SKY News Summary – 10-30-08
“New orders for manufactured durable goods in September increased $1.6 billion or 0.8 percent to $207.8 billion, according to the U.S. Census Bureau. This followed a 5.5 percent August decrease. Excluding defense, new orders decreased 0.6 percent.
Inventories of manufactured durable goods in September, up fourteen of the last fifteen months, increased $1.2 billion or 0.4 percent to $340.2 billion. This was also at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.8 percent August increase. Defense new orders for capital goods in September increased $1.9 billion or 19.6 percent to $11.8 billion.”
http://www.census.gov/indicator/www/m3/
“Real gross domestic product decreased at an annual rate of 0.3 percent in the third quarter of 2008, according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent. The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.”
http://www.bea.gov/newsreleases/national/gdp/2008/gdp308a.htm
According to Bloomberg news, “It has been 52 years since an incumbent party won the presidency after GDP declined in the third quarter of an election year. In 1956, President Dwight Eisenhower, a Republican, was re-elected to a second term after GDP declined 0.5 percent in the third quarter.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=al..RukPocIo&refer=home
The Federal Reserve’s program to support the commercial paper market may be helping. Issuers are announcing their use of the Fed’s offer to buy up paper, and long-term paper is again being sold. One trader said that “Of the $5.5 billion he processed Wednesday, 40% was for longer-term paper, rather than the overnight maturities previously preferred by investors.” GE, UBS, and American Express are among the companies using the Fed’s program.
http://online.wsj.com/article/SB122528450520479977.html?mod=todays_us_money_and_investing
American Express announced staff, investment, and salary cuts in order to save about $1.8 billion in expenses in 2009. The company expects a fourth quarter charge of between $370 and $440 million pretax for severance and other costs related to the elimination of 7,000 jobs.
http://home3.americanexpress.com/corp/pc/2008/reeng.asp
Boeing and the International Association of Machinists and Aerospace Workers announced a tentative agreement on wage increases and pension benefits. The agreement must be ratified by the workers.
http://www.boeing.com/news/releases/2008/q4/081027c_nr.html
Kimberly-Clark Corporation announced it purchased from Compañía Colombiana de Inversiones S.A. (Colinversiones) the remaining 31 percent shares of Kimberly-Clark’s Andean region subsidiary, Colombiana Kimberly Colpapel S.A.. The company is headquartered in Bogotá, Colombia, operates nine manufacturing facilities and employs more than 6,400 full-time employees and contracted personnel across the region.
http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=343819
Merck announced that its product, Isentress, reduced the HIV virus to an undetectable level when combined with other medicines. The Phase III study compared Isentress with Efavirenz and found, when combined with tenofovir/emtricitabine, both medicines reduced HIV virus to an undetectable state, but Isentress was more effective.
http://www.merck.com/newsroom/press_releases/product/2008_1026.html
Royal Dutch Shell announced that Peter Voser will succeed Jeroen van der Veer as Chief Executive, effective 1 July 2009. Voser (50) is Chief Financial Officer and a Director of the Board since October 2004. Voser joined the Royal Dutch/Shell in 1982 and has held a number of finance and business roles in Switzerland, Argentina, Chile and the UK until March 2002. He then joined Asea Brown Boveri as Chief Financial Officer, returning to Shell four years ago.
http://www.shell.com/home/content/investor/news_and_library/press_releases/2008/peter_voser_ceo_29102008.html
Microsoft commissioned a study by StrategyOne Research that showed that two out of three Americans will consider spending less money on family and friends this Christmas than they did last Christmas. “Our research suggests that nearly half of families out there are considering one large family gift as opposed to many smaller individual items. There is a real renewed emphasis on that family experience.”
http://www.microsoft.com/presspass/features/2008/oct08/10-22h4h.mspx
As a sign of the times, the Fannie Mae website has a new link to properties it owns.
http://reosearch.fanniemae.com/reosearch/backToResultAction.do?netui_row=reoSearchResultGrid;10
PepsiCo announced that it will acquire Spitz International Inc,, the leading maker of sunflower and pumpkin seeds in Canada. Spitz sells sunflower seeds in six flavors (salted, seasoned, dill pickle, spicy, chili lime and smokey bbq) and pumpkin seeds in three flavors (salted, seasoned and dill pickle). “Spitz enables Frito Lay Canada to grow our seed business in Canada and help us expand in the U.S. , while supporting PepsiCo’s broader health and wellness strategy …” according to Al Carey, Frito-Lay North America President and CEO.
http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-newsArticle&ID=1219015&highlight=
Fifth Third Bancorp will participate in the Treasury’s voluntary Capital Purchase Program. The Treasury intends to invest approximately $3.45 billion in senior preferred stock and related warrants of Fifth Third Bancorp under the terms of the program. According to the 53 website announcement, “The investment consists of senior preferred stock with a five percent dividend for each of the first five years of the investment, and nine percent thereafter, unless the shares are redeemed. The shares are callable at par after three years and may be repurchased at any time under certain conditions. The Treasury will also receive 10-year warrants for common stock in the amount of 15 percent of the preferred stock investment. A summary of the CPP can be found on the Treasury’s web site at www.ustreas.gov/initiatives/eesa.”
“As part of our capital plan, we anticipated the sale of non-core assets that would generate an additional $1 billion or more in capital to provide for the possibility of a difficult 2009,” said Kevin T. Kabat, chairman, president and chief executive officer of Fifth Third Bancorp.
http://ir.53.com/phoenix.zhtml?c=72735&p=irol-newsArticle&ID=1218509&highlight=
UPS announced its first purchases of the hydraulic hybrid vehicle which the company and the U.S. Environmental Protection Agency believe will achieve a 45-to-50 percent improvement in fuel economy, compared to conventional diesel delivery trucks, and a 30 percent reduction in CO2. The Eaton Corporation, which helped develop and refine the vehicle’s hydraulic hybrid power system, will monitor the vehicle’s fuel economy and emissions in the Minneapolis area. http://www.ups.com/pressroom/us/press_releases/press_release/0,0,5052,00.html
Sources: The Wall Street Journal and Wall Street Journal online, Bloomberg News, UPS,Fifth Third, PepsiCo, FannieMae, Microsoft, RoyalDutch, Merck, Kimberly-Clark, Boeing, American Express and U.S. Census Bureau, Bureau of Economic Analysis websites.
SKY News Summary 10-23-08
The Bank of International Settlements in Basel, Switzerland has an informative article on the extent of globalization in the banking industry. The article gives statistics for dramatic growth of cross-border lending and deposits from $684 billion in 1977 to $35.9 trillion as of March 2008.
http://www.bis.org/publ/work244.pdf?noframes=1
http://www.bis.org/statistics/rppb0807.pdf
The Wall Street Journal reported that Boeing held an analyst conference call yesterday in which the company disclosed that “only about 10% of the company’s orders are from U.S. airlines.” According to Mr. McNerney, “the company had seen only two outright order cancellations and 80 postponed deliveries. Those slots, he said, were immediately snapped up by other airlines eager to get planes earlier.”
http://online.wsj.com/article/SB122459864105054085.html?mod=todays_us_page_one
According to the Wall Street Journal online, “The value of Mr. Buffett’s equity in Berkshire Hathaway Inc. declined more than that of any other big-company chief executive, according to an analysis by Steven Hall & Partners, a compensation-consulting firm.” “Mr. Buffett has lost $9.6 billion this year in his company alone.”
http://online.wsj.com/article/SB122470916865059839.html
The Bureau of Labor Statistics has an interesting spotlight on older workers in the workforce. In the past thirty years, workers 65 and over increased 101% while total employment increased 59%. Employed women over 65 increased 147%. Most of these workers are full time, not part time.
http://www.bls.gov/spotlight/2008/older_workers/
The Economist blames hedge funds for some of the recent fluctuations in the market. The author blames hedge funds’ client base which has changed from affluent, loyal clients to funds-of-hedge-funds, which act as intermediaries for private banks, some institutions and individuals who are merely affluent, which have become hugely important. “They supply more than 40% of industry assets under management, compared with only 5% in 1990 (see chart 3).
Even if institutions want to buy and hold their positions, some are being forced to raise cash. One hedge-fund manager says that pension funds have onerous commitments to private equity, which they are meeting by selling out of hedge funds. And there is a widespread feeling that money originated through funds-of-hedge-funds is liable to get jumpy at any hint of trouble and skedaddle if losses are made. One fund-of-funds manager says he rushes to be the first out if he suspects that others may desert a hedge fund. Some also argue that the behavior of the individuals who invest through funds-of-funds most closely resembles that of mutual-fund investors, traditionally viewed as finance’s headless chickens.
Despite the fidgetiness of their new clients, few hedge funds have locked in their money for long periods. Most funds allow redemptions each quarter: only those with the strongest records, such as TCI, an activist firm in London, can lock money in for several years. Funds-of-hedge-funds have marketed themselves as providing monthly liquidity, a claim that holds true only if clients don’t all test it at once. The result is eerily similar to the plight of those banks that relied too much on fickle wholesale funding. If investors ask for their money back, funds often have to sell out of illiquid positions to raise cash, which may force prices down. In September clients withdrew a record $40 billion from hedge funds, according to analysis by TrimTabs, a research firm.
Fear of redemptions is just as damaging as the fact of them: if managers worry that clients will bail out, they may try to raise cash in anticipation. Merrill Lynch estimates that between July and August alone, the industry’s cash holdings rose from $156 billion to a record $184 billion, equivalent to 11% of assets under management. Since then the vicious cycle of forced sales to fund anticipated or actual redemptions has only intensified.”
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=12465372
Stowe Mountain is owned by AIG and is halfway through a $400 million renovation. (AIG was founded by Cornelius Vander Starr who also developed the resort 60 years ago). Will AIG have to sell the ski resort to repay the $122.8 billion Federal Reserve credit line it was given to avoid collapse?
http://www.bloomberg.com/apps/news?pid=20601109&sid=axG92Y6PUKkE&refer=news
Foreign Affairs has a great article about what the new administration has to do after this market crash. It points out that even if the government sells off its biggest asset, 28% of the country’s landmass, the sale would barely cover the cost of Social Security for one year. The author would like us to revert to a gold-based monetary system. He says, “The world’s reserve-currency franchise is a U.S. national treasure. To begin to understand its value, imagine how any other country would receive the news that it had been granted the right to discharge its international obligations, as the United States does, in its very own currency, which only it can lawfully print. There would be dancing in the streets.”
http://www.foreignaffairs.org/20081001faessay87611-p10/james-grant/after-the-crash.html
Sources: The Wall Street Journal and Wall Street Journal online, Bloomberg News, Foreign Affairs, The Economist, Bank of International Settlements, and Bureau of Labor Statistics websites.
SKY News Summary 10-21-08
Exelon announced its intention to purchase NRG Energy for $26.43 per share, or $6.2 billion. NRG’s 52 week high is $46.56. The offer represents a 37% premium to the October 17 closing price for NRG shares. The combined company would be the largest power company in the U.S., with an enterprise value of approximately $60 billion and a market capitalization of $40 billion. According to the Exelon website, it “would have a more highly diversified mix of generation capacity with a presence in four major domestic competitive power generation regions and a diversified fuel mix using uranium, natural gas, coal and oil. The combined company would also have best-in-class nuclear and fossil operations with the second lowest carbon emitting intensity in the industry, positioning it to address the challenges of a carbon constrained world.”
http://www.exeloncorp.com/aboutus/news/pressrelease/corporate/Press+Release+-+Exelon+offer+to+aquire+NRG.htm
The Federal Reserve Board announced the creation of the Money Market Investor Funding Facility (MMIFF), “which will support a private-sector initiative designed to provide liquidity to U.S. money market investors. The Fed New York will provide senior secured funding to a series of special purpose vehicles to facilitate an industry-supported private-sector initiative to finance the purchase of eligible assets from eligible investors. Eligible assets will include U.S. dollar-denominated certificates of deposit and commercial paper issued by highly rated financial institutions and having remaining maturities of 90 days or less. Eligible investors will include U.S. money market mutual funds and over time may include other U.S. money market investors.”
The MMIFF complements the previously announced Commercial Paper Funding Facility (CPFF), which on October 27, 2008 will begin funding purchases of highly rated, U.S.-dollar denominated, three-month, unsecured and asset-backed commercial paper issued by U.S. issuers, as well as the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), announced on September 19, 2008, which extends loans to banking organizations to purchase asset backed commercial paper from money market mutual funds.”
http://www.federalreserve.gov/newsevents/press/monetary/20081021a.htm
The Bureau of Labor Statistics released regional and state unemployment rates today. Rates were generally unchanged in September but up substantially over the year. The national unemployment rate stayed at 6.1 percent but was up from 4.7 percent a year earlier.
http://www.bls.gov/news.release/laus.nr0.htm
The Conference Board also released the composite index of leading indicators for September. The index increased 0.3% in September, the first increase in five months Over the six months ended in September, the index has fallen 1.3%. According to the WSJ, “six out of the ten indicators rose. The largest positive contributors to the index were real money supply, consumer expectations, and the interest rate spread. The most significant negative contributors were jobless claims and building permits.”
http://online.wsj.com/article/SB122451054271550007.html?mod=todays_us_page_one
http://www.conference-board.org/economics/bci/pressRelease_output.cfm?cid=1
Bloomberg had an interesting article on oil prices. According to the article, “OPEC lowered its forecast for demand in 2009 last week, saying consumption will be 450,000 barrels a day less than expected at 87.21 million a day. The Paris-based International Energy Agency shaved its 2009 outlook the previous week and said this year’s demand growth of 0.5 percent will be the weakest since 1993.” At the same time, “world oil capacity will rise 1.45 million barrels a day in 2009, twice the rate of growth in demand, according to the International Energy Agency” with Exxon’s new fields in Angola and BP’s field in the Gulf of Mexico coming on line by the end of this year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSARub6YaVDQ&refer=home
BP America announced last week that it made a significant oil discovery at its Freedom Prospect in the deepwater Gulf of Mexico. “The Freedom well is our third discovery in this part of the deepwater Gulf of Mexico following our Tubular Bells and Kodiak discoveries,” said Andy Inglis, BP chief executive, Exploration and Production. “This discovery further strengthens BP’s resource base and portfolio of potential development projects in the Gulf of Mexico.” The well is operated by BP with a 25 % working interest, and includes co-owners Noble Energy, Inc. (37.5%), Samson Offshore Company (25%) and Marathon Oil Company (12.5%).
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7048456
Eli Lilly announced that it will take a $1.415 billion charge in the 3Q of 2008 to resolve the Government’s investigation of its marketing practices of Zyprexa dating back to March of 2004.
http://newsroom.lilly.com/releasedetail.cfm?ReleaseID=341963
Walgreen announced its purchase of McKesson Corporation’s specialty pharmacy. Terms of the agreement were not disclosed. Walgreens will become the fourth-largest specialty pharmacy in the country.
http://news.walgreens.com/article_display.cfm?article_id=5098
IBM unveiled a smaller mainframe designed for midsized companies. The new mainframe has the capacity of 232 x86 servers, but with a 83% smaller footprint and with up to 93% lower energy costs. IBM Global Financing even offers no-interest, no-payment for 90 days for qualified buyers.
http://www-03.ibm.com/press/us/en/pressrelease/25584.wss
Sources: The Wall Street Journal and Wall Street Journal online, Bloomberg News, Walgreens, Lilly, BP, Exelon, Commerce Board, Bureau of Labor Statistics, and Federal Reserve websites.
SKY News Summary 10-16-08
American Airlines ordered 42 B787-9 Dreamliner planes from Boeing with delivery between 2012 and 2018. An additional 58 may be purchased between 2015 and 2020. The plane was chosen for its reduced weight (fuselage and wings are made of composite material) which could reduce flight costs by 20%, and quieter engine which reduces the noise footprint by 60%. The overhead bins are 30% larger than comparable aircraft bins.
http://www.aa.com/aa/viewPromotionDetails.do?itemDescriptor=PromotionContent&fileName=787.xml&type=MarketingMessageTeaser&anchorLocation=index.jsp&url=787.xml&_locale=en_US&repositoryName=PromotionContentRepository&repositoryId=16106430
http://www.boeing.com/news/releases/2008/q4/081015b_nr.html
Home Dialysis Plus, a developer of devices and products for kidney dialysis announced a licensing agreement with HP to use HP’s inkjet technology to mix the correct amount of water and concentrated dialysate (a salt and electrolyte solution) for a portable, nightly dialysis machine.
http://www.hp.com/hpinfo/newsroom/press/2008/081016a.html
The Consumer Price Index decreased 0.1% in September, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The September
level of 218.783 (1982-84=100) was 4.9 % higher than in September
2007.
http://www.bls.gov/news.release/cpi.nr0.htm
“A CPI index used to calculate annual cost of living adjustments for Social Security benefits rose 5.8% in the third quarter versus one year ago, meaning benefits will see their biggest COLA increase since 1982.”
http://online.wsj.com/article/SB122415936359040327.html
The Bureau of Labor Statistics also announced that weekly earnings were unchanged from August to September. Average weekly earnings rose by 2.8 % from September 2007 to September 2008.
http://www.bls.gov/news.release/realer.htm
The Swiss government moved to strengthen UBS. UBS will transfer $60 billion in subprime loans to SNB and the Swiss government will increase account holder protection for UBS customers above the current 30,000 francs. The Swiss will end up with a 9% nonvoting stake in UBS.
The UBS website reported the terms of the agreement:
“The fund will be capitalized with up to USD 6 billion of equity capital provided by UBS and a non-recourse loan in the maximum amount of USD 54 billion provided to the fund by the SNB. The entity will be controlled by the SNB. UBS will sell its equity interests to SNB for USD 1 and will have an option to repurchase the equity once the loan is fully repaid for a purchase price of USD 1 billion plus half of the equity value exceeding USD 1 billion. To fund its equity contribution, and at the same time maintain its strong capital position, UBS can raise CHF 6 billion of new capital in the form of mandatory convertible notes (MCN). The MCN has been fully placed with the Swiss Confederation.”
http://www.ubs.com/1/e/investors/releases?newsId=154213
http://online.wsj.com/article/SB122413491 899139953.html
The Treasury’s money-market fund guarantee program, announced September 19th, seems to be working to restore confidence in money-market accounts. According to Money Fund Report, published by iMoneyNet, a research firm that monitors money fund data, investors put about $58.38 billion into money-market funds in the week ended Oct. 14, to bring total money-market funds assets to $3.446 trillion. “It was the third week of net buying in the funds, and $26 billion, or about 45%, of the money went into institutional funds that invest in government securities.
http://online.wsj.com/article/SB122412620502139641.html?mod=todays_us_money_and_investing
Sources: The Wall Street Journal and Wall Street Journal online, UBS, HP. American Airlines, Boeing, and Bureau of Labor Statistics websites.
SKY News Summary 10-14-08
“When written in Chinese, the word ‘crisis’ is composed of two characters. One represents danger and the other represents opportunity.”
John F. Kennedy
United Technologies withdrew its offer to purchase Diebold at $40 per share. UTC wrote, “In light of your extended refusals of UTC’s requests for management discussions and due diligence, we are withdrawing our offer of February 29 to purchase any and all Diebold common shares at $40 per share.”
http://www.utc.com/press/releases/2008-10-13.htm
Altria announced that it plans to extend its purchase agreement with UST until January 2009. According to the company, “While Altria currently has fully committed financing to complete the transaction; Altria’s lenders advised that it would be preferable to close the transaction in 2009.”
http://www.altria.com/media/02_00_NewsDetail.asp?reqid=1205381
Roche announced that the Pivotal Phase III study shows MabThera successfully delays disease progression in patients with relapsed or refractory Chronic Lymphocytic Leukaemia who use the drug in conjunction with chemotherapy. Full results of this study will be presented at an upcoming medical meeting.
http://www.roche.com/media/media_releases/med-cor-2008-10-07.htm
IBM announced the opening of a new research facility in Shanghai that will provide opportunities for collaboration with universities and other research institutions in China.
The new facility is an extension of the IBM China Research Laboratory, established in Beijing in 1995.
http://www-03.ibm.com/press/us/en/pressrelease/25486.wss
The Treasury, Federal Reserve, and FDIC issued a joint statement this morning outlining actions designed to strengthen capital in financial institutions, enhance public confidence and stabilize liquidity.
“Today we are implementing our strategy with three important actions:
First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer.
Second, after receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Paulson signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily guarantee the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing deposit transaction accounts. Regulators will implement an enhanced supervisory framework to assure appropriate use of this new guarantee….
Third, to further increase access to funding for businesses in all sectors of our economy, the Federal Reserve has announced further details of its Commercial Paper Funding Facility (CPFF) program, which provides a broad backstop for the commercial paper market. Beginning October 27, the CPFF will fund purchases of commercial paper of 3 month maturity from high-quality issuers.
http://www.federalreserve.gov/newsevents/press/monetary/20081014a.htm
http://www.newyorkfed.org/markets/cpff_terms_conditions.html
Later in the day, further details were released in Wall Street Journal blogs:
Capital Purchase Program Details
The Treasury plans to contribute up to $250 billion from the $700 billion financial rescue package into potentially thousands of banks through the new, voluntary program. It initially will buy $25 billion in preferred stock in Bank of America — including Merrill Lynch — as well as J.P. Morgan and Citigroup; between $20 billion and $25 billion in Wells Fargo; $10 billion in Goldman and Morgan Stanley; $3 billion in Bank of New York Mellon; and about $2 billion in State Street. There are strings attached to the Fed’s purchase, such as no new golden parachutes and caps of executive salaries as a tax deduction.
http://blogs.wsj.com/economics/2008/10/14/treasurys-capital-purchase-program-details
http://www.efinancialnews.com/usedition/index/content/2452171041/printerfriendly
Temporary Liquidity Program – Guaranteed senior debt
“Under the plan, certain newly issued senior unsecured debt issued on or before June 30, 2009, would be fully protected in the event the issuing institution subsequently fails, or its holding company files for bankruptcy. This includes promissory notes, commercial paper, inter-bank funding, and any unsecured portion of secured debt. Coverage would be limited to June 30, 2012, even if the maturity exceeds that date.
In addition, any participating depository institution will be able to provide full deposit insurance coverage for non-interest bearing deposit transaction accounts, regardless of dollar amount. These are mainly payment-processing accounts, such as payroll accounts used by businesses. Frequently, these exceed the current maximum limit of $250,000. This new, temporary guarantee—which expires at the end of 2009—will help stabilize these accounts. The program will be funded through special fees and does not rely on taxpayer funding. Participants will be charged a 75-basis point fee to protect their new debt issues, and a 10-basis point surcharge will be added to a participating institution’s current insurance assessment in order to fully cover the non-interest bearing deposit transaction accounts.”
http://blogs.wsj.com/economics/2008/10/14/fdic-sets-temporary-liquidity-program/
The Bureau of Labor Statistics reported that “import prices fell 3.0 percent in September, the largest one-month decline since April 2003. Despite the 5.5-percent drop over August and September, the largest two-month decline since the index was first published monthly in December 1988, import prices were still up 14.5 percent over the past year.
The September decrease in import prices was led by a 9.0-percent decline in petroleum prices, the largest monthly drop since October 2006. The September decline in petroleum prices followed an 8.2-percent decrease in August; however, the index still rose 47.1 percent over the past 12 months.”
http://www.bls.gov/opub/ted/
Apple switched from Intel Corp. to Nvidia Corp. as the supplier of it new laptop graphics chips in order to speeds up (by as much as six times) processing speeds for gaming applications.
http://online.wsj.com/article/SB122400584842132957.html?mod=testMod
Pepsi will cut 3,300 jobs, or about 2% of its work force, resulting in fourth-quarter charges of $550 million to $600 million. http://online.wsj.com/article/SB122398424860432297.html?mod=testMod
Sources: The Wall Street Journal and Wall Street Journal online, Bureau of Labor Statistics, the New York Fed and Federal Reserve, IBM, Roche, and UTC websites.
SKY New Summary 10-9-08
The Federal Reserve cut interest rates from 2.0% to 1.5%, followed by the Bank of England (from 5.0% to 4.5%), The European Central Bank (from 4.25% to 3.75%) and central banks in China, Canada, Sweden and Switzerland. Even the Bank of Japan offered its strong support of a move although it cannot reduce rates any farther. There has been only one other time in its eleven-year history (after the September 11 attacks) that the European Central Bank reduced rates outside its regular meetings. This global coordination underscores the willingness of central bankers to act swiftly and to act together. Finance ministers from these countries will be meeting later this week at the International Monetary Fund in Washington.
http://www.csmonitor.com/2008/1009/p01s03-usec.html
The National Association of Realtors reported the index of sales contracts on previously owned homes rose 7.4% in August in all four regions followed by the NAR. The number of sales contracts rose 18.4% in the West, 8.4% in the Northeast, 3.6% in the Midwest and 2.3% in the South. July’s pending home-sales decreased by 2.7% perhaps due to stricter lending criteria at Fannie and Freddie.
http://www.marketwatch.com/news/story/realtors-say-pending-home-sales-index/story.aspx?guid=%7B41AEF5B8-D76A-4AEA-97AD-40E1510FA22E%7D
American Express released its semi-annual survey of small business owners. According to the report, “Cash flow concerns have risen year over year, capital investment plans are at their lowest in the history of the Monitor and the number of business owners offering healthcare benefits to employees is also lower…Three quarters of business owners plan to grow their businesses over the next six months, but keeping and maintaining current business and sources of revenue has surpassed growth as the top priority for entrepreneurs. To help retain their current sources of business, entrepreneurs will place a heightened focus on better servicing customers to set their business apart from competitors…Business owners in the services sector are among the most optimistic (53%) and most likely to have hiring plans (44%), but least likely to have plans for growth. ..Retailers are least optimistic (48%) among these business sectors…Business owners will employ a variety of tactics as they manage their businesses through the current economy. Nearly six in ten entrepreneurs (56%) find themselves reducing or accepting lower profit margins, which is also the top tactic for business owners in the services sector (48%). Half of business owners (51%) find themselves working longer hours in an effort to manage with retail business owners most likely to work longer hours (64%). Just under half will cut business or capital expenses (49%), will raise prices (48%) or will cut back or delay marketing expenses (46%). Business owners in the manufacturing sector are among the most likely to raise prices (63% vs. 60% of retailers and 40% of services companies).”
http://home3.americanexpress.com/corp/pc/2008/sbm08.asp
ExxonMobil announced that it will join with Pratt & Whitney Rocketdyne to develop technology to convert coal, coke or biomass to synthesis gas (i.e., CO and hydrogen), focusing on the development of a gasification-reactor system. Pratt’s experience with uniform feed distribution, high temperature combustion and rapid heat removal and ExxonMobil’s technology leadership in the energy sector should result in a gasification process that reduces emissions from the use of coal and other feedstocks and convert these sources into chemicals, fuels and power plant feedstock.
http://www.businesswire.com/portal/site/exxonmobil/index.jsp?ndmViewId=news_view&ndmConfigId=1001106&newsId=20081003005614&newsLang=en
The Procter & Gamble announced that it has begun an exchange offer for P&G common stock associated with the merger of P&G’s Folgers coffee subsidiary with The J. M. Smucker Company. P&G shareholders have the option to exchange some, none or all of their shares of P&G common stock for shares of Folgers common stock. “Following the merger, each share of Folgers common stock will automatically convert into the right to receive one Smucker common share. The Smucker common shares issued in the Folgers merger are expected to represent approximately 53.5 percent of the Smucker common shares that will be outstanding after the merger.”
http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1206949&highlight=
HP announced plans to open a 20,000-square-foot plant in Chongqing, in Western China where it will make notebook and desktop PCs.
http://www.hp.com/hpinfo/newsroom/press/2008/081009a.html
Walgreens announced that it has dropped its bid to purchase Longs Drug Stores for $75 per share in cash. Long’s board of directors voted in favor of a proposed acquisition by CVS/Caremark Corp. announced on Aug. 12.
http://news.walgreens.com/article_display.cfm?article_id=5087
The U.S. Census Bureau announced that August 2008 sales of merchant wholesalers were $404.9 billion, down 1.0% from the revised July level, but up 13.4 % from August 2007. August sales of durable goods were down 1.5 % from last month, but were up 5.5% from a year ago. Sales of nondurable goods were down 0.6% from last month, but were up 20.7% from last year. Total inventories of merchant wholesalers were $445.4 billion at the end of August, up 0.8% from the revised July level and were up 11.1% from a year ago.
http://www2.census.gov/wholesale/pdf/mwts/currentwhl.pdf
Sources: The Wall Street Journal, Market Watch, the National Association of Realtors, American Express, Walgreens, HP, P&G, ExxonMobil and Bureau of Labor Statistics websites