U.S. Futures Weighed Down by Gloomy Earnings Reports (TheStreet.com)
Despite good news from the Apple camp after the bell yesterday, an overnight selloff along with the likes of AT&T, Wachovia and Boeing reporting today is having a gloomy impact on futures trading. S&P futures are off between 19 - 31 points, at 939, while Nasdaq futures are down 17 points, at 1276. Dow futures are in the red by 242 points. The Energy Information Administration is also releasing crude-oil inventory figures for last week.
Mortgage applications dropped 16.6% last week (Marketwatch)
This doesn't look promising. The weekly mortgage application volume was off 44% from the same week last year, and hasn't been so low since December, 2000. The four week moving averages for mortgage applications has dropped 9.2%. No doubt about it: that looks recessionary.
Asian markets slide on glum corporate outlook (AP)
When the U.S. sneezes, the world catches cold while Asia gets SARS. So it was overnight: the Nikkei is back through the 9,000-point band, down nearly 7%; Hong Kong fell 5.2%; South Korea's Kospi slid 5.1%, and China held up a little better, slipping 3.2%. The yen is much higher, prompting a 9% tumble in shares of Sony. This crisis is going to be much more prolonged in emerging markets than over here in the U.S. Dealer notes in Asia are all pointing out Argentina's next possible default (see next article). Samsung has decided not to buy a stake in Sandisk.
Argentina Default Looms, Pension Seizure Roils Market (Bloomberg)
Mainly because things have been so ugly everywhere right now, lots of investors have taken their eye off Latin America. But if you look closely at the wires every day, leaders in Chile, Argentina and Brazil in particular have been printing money better than Dick Fuld. Now there are genuine fears of a big default in Argentina. The stock market plunged more than 11%, as the government seized around $29 billion of private pension funds. Bond yields are above 24%.
OPEC, Alone (Forbes.com)
Oil fell through the $70 band overnight, to $69.48 a barrel, even as OPEC is mulling a 1 - 2 million barrel cut in daily output. Russia's surplus ceases to be once oil falls lower than $70 a barrel, raising concerns there about economic tightening. Despite pleas from OPEC, Norway is refusing to cut production, however.
Wal-Mart profit could be hurt by new supplier standards (Reuters)
Finally, Wal Mart is cleaning up its quality standards act, although chief exec Lee Scott says that could harm margins and make goods more expensive for customers. Wal Mart gets around $9 billion worth of products a year from China. With everyone raising the standards bar, and Chinese consumption declining, things are going to look precarious on the economic front there very soon (if they don't already).
Money-Market Rates Ease (WSJ)
LIBOR is falling again, to around 3.8% (from 4+% Monday) after Bank of England, ECB and Swiss National Bank flooded the money market with funding through unlimited auctions. LIBOR is at its lowest since September 26, which still is not low enough, but it's a big plus for banks in general. The ECB is trying out other new options too, including a $101.93 billion unlimited 28-day dollar auction, and $22.61 billion of FX swaps.
Regional banks' results hurt by credit crisis (Reuters)
This sums it up pretty well: "This is what happens in a recession, especially one driven by financials and the consumer," said Edward Hemmelgarn, president of Shaker Investments in Cleveland. "Everything always looks gloomiest as banks try to stay ahead of the curve." Nevertheless, he said capital at many banks "is actually in pretty good shape."
BayernLB May Get EU5.4 Billion From Germany in Return for Stake (Bloomberg)
When the Opening Bell column stops featuring bailouts, that's when things are starting to look up. There's one of these stories every day right now ... the latest in line is Bavarian Bayerische Landesbank, which is Germany's second biggest lender. After 4.9 billion of write-downs this year, it's asking for around $7 billion, with the German government getting an equity stake. Dick Fuld's management by wandering around ended up costing the bank $300 million in losses on a stake in Lehman's.
Renault-Nissan exploring Chrysler options (Detroit Free Press)
Perhaps the automotive industry ends up looking like the banking one, with the Japanese owning lots of stakes? Apparently, execs from Nissan have been round to Chrysler's factories to kick the tires, and like what they see. Chrysler and Nissan already have a joint venture style deal going on, with Chrysler making Nissan's pickups, and Nissan making small cars for Chrysler. Cerebrus Capital, which owns Chrysler, is said to be heralding the talks. In other car news, Ford is looking at selling some of it's Mazda stake. What are the odds Mazda ends up with a large stake in Ford, ultimately?