Monday, January 28, 2008

Alliance Data buyout falls apart

Alliance Data Systems said its $6.6 billion takeover by Blackstone Group LP won't get approval by the U.S. Comptroller of the Currency. The shares dropped 44 percent to $36.50.

Analysts slashed their outlooks for financial results for S&P 500 companies, now expecting earnings growth to fall 17.6 percent in the fourth quarter, down from a decline of 10.9 percent expected in the week-prior survey.

S&P 500 Earnings Scorecard: 73% Have Met Or Exceeded Expectations To Date

Fannie Mae and Freddie Mac fall to session lows on Friday as Reuters reports that Fannie's mortgage delinquencies rose to 0.90% in Nov. from 0.83% in Oct, its mortgage investment portfolio rose by an annualized 3.3 percent in December to $724.0 billion.

Goldman Sachs announced on Friday plans to sack about 5 percent of its global workforce in coming months after its annual staff evaluation.

Credit Suisse said on Friday it was cutting about 500 jobs across the investment banking division.

"The real indicator of how the economy will impact the MBA job market will come next fall, when these firms decide how many offers to give to their summer interns."

Banks will need at least $22 billion if bonds covered by insurers led by MBIA Inc. and Ambac Assurance Corp. are cut one level from AAA, and six times more for downgrades by four steps according to Barclays Capital.

Fortis climbed 6 percent to 14.06 euros. Belgium's biggest financial-services company said yesterday it meets capital and solvency requirements even when its holdings in subprime collateralized debt obligations are valued under "very stringent scenarios.'' Fortis applied its standard model for valuing impairments.

Jim O'Neill, chief economist at Goldman Sachs in London, says growth in the first half of 2008 may be the "weakest since 2002 and maybe even 2001.'' "The economy is slowing everywhere,'' he says.

Bankers meeting at the Swiss ski resort of Davos said there are increasing risks of a global recession, while manufacturers countered that they have yet to feel it in their business.

A key element of the stimulus package aimed at jump-starting the ailing U.S. housing market may have the unintended consequence of raising mortgage rates, said analysts studying the plan.

Maker of touch-screen user interfaces Synaptics posted second-quarter earnings above Wall Street expectations, but forecast third-quarter revenue below analysts' estimates. Shares plunge.

Investors shift bets to oil slide. The outstanding number of put options for June 2008 at $80 a barrel have jumped by a factor of four in the past two and half months to more than 47,000 contracts.

Demand for municipal bonds faltered last week on concerns that high floating rates on some insured tax-exempt bonds would squeeze profits for structured trusts at banks and hedge funds.

After the best annual start for Treasuries since 1998, investors are betting the highest-rated mortgage and corporate bonds will outperform as the Federal Reserve cuts interest rates.

Sales of bonds backed by Spanish mortgages will slow from a record in 2007 as the country's 10- year real-estate boom ends, according to Moody's Investors Service.

SLM secured $31 billion in financing from banks including Bank of America and JPMorgan Chase, replacing an expiring line of credit from investors who abandoned a buyout bid last year.

Verizon said fourth-quarter profit rose 3.9 percent as wireless and television subscriptions increased.

Tyson Foods, the world's largest meat processor, said first-quarter profit plunged 40 percent as the loss on beef widened and feed costs surged. Tyson withdrew its earnings forecast, citing rising grain costs.

Banco Bradesco SA, Brazil's second- biggest non-state bank, said profit in the fourth quarter rose 29 percent on higher lending.

McDonalds said fourth-quarter profit rose 2.6 percent. Shares fell in early trading after it posted the slowest U.S. same-store sales growth in almost five years.

Loewe AG, the German television maker partly owned by Sharp Corp., said 2007 profit rose 60 percent on sales of wide-screen products.

SocGen accused of smokescreen after loss. The timing of the bank’s decision to close positions relating to Mr Kerviel’s trading and the manner it executed these trades itself provoked the losses, said Lawyers for Jérôme Kerviel.

Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

The effects of the U.S. housing downturn and troubles in the subprime mortgage market will cure themselves and the job is "half-done already", JP Morgan Chase Chief Executive Jamie Dimon said.

U.K. Hometrack House Prices Fall for a Fourth Month.The average cost of a home in England and Wales fell by 0.3 percent, the same rate as in December.

Conditions in the New Zealand services sector deteriorated in December, as the Performance of Services index plummeted to a reading of 53.9 from 62.6.

Money supply growth in the Euro-zone surged in December, as the three-month average jumped 12.1 percent from a year ago - the fastest pace since record-keeping began in 1981 - suggesting that inflation pressures in the region remain strong. On the other hand, the annual rate slowed more than expected to 11.5 percent from 12.3 percent during the month prior.

Stocks retreated in Europe and Asia, led by commodity producers and banks, on growing concern the global economy is slowing. Barclays Plc and Royal Bank of Scotland Group Plc declined in London as Dresdner Kleinwort predicted more writedowns, while Mitsubishi UFJ Financial Group Inc. slid in Tokyo after Goldman, Sachs & Co. said Japan is probably in a recession. Japan's Nikkei 225 Stock Average lost 4 percent. China's CSI 300 Index slumped 6.8 percent, while Hong Kong's Hang Seng Index plunged 4.3 percent. National benchmarks declined in all of the 18 western European markets. France's CAC 40 slid 1.3 percent. The U.K.'s FTSE 100 sank 2.1 percent, and Germany's DAX retreated 1 percent.

U.S. overnight and premarket:

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