Wednesday, January 30, 2008

Big write down at UBS

UBS warned in a surprise update Wednesday that it will post steep net losses as an additional $14 billion in subprime-related write-downs in the fourth-quarter.

BNP Paribas, France's largest bank, reported a 42 percent decline in fourth-quarter profit following 589 million euros ($871 million) of costs linked to the global credit market slump.

Further Fed cuts would probably reduce scheduled increases through 2010 in subprime borrowers' payments to 8 percent on average, or $182. During August, Libor levels pointed to increases of 33 percent on average.

In its latest forecast, the IMF said U.S. economic growth will slow to 1.5% in 2008 from 2.2% last year. Largely as a result, the IMF expects world-wide growth to decline to 4.1% this year from 4.9% in 2007.

IMF said the credit crisis was entering a new phase, in which strains in the interbank money market had eased but “credit concerns now extend beyond the subprime sector”, with calls for recapitalisation of the bond insurers.

Banks may have to post additional writedowns of as much as $70 billion if credit ratings for bond insurers are downgraded, according to Oppenheimer & Co.'s Meredith Whitney.

Kaupthing Bank, Iceland's biggest bank, canceled the 3 billion-euro purchase of Dutch investment bank NIBC Holding NV because of "instability in the financial markets.''

"The ECB will adopt a wait-and-see attitude,'' Bofinger, a member of German Chancellor Angela Merkel's panel of economic advisers, said in an interview. "The only chance for the ECB to lower rates is more rate reductions in the U.S. and a strong increase in the euro.''

Mervyn King was appointed to serve a second term as governor of the Bank of England, overcoming criticism.

Yahoo Inc posted a drop in quarterly profit on Tuesday and forecast 2008 revenue below Wall Street forecasts as it cuts jobs and invests to shore up its Web advertising business.

About 1.3 million homes received foreclosure-related warnings last year, up from 717,522 in 2006, Irvine-based RealtyTrac Inc. said. Foreclosure filings rose 75 percent from the previous year to 2.2 million.

Merrill Lynch will no longer underwrite collateralized debt obligations or other structured credit products, new Chief Executive Officer John Thain said.

Lehman Brothers boosted the dividend on its stock by 13 percent.

MS reclassified $7 billion of assets as Level 3 from Level 2, meaning they are more difficult to value.

Troubles among U.S. bond insurers are forcing regulators to rethink a 1998 loophole that let an industry expand into the complex and now costly world of derivatives.

The number of insolvencies among Spanish companies rose by 15% in 2007 from the year-earlier period, the result of increased pain in construction and real estate sector, to 1,015, levels not seen since 2002.

Boeing lowered its sales forecast because of 787 Dreamliner delays and shares fell in early trading.

Thomas Cook, Europe's second- biggest tour operator, reported a 27 percent gain in annual profit and said summer vacation bookings have been unhurt by slower consumer spending.

Lazard said fourth-quarter earnings rose 43 percent. Lazard completed $164 billion of takeovers in the quarter, more than double the $71.6 billion of the same period in 2006.

Munich Re, the world's second-biggest reinsurer, said 2007 profit rose 11 percent to a record on the absence of costly hurricanes and a tax gain, allowing it to raise the dividend.

JB Hunt Transport reported fourth quarter revenue rose 11% from year ago levels. The stock jumped 6.1% in after-hours trading.

U.S. oil demand in November rose 0.2%, or 39,000 barrels a day, from a year earlier, to 20.708 million barrels a day. The new figures are down 0.9% from an earlier estimate from the EIA, which had indicated a 1.1% rise in oil demand from a year ago.

Companies in the U.S. added 130,000 jobs this month, compared with 37,000 in December, ADP Employer Services said today.

Economic growth slowed to an annual rate of 0.6 percent in October through December, half the rate forecast, in the first of three readings.

Industrial production in Japan was weaker than expected during December, as output rose 1.4 percent from the month prior after falling 1.6 percent

European retail sales declined for the fourth straight month, as the index held below the 50 boom/bust level at 48.1. The reduction in consumer spending, which accounts for 60% of the region’s GDP, could easily take a toll on expansion.

Copper jumped the most in three weeks as rallying equity markets and the prospect of lower borrowing costs eased concern that a U.S. economic slowdown will curb metals demand.

The KOF Swiss leading indicator fell more than expected to a two-year low of 1.70 in January, as signs continue to confirm that expansion in the country peaked in 2007.

Asian stocks fell, led by South Korean shipbuilders and Japanese power producers, on concern slowing global growth and rising fuel costs will erode earnings. Japan's Nikkei 225 Stock Average dropped 1 percent to 13,345.03. Hong Kong's Hang Seng Index slumped 2.6 percent. All other Asian benchmarks retreated apart from the Philippines, Thailand and Vietnam. Indonesia was little changed.
European stocks fell after BNP Paribas SA's earnings missed analyst estimates and Goldman Sachs Group Inc. slashed profit forecasts for the region's carmakers. National benchmarks fell in 11 of 18 markets in western Europe. France's CAC 40 dropped 1.4 percent, while the U.K.'s FTSE 100 lost 0.6 percent. Germany's DAX slipped 0.2 percent.

U.S. overnight and premarket:

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