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| Market Summary |
Stocks stayed lower on Monday as economic worries prevented the market from heading higher. The Dow Jones Industrial Average lost 73.27 points to close at 8,870.54. Stocks initially rallied at the start of the session after China announced a $586 billion stimulus package, but those gains were quickly given back during afternoon trading. Investors received another round of corporate reports that failed to impress. Fannie Mae (FNM: Charts, News, Offers) reported a $29 billion loss in the most recent quarter mainly because of its exposure to bad mortgage bets. Circuit City (CC: Charts, News, Offers) filed for bankruptcy protection on Monday after announcing last week that it would slash 17% of its domestic workforce. AIG (AIG: Charts, News, Offers) reported a $24.5 billion loss in the third-quarter. The Federal Government said that it will pump another $40 billion into the struggling insurer. The auto sector continued to struggle as investors worried about automakers’ stability during this global economic slowdown. Shares of General Motors (GM: Charts, News, Offers) and Ford Motors (F: Charts, News, Offers) declined. U.S. light crude oil for December delivery gained $1.37 to settle at $62.41 a barrel on the New York Mercantile Exchange. Treasury prices rose, lowering the yield on the benchmark 10-year Treasury note to 3.75 percent from 3.79 percent. The dollar was mixed against other major currencies and gold prices rose $11.40 to settle at $745.60 an ounce.
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| Market News |
Circuit City Stores Inc. (CC: Charts, News, Offers) filed for bankruptcy protection Monday, heading into the busy holiday season hoping the move will help the nation's second-biggest electronics retailer will be able to survive. The company said it made the filing because it was facing pressure from vendors who threatened to withhold products during the holiday period. The company also said it cut 700 more jobs at its headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers. Circuit City filed for Chapter 11 protection, which will allow it to keep operating while it develops a reorganization plan. Its Canadian operations also filed for similar protection. In court documents, Chief Financial Officer Bruce H. Besanko cited three factors: erosion of vendor confidence, decreased liquidity and the global economic crisis. (Source: Yahoo! Finance) Full Story
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Global delivery company DHL announced Monday that it was cutting 9,500 jobs as it discontinues air and ground operations within the United States. DHL said its DHL Express unit will continue to operate between the United States and other nations. But the company said it was dropping "domestic-only" air and ground services within the United States by Jan. 30 "to minimize future uncertainties." "We see [a] significant shortfall in the U.S. part of our express business due to the fact that the economy has weakened deeply," said Frank Appel, chief executive of DHL's parent company Deutsche Post World Net. "We have taken a massive action in the U.S." "As you can imagine, this was not an easy decision," said Appel, speaking by webcast from corporate headquarters in Bonn, Germany. "It has a massive impact on jobs for our people." (Source: CNN Money) Full Story
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The Treasury Dept. and the Federal Reserve say they are restructuring the more than $100 billion in assistance provided to shaky insurance giant American International Group Inc. (AIG: Charts, News, Offers), easing lending terms, replacing some of the company’s existing government credit lines with a capital investment and establishing pools to buy assets from AIG. All told, AIG will receive more than $150 billion in government aid, some of it replacing the loans it was already promised. Under the agreement, the company will freeze its bonus pool and restrict severance pay for scores of executives, among other conditions. Shortly after the agreement was announced, AIG reported a $24.5 billion third-quarter loss, or $9.05 a share, the insurer’s fourth quarterly loss in a row. (Source: BusinessWeek) Full Story
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| Market Analysis |
As President-elect Barack Obama prepares to enter the White House, he must ponder what to do about the world's trouble spots: Iran, Iraq, North Korea, the Caucasus. And, oh yes, Detroit. On Friday, General Motors (GM: Charts, News, Offers) and Ford (F: Charts, News, Offers) announced more multibillion-dollar losses in the third quarter; closely held Chrysler doesn't publicly report results. When GM, which seems in the worst shape, was 45 minutes late releasing its results, rumors spread that a bankruptcy filing was imminent. It wasn't, but the company says it could run out of cash in the first half of next year. Make that the first quarter if the current cash bleed continues. GM is lobbying furiously for emergency federal assistance, with Ford and Chrysler close behind. Let's assume that the powers in Washington -- the Bush team now, the Obama team soon -- deem GM too big to let fail. If so, it's also too big to be entrusted to the same people who have led it to its current, perilous state, and who are too tied to the past to create a different future. (Source: Wall Street Journal) Full Story
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It may still take awhile before Wall Street finally accepts that it won't get paid. At the moment, as their bony fingers fondle the new taxpayer loot, the firms appear to believe that they might still fool the public into thinking that bonus money isn't taxpayer money. "We've responded appropriately to the attorney general's request for information about 2008 bonus pools," a Citigroup Inc. spokeswoman told Bloomberg News recently, "and confirmed that we will not use TARP funds for compensation.'' But as the Bloomberg report noted, "she declined to elaborate.'' As well she might! For if the Citigroup spokeswoman had elaborated she would have needed to say something like this: "We're still trying to figure out how the $25 billion we've already taken of taxpayers' money has nothing to do with the $26 billion we're planning to hand out to our highly paid employees in 2008 (up 4 percent from 2007!). But it's a tricky problem because, when you think about it, it's all the same money." (Source: Bloomberg) Full Story
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Not so long ago, the dollar stood for a sum of gold, and bankers knew the people they lent to. The author charts the emergence of an abstract, even absurd world--call it P***t Finance--where mathematical models ignored both history and human nature, and value had no meaning. This year we have lived through something more than a financial crisis. We have witnessed the death of a p***t. Call it P***t Finance. Two years ago, in 2006, the measured economic output of the entire world was worth around $48.6 trillion. The total market capitalization of the world's stock markets was $50.6 trillion, 4 percent larger. The total value of domestic and international bonds was $67.9 trillion, 40 percent larger. P***t Finance was beginning to dwarf P***t Earth. P***t Finance seemed to spin faster, too. Every day $3.1 trillion changed hands on foreign-exchange markets. Every month $5.8 trillion changed hands on global stock markets. (Source: Vanity Fair) Full Story
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| On This Date |
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November 10, 1927: GM announces the largest dividend payment in history to date: $65 million, or almost $4 per share.
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| Notable Quotable |
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More than ever before, Americans are suffering from back problems. Back taxes, back rent, back auto payments... - Robert Orben
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| Previous Newsletters |
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| November 7, 2008 |
| November 6, 2008 |
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| November 4, 2008 |
| November 3, 2008 |
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