Thread: Bank failure(s)

Well, my being away didn't help the markets this time, did it?

At least Wall Street seems happy for my return and is up 2% this morning. Pfizer's bid for Wyeth had more effect . Caterpillar cuts 20k jobs. Europe was up gently initially after Tokyo ended down 1%.

The Bank of Israel dropped interest rates 0.75% to 1%. The Icelandic government fell and the prime minister resigned on ill-health grounds. New elections have been called for May.

Sterling had a bad week while I was away, down from 130 to the yen to 125 and we're below 1.40 to the US dollar. UK Banks have further problems (many share prices halved in the week I was away) and the UK government doesn't know how much their potential guarantees are going to cost the taxpayer.

In the US I suppose the new economic stimulus package announced on Friday was the big news. No real surprises, I think.

Iceland's government topples amid financial mess - Yahoo! News

I work for Wyeth. And I have a bad feeling.

Pfizer shut down their Ann Arbor facility last year, putting about 2000 out of work. The nearby businesses are holding on by their fingernails until the University comes in... and takes the whole thing off the tax roles.

Originally Posted by SHOTIME

Don want to work for Pfizer? Are they planning layoffs?

My department does High Throughput Screening. Usually a big Pharma company has their own HTS department so we're worried that Pfizer will keep their HTS people and ditch us. From what we've heard, their HTS group is antiquated while ours is pretty cutting edge and very efficient. So that's in our favor but really who can tell. I'm pretty sure that nothing will happen for quite a while.

The article that I just read said that once the two companies are merged Pfizer still plans on 15% layoffs. After their layoffs today that leaves ~19350 people still to go in the near future!

Originally Posted by CBRVFR

Pfizer shut down their Ann Arbor facility last year, putting about 2000 out of work. The nearby businesses are holding on by their fingernails until the University comes in... and takes the whole thing off the tax roles.

Wouldn't that be on the tax roles

Two US economic stats came in above expectations yesterday, the first time since Lehman's bankruptcy: leading indicators were up 0.3% v consensus -0.2%; and existing home sales rose 6.5% v an expected -2%. These both essentially stem from the Fed's aggressive move to expand money supply. Median home prices were down 15% to $175,400 and sales of distressed homes accounted for 45% of the existing home sales, so it's not exactly a sign of health, but something positive.

Tim Geithner was sworn in as Treasury Secretary; William Dudley replaces Geithner at the New York Fed. Dudley was Goldmans' chief economist for 10 years before heading up the markets group at the NY Fed from 2007.

Tokyo was up 5% overnight as a better Wall Street was reinforced by a weaker yen and further measures from the Japanese government to provide finance for companies directly. Europe is mixed, without trend.

Further to the Wyeth deal announcement, as davef mentioned, Pfizer announced 20k lay-offs in the combined operation.

Geithner =

Originally Posted by SheepOfBlue

Wouldn't that be on the tax roles

Property owned by the University is not subject to Real Estate or personal property tax, from which we fund the local schools and city infrastructure. They did not consult with the mayor or members of council, in true 400 lb gorilla fashion. Those who accuse U of M of arrogance are understating the problem.

The tradeoff is that no one else looked likely to buy the Pfizer campus anytime soon, and presumably those who will work there will live in town, support local businesses, etc. A debatable argument, for sure.

Originally Posted by luvtolean

Geithner =

That emoticon doesn't have near enough swearing attached to it.

Asian markets quiet today, Europe up modestly. SAP, the German software company, cuts 3k jobs but results beat expectations. BSkyB, the largest UK satellite broadcaster, reports profits up 26% and 1k new jobs on increased take-up of High Definition TV. Japanese car companies cut production worldwide: Bloomberg.com: Asia

US House vote today on the Obama reflation package. Rush Limbaugh gets some publicity for the counter view. Think Progress Limbaugh against stimulus because its success could hurt GOP’s electoral chances.

Obama's package passed, but with not a single Republican vote in favour. Nevertheless, stocks in the US were happy that the package went through and rose 3%. Asia was similarly encouraged overnight, but Europe is down 2% this morning, having risen on the expectation yesterday.

The Fed policy statement yesterday confirmed it is prepared to buy Treasury Bonds directly, but was less gung-ho than overbought bond markets expected, so prices slipped in this market. The ECB says its next "important meeting" is in March, lowering expectations of rate cuts before then. Expectations that Geithner will create a "bad bank" run by the FDIC increase.

Interest rates in the Philippines were cut 0.5% to 5%. Russian reserves fell by $9.7bn after record one-day intervention on 19th January.

Ford is expected to announce a big loss today. Royal Dutch Shell announced a 28% fall in profits for Q4 but an increase in both dividends and capex. Total spends C$617m acquiring CTS Energy, a tar sands company, adding to Synence and American Shale Oil previous purchases.

Edit: Ford's announcement http://news.bbc.co.uk/1/hi/business/7858289.stm

Japanese industrial production was down 9.6% month-on-month in December. The Japanese equity market was down 3% on the news and Wall Street's fall yesterday. European markets are modestly mixed this morning.

Honda halved its current-year profit forecast to $900m. This still contrasts with Ford's big loss announced yesterday. Half of Honda's profit is estimated to come from its motorcycle business. Edit: UK factory closure http://news.bbc.co.uk/1/hi/business/7859863.stm

Roche announced a hostile bid for the minority in Genentech. Toshiba is in talks to merge its chip business with NEC. NEC announces 20k layoffs, Toshiba cuts $3bn of NAND chip capex, Toshiba shares fall 17%.

Most markets off 2% after Friday's Wall Street decline. Sterling's weak again today, down 2% as well.

The Rouble is weaker again, Prime Minister Putin's performance at Davos having reminded people how poorly the leadership understands economic issues and how controllling their inclinations.

Iceland gets a new left-wing coalition government. GlaxoSmithKline plans to cut 6k jobs, the same as Astra Zeneca. Honda's US January sales equally bad as December's: Honda U.S. sales tumbled again in January | U.S. | Reuters

Thanks for the updates. There may not be many people that post inthis thread but I know a few of us read it daily.

Originally Posted by Hammer

Thanks for the updates. There may not be many people that post inthis thread but I know a few of us read it daily.

Now if someone would start a thread that explains why we need a stimulus package, I'd have two daily serials to read...

Originally Posted by Baketech

Now if someone would start a thread that explains why we need a stimulus package, I'd have two daily serials to read...

I am so fed up with the "bail out". As it currently sits, it's fuck all to do with stimulating the economy (though our kids and grandkids will be saddled with the debt), and everything about blowing a trillion dollars pushing Obama and Congress' ulterior motives, such as union contract protection, vote buying and especially their "green" farce.

I have yet to see any serious economist say what is being done will help anything. Yet, the Wall Street Journal has been full of why it won't work. The markets are still on strike. I've seen more than one serious economist say foreclosure is the best thing that can happen to an owner with a jacked up balance sheet.

I have seen many already talking about the next trillion dollars Obama and Congress will spend to actually take on the problem, liquidity at banks and in the system.

Most of what I've seen mentioned about the current $800+ bill they're trying to push through states that there's minimal immediate spending - it's mostly 6+ months. I don't see how that stimulates anything but their own agendas.

Markets mixed, though Moscow fell 5% yesterday (see Putin / Davos comment yesterday). Tech performing better on higher profits from Vodafone, thanks to the weak pound, and better US ISM Manufacturing orders stats of 35.6 v expected 32.5 and prices paid 29 v 18

Australia cut interest rates 1% to 3.25%. Norway and the UK are expected to cut rates 0.5% each later this week. Australia also announced a $26.5bn fiscal package, roughly 1/3 tax cuts and 2/3 infrastructure spending.

Research recently showed 33 of the 34 most leveraged big global banks were European.

Another positive surprise yesterday with the US December pending home sales up 6.9% month-on-month: refi's are naturally strong with interest rates having fallen and clearly some bargain-hunting is going on.

Asian markets are up 2% overnight after similar moves on Wall Street, but Europe is flat. Politicians in the US and UK continue to discuss the state "bad bank" creation.

Panasonic is to cut 15k jobs worldwide, after forecasting an annual loss of $4.2bn. ATT is bidding around $3bn for Verizon's wireless assets it needs to sell after its acquisition of Alltel.

Indonesia cut its interest rates 0.5% to 8.25%: market rates are around 16% and inflation 9% and falling. Kazakhstan, Central Asia's biggest energy producer, devalued its currency, the tenge, by 18% against the dollar and dropped interest rates by 0.5% to 9.5% after forex reserves fell 10% in January defending the rate. Private commentators do not expect this to be the last move down if oil prices remain low.

Edit: Some new initials for you, TALF, the proposed fund in the Obama package to support the market for Asset-Backed-Securities. The idea is that holders of such bonds (which include credit-card, student-loans and car-loans) can put them into a fund where the government will give a guarantee over defaults in return for a 10-20% haircut in the market value of the loans accepted. Investors could walk away from their assets (i.e. non-recourse) and this would be in the context of perhaps 5x or 10x gearing for investors. This would potentially restore car loan access quite quickly, perhaps permitting a bounce-back (but not recovery) in car sales to say 12m from the 10m in December.

Markets are down around 1% in line with Wall Street yesterday.

The US Services PMI index was also a positive surprise yesterday, at 42.9 for January rather than the expected 39.0. This still means contraction, but less bad than feared. The Baltic Dry Shipping index, an indicator of trade demand, has doubled from its December lows, though it is still down 90% from its peak in mid-2008.

Hyundai's US sales rose 19% in January against the market's 37% decline after it offered to take back cars of people who are made unemployed. Ford is rumoured to be selling Volvo to China's Geely Automobile.

Czech central bank reduces interest rates 0.5% to 1.75%. UK has reduced rates by 0.5% to 1.0% at lunchtime.

Pennsylvania proposes a budget cut of $1bn or 0.2% for 2010 with 3k job losses.

Originally Posted by ND4SPD

Most of what I've seen mentioned about the current $800+ bill they're trying to push through states that there's minimal immediate spending - it's mostly 6+ months. I don't see how that stimulates anything but their own agendas.

Actually, a big chunk of it starts getting spent in 2010 ... just in time for the elections.

Most markets up 1-2% after stronger Wall Street last night. US unemployment report out today, expected to show 16-year high.

Toyota triples loss expectation for the year to 31st March to $5bn: BBC NEWS | Business | Toyota triples year loss forecast . Ford may be required to put $4bn into its US pension scheme: Bloomberg.com: U.S. .

Hungarian industrial production dropped 23% year-on-year in December and Latvia's Q4 08 gdp dropped an annualised 7.3% after a 5.2% decline in Q3. Prime Minister Yulia Timoshenko's government in the Ukraine survived a confidence vote, called after the gas supply issue last month.

A Ukrainian ship carrying 20 Russian T72 tanks to Kenya was released by Somali pirates after reportedly a joint Russia-Ukrainian military effort and payment of a $3.2m bribe.

Strong Wall Street on Friday, partly on hopes that Geithner would announce plans for the "bad bank" over the weekend, which didn't happen (talks are ongoing). So US up 3% Friday, but Asia and Europe are +/-1% today.

Nissan announces 20k job cuts, forecasts $2.9bn loss.

Switzerland reconfirms its deal with EU to allow EU citizens to work in Switzerland, replacing an existing 7-year deal and extending the cover to include new members such as Rumania and Bulgaria after some heated political debate.

Still no "Geithner plan", probably today, so markets off gently. Politicians' words describing the economy take a step up, President Obama calling it a "full-blown crisis" and in the UK Minister Balls calls it "the worst recession in 100 years" and says it will last over ten years!

Bob Lutz, 76, is to change roles at GM and retire at the end of the year, stepping down to Vice Chairman on 1st April. http://www.autocar.co.uk/News/NewsAr...llCars/238022/

Japanese machine tool orders fell 84% year-on-year in January, compared to the 2001 low of -44% in the previous recession. German exports are down 11.7% year-on-year in December, a similar level to the low of 1993. Cumulative job losses in the US since the start of the recession stand at 3.5m, compared to 2.0m and 1.5m in the previous two recessions at the same stage.

[Edit: Taiwanese chipmaker UMC announces Q4 08 $700m loss: http://news.bbc.co.uk/1/hi/business/7880909.stm]

Does this sound like peaking bad news just before the final monetary policy component (the "bad bank") is put in place?

Originally Posted by oldfogey

UK Minister Balls

That must have been rough in high school.

His wife is also a cabinet minister, but goes by her maiden name of Cooper. Ed Balls was Gordon Brown's closest confidant when he was Chancellor, so although he's now Minister of Education, he still pronounces on economics issues.