inc., the nation's biggest oil explorer, dropped 20,000 yen, or 1.7 percent, to 1.17 million. Mitsubishi Corp., the country's largest trading house, fell 25 yen, or 0.9 percent, to 2,880.

Crude oil for February delivery fell 2.9 percent to $95.09 a barrel in New York, the biggest drop since Nov. 28. The decline came amid speculation slowing global economic growth will reduce demand for commodities.

Mitsui O.S.K., Japan's second-largest shipping line, jumped 39 yen, or 3 percent, to 1,322. Kawasaki Kisen K.K., the third biggest, gained 31 yen, or 3.2 percent, to 992. Nippon Yusen K.K. the largest, rose 18 yen, or 2.2 percent, to 834.

Electronics Retailers

The Baltic Dry Index, a benchmark for the price of shipping bulk commodities, rose 0.3 percent yesterday, the first time since Dec. 13 the gauge advanced. Seigo Ando, an analyst at Deutsche Bank in Tokyo, rated shares of all three companies ``buy'' in new coverage.

Best Denki Co. jumped 27 yen, or 3.8 percent, to 742 after the Nikkei newspaper said Edion Corp., the country's second- largest electronics retailer, proposed a capital tie-up with the Kyushu-based company.

Edion will boost its stake in Best to as much as 10 percent from 3 percent currently, according to the report. The move is designed to counter Yamada Denki Co.'s expanding relationship with Best Denki, the Nikkei said.

Edion added 23 yen, or 2 percent, to 1,176. Yamada dropped 140 yen, or 1.2 percent, to 11,420.

Kurita Water Industries Ltd., which makes pure water for use in liquid-crystal display production, gained 90 yen, or 2.8 percent, to 988 after the Nikkei said the company will invest more than 50 billion yen ($458 million) by 2010 to expand its operations at one of Sharp Corp.'s manufacturing sites.

Nikkei futures expiring in March slipped 0.4 percent to 14,410 in Osaka and declined 0.5 percent to 14,410 in Singapore.

In other Asian markets open for trading, Australia's S&P/ASX 200 Index percent slipped 0.2 percent, and South Korea's Kospi index dropped 0.4 percent.

 

Stocks ward off losses

Wall Street manages to stabilize at the end of a rollercoaster day. Paulson speech, Iran confrontation and falling oil prices all factor into a choppy session.

NEW YORK (CNNMoney.com) -- Stocks managed to cut losses by the close of a very choppy session Monday in which investors mulled commentary about the economy from President Bush, Treasury Secretary Henry Paulson and a Federal Reserve official, as well as news of an incident between Iran and the U.S. military.

The Dow Jones industrial average (INDU) added 0.2 percent. The broader S&P 500 (INX) index added 0.3 percent. The Nasdaq (COMPX) composite slid 0.2 percent.

Stocks seesawed on both sides of unchanged throughout the session, as investors sorted through the day's news and struggled to find stability after last week's big selloff.

Shortly before the close, the major gauges were down sharply, until a last-minute advance propelled the Dow and S&P 500 into positive territory and helped the Nasdaq cut losses.

"The market bounced around a lot today, and I think that's going to continue to be the case going forward, at least until the next Fed meeting," said John Forelli, portfolio manager at Independence Investments.

He said that in the next few weeks, investors will be parsing the economic news for what it says about growth, but also whether it implies the Fed is more likely to cut interest rates by a quarter-percentage or a half-percentage point at its meeting at the end of the month.

On Tuesday, Philadelphia Fed President Charles Plosser and Boston Fed president Eric Rosengren are due to speak about the economic outlook. Plosser will be a voting member of the Fed's 2008 policy-setting committee, starting with the Jan. meeting. Rosengren was a voting member in 2007.

Government and Federal Reserve officials spoke Monday on the outlook for the economy in the wake of the ongoing housing market fallout.

Treasury Secretary Henry Paulson, in a New York speech, said that while the Bush administration is working to counteract the housing crisis, there is no simple solution. He also sought to defend the Bush administration's plan to "freeze" rates on certain subprime mortgages. (Full story).

President Bush, speaking in Chicago, said that the economic signals are mixed, creating anxiety for many Americans, but that the economy is resilient and the nation has dealt with anxiety in the past. He also discussed the need for keeping taxes low.

Atlanta Fed president Dennis Lockhart said that negatives in the economy are picking up speed and market contacts are worried about further deterioration. Lockhart is not a voting member of the Fed's 2008 policy committee, but will be an alternate as of the upcoming Jan. 29-30 meeting.

Adding to stock skittishness was word from the U.S. military that five Iranian boats harassed three U.S. naval ships in international waters Sunday. Iran denied that the matter was a serious incident. The White House said it will confront such behavior if Iran threatens the United States or its allies. (Full story).

Stocks could benefit in the next few days from technical market factors. The major stock gauges have now fallen 10 percent from the October highs, in intraday trading Monday. Should stocks close 10 percent off the highs, that would be the technical definition of a "correction."

Such a development can often cause a bounce back effect, as was the case in November, the last time the major gauges corrected.

However, it's going to take more than technical factors for stocks to make a sustained move higher, said John Wilson, chief technical strategist at Morgan Keegan.

In addition to the technical factors, stock investors in the next few weeks will be responding to fourth-quarter earnings reports, which start pouring in Wednesday with Alcoa (AA, Fortune 500), and the upcoming economic news.

Wilson said last week's economic news was bad, but other news has been mixed. If that continues to be the case, "that would send the message to the recession bears that conditions are still OK, and that could help stocks recover a bit," he said.

Additionally, Wilson said that earnings expectations are so low that it wouldn't be hard for corporations to top expectations. These factors could help give stocks a push ahead of the next Federal Reserve meeting, when the central banks is expected to cut rates again.

 

Economic indictors are 'mixed' claims Bush

It is important to suggest that taxes will stay low, President says.

CHICAGO (AP) -- President Bush said Monday that economic indicators are "increasingly mixed," causing anxiety for many Americans. But he said the economy is resilient and the U.S. has dealt with anxiety before.

Bush said it was important, in a time of economic uncertainty, to send a signal that taxes will remain low.

"A lot of Americans are anxious about the economy," the president told business leaders in Chicago. "This frankly is not unprecedented," he said, pointing to the recession in the early months of his administration, terrorist attacks, corporate scandals, wars in Iraq and Afghanistan and natural disasters.

"In seven years we've had experience in dealing with anxiety," Bush said.

Bush scheduled the speech to try to calm fears that his administration would stand by and let the economy slip downward or that a recession is inevitable.

"We've had experience in dealing with anxiety. Every time, our economy has absorbed those shocks and dealt with them," he said to a gathering organized by the Illinois Chamber of Commerce.

The president spoke after having lunch with Chicago business leaders at the stately, art-filled Union League Club of Chicago, a private club in the heart of the city's financial district.

His newly sober commentary on the economy reflected a consensus among advisers that Bush needed to acknowledge the economy's shaky performance of late, rather than only tout its strengths, in order to inspire confidence in both his administration and the economy's resilience.

"Recent economic indications have become increasingly mixed," he said.

He argued that this bolsters the need to make all the tax cuts passed during his presidency permanent.

"A mixed report only reinforces the need for sound policies in Washington, which do not create more regulation and more lawsuits," Bush said. "We don't need more uncertainty in an uncertain market."

He made no mention of the fact that he and his advisers have been discussing whether a short-term stimulus package may be necessary.

White House spokesman Tony Fratto said Bush wants more time and information before making a final decision about what, if anything, to do. But Fratto said Bush regards his State of the Union address to Congress at the end of the month and the release of his new budget proposal shortly after as a sort of deadline for making that call.

"He wants to look at the data. He hasn't made a final decision," Fratto said. He wouldn't comment on the White House view of any of the stimulus ideas that have been floating around, nor would he say with whom the White House is consulting as it examines the situation.

 

Father of Bush tax cuts: Recession likely

Harvard economist Martin Feldstein says more tax relief, deeper Fed rate cuts needed if U.S. is to avoid recession.

NEW YORK (CNNMoney.com) -- Martin Feldstein, the Harvard economist credited with being one of the fathers of the Bush administration tax cuts, says the U.S. economy is now likely to slip into a recession, and that avoiding one will take a new round of tax cuts and interest rate cuts from the Federal Reserve.

Feldstein is president and CEO of the National Bureau of Economic Research (NBER), the organization charged with determining when the economy is in a recession and when it is growing. He told CNNMoney.com that he had thought the chance of a recession was about 50-50 even before last week.

But he said he now believes a recession is likely, as he pointed to both a report from the Institute of Supply Management showing manufacturing activity in decline for the first time in almost a year, and Friday's December jobs report that showed a jump in the unemployment rate to a two-year high.

He did not give a new percentage for the chance of a recession, saying that will depend on what both the Federal Reserve and Congress and the administration do in response to the weakness.

"It's not just clear that lower interest rates and monetary policy more generally will have enough traction because of conditions in the credit market," he said when asked if the Fed could hold off a recession. "We should have some fiscal stimulus to back that up."

Feldstein made his remarks the same day President Bush gave a speech in Chicago in which he said that economic indicators are "increasingly mixed," and he acknowledged that many Americans are growing anxious about the economy. But the president argued the economy itself is resilient.

The president did not propose any kind of short-term economic stimulus package in his comments, as some had expected, although he argued that it was important not to raise taxes and called for making permanent the tax cuts he passed early in his administration that are due to expire after he leaves office.

Feldstein said he was not surprised that there was no plan laid out on Monday, saying he expects to see it in the State of the Union address. He said an extra $300 tax credit for each tax payer, similar to what was passed in 2001, would only be a good first step this time, and that some kind of deeper cuts might be necessary if the economy starts to lose jobs.

"The precise mix is not as important as a decision that what the economy needs is an additional amount of fiscal stimulus on top of the lower interest rate. That can be a cut in personal taxes, it can be a business investment credit of the sort we had in 2003 or some combination of the two," he said.

Feldstein served as chairman of the Council of Economic Advisers during the Reagan administration. He has served as president and CEO of NBER since leaving that post in 1984, as well as serving on Harvard's faculty. He has given notice that he will be retiring from NBER in June of this year.

Feldstein said that the NBER generally waits at least six months after the economy goes into recession to meet and assign a date to the start of the downturn, and that it is nowhere near ready to call such a meeting. But he said that some stimulus is needed, even if it turns out that the economy continues to grow, albeit at a weak rate.

"What's clear is even if the economy doesn't go into a full scale recession it will be a slow year, one that would benefit from a fiscal stimulus like a $300 (tax credit.) If we're going to actually going to slip into negative GDP, I would want to see more than that."

While he did not serve in the Bush administration, he was an advisor to the campaign and was seen as a leading force in shaping the administration's tax cut strategy, as well as its push to privatize social security. He also served as the faculty advisor for several top members of the Bush administration's economic team when they were working on their doctorates in economics

 

Home > Latest News > Money
Jan 7, 2008
Asian shares close mixed
HONG KONG - ASIAN stocks slumped to a two-week low on Monday, extending a weak start to 2008, while the greenback hovered near multi-week lows after weak US jobs data heightened fears of a recession in the region's top export market. Oil prices fell as investors feared the United States was sliding into a bigger economic downturn than previously expected, while bonds rallied on expectations that the weak US employment data on Friday will make it more likely the Federal Reserve will cut interest rates later this month. 'The sluggish jobs data is reinforcing concerns that the subprime mortgage crisis is pushing the US economy towards a recession,' said Mr Kim Young Gak, an analyst at Hyundai Securities. 'Now it looks like the US Federal Reserve will almost certainly cut interest rates by at least a quarter percentage point this month.' HONG KONG Hong Kong share prices closed down 1.24 per cent on Monday, following a sell-off on Wall Street after US jobs data sparked fresh fears of a recession in the world?s largest economy, dealers said. The benchmark index came off the day's lows as property stocks recovered from early falls, dealers said. The Hang Seng index closed down 340.2 points at 27,179.49, off a low of 26,698.54 and a high of 27,186.07. Turnover was at HK$113.54 billion (US$14.54 billion). KUALA LUMPUR Malaysian share prices closed 0.3 per cent higher Monday to hit a new high due to investors buying into palm oil stocks, dealers said. The Kuala Lumpur Composite Index (KLCI) gained 4.1 points at 1,470.77, off an all-time intraday high of 1,473.74. SHANGHAI Chinese share prices closed 0.59 per cent higher on Monday for a fourth straight session, bucking the downtrend across Asia, with property and infrastructure stocks leading the gains, dealers said. They said property stocks outperformed after the central bank set the yuan central parity rate at a record high of 7.2695 to the dollar. The benchmark Shanghai Composite Index, which covers both A and B shares, closed up 31.77 points at 5,393.34 on turnover of 162.23 billion yuan (US$22.22 billion). TOKYO Japanese share prices closed down 1.30 per cent on Monday at a fresh 17-month low following sharp falls on Wall Street on Friday triggered by growing fears of a US recession, dealers said. The Tokyo market has now lost more than five percent of its value since the start of 2008 on worries about the health of the US economy and a surge in crude oil prices, they added. The Tokyo Stock Exchange's benchmark Nikkei index fell 190.86 points to 14,500.55, the lowest closing level since July 19, 2006. -- REUTERS, AFP

 

Jan 7, 2008
Will a US recession hit commercial property next?
NEW YORK - AS chances of a United States recession increase with each new batch of economic data, some investors are worrying that commercial property could follow residential housing down the path of a steep decline. And in doing so, leave behind unpaid debt that would be difficult to unwind. 'Real estate is a derivative of the economy and credit. If the outlook for those two items is not good, that obviously affects real estate,' said UBS analyst Alexander Goldfarb. Clearly, expectations of growth have changed significantly.' A crisis in credit market has led to tighter lending requirements, forcing some sellers to dramatically reduce prices and, in some cases, to take properties off the market. Simultaneously, demand for commercial space is down compared with 2006, when pent-up demand by businesses was still causing them to snap up space. According to preliminary data by real estate services company CB Richard Ellis Group, the vacancy rate for US offices, the largest commercial real estate group, inched up to 12.8 per cent in the fourth quarter of last year, from 12.6 per cent in the third quarter. While US downtown office vacancies remained unchanged at 10.3 per cent, suburban office vacancies rose to 14.2 per cent in the fourth quarter of last year from 13.9 per cent in the third quarter. In 2007, the amount of space tenants rented over and above the amount of space they vacated - called net absorption - fell 24.5 per cent, according to Property & Portfolio Research. The firm expects this to fall another 15 per cent in 2008 this year. Since 2003, the US commercial real estate market had been riding a wave of high prices as investors, loaded with cheap debt, bought shopping centres, apartment houses, distribution centres and office buildings Prices soared as interest rates fell and rents went through the roof with demand. But the boom times are now gone. Last Friday, the US Labour Department reported that employers added only 18,000 jobs in December and that the unemployment rate had reached 5 per cent, its highest rate since October 2001. That sent the MSCI US Reit Index,, a yardstick used to measure real estate investment trust share performance, to 803.04, its lowest level since November 2005. Weakness in commercial real estate demand is concentrated in previously hot housing markets in Florida, Southern California, Phoenix and Las Vegas, PPR said. 'Housing-related employment declines in those areas have impacted the demand for office space,' said PPR director of Strategic Research. -- REUTERS

 

Jefferies expects to lose $24 million

The investment bank says it does not have a liquidity problem but has been hurt by weakness in high yield assets.

 

Stocks set to rebound

Wall Street eyes a rebound after last week's brutal selloff; oil prices slide below $98.