Money market rates retreat!

Money market rates fell for a second day after the European Central Bank injected an unprecedented $500 billion into the banking system yesterday, adding to evidence that central banks are making headway in their attempts to counter turmoil in money markets. The three-month euro interbank offered rate, or Euribor, dropped 7 basis points to 4.81 percent, the lowest since Nov. 30.

Morgan Stanley, the second-biggest U.S. securities firm, reported a fourth-quarter loss of $3.56 billion, the first in the company's history, after $9.4 billion of writedowns on mortgage-related investments. MS said it sold a $5 billion stake to China Investment Corp to bolster its capital.

Goldman Sachs Group Inc. on Tuesday gave a cautious outlook for Wall Street in 2008 because of the ongoing credit crisis, even as the world's largest investment bank chalked up another record-breaking year.

Ralph Cioffi, the manager of Bear Stearns Cos. hedge funds that invested in subprime mortgages, left the firm as U.S. prosecutors investigate whether he withdrew money from two funds before they collapsed in July.

A growing number of Americans expect a U.S. recession in the next year as the housing slump and steep food and energy prices sour sentiment, a Reuters/Zogby poll released on Wednesday shows. Of the likely voters surveyed, 43.4 percent said they expect a recession, up from 40 percent a month earlier.

Concerns about the U.S. mortgage crisis and turmoil in global credit markets intensified, with U.S. policy makers seeking to clamp down on the practices that created the crisis and Europe's central bank pouring an unprecedented half-trillion dollars into an effort to soothe markets.

U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago.

Retailers in the U.S. posted their smallest sales gain in two months last week as discounts failed to attract holiday shoppers and consumers made more purchases online.

Shares of home builder Hovnanian Enterprises tumbled on Wednesday after the company posted a wider-than-expected loss as the value of its land and inventory continued to deteriorate.

European Central Bank President Jean- Claude Trichet signaled faster inflation will prevent a cut in borrowing costs as German business confidence fell to the lowest in almost two years.

MasterCard Inc. must remove a credit-card transaction fee charged to retailers or face a daily penalty of up to 3.5 percent of global sales, European Union regulators said.

Goldman Sachs Group Inc. reduced its ratings on Barclays Plc and Natixis SA to ``sell,'' while UBS AG and HBOS Plc were cut to ``neutral'' on credit-market concerns.

Centro Properties Group, struggling to refinance A$3.9 billion ($3.4 billion) of debt, may sell assets to raise cash after losing 86 percent of its market value in two days.

Japan’s all-industries index increased 1.2%. The index which covers a broad range of economic data, was pushed higher by spending in the services sector. It rebounded from the previous months decline.

German business confidence fell more than expected as the IFO index fell to 103.0 from 104.2. Tight credit market conditions, higher energy costs and a strong Euro were the culprits. However, German producer prices increased 0.8% on a monthly basis.

Shanghai and Hong Kong were up strongly Wednesday, while Japan saw red. The Nikkei was down -1.17%, the Hang Seng was up +1.11% and the Shanghai Composite was up +2.18%.
European markets were down slightly in early afternoon trading Wednesday as of 7:15 a.m. ET. The FTSE was down -0.34%, the CAC was down -0.49% and the Dax was down - 0.24%.