Friday, November 28, 2008

Government Loan Programs

11/28/08 Government Loan Programs

The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News. That sum represents almost 60 percent of the nation's estimated gross domestic product.

Inventories of crude oil held by developed countries have risen above the Opec oil cartel’s comfort level, Opec warned just as its member countries’ ministers arrived in Cairo on Friday to discuss whether to cut their output further.

Adulla El-Badri, Opec’s secretary-general, said: “The market is oversupplied,” and called the rising oil inventories in consuming countries “a concern”.

The British government took control of Royal Bank of Scotland after investors shunned the bank’s share sale.

Britain's retailers are as gloomy about the crucial Christmas trading period as at any time in the last 25 years, the country's biggest business lobby group said Friday.

In its monthly survey of 185 firms covering 20,000 outlets, the Confederation of British Industry said 40 percent more retailers expected a year-on-year fall in retail sales than a rise in December.

Unemployment in the 15 nations that share the euro shot up to 7.7 percent in October — the highest level in two years — as growth dropped sharply, the EU statistics agency Eurostat said Friday.

Prices also plunged with the annual inflation rate sinking to 2.1 percent in November from 3.2 percent in October, Eurostat said. Lower inflation gives the European Central Bank more room to reduce interest rates, which would help stoke growth.

Citigroup forecasts gold hitting $2000 in 2009.

The yield on the 10 year note tumbled nearly four basis points to a paltry 2.94 percent., the lowest in modern bond market history.

In Japan, factory output fell 3.1 percent from September and household spending slid 3.8 percent. Companies plan to cut output by over 6 percent this month.

Since September, muni bond issuance has plunged by 41% compared with the same period in 2007. 10-year munis now yield about 4% - one full percentage more than Treasurys - despite the former's huge advantage of being tax-exempt.

The market for personal computers won't recover until the third quarter of next year as a global recession weighs on demand and prices, according to a report from JPMorgan released Friday.

In a note to investors, JPMorgan analyst Gokul Hariharan said he expects PC sales to decline by 5 percent year over year in 2009, with revenue from sales down 13 percent. Hariharan predicted that 10 percent growth in notebook sales will be offset by a 19 percent decline in desktops.

The 78 remaining retail locations of the parent company of Corral West Ranchwear are being liquidated, including nine in Montana.

The liquidation, which began Wednesday, is part of bankruptcy proceedings for BTWW Retail.

Steve & Barry’s, Linens ’n Things, Value City and Club Libby Lu have all announced plans to liquidate their inventories and go out of business.

Black Friday brought a sparser and more cautious horde huddling outside stores Friday morning.

The Federal Reserve boosted its lending to commercial banks and investment firms over the past week, indicating that a severe credit crisis was still squeezing the financial system.
The Fed released a report Friday saying commercial banks averaged $93.6 billion in daily borrowing for the week ending Wednesday. That was up from an average of $91.6 billion for the week ending Nov. 19.
The report also said investment firms borrowed an average of $52.4 billion from the Fed's emergency loan program over the week ending Wednesday, up from an average of $50.2 billion the previous week.

Crude for December delivery closed at $54.43 a barrel on the New York Mercantile Exchange. Gold for December delivery rose $7.70, or 1%, to close at $816.20 an ounce on the Comex division of the New York Mercantile Exchange.The Dow gained 102 points, the Nasdaq 3 points, and the S&P 8 points in the half-day session.

Wednesday, November 26, 2008

Lousy Economic Data

11/26/08 Lousy Economic Data

Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, said the economic turmoil in the US had confirmed his long-held belief that the country was heading for extinction in its present form.

In an interview with the Russian newspaper Izvestia, he outlined how the US would divide along ethnic and cultural lines.

They are: the Pacific coast with its growing Chinese population; the increasingly Hispanic South; independence-minded Texas; the Atlantic Coast; a central state with a large Native American population; and the northern states where – he maintains – Canadian influence is strong.

Alaska could be claimed by Russia, he said, claiming that the region was "only granted on lease, after all".

He said the country's break-up would be accelerated by rising unemployment and Americans losing their savings.

"The dollar isn't secured by anything. The country's foreign debt has grown like an avalanche; this is a pyramid, which has to collapse," said Prof Panarin.

Fitch Ratings cut Toyota's top-notch credit rating today, blaming the world auto market slump and surging yen — the latest sign that even Japan's top automaker is suffering from the global slowdown.

Canadian telecom company BCE Inc. said Wednesday that its $35 billion privatization deal may be in jeopardy, as a preliminary review has found the proposed acquisition may not meet solvency requirements.

BCE, the parent of Bell Canada, is being privatized by an investment group led by the Ontario Teachers Pension Plan Board and several U.S. partners. The deal, which had been set to close on Dec. 11, would be the biggest takeover in Canadian history.

Consumer spending fell 1% in October, the largest decline since September 2001, the Commerce Department reported Wednesday. The result matched analysts' expectations. Real consumer spending fell 0.5%. Personal income rose 0.3% in October after a 0.1% gain in September.

First-time claims for state unemployment benefits fell by 14,000 to 529,000 in the week ending Nov. 22, the Labor Department reported Wednesday. The four-week average of those claims rose to a 25-year high of 518,000. Meanwhile, the number of continuing jobless claims fell by 54,000 to 3.96 million. The four-week average of continuing claims rose to a 25-year high of 3.92 million.

Orders for U.S.-made durable goods fell 6.2% in October, the largest decline in two years, the Commerce Department estimated Wednesday, as orders for transportation goods fell 11.1%. Economists surveyed by MarketWatch had expected an overall decline of 2.5%. Excluding transportation, orders fell 4.4%. Orders for core capital equipment - the kind of investments businesses make to expand or update their productive capacity - fell 4% in October, after a 3.3% decline in September. October shipments fell 2.4% after a 0.2% dip in September. Excluding transportation, shipments fell 1.7% in October after a 0.9% decline in September. New orders for September were revised to a decline of 0.2%, compared with the prior estimate of a 0.9% gain.

Sales of new homes fell an estimated 5.3% in October to a seasonally adjusted annual rate of 433,000, the lowest level since 1991, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch had expected a result of 441,500. Sales fell 6% in the South, hitting the lowest level since 1992. Sales declined 18% in West, hitting the lowest level since 1982. Nationally, sales in October were down 40.1% compared with October 2007. The inventory of unsold homes fell a record 8% in October to 381,000. In the past year, inventories have fallen 25.7%, the biggest drop since the government began tracking the data in 1963. The median sales price was $218,000, down 7% in the past year.

Gold for December delivery fell $7.50, or 0.9%, to $811 an ounce in early electronic trading.

Crude oil for January delivery gained 61 cents to $51.38 a barrel in electronic trading on Globex.

Poland's central bank cut its benchmark interest rate by 25 basis points to 5.75% on Wednesday.

U.S. consumer sentiment fell in November, according to the University of Michigan/Reuters index released Wednesday. The index fell to 55.3 from an early November reading of 57.9.

General Motors Corp. is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer as part of its effort to cut costs to secure $12 billion in government loans, Bloomberg reported in its online edition Wednesday.

The Dow Jones Industrial Average rallied 247 points, or 3%, to end at 8,726, rebounding from a morning low of 8,311. Out of the Dow's 30 stocks, 28 advanced. The S&P 500 index gained 30 points, or 3.5%, to 887, while the Nasdaq Composite jumped 67 points, or 4.6%, to end at 1,532.

Crude for January delivery rose $3.67, or 7.2%, to end at $54.44 a barrel on the New York Mercantile Exchange. Gold for December delivery fell $10 to end at $808.50 an ounce on the Comex division of the New York Mercantile Exchange. - Natural gas inventories fell by 66 billion cubic feet to stand at 3,422 billion cubic feet in the week ended Nov. 21, the Energy Information Administration reported Wednesday. After the data, January natural gas futures were up 28 cents, or 4.4%, to $6.67 per million British thermal units.

The Economy

11/25/08 The Economy

The Commerce Department's revised reading for the three months ended in September showed gross domestic product declined 0.5%. U.S. corporations' before-tax profits from current production fell 9.0% over the past year, the Commerce Department estimated Tuesday. This is the slowest annual rate since the third quarter of 2001, which included 9/11. In the third quarter, profits fell 0.9% to $1.52 trillion annualized in the third quarter. The government data are adjusted for inventory valuations and capital consumption.
The government said the economy took a tumble in the summer that was worse than first thought as American consumers throttled back their spending by the most in 28 years.

It was further proof the country is almost certainly in the throes of a painful recession.

Case-Shiller U.S. National Home Price Index down 16.6% in Q3. Home prices in 20 major U.S. cities dropped 1.8% in September from the prior month, and had fallen a record 17.4% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest decline in September was found in the San Francisco metro area, where prices fell 3.9%. In the past year, Phoenix has had the largest decline, down 31.9%. For the original 10-city index, prices fell a record 18.6% in the previous 12 months.

BHP Billiton Ltd., the world's biggest mining company, abandoned a hostile $68 billion takeover bid for rival Rio Tinto Ltd., blaming the global economic downturn and plunging commodity prices. Shares of BHP Billiton were up 14 percent at midday in London. Rio Tinto shares had plummeted 36 percent.

Venezuelan President Hugo Chavez said the Organization of Petroleum Exporting Countries should return to a system of setting a price band for crude oil in order to guarantee stability in the market. The country would consider a price of $80 to $100 a barrel to be ``fair,'' Chavez said today in a televised press conference in Caracas.

Brazil, the world’s largest exporter of poultry and second-biggest supplier of soybeans, is seeking investments in ports and roads from China, its largest market for agricultural products.

The collapse of global credit markets that is pushing the U.S., Europe and Japan into simultaneous recessions for the first time since World War II also threatens farmers in Brazil, the world’s biggest grower of coffee, oranges and sugar cane, the second-largest producer of soybeans and third-biggest of corn. Smaller harvests in Brazil may increase costs of commodities next year, said Andre Pessoa, an analyst at Agroconsult who conducts the country’s broadest crop survey.

“When we look ahead, we see demand continuing to grow, while supply will face difficulties,” Pessoa said in an interview from the Florianopolis, Brazil-based company.

Futures contracts in Chicago show corn will jump 18 percent by the end of 2009 to $4.1775 a bushel and soybeans will gain 2 percent to $9.015 a bushel. Coffee will rise 10 percent to $1.2545 a pound, according to contracts in New York.

U.S. average gasoline prices fell below $1.90 a barrel on Tuesday, according to the AAA Daily Fuel Gauge Report. The current average price stands at $1.89 a gallon, down from $1.91 on Monday. A month ago, gasoline sold for $2.70 a gallon. A year ago, it sold for $3.09 a gallon.

D.R. Horton , the largest U.S. homebuilder, on Tuesday reported a wider quarterly loss of $2.53 per share, or $799.9 million, compared with 16 cents per share, or $50.1 million, a year ago.

Home sales revenue for the fourth quarter fell by 50 percent to $1.5 billion.

The company recorded pretax impairment charges totaling $988.9 million and write-offs of $85.7 million related to land option contracts Horton does not intend to pursue.

The financial crisis will likely push the world's developed countries into their worst recession since the early 1980s, the Organization for Economic Cooperation and Development said Tuesday.

The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore. ``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' said Rogers.

The dollar is ``going to lose its status as the world's reserve currency,'' Rogers said yesterday in a televised interview with Bloomberg News. ``It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.''
Rogers said that he is buying the Japanese yen.

Rep. Ron Paul: "We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed - the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me."

Doug Floyd: "You don't get harmony when everybody sings the same note"

The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.

Gold for December delivery gained $9.20, or 1.1%, to $828.70 an ounce on the Comex division of the New York Mercantile Exchange.

Houston-based energy research firm Tudor Pickering Holt on Tuesday noted that U.S. electricty demand appears to be softening as the economy cools off. Data on U.S. electricity use shows a drop of 3% over past five weeks compared to weather-based models. The trend points to less natural gas and coal consumption and lower power needs, analysts noted. "Sluggish electricity demand points to weak industrial or residential conservation and soft Gross Domestic Product," Tudor Pickering Holt noted.

Dollar Tree sees fourth-quarter earnings of $1.07 to $1.15 a share and full-year earnings of $2.45 to $2.53 a share.

Satyajit Das: "John W. Gardner once observed: "The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water." Shoddy monetary philosophies caused the financial crisis. Now inadequate plumbing of the global financial system is exacerbating its risks."

Falling gas prices perked up consumers in November, according to the monthly Conference Board index, which reported Tuesday that confidence rose from a record low in October. The November consumer confidence index increased to 44.9 from an upwardly revised October reading of 38.8. However, consumers' view of current conditions worsened in November, with those saying jobs are "hard to get" rising to 37.2% from 36.6% in the prior month.

The number of problem U.S. banks and thrifts jumped in the third quarter to 171, from 117 at the end of the prior quarter, marking the highest level since the end of 1995 and adding to expectations that more banks will fail, regulators said on Tuesday.

The Federal Deposit Insurance Corp said the industry-funded reserve to back deposits was $34.6 bln as of September 30, a 23.5 percent decrease from the previous quarter.

The FDIC also reported that bank industry income fell 94 percent from the previous year to $1.7 billion in the third quarter.

The "coverage ratio" of reserves to noncurrent loans fell from 89 cents in reserves for every $1 of noncurrent loans to 85 cents, the FDIC said. "This is the tenth consecutive quarter that the industry's coverage ratio has fallen; it is now at its lowest level since the first quarter of 1993," the FDIC warned.

The Dow Jones Industrial Average gained 36.08 points to end at 8,479.47. The S&P 500 climbed 5.57 points to 857.38, while the Nasdaq Composite shed 7.29 points to 1,464.73.

Cisco Systems Inc.reportedly plans to shut down its U.S. and Canadian operations for the last week of December in a cost-cutting move.

Crude for January delivery finished down $3.73, or 6.8%, to end at $50.77 a barrel on the New York Mercantile Exchange. Gold for December delivery closed down $1, or 0.1%, at $818.50 an ounce on the Comex division of the New York Mercantile Exchange.

Deere & Co.'s fiscal fourth-quarter net income fell to $345 million, or 81 cents a share, from $422 million, or 94 cents a share in the year-ago period. The Moline, Ill., farming and construction equipment company said sales rose 21% to $7.4 billion.

Tiffany & Co.earned $44 million, or 35 cents a share, in the third quarter. In the same period a year ago, Tiffany earned $102 million, or 74 cents a share. Net sales were $618 million compared to $627 million.

The Andersons Inc.cut its earnings guidance for 2008 to a range of $2.00 to $2.80 a share from its previous range of $3.50 to $4.00 a share. The diversified group, which includes interests in agriculture and railcar leasing, said the cut was due to continued volatility in the plant nutrients sector.

Steve & Barry's, the once-fast-growing Port Washington, N.Y., retailer of discounted apparel, will close all 173 of its remaining stores, liquidating $250 million of merchandise, the company's owners said.

The People's Bank of China slashed both its lending and borrowing rates by a steep 1.08 percentage points, continuing its monetary easing stance amid a slowing economy, according to reports. Following the latest round of interest rate cuts, the central bank's one-year yuan lending rate stands at 5.58%, while the one-year yuan deposit rate has dropped to 2.52%. The central bank also slashed banks' reserve requirements by 1 percentage point for six big banks and by 2 percentage points for smaller banks.

LandAmerica Financial Group Inc., the Richmond, Va., title insurer, said on Wednesday that it and a subsidiary filed to reorganize under Chapter 11 of U.S. bankruptcy law. LandAmerica said it filed the petitions in U.S. Bankruptcy Court in Richmond.

Nippon Steel Corp. plans to double a planned production cut in the second half of the current financial year because of weakening demand, according to reports.

Monday, November 24, 2008

Two Day Rally

11/24/08 Two Day Rally

Home builders are lobbying Congress for a $250 billion stimulus package, arguing that financial markets won't recover until home prices stop falling.

The U.S. agreed to take unprecedented steps to stabilize Citigroup by moving to guarantee $306 billion in troubled assets weighing on the bank's books.

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Crude oil for January delivery rose $1.77, or 3.4%, to $51.67 a barrel in electronic trading on Globex. December gold rose $24 to $815.80 an ounce in electronic trading on Globex. Other metal futures also gained, with silver up 5% and copper up 7%.

The number of people working part-time for economic reasons jumped 645,000 in October to 6.7 million. "No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co in New York.

Johnson & Johnson will acquire Israel's Omrix Biopharmaceuticals for $27 a share, or a total of $465 million, the Globes financial news website said on Monday.

Omrix, which makes biosurgical sealants for the prevention of bleeding, or homeostasis, in surgery, is a partner of Johnson & Johnson unit Ethicon.

Hungary's central bank cut its benchmark interest rate by 50 basis points to 11% on Monday.

Resales of U.S. single-family homes and condos fell 3.1% in October to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported Monday. Resales have sunk 1.6% in the past year. Economists surveyed by MarketWatch expected sales to fall to 5.0 million. The inventory of unsold homes on the market fell 0.9% to 4.23 million, a 10.2 month supply at the current sales pace. The median sales prices fell 11.3% in the past year to $183,300. This is the lowest sales price since March 2004.

Citigroup U.S. equity strategist Tobias Levkovich on Monday cut his targets for the S&P 500. He now sees the S&P 500 ending the year at 850, down from 1,200 previously and only 10 points higher than its current levels. By the end of 2009, the index of large capitalization companies should rebound modestly to 1,000 -- instead of the 1,300 previously targeted.

Crude for January delivery surged $4.57, or 9.2%, to end at $54.50 a barrel on the New York Mercantile Exchange.

U.S. stocks posted the biggest two- day rally since 1987 after the government said it will guarantee $306 billion of troubled Citigroup Inc. assets and lawmakers pledged to pass another economic stimulus package.

The S&P 500 added 6.4 percent to 851.31, capping a two-day gain of 13 percent. The Dow Jones Industrial Average climbed 388.68 points, or 4.8 percent, to 8,435.1. The Nasdaq Composite rose 6.3 percent to 1,472.02. Europe’s Dow Jones Stoxx 600 climbed 8.4 percent, while the MSCI Asia Pacific Index slipped 0.7 percent.

Starbucks faces an extremely challenging fiscal 2009 due to the ongoing economic slowdown, the coffee retailer said in a regulatory filing Monday. It noted that its customers may have less money for discretionary spending as a result of job losses, foreclosures, and bankruptcies. "Any resulting decreases in customer traffic or average value per transaction will negatively impact the company's financial performance as reduced revenues result in sales de-leveraging which creates downward pressure on margins," said Starbucks. The company also said it expects negative comparable store sales for fiscal 2009 and that additional restructuring measures may be needed in the future if Starbucks is unable to improve its financial performance.

Sunday, November 23, 2008

Risk Accountability

11/23/08 Risk Accountability

Loganville, Ga.-based The Community Bank has been closed by regulators, the Federal Deposit Insurance Corporation said late Friday, marking the 20th bank failure of the year amid the ongoing financial crisis.

In yesterday's posting there was a typo error. The volume on Friday for Citigroup was 1 billion shares and not 1 million.

Steven M. Sears: "Goldman Sachs derivatives strategists told clients on Friday that Standard & Poor's 500 three-month realized volatility is now 66%, surpassing levels of the 1987 crash and the economic malaise of the 1930s. Volatility now rests within striking distance of a moment in stock-market history that has defined financial crisis for almost 100 years.

"During 1929, realized volatility peaked at 68%. We will likely pass that number in short order. That will make the current market the highest sustained volatility environment in S&P 500 history," says Goldman's Krag "Buzz" Gregory, an options strategist."

"Investors right now aren't convinced that we're done seeing dead bodies on the Citigroup balance sheet," said William Fitzpatrick, an equity analyst at Optique Capital Management Inc. in Milwaukee, which oversees about $1 billion and doesn't own Citigroup shares. "That's what the sell-off is, concern over more and more losses over the next couple of quarters."

Peter Schiff: "Borrowed or printed money only has the power to destroy."

Ben Bernanke: "To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system -- for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."

Forbes points out Number of layoffs since Nov. 1, 2008, at America's 500 largest public companies: 90,078.

Buffett's Berkshire Hathaway Inc. investing company is USG's biggest stockholder, with a 17.2 percent stake. With Friday's agreement, Berkshire will receive debt securities designed to be convertible into 26.3 million new USG shares, which could boost its stake to 32 percent. Berkshire is being joined in the deal by Fairfax Financial Holdings Ltd., a Toronto-based insurance and financial-services company.
Under terms of the buy-in, the two companies will purchase a total of $400 million of 10-year convertible senior notes, led by Berkshire's $300 million contribution.
The notes will initially pay a 10 percent annual interest rate and are expected to become convertible into USG shares at a price of $11.40. But the convertibility of the notes needs approval of USG shareholders. If the stockholders turn down the conversion rights, USG said, the interest rate on the notes will jump to 20 percent.
This may seem like a good deal for Berkshire; however, the bulk of their holdings cost about $45 a share. This is more than averaging down. It's providing a life raft to USG.

Dillard's Inc. said it would cut 500, or 0.8%, of its workers to reduce operating costs.

Brett Steenbarger: "Money flow was quite positive for all sectors on Friday, but the Dow Jones Industrial stocks still finished at -$165 million for the week. The weakest flow numbers were seen among the health care and consumer services stocks; the strongest readings came from telecommunications, energy, consumer goods, and utilities.
For the month, money flow was weakest for consumer services and financial stocks; strongest for telecommunications and health care. As has been the case for a while now, monthly money flow among Dow stocks remains in negative territory."

Lynn Turner, a former chief accountant with the Securities and Exchange Commission:“If you’re an entity of this size,” he said, “if you don’t have controls, if you don’t have the right culture and you don’t have people accountable for the risks that they are taking, you’re Citigroup.”

“There is really no excuse for institutions that specialize in credit risk assessment, like large commercial banks, to rely solely on credit ratings in assessing credit risk,” John C. Dugan, the head of the Office of the Comptroller of the Currency, the chief federal bank regulator, said.

NY Times:"Citigroup still holds $20 billion of mortgage-linked securities on its books, the bulk of which have been marked down to between 21 cents and 41 cents on the dollar. It has billions of dollars of giant buyout and corporate loans. And it also faces a potential flood of losses on auto, mortgage and credit card loans as the global economy plunges into a recession.

Also, hundreds of billions of dollars in dubious assets that Citigroup held off its balance sheet is now starting to be moved back onto its books, setting off yet another potential problem.

The bank has already put more than $55 billion in assets back on its balance sheet. It now says an added $122 billion of assets related to credit cards and possibly billions of dollars of other assets will probably come back on the books.
Even though Citigroup executives insist that the bank can ride out its current difficulties, and that the repatriated assets pose no threat, investors have their doubts. Because analysts do not have a complete grip on the quality of those assets, they are warning that Citigroup may have to set aside billions of dollars to guard against losses."

BHP Billiton Ltd.'s Brazilian operations will reduce iron ore pellet production due to weak demand, the Australian resources company said.

BHP's 50 percent-owned Sarmarco iron ore company will close two of its older plants from the end of November until mid-January, and then reassess the market, the company said in a statement Saturday. It did not say what would happen to staff at the plants.

Samarco's third iron ore pellet plant, opened in April this year, will remain in operation. BHP previously said it has no plan to cut iron ore pellet production in Australia.

The closure will temporarily reduce Samarco's annual iron ore pellet production capacity from 24.19 million tons (22 million metric tons) to 8.51 million tons.

Mike Burk: "In the 1930's, the last time we saw declines of this magnitude in the same time frame, the rallies that followed took the S&P 500 (SPX) up 20% - 46%. As of Thursday's close the SPX was down over 40% in less than 3 months, a rare occurrence. From its August 87 high to its October crash low the SPX was down 33.2%. Late 1937 was the last time the SPX fell more than 40% in 3 months, 71 years ago....The 1937 low occurred in late November, the pattern and time frame are similar to what we have recently experienced....I found no examples of the SPX falling more than 50% in 3 months so there is hope for a rally....I expect the major indices to be higher on Friday November 28 than they were on Friday November 21."

Saudi Arabia’s central bank cut its repo rate by 1 percentage point to 3 percent and reduced the level of reserves commercial banks are required to hold with it to 7 percent from 10 percent.

The rate cuts are the second by the Saudi Arabian Monetary Authority in less than two months and are intended to “sustain private sector credit growth,” John Sfakianakis, chief economist at Saudi British Bank in Riyadh, said in a telephone interview today. “We’ve to see whether these measures are fully successful in offsetting a slowdown in the credit growth.”

2009 will be "a year of bad news" for the economy," German Chancellor Angela Merkel warns. "We have stabilized the financial markets thanks to a series of measures for the banks, but confidence still has to be found again and the interbanking market must become functional again."

Michael Santoli: "At the moment, the only close precedents for the past year are a pair of Great Depression-era bear phases. Andrew Burkly of Brown Brothers Harriman noted Friday that the current bear was 284 days old, and was down almost exactly as much as the 1929-'32 and '37-'38 bear markets were after 284 days.

And this was about the point where the paths of those earlier markets diverged, with the '29-'32 example sinking relentlessly to an 86% loss, and the '37-'38 version beginning a bounce that recouped 50% of its losses over six months before rolling over again. This history offers no immediate trading edge, but seems to suggest that being aggressively bearish from recent levels requires a belief that the economic implications of the present crisis at least rhyme with the Depression's....The options market's fear gauge, the Chicago Board Options Exchange's Market Volatility Index (VIX), which is calculated by measuring the implied volatility of certain Standard & Poor's 500 index options expiring in 30 days, set a new all-time closing high of 80.90 on Thursday. This spells trouble for stocks.

VIX at 80 implies a Standard & Poor's 500 average daily move of about 5%."

As many as 2,444 employees at ArcelorMittal's steel plant could be laid off indefinitely in January, the company said.
The company has notified the United Steelworkers and other stakeholders about the possibility of an "indefinite layoff" at the Porter County plant beginning in the second half of January, ArcelorMittal announced Friday.