"Canada's Economy Grew 0.7% in July, Fastest Since `04 (Update1) "
By Theophilos Argitis
"Sept. 30 (Bloomberg) -- Canada's economy expanded at its fastest pace in more than four years in July, signaling the country is recovering from a slowdown earlier this year."
"Gross domestic product advanced 0.7 percent, the most since March 2004, as production of crude oil and manufactured goods surged, Statistics Canada said today in Ottawa. Economists in a Bloomberg survey predicted a 0.2 percent gain, the median of 15 estimates."
"The report indicates the world's eighth-biggest economy may be rebounding from the first half of this year, which saw it teetering on the edge of a recession. Gross domestic product expanded at a 0.3 percent annualized rate in the second quarter, after contracting 0.8 percent in the first quarter."
"``Given that GDP was so strong in July, we're probably looking at a reasonably decent third quarter,'' said Charmaine Buskas, an economist at TD Securities in Toronto. ``We do think there is a little bit of a resilience in the economy.''"
"Output from the energy industry jumped 3.1 percent in July, after maintenance work was completed at some of the country's oil facilities. Mining and oil-and-gas extraction gained 4.2 percent during the month."
"Manufacturing advanced 1.3 percent, the statistics agency said. The country's auto shipments recovered in July after a three-month strike at a supplier to General Motors Corp."
"Still, as the crisis in U.S. financial markets deepens, the July reading isn't sustainable, economists said."
`High-Water Mark'
"``Given the recent swirling financial turmoil, as well as the deep dive in commodity markets, this robust performance no doubt represents the high-water mark for the year,'' Doug Porter, an economist with BMO Capital Markets in Toronto, said in a note to investors."
"Prime Minister Stephen Harper, vying for re-election on Oct. 14, has framed his campaign around the notion he can better manage the economy through turbulent times such as the U.S. slowdown and the current crisis in financial markets."
The Canadian dollar fell 1.7 percent to C$1.0639 per U.S. dollar at 11:23 a.m. in Toronto from C$1.0456 yesterday.
"Statistics Canada said separately today that falling petroleum prices led to a 0.2 percent drop in its industrial product price index in August, and a 7.7 percent drop in its price index for raw materials."
To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net.
"Last Updated: September 30, 2008 11:25 EDT"
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Germany Sept. Seasonally Adjusted Unemployment: Summary (Table)
By Kristian Siedenburg
Sept. 30 (Bloomberg) -- Following is a summary of Germany's September seasonally adjusted unemployment figures from the German Federal Labor Office in Nuremberg:
================================================================================
Sept. Aug. July June May April March
2008 2008 2008 2008 2008 2008 2008
================================================================================
Unemployment rate 7.6% 7.7% 7.7% 7.8% 7.9% 7.9% 8.0%
--------------------------------------------------------------------------------
"Unemployed chg -29,000 -39,000 -18,000 -42,000 -13,000 -18,000 -50,000"
"Vacancies 6,000 1,000 -7,000 8,000 -6,000 -9,000 -4,000"
"Employed n/a 39,000 39,000 18,000 17,000 33,000 33,000"
================================================================================
NOTE: Levels represent the change from the previous month.
SOURCE: Bundesagentur fur Arbeit (Federal Labor Office)
To contact the reporter on this story: Kristian Siedenburg in Budapest at ksiedenburg@bloomberg.net
"Last Updated: September 30, 2008 04:03 EDT"
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U.S. Sept. Chicago Purchasing Managers' Index Slowed (Update1)
By Timothy R. Homan
Sept. 30 (Bloomberg) -- A measure of U.S. business activity slowed for the first time in seven months in September as new orders and inventories weakened.
The National Association of Purchasing Management-Chicago said today its business index decreased to 56.7 this month from 57.9 in August. Fifty is the dividing line between growth and contraction. The index averaged 54.4 last year.
"Demand for American exports is helping offset a domestic slowdown in consumer spending. Still, the credit crisis that brought down Lehman Brothers Holdings Inc., American International Group Inc. and Washington Mutual Inc. is causing companies to cut back on spending."
"``Manufacturing is not doing too badly when you think about how poor the domestic conditions are,'' said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts. ``Credit conditions for large machinery purchases are definitely getting much tighter.''"
"Economists surveyed by Bloomberg News had projected the index would fall to 53, according to the median of 59 forecasts. Estimates ranged from 49 to 56."
"Earlier today, a private report showed house prices in 20 U.S. cities declined in July at the fastest pace on record. The S&P/Case-Shiller index dropped 16.3 percent after a drop of 15.9 percent the prior month."
New Orders
"The Chicago report's measure of new orders decreased to 53.9 from 60.2 in August, which was the highest since September 2007. The production gauge rose to 71.4, the highest since October 2004, from 63.4 the previous month."
"Order backlogs fell to 54.9 from 63, while the employment index increased to 49.1, the highest level since December, from 39.2 a month ago."
"The group's inventories index dropped to 37.7, the lowest since February 2002, from 52.2."
The purchasing managers' measure of prices paid for raw materials increased to 80.7 from 80.6 in August.
"Manufacturers such as Xerox Corp., the world's largest maker of high-speed color printers, are seeing weaker demand as companies rein in spending amid tighter credit conditions."
"``We are seeing a slowdown in Xerox North America,'' President Ursula Burns told reporters at an event in Lisbon Sept. 26. ``Corporate clients are more cautious, but we are seeing strong signs from our services business.''"
Second-Half Slump
"Economists monitor the Chicago index for an early reading on the outlook for U.S. manufacturing, which makes up about 12 percent of the economy."
"Manufacturing in the U.S. probably contracted in September for a sixth time in nine months, economists project a report tomorrow will show. The Institute for Supply Management's factory index probably dropped to 49.5 from 49.9 in August, according to the survey median."
"In the second quarter the economy expanded at a 2.8 percent annual pace, slower than the prior estimate of 3.3 percent, as consumer spending contributed less to growth, the Commerce Department said last week."
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
"Last Updated: September 30, 2008 10:36 EDT"
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"Japan's 5-Year Notes Gain on Rejected Rescue Plan, Stocks Drop "
By Theresa Barraclough
Sept. 30 (Bloomberg) -- Japan's five-year government notes advanced for the first time in four days and stocks tumbled after the U.S. House of Representatives rejected a $700 billion plan to revive credit markets.
Five-year yields fell to a two-week low after the Bank of Japan added 3 trillion ($28.8 billion) to the money market as financial institutions hoard cash worldwide amid a credit squeeze. Bonds also gained after government reports today showed household spending declined for the sixth consecutive month and unemployment increased more than estimated in August.
"``Equities are a disaster, supporting government bond buying,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co., one of the 24 primary dealers that are required to bid at auctions, in Tokyo. ``Flight to quality to the bond market will continue.''"
"The yield on the 1.1 percent note due September 2013 fell 5.5 basis points to 1.045 percent as of 4:26 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price gained 0.259 yen to 100.259 yen. The yield earlier dropped to 1.01 percent, the lowest since Sept. 16."
Ten-year yields declined 3 basis points to 1.455 percent. A basis point is 0.01 percentage point.
"Ten-year bond futures for December delivery jumped 0.54 to 137.54 as of the afternoon close in Tokyo. The Nikkei 225 Stock Average dropped 4.1 percent, the biggest decline since Sept. 16, and the broader Topix index fell 3.6 percent."
"Bonds often move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.64 with the Nikkei 225 this month, according to Bloomberg data. A value of 1 means the two moved in lockstep."
"Japanese bonds have handed investors a return of 0.8 percent this quarter through yesterday, the least among Group of Seven nations, according to indexes compiled by Merrill Lynch & Co. The Nikkei lost 13 percent in the same period."
Rejected Plan
"The Dow Jones Industrial Average plunged 778 points yesterday, the biggest drop ever, after the House of Representatives voted down a proposal to use taxpayers' funds to buy distressed assets from financial institutions. The purchases may have eased a credit crunch stemming from a housing recession."
"``The plan was voted down and an increased sense of anxiety is unavoidable,'' resulting in a surge in bonds, said Kazuhiko Sano, chief strategist in Tokyo at Nikko Citigroup Ltd., a Japanese unit of the world's biggest bank by assets."
Money Market Chaos
"The Bank of Japan pumped more than 19 trillion yen into the system this month, the biggest amount since at least April 2002, after the demise of Lehman Brothers Holdings Inc. and Washington Mutual Inc. prompted lenders to hoard cash."
Japan's central bank and the U.S. Federal Reserve also agreed to double the supply of dollars available under a swap agreement as part of a joint action by central banks worldwide to ease tensions in financial markets.
"``We acted because of the increasing risk that the shortage of liquidity in dollar-denominated markets may affect the yen- denominated money market,'' Governor Masaaki Shirakawa said in Tokyo late yesterday."
"The central bank will boost the amount of dollars it will offer local and foreign financial institutions to $120 billion from the $60 billion it agreed with the Fed on Sept. 18, according to a statement on the bank's Web site late yesterday."
Prolonged Recession
"Japan's jobless rate rose to a two-year high of 4.2 percent in August, while industrial production dropped 3.5 percent from July, the most in five years, according to government reports published today. Household spending slid 4 percent from a year earlier, the biggest decline since September 2006."
"``There seems to be a lot of views that the recession will be shallow, but it will be deep and prolonged,'' said Eiji Dohke, chief strategist at UBS Securities Japan Ltd. in Tokyo."
"A central bank survey tomorrow is forecast to show sentiment among Japan's large manufacturer declined to the lowest in five years. The Tankan index of manufacturer confidence fell to minus 2 points on September, from 5 in June, according to the median estimate of 28 economists surveyed by Bloomberg News."
"We expect ``a very gloomy Tankan,'' said Peter Wilson, a yen strategist in London at the local subsidiary of Mitsubishi UFJ Financial Group Inc., Japan's biggest bank. ``We are happy to shift to a more bullish positioning on JGBs.''"
To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
"Last Updated: September 30, 2008 03:39 EDT"
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Wheat Rises as U.S. Report Shows Smaller-Than-Expected Supplies
By Tony C. Dreibus
Sept. 30 (Bloomberg) -- Wheat rose from a 13-month low after a government report showed U.S. inventories were smaller than some analysts expected.
"Warehouses held 1.86 billion bushels (50.6 million metric tons) as of Sept. 1, up 8.1 percent from a year earlier, the U.S. Department of Agriculture said. That was less than the 1.94 billion expected by analysts surveyed by Bloomberg News. Wheat still is down 15 percent this month on signs that global production is increasing."
"``The wheat quarterly stocks was a little positive,'' said Clark Neighbors, an analyst at Bump Investor Services in Cedar Rapids, Iowa. ``The average trade guess was 1.94 billion, so that is a little supportive.''"
"Wheat futures for December delivery rose 14 cents, or 2.1 percent, to $6.82 a bushel at 12:04 p.m. on the Chicago Board of Trade. Earlier, the price touched $6.625, the lowest for a most- active contract since Aug. 17, 2007. Before today, the grain tumbled 50 percent from a record $13.495 on Feb. 27."
"U.S. inventories still are up from 1.72 billion a year earlier, USDA data show. Farmers planted more of the grain to take advantage of prices that soared 77 percent in 2007."
"Global stockpiles may increase 18 percent to 139.9 million tons in the year that started June 1, the USDA said in a report on Sept. 12. World production is expected to jump to a record 676.3 million tons, the agency said."
Australian Drought
"Still, a lack of precipitation in parts of Australia, forecast to be the third-biggest exporter of wheat behind the U.S. and Canada, probably will shrink the nation's crop. Drought slashed the country's output in the past two years."
"Rabobank Group lowered its production forecast for Australia today by 500,000 tons to 20.5 million."
"``Production expectations have edged lower in September following frost in Western Australia and dry conditions, particularly in Victoria, parts of South Australia and southern New South Wales,'' Luke Chandler, a senior commodity analyst at Rabobank in Sydney, said in a report."
"Futures also rose on speculation that lawmakers will salvage the U.S. government's $700 billion bank-bailout plan, spurring investors to sink more money into commodities and equities. The Dow Jones Industrial Average rose as much as 3 percent today after plunging 7 percent yesterday."
"Wheat is the fourth-biggest U.S. crop, valued at $13.7 billion in 2007, behind corn, soybeans and hay, government data show."
To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.
"Last Updated: September 30, 2008 13:05 EDT"
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U.K. Economy Grows at the Weakest Pace Since 1992 (Update1)
By Jennifer Ryan
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"Sept. 30 (Bloomberg) -- The U.K. economy grew at the weakest annual pace since 1992 in the second quarter as the financial crisis curbed investment, construction and industrial production."
"Gross domestic product rose 1.5 percent from a year earlier, the Office for National Statistics said in London today. That exceeded the previous estimate of 1.4 percent, which was the median forecast of 29 economists in a Bloomberg News survey. On the quarter, the economy didn't expand, as initially measured."
Prime Minister Gordon Brown's government seized Bradford & Bingley Plc and helped rescue HBOS Plc this month after the crisis undermined both mortgage lenders and threatened to worsen the economic downturn. The Bank of England has still refrained from cutting interest rates to support growth after inflation accelerated to the fastest pace in at least a decade.
"``It's not a very good set of figures, the economy is heading toward a recession,'' said Howard Archer, chief European economist at Global Insight Inc. in London. ``We were looking for a rate cut in November, but increasingly we're leaning to next week.''"
The Bank of England kept its benchmark interest rate at 5 percent for a fifth month on Sept. 4. It lowered the rate three times until April.
The Bradford & Bingley action yesterday prompted the pound's biggest one-day drop against the dollar in 16 years. The currency traded at $1.8067 today in London.
Brown's Pledge
"Brown said yesterday the government will work ``night and day'' to preserve the stability of the banking system. His handling of the crisis helped narrow the Conservatives' lead to 9 points from 15 points a month earlier, according to an ICM Ltd. poll finished Sept. 25."
"The statistics office said today that services grew 0.2 percent from the first quarter, the weakest pace since 1995. Industrial production dropped 0.7 percent, revised up from the 0.8 percent estimated previously and construction fell 0.5 percent, compared with the 1.1 percent decline initially measured."
"Fixed investment fell 2.8 percent, compared with a previous estimate of 5.3 percent. Business spending fell 1 percent on the quarter. Government spending rose 0.5 percent, instead of 0.4 percent in the initial measure."
"The current account deficit widened to 11 billion pounds ($19.8 billion), the largest in three quarters, the statistics office said in a separate report today."
Rate Forecasts
"Market turmoil has bolstered the case for the central bank to resume rate cuts as record oil and food prices stoked inflation, which reached 4.7 percent in August. Economists Michael Saunders at Citigroup Inc. and Alan Clarke at BNP Paribas on Sept. 26 pulled forward predictions for the next rate reduction to as soon as October."
"David Kern, economic adviser at the British Chambers of Commerce, yesterday called for policy makers to consider a half- point reduction in the benchmark interest rate, saying ``threats to the economy are mounting and we need urgent action.''"
Eight of the nine-member Monetary Policy Committee voted to leave the key interest rate unchanged this month as they weighed the growth outlook against faster inflation. The bank makes its next interest-rate decision on Oct. 9.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
"Last Updated: September 30, 2008 06:03 EDT"
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Japan's Factory Output Drops; Unemployment Rate Rises (Update1)
By Jason Clenfield and Toru Fujioka
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"Sept. 30 (Bloomberg) -- Japan's industrial production fell at the fastest pace in at least five years in August, the unemployment rate rose and household spending tumbled, deepening the slump in the world's second-largest economy."
"Factory output dropped 3.5 percent from July, the Trade Ministry said today in Tokyo. The jobless rate climbed to a two- year high of 4.2 percent and purchases by households slumped 4 percent, the most since September 2006, the government said."
Japan may already be in a recession as the U.S. economic woes weaken exports and demand at home plummets because of rising prices and the deteriorating labor market. Economic and Fiscal Policy Minister Kaoru Yosano said U.S. lawmakers' rejection of a $700 billion plan to rescue the financial system will have a ``significant effect'' on the global economy.
"``Japan has one leg in a serious recession,'' said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. ``We have to lower our growth forecasts for Japan this year given today's numbers.''"
"The Nikkei 225 Stock Average tumbled 4.6 percent to 11,199.07, the lowest in three years, at the break in Tokyo. The yen traded at 104.10 per dollar from 103.82 before the reports. Japan's currency gained 1.8 percent this week as the financial crisis prompted investors to withdraw from riskier assets."
Factory output declined more than the 2.4 percent estimated by economists surveyed by Bloomberg News and the most since the current index began in 2003. Analysts expected the jobless rate to rise to 4.1 percent from 4 percent.
Exports to U.S.
"Japanese exports to the U.S. plunged the most on record in August amid a widening financial crisis that has put some of Wall Street's biggest firms out of business. Japan's three largest automakers -- Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. -- all cut domestic production last month."
"``The question is: how much worse are the U.S. and Europe going to get?'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. ``The Asian economies are also slowing, so they might not be able to keep the ball rolling.''"
"Production will rebound 1.6 percent in September before slipping 0.1 percent in October, according to companies surveyed by the Trade Ministry. Even if September's gain were to be achieved, output would fall 1.1 percent for the quarter, the third straight decline."
"The last time production fell for three straight quarters was in 2001, when the economy was in a recession."
Tankan Survey
"Sentiment among large manufacturers probably dropped to a five-year low this month, economists expect the Bank of Japan's quarterly Tankan survey will show tomorrow, worsening prospects for wages and hiring."
"The ratio of jobs available to each applicant slid for a seventh month in August, the Labor Ministry said today. Every 100 applicants have to compete for 86 positions, the fewest since September 2004."
"``Japan is having a downturn and a downturn is never good news, particularly when that comes with a sharp deceleration in employment growth,'' Huw McKay, senior international economist at Westpac Banking Corp. in Sydney, said on Bloomberg Television. ``The problem right now is that Japanese consumers are really feeling the negative terms of trade.''"
"The rising cost of living made households the most pessimistic they've been in at least 26 years in August. Consumer prices excluding fresh food climbed 2.4 percent last month, matching July's increase as the fastest since October 1997. Wages grew the least this year in July."
"Seiyu Ltd., the Japanese unit of Wal-Mart Stores Inc., will cut 350 jobs and close about 20 of its 390 stores, the Tokyo- based company said yesterday."
Exports Key
"The economy is unlikely to recover until exports improve, Economy Minister Yosano said last week after a report showed that Japan had a trade deficit in August."
"The slowdown overseas is already taking a toll on the smaller companies that supply Japan's biggest makers of cars and electronics. Akebono Brake Industry Co., a Saitama-based Toyota supplier that employs 7,000 workers, last week cut its full-year profit forecast by more than half, citing weak U.S. car sales."
Japan's exporters have cushioned themselves from the U.S. downturn by diversifying their markets. Sales in Asia and oil- producing economies helped companies including Toyota and construction equipment-maker Komatsu Ltd. compensate for slumping U.S. demand in the past year.
"Those markets are now showing signs of deterioration. Growth in China, which in July surpassed the U.S. as Japan's biggest overseas customer, has slowed for four quarters and both Toyota and Honda have cut production there."
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
"Last Updated: September 29, 2008 22:31 EDT"
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"Chile Pension Funds May Reenter Domestic Stocks, JPMorgan Says "
By James Attwood
"Sept. 30 (Bloomberg) -- Chile's pension funds, which own a 10th of stocks by market value in the country's main index, may start to buy domestic shares again, JPMorgan Chase & Co. wrote."
"Four straight months of selling material and retail stocks, including an estimated $177 million divestment in August, took the funds, known as AFPs, to $1.2 billion below their local stock investment limits at end-August, strategists including Brian Chase wrote in a note to clients dated yesterday."
"``We believe AFPs could become near-term buyers as they potentially look to use their strategic position to boost Chilean returns as they close out the year,'' they wrote."
"A potential pension-fund led recovery may be supported by an easing of inflation, the analysts wrote, recommending easy- to-trade ``defensive'' companies such as Enersis SA, Banco Santander SA and Cia. Cervecerias Unidas SA."
To contact the reporters on this story: James Attwood in Santiago at jattwood3@bloomberg.net
"Last Updated: September 30, 2008 10:25 EDT"
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European Notes Drop on Speculation U.S. Will Revive Rescue Plan
By Lukanyo Mnyanda
"Sept. 30 (Bloomberg) -- European bonds dropped for the first time in three days as confidence that U.S. lawmakers will salvage a $700 billion bank-rescue package boosted stocks, reducing demand for the safest assets."
"Notes also pared their biggest quarterly gain since at least 1990 on speculation the European Central Bank will resist pressure to cut interest rates this week and instead say it's focused on reducing inflation. Bonds soared earlier, pushing two-year yields to the lowest level since March, as Dexia SA, the world's biggest lender to local governments, got a 6.4 billion-euro ($9.2 billion) state-backed cash injection."
"``The market is hopeful something will get passed,'' said Orlando Green, a fixed-income strategist in London at Calyon, a unit of Credit Agricole SA. ``The ECB will continue to focus on inflation, as there isn't enough reason for them to blink yet.'' Bonds will decline as ``we go past the uncertainty'' and the 10- year yield may rise to 4.25 by year-end, Green said."
"The yield on the two-year note rose 4 basis points to 3.47 percent by 4:49 p.m. in London, after earlier dropping to the lowest since March 24. The 4 percent note due September 2010 lost 0.07, or 70 euro cents per 1,000-euro ($1,409) face amount, to 100.98. The yield has fallen 113 basis points since the end of June, the biggest quarterly drop since at least 1990."
"The yield on the 10-year bund, Europe's benchmark government security, rose 4 basis points to 4.01 percent, leaving it 61 basis points lower in the past three months. Yields move inversely to bond prices."
Plan `Will Pass'
"Stock markets rose as Democrat and Republican congressional leaders said a bailout deal will eventually pass after its rejection yesterday spurred the Standard & Poor's 500 Index's biggest plunge in two decades. They may try as early as tomorrow, Banking Committee Chairman Christopher Dodd said."
"Europe's benchmark Dow Jones Stoxx 600 climbed 1.9 percent, after earlier losing as much as 2.7 percent. The MSCI World Index, gained 0.8 percent today, after sinking 7 percent yesterday, its biggest loss since October 1987."
"The ECB, which aims to keep inflation below 2 percent, will probably keep its key interest rate unchanged this week, according to all 58 economists polled by Bloomberg. Inflation slowed to 3.6 percent last month from 3.8 percent in August, the European Union statistics office in Luxembourg said today."
"Bonds jumped yesterday as Fortis became the largest European financial services company to be bailed out and a Credit Suisse Group index of derivatives showed investors increased bets on an ECB rate cut this week. The odds were 54 percent today, from 22 percent Sept. 26."
Dexia Rescue
"Belgium's federal and regional governments, France and Dexia's largest shareholders agreed to supply the bailout funds, according to a statement from Belgian Prime Minister Yves Leterme today. Belgium, together with the Netherlands and Luxembourg, spent 11.2 billion euros ($16.3 billion) in rescuing Fortis. Hypo Real Estate, Germany's second-biggest commercial- property lender, got a 35-billion euro loan guarantee to fend off insolvency."
"``I don't think the ECB will ratify market expectations of lower rates, and the chances of a cut anytime soon are pretty slim,'' said Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets. ``From a fundamental view, this market looks overcooked.''"
"Investors favored shorter-dated paper, with the difference in yield, or spread, between two-year notes and the 10-year bund widening for a third day, to 55 basis points, after earlier increasing to the most since March."
"`All the turmoil is driving yields lower and our strategy is to remain bullish on bonds,'' said Michael Markovic, a senior fixed-income strategist in Zurich at Credit Suisse Group, Switzerland's second-biggest bank. ``However, the way the market has run means it might be a good idea to take profit if you're long on the short end.'' A long position is a bet the value of a security will rise."
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
"Last Updated: September 30, 2008 11:52 EDT"
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Libor Rises Most on Record After U.S. Congress Rejects Bailout
By Gavin Finch
"Sept. 30 (Bloomberg) -- The cost of borrowing in dollars overnight rose the most on record after the U.S. Congress rejected a $700 billion bank-rescue plan, putting an unprecedented squeeze on the global financial system."
"The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans jumped to a record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, also increased to an all-time high."
"``This is unheard of, the money markets should be the engine driving the financial system but they have broken down,'' said Kornelius Purps, a fixed-income strategist in Munich for UniCredit Markets and Investment Banking, a unit of Italy's largest lender. ``Any institution that hasn't completed its 2008 funding needs by now is going to be in very serious trouble. More banks are going to need to be bailed out.''"
"The seizure in the credit markets is tipping lenders toward insolvency, forcing U.S. and European governments to rescue five banks in the past two days, including Dexia SA, the world's biggest provider of loans to local governments, and Wachovia Corp. Money-market rates climbed even after the Federal Reserve yesterday more than doubled the size of its dollar-swap line with foreign central banks to $620 billion. In Europe, banks borrowed dollars from the ECB today at almost six times the Fed's benchmark interest rate."
Commercial Paper
"Libor, set by 16 banks including Citigroup Inc. and UBS AG in a daily survey by the BBA, is used to calculate rates on $360 trillion of financial products worldwide, from credit derivatives to home loans and company bonds."
"As money-market rates rise, banks charge higher interest on loans to companies and consumers. U.S. securities firms and lenders alone have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co."
"Yields on overnight U.S. commercial paper jumped 171 basis points today to an eight-month high of 3.95 percent, according to data compiled by Bloomberg. Average rates on paper backed by assets such as credit cards and auto loans rose 229 basis points to 6.5 percent, the highest since 2001. Companies sell commercial paper to help pay for day-to-day expenses such as salaries and rent."
"Funding constraints are being exacerbated as financial companies try to settle trades and buttress balance sheets over the quarter-end, balking at lending for more than a day."
ECB Injection
"The Frankfurt-based ECB said it lent banks $30 billion for one day at a marginal rate of 11 percent, 900 basis points above the Fed's key rate of 2 percent. The ECB said it received bids for $77.3 billion. The Bank of Japan injected more than 19 trillion yen ($182 billion) into the country's system over the past two weeks, the most in at least six years. The Reserve Bank of Australia pumped in A$1.95 billion ($1.6 billion) today."
"In the year before the turmoil in money markets began in July 2007, the Libor-OIS spread, the difference between the three-month dollar rate and the overnight indexed swap rate, never exceeded 15 basis points. It widened to a record 250 basis points today."
"``The money markets have completely broken down, with no trading taking place at all,'' said Christoph Rieger, a fixed- income strategist at Dresdner Kleinwort in Frankfurt. ``There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.''"
Asian Rates
"Borrowing rates rose in Asia earlier today. The three-month interbank offered dollar rate in Singapore jumped to an eight- month high of 3.90 percent. The three-month rate in Hong Kong rose by the most in almost a week to 3.664 percent. The difference between the rate Australian banks charge each other for three- month loans and the overnight indexed swap rate reached 98 points, close to a six-month high."
"Financial institutions have posted almost $590 billion of writedowns and losses tied to U.S. subprime mortgages since the start of last year, according to data compiled by Bloomberg."
"Dexia got a 6.4 billion-euro ($9.2 billion) state-backed rescue, Belgian Prime Minister Yves Leterme said today. Yesterday, the U.K. Treasury seized Bradford & Bingley Plc, Britain's biggest lender to landlords, while governments in Belgium, the Netherlands and Luxembourg extended a lifeline to Fortis, Belgium's largest financial-services firm. Elsewhere, Hypo Real Estate Holding AG received a loan guarantee from Germany, and Iceland agreed to rescue Glitnir Bank hf."
`New Extreme'
"``Counterparty fear in the banking sector is at a new extreme,'' said Greg Gibbs, director of currency strategy at ABN Amro Holding Bank NV in Sydney. ``Credit conditions are as tight as a drum. Unless this settles down, central banks would need to cut rates globally to bring funding costs down.''"
"Congress's rejection of the U.S. government's bank-rescue plan yesterday prompted traders to fully price in a cut in the Fed's target rate of at least a quarter point next month, futures on the Chicago Board of Trade showed. The odds were zero percent a month ago."
"The difference between what banks and the U.S. Treasury pay to borrow money for three months, the so-called TED spread, was at 314 basis points today after breaching 350 basis points for the first time yesterday. The spread was at 110 basis points a month ago."
"``We can be sure that funding pressures are not going to ease while there is so much uncertainty,'' said Adam Carr, senior economist in Sydney at ICAP Australia Ltd., part of the world's largest inter-bank broker. ``Cash is going to be at a premium. There's really no end in sight.''"
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
"Last Updated: September 30, 2008 13:10 EDT"
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"Asian Stocks Decline, Yen Gains as U.S. Lawmakers Block Rescue "
By Kyung Bok Cho and Haslinda Amin
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"Sept. 30 (Bloomberg) -- Asian stocks dropped, extending the worst global sell-off in 21 years, after the rejection of a $700 billion rescue plan by U.S. lawmakers deepened concern more economies will fall into recession. Japan bonds and the yen rose."
"Mitsubishi UFJ Financial Group Inc. and DBS Group Holdings Ltd. led declines in financial shares as money-market rates and corporate bond risk rose. BHP Billiton Ltd. and SK Energy Co. dropped after oil fell more than $10 yesterday, the most in seven years. Regulators in South Korea and Taiwan tightened curbs on short selling to help stem market declines after U.S. stocks tumbled by the most since the 1987 crash."
"``There is a massive crisis of confidence,'' said Khiem Do, who helps oversee $9 billion of Asian equities at Baring Asset Management (Asia) Ltd., in an interview with Bloomberg Television. ``There is definitely further downside.''"
"The MSCI Asia Pacific Index fell 3 percent to 107.97 as of 7:31 p.m. in Tokyo, adding to a five-day, 4.9 percent retreat. The measure is set to lose 14 percent this month, the biggest monthly loss since September 1990. Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slid 2.9 percent."
"The yen rose against the euro as investors cut holdings of higher-yielding assets funded in the Japanese currency, trading at 150.06 per euro from 150.38."
"The MSCI Asian index has slumped 32 percent this year as credit turmoil caused more than $590 billion in losses and writedowns and the failure of Lehman Brothers Holdings Inc. Citigroup Inc. yesterday agreed to buy the banking operations of Wachovia Corp., a North Carolina lender that collapsed under the weight of overdue mortgages."
Global Rout
"Japan's Nikkei 225 Stock Average lost 4.1 percent to 11,259.86, its lowest since December 2004, as the unemployment rate rose to a two-year high in August while industrial production fell at the fastest pace in five years."
"Vietnam's VN Index lost 4.7 percent, the most in the region. China's markets are closed this week for holidays."
"The Standard & Poor's 500 Index tumbled 8.8 percent yesterday after the U.S. House of Representatives voted down the financial-rescue proposal. The MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years."
"``That Congress is reining in the regulators themselves in return for the bailout gives us a glimpse of the post-apocalyptic finance system landscape: highly regulated and very restricted,'' said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur."
"South Korea said it will temporarily ban short selling on all stocks, while Taiwan tightened limits on the practice for the remainder of the year. Hong Kong regulators said they will take ``more aggressive'' measures against short selling, in which investors try to profit by betting stock prices will fall."
"Banks, Automakers"
"Mitsubishi UFJ, Japan's largest bank, retreated 4.7 percent to 893 yen. DBS, Southeast Asia's biggest, lost 2.4 percent to S$16.50 in Singapore. Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 17 percent to A$1.95 in Sydney, taking its decline this year to 93 percent, the worst performance on the MSCI Asian index."
"Toyota Motor Corp., Japan's largest automaker, fell 4.6 percent to 4,380 yen. Output by the nation's automakers decreased 11 percent in August from a year earlier, the steepest drop since 1998, the Japan Automobile Manufacturers Association said today."
"Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, declined 12 percent to A$3.09 after it said profit for the first two months of the year fell 18 percent."
"``People are out there worrying,'' said billionaire Gerry Harvey, chairman of Harvey Norman. ``If the U.S. doesn't turn it around, we are in for a prolonged world recession.''"
Default Risks Rise
"The cost of protecting Japanese corporate bonds from default increased. The Markit iTraxx Japan Series 10 index rose 17 basis points to 175 basis points at 12:39 p.m. in Tokyo, Morgan Stanley prices show. Credit-default swaps, contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements."
"Japan's overnight call loan rate rose 10 basis points, or 0.10 percentage point, to 0.5 percent as the Bank of Japan pumped 3 trillion yen ($28.8 billion) into the financial system."
"BHP, the world's largest mining company, slipped 9.5 percent to A$31. SK Energy, South Korea's biggest oil refiner, fell 3.3 percent to 89,000 won. Fortescue Metals Group Ltd., an Australian iron-ore producer, slipped 17 percent to A$4.66, down 64 percent from its June 24 peak."
"Crude oil slumped 9.8 percent yesterday to $96.37 a barrel in New York, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest drop since at least 1956. It recently slid further to $96.14 a barrel today."
Buying Opportunity?
"``You're seeing a general flight from commodity players around the world,'' said Sean Fenton, who manages the equivalent of $540 million at Tribeca Investment Partners in Sydney. ``There's a lot of fear and uncertainty in the market.''"
Australia's currency dropped as the stocks rout curbed investor appetite for buying the nation's higher-yielding assets. The Australian dollar fell 1.9 percent to 79.93 U.S. cents while New Zealand's dollar slid 0.9 percent to 66.98 cents.
"Stock indexes pared earlier declines as S&P 500 futures added 1.3 percent in after-hours trading. South Korea's National Pension Service, the nation's biggest investor with the equivalent of $187 billion in assets, is ``steadily'' buying, said Hong Sung Gi, head of the fund's strategy division."
"``It's a good time to pick up value stocks, those with steady cashflows, high dividend yields and good earnings visibility,'' said Masahiko Ejiri, who helps manage about $30 billion at Mizuho Asset Management Co. in Tokyo. ``I am sure the U.S. knows the gravity of the situation and a plan will be reached to save their financial institutions.''"
Currency Movements
"U.S. notes fell, paring the biggest monthly rally since January, after Treasury Secretary Henry Paulson said he will work to salvage the rescue plan. The yield on the two-year note rose 8 basis points to 1.74 percent as of 7:10 a.m. in London, according to BGCantor Market Data."
"Japanese bonds rose, with 10-year yields reaching a two- week low after government reports today showed household spending fell for the sixth consecutive month and unemployment increased more than estimated in August. The yield on the 1.5 percent bond due September 2018 fell 2.5 basis points to 1.46 percent."
"``Equities are a disaster, supporting government bond buying,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co.. ``Flight to quality to the bond market will continue.''"
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Haslinda Amin in Singapore at hamin1@bloomberg.net.
"Last Updated: September 30, 2008 06:35 EDT"
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"Asian Currencies Fall, Led by Won, as Bank Rescue Plan Rejected "
By Anil Varma and Bob Chen
"Sept. 30 (Bloomberg) -- Asian currencies declined, with South Korea's won falling to its lowest in more than five years, after U.S. lawmakers rejected a $700 billion financial rescue plan to bail out the banking system."
"The won completed its worst quarter since the Asian financial crisis in 1997, after Lehman Brothers Holdings Inc. collapsed, American International Group Inc. was nationalized and Merrill Lynch & Co. was acquired by Bank of America Corp. Korea's Kospi stock index slumped 13 percent in the three months, the most since March 2003, as the deepening credit crisis spurred investors to sell emerging-market assets."
"``We'll see broad-based Asian currency weakness,'' said Mitul Kotecha, global head of foreign-exchange strategy at Calyon in Hong Kong. ``The weakness in equities results in further outflows from equity markets among foreign investors.''"
"The won fell as low as 1,230 versus the dollar, the weakest since April 2003, according to Seoul Money Brokerage Services Ltd. It was down 1.5 percent at 1,207 at the 3 p.m. close of trading in Seoul. The currency slumped 13 percent this quarter."
"The rejection by U.S. lawmakers yesterday of the biggest government intervention in markets since the Great Depression may lead to more bank failures worldwide. The bill would have allowed the government to buy troubled assets from financial companies, which have reported losses and writedowns of $591 billion due to the collapse of the U.S. subprime mortgage market. Federal Reserve Chairman Ben S. Bernanke warned of ``grave threats'' to the financial system if Congress rejected the plan."
Taiwan Dollar
"Taiwan's dollar had the worst quarter since 1997 on concern increasingly risk-averse investors are pulling out of emerging markets. Taiwan's Taiex stock index tumbled 3.6 percent to 5,719.28 today, capping a 24 percent drop for the quarter. Its close of 5,641.95 on Sept. 18 was the lowest since October 2005."
"The local currency fell as much as 1 percent today to NT$32.368 against the U.S. dollar, the lowest level since Jan. 24, before trading down 0.3 percent at NT$32.13, according to Taipei Forex Inc. The currency lost 5.5 percent this quarter."
Taiwan's financial regulator said late yesterday that it placed temporary limits on short-selling of stocks ``to maintain market stability and boost investors' confidence'' after the Standard & Poor's 500 Index fell the most since the 1987 crash and the Dow Jones Industrial Average plunged the most ever.
"Short sellers borrow stocks and sell them, betting the price will fall and they will be able to buy them back later, return them to the lender, and pocket the difference in price."
The Philippine peso fell for a fourth day as Asian stocks extended the worst global equities sell-off in 21 years. The MSCI Asia Pacific Index has slumped 32 percent this year as deteriorating confidence in global credit markets caused the world's financial institutions to report losses and asset writedowns of more than $590 billion.
`Risk Averse'
"``The bailout hasn't happened and it's making people more risk averse,'' said Jonathan Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila. ``That, plus the month-end dollar requirement of companies, is pushing the exchange rate higher.''"
"The peso weakened 0.2 percent to 47.04 per dollar, according to Tullett Prebon Plc."
Malaysia's ringgit rounded off a second month of losses.
"``Risk aversion and flight to safety will dominate, and that means almost everyone will be getting out of emerging markets for a while,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The ringgit is heading for weaker levels'' unless a U.S. bank bailout is approved, he said."
"The ringgit fell 1.4 percent this month to 3.4407 versus the dollar, according to data compiled by Bloomberg. The currency touched 3.4595, the weakest level since Sept. 19."
"Elsewhere, the Singapore dollar gained 0.6 percent to S$1.4260 against the U.S. currency and the Thai baht rose 0.5 percent to 33.86. Vietnam's dong was unchanged at 16,600."
To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net.
"Last Updated: September 30, 2008 05:41 EDT"
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Ruble Set for Record Monthly Drop as Stocks Decline; Bonds Fall
By Emma O'Brien
"Sept. 30 (Bloomberg) -- The ruble fell against the dollar and was headed for its biggest monthly drop versus Russia's currency basket since its introduction in 2005, as stocks slid after U.S. lawmakers rejected a $700 billion bank bailout."
"The currency dropped as Russia's benchmark Micex stock index declined 2.7 percent, after trading was halted for two hours. The ruble, managed by the central bank against a dollar- euro basket, was also poised for its largest quarterly decline versus the dollar since the final three months of 1999, when it fell 9.2 percent."
"``There has been a change in the mood among investors toward Russia and all these people have unwound their long ruble positions,'' said Gaelle Blanchard, an emerging-markets currency strategist in London at Societe Generale SA. ``We're in the worst-case scenario for Russia now, from everything being OK to a very, very black picture.''"
A long position is a bet an asset will rise.
"Russia's currency was at 25.4879 per dollar by 4:39 p.m. in Moscow, from 25.3059 yesterday. It's headed for a 3.3 percent loss versus the dollar in the month, after falling 5.1 percent in August. The currency rose to 36.3490 per euro, from 36.5256, and is poised to lose 1 percent in September."
"The ruble was little changed at 30.3721 to the basket, from 30.3548 late yesterday, when it dropped 0.4 percent."
Financial Turmoil
"The ruble has lost 8.5 percent versus the dollar this quarter as investors shunned higher-yielding, emerging-market assets amid the global financial turmoil. It's down 1.8 percent versus the basket this month, the most since its debut in February 2005, and 2.9 percent lower in the June-to-September period, its first quarterly drop this year."
"The Micex fell 4.1 percent and is set for a 27 percent decline in September, the biggest monthly drop since Bloomberg data on the index began in 2001."
"``Investors everywhere are suffering an almost complete loss of confidence,'' Chris Weafer, chief strategist in Moscow at UralSib Financial Corp., said in an e-mailed note to clients today. Sentiment has been ``executed,'' he said."
"Bank Rossii sold as much as $13 billion in September to prevent the ruble from falling beyond 30.40, the lower end of the basket's range, according to Evgeniy Nadorshin, a senior economist at Moscow-based Trust Investment Bank. It sold ``several billion'' dollars to support the ruble, First Deputy Chairman Alexei Ulyukayev said Sept. 4, a day after the Russian currency slid 1.3 percent against the basket."
Stable Ruble
"The central bank probably won't allow the ruble to fall below 30.40, and will continue to use Russia's $559.4 billion in foreign currency reserves, the world's third-largest, to prop it up, Societe Generale's Blanchard said."
"``They will continue to keep it stable versus the basket, otherwise it could trigger fears among the population about their savings,'' she said. ``People could start to withdraw their money.''"
"With the ruble trading just below 30.40 today, Bank Rossii hasn't been seen making bids, according to Oleg Khasyanov, a Trust currency trader, and Mikhail Galkin, director of fixed- income and credit research at MDM Bank in Moscow. The bank doesn't typically comment on its actions in the foreign exchange markets."
"``There are tax payments going on today and people need liquidity, so that might be providing some support'' to the basket rate, Galkin said."
Liquidity Injection
"The average rate of interest Russian banks charge to lend money to each other climbed to 8 percent today, the highest level in more than a week. The government pledged more than $100 billion to stabilize stock markets and reduce borrowing costs in the past 1 1/2 weeks. It offered a further $50 billion yesterday to boost funds in the banking system."
"Russian government bonds were mixed. The yield on Russia's 30-year benchmark bond advanced 11 basis points to 7.24 percent, gaining 151 basis points this month."
"The 8.25 percent note due March 2010 yielded 5.66 percent, down 15 points, and 25 points in September. The extra yield investors demand to hold two-year Russian notes over equivalent- maturity U.S. Treasuries narrowed to 396 basis points, from 411 points yesterday. Bond yields move inversely to prices."
"``September brought devastation to Russia's Eurobond market,'' analysts at Trust, led by corporate-credit strategist Alexei Demkin, wrote in a note today. ``The turnover has grown due to forced and panicky sales as people tried to exit the market at any price.''"
"The yield on 8.6 percent ruble notes due 2013 from VTB Group, Russia's second-largest bank, jumped 145 basis points to 12.91 percent. The 9 percent, 19 billion-ruble municipal bonds of the Moscow region also declined, as the yield gained 130 points to 14.61 percent."
To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net
"Last Updated: September 30, 2008 08:41 EDT"
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Natural Gas Gains on Speculation Financial Rescue Will Proceed
By Reg Curren
"Sept. 30 (Bloomberg) -- Natural gas futures advanced on speculation U.S. lawmakers will pass a $700 billion government bailout plan for the financial industry, preventing a further weakening of the economy and preserving energy demand."
Concern that demand for gas from utilities and factories would drop after the bailout plan failed in the House of Representatives sent prices down 3.4 percent yesterday. The Senate will try to resuscitate the rescue package tomorrow.
"``Moves in gas are going to be more driven by what's happening with the economic outlook and oil,'' said Scott Hanold, an analyst at RBC Capital Markets in Minneapolis. ``There's a broader bounce for markets after yesterday, so I don't think you're going to see anything different for gas.''"
"Natural gas for November delivery gained 21.7 cents, or 3 percent, to settle at $7.438 per million British thermal units at 3:10 p.m. on the New York Mercantile Exchange after dropping 5.3 percent yesterday."
"Gas fell 44 percent in the third quarter, the first decline since the second quarter of 2007 and the biggest quarterly drop since the three months ended March 2001."
"Crude oil rose $4.27, or 4.4 percent, to $100.64 a barrel on the exchange, rebounding from yesterday's 9.9 percent decline. Crude fell 28 percent in the quarter."
"``Gas will likely trade much closer to broader market indexes versus anything related to its fundamentals,'' Hanold said. ``It's looking at economic fundamentals instead of weather fundamentals.''"
Credit Markets
"Supporters of a bailout say it will help to improve access to credit for companies and soften a broader economic recession. If companies can't expand, or are forced to pare back operations, demand for gas would decline."
"``If the industrial side shrinks, decreasing the total draw, that would point to a downward move,'' said George Hopley, an analyst at Barclays Capital in New York. ``Though everything is so unwritten right now it's tough to run in one direction until you know what is happening.''"
"Industrial and commercial demand together accounted for 9.64 trillion cubic feet, or 42 percent, of gas consumption in the U.S. last year, according to the Energy Department."
"U.S. inventories are on pace to reach about 3.45 trillion cubic feet by the start of the heating season on Nov. 1, an amount that's probably adequate because of weaker demand, Hopley said."
"Stockpiles being rebuilt to meet needs during the winter, when demand peaks, increased in the week ended Sept. 19 to 3.023 trillion cubic feet. Inventories were 35 billion cubic feet, or 1.2 percent, above the five-year average, the Energy Department said Sept. 25."
Supplies have on average started the winter at 3.327 trillion cubic feet.
Stockpile Forecast
"Gas in storage probably rose 73 billion cubic feet in the week ended Sept. 26, according to the median of eight analyst estimates compiled by Bloomberg. The average change for the period is a gain of 72 billion."
The Energy Department is scheduled to release the next weekly storage report on Oct. 2.
"There is some fundamental support for higher prices as about half of Gulf of Mexico output is still closed after hurricanes Ike and Gustav moved through the region earlier this month, Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York, said in a note today."
"``With total storage still lagging last year's total, an early bout of cold weather could be problematic,'' he said."
Supplies reached a record 3.545 trillion cubic feet to start the cold-weather season in November 2007. Inventories fell to 1.234 trillion by April.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
"Last Updated: September 30, 2008 15:53 EDT"
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"French Stocks: Dexia Gains as Axa, BNP Paribas, Natixis Fall "
By Alexis Xydias
"Sept. 30 (Bloomberg) -- France's CAC 40 Index lost 7.15, or 0.2 percent, to 3,946.33 as of 12:34 p.m. in Paris, after earlier falling as much as 2.8 percent. The measure is heading for a 12 percent slump in September. The SBF 120 Index slipped 0.1 percent."
The following shares rose or fell in the local market. Stock symbols are in parentheses.
"Axa SA (CS FP), Europe's second-largest insurer, slipped 43 cents, or 2 percent, to 21.13 euros. BNP Paribas SA (BNP FP), France's biggest bank, declined 2.3 euros, or 3.5 percent, to 63.23. Insurance and banking stocks fell across Europe after the U.S. House of Representatives rejected a $700-billion rescue plan for financial markets."
"Dexia SA (DX FP) jumped 76 cents, or 11 percent, to 7.96 euros, rebounding from yesterday's 29 percent decline. The world's biggest lender to local governments got a 6.4 billion- euro ($9.2 billion) state-backed rescue and will replace its chairman and chief executive officer as worsening financial crisis forces policy-makers across Europe to aid ailing banks."
"Natixis SA (KN FP), the French bank that raised 3.7 billion euros in a rights offering this month, slid 4 cents, or 1.8 percent, to a record low of 2.16 euros. The shares extended yesterday's 14 percent decline after Citigroup Inc. cut its recommendation on them to ``sell'' form ``hold,'' saying the bank's ``business model now looks to be increasingly challenged.'' Citigroup halved its price estimate on the shares to 1.5 euros from 3 euros."
"SQLI SA (SQI FP) tumbled 31 cents, or 21 percent, to 1.14 euros, its biggest decline ever. The Web design and computer- services company reported a 45 percent drop in first-half net income to 2.11 million euros. SQLI forecast full-year sales of more than 160 million euros and ``adjusted'' its operating profit target to 10 million euros."
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
"Last Updated: September 30, 2008 06:40 EDT"
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Oil Drops Most in 17 Years in Quarter on Economy Woes (Update2)
By Margot Habiby
"Sept. 30 (Bloomberg) -- Crude oil futures plunged 28 percent in the third quarter, their biggest decline since 1991, amid concern that slowing economic growth will curtail global demand and as the dollar advanced."
"Oil traded within a $56 range in the quarter, reaching a record $147.27 a barrel on July 11 and retreating to as low as $90.51 a barrel on Sept. 16, as long-term supply concerns gave way to forecasts a recession would cause fuel use to drop. The dollar is having its best quarterly gain against the euro."
"``It's been one of the wildest quarters I've ever seen,'' said Peter Beutel, president of Cameron Hanover Inc. in Stamford, Connecticut, who has been watching the oil market for 25 years."
"Crude oil for November delivery fell $39.36 in the three months ended today to settle at $100.64 a barrel at 2:51 p.m. in New York Mercantile Exchange trading. It was the first decline in seven quarters. Futures moved 5 percent or more on a quarter of the trading days. Oil rose $4.27, or 4.4 percent, today."
"Crude posted the biggest single-day gain ever on Sept. 22, as traders rushed to unwind positions on the October contract's last day of trading. Prices rose as much as $25.45 a barrel before closing up $16.37, or 16 percent, to $120.92 a barrel."
"``It's certainly been a tremendously volatile quarter, and you can throw the way the October contract expiration occurred in as a part of that,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York. ``Volatility has just bloomed here and hasn't settled down.''"
Volatility Index
"The Chicago Board Options Exchange Crude Oil Volatility Index, or OVX, rose to a record 64.21 yesterday, then retreated to 59.84 at 3:07 p.m. New York time today, which would be the second-highest closing level. The gauge, introduced by the largest U.S. options exchange on July 15, extends back to May 2007 and measures expected price swings for the United States Oil Fund, an exchange-traded fund tracking crude futures."
The dollar's advance in the quarter reduced oil's appeal among investors who purchased energy and metals as a hedge against the currency's drop earlier in the year. The euro declined the most versus the dollar today since its introduction in 1999.
"The International Energy Agency, adviser to 27 nations, on Sept. 10 lowered its 2008 demand forecast as high prices and slowing economic growth trimmed demand for diesel, gasoline and jet fuel. The agency cut its 2008 forecast by 100,000 barrels to 86.8 million barrels a day and the 2009 forecast by 140,000 barrels to 87.6 million barrels a day."
OPEC Oil
"The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, cut its forecast for 2009 oil demand on Sept. 16. The 13-member group said oil consumption will average 87.66 million barrels a day next year, compared with 87.80 million barrels a day in its previous outlook. It also cut its 2008 forecast by 120,000 barrels a day."
U.S. stocks plunged yesterday after U.S. lawmakers rejected a $700 billion plan to rescue the financial system. The move caused the Standard & Poor's 500 Index to tumble the most since the 1987 crash and the Dow Jones Industrial Average to post its biggest point drop ever. The indexes rallied today on speculation Congress will salvage the package.
"``Our most pressing concern is to what extent the U.S. virus spreads globally and specifically to China,'' Adam Sieminski, a Deutsche Bank AG analyst in Washington, said in a report yesterday. ``We believe recessions are under way in both Europe and Japan, and that U.S. growth over the next few quarters looks to be very flat at best.''"
Forecast for 2009
Deutsche Bank yesterday slashed its 2009 New York oil price forecast by 23 percent to $92.50 a barrel because of the economic crisis.
"U.S. petroleum demand is about 4 percent below year-ago levels, amid rising U.S. economic growth, according to Citi's Evans."
"``That's a pretty clear indication that consumers were making efforts to become more efficient in their petroleum use as a response to all-time high prices,'' he said, adding that ``the economic pressures that high prices for crude oil brought'' have a lot to do with the quarterly slide in prices."
"Oil averaged $118.22 a barrel in the quarter, down 4.5 percent from a second-quarter average of $123.80, a record. It was the first time the average price dropped in six quarters."
No Impact
"Futures couldn't sustain a rally even when faced with factors which under other conditions would have driven the market higher, Beutel said. They include Hurricanes Ike and Gustav, which shut in all of U.S. Gulf of Mexico production and much of the region's refining capacity, the Russian incursion into Georgia, an OPEC production cut, pipeline fires and Nigerian unrest."
"``Had you told me July 11 that we've got two hurricanes coming, one that will hit Louisiana and one that will hit Texas, we've got an OPEC cut coming, we've got Russia going into Georgia and a number of attacks into Nigeria, I would have said without a second's hesitation that we would have been over $200, no question,'' he said."
"U.S. gasoline stockpiles fell to an 18-year low in the week ended Sept. 12 after the hurricanes struck Texas and Louisiana, according to the U.S. Energy Department. U.S. refiners operated at 66.7 percent of capacity in the week ended Sept. 19, the lowest since at least 1989, because of storm damage."
"Gasoline prices have dropped the most since the third quarter of 2006. Futures for October delivery fell $1.0168, or 29 percent, in the three months ended today to settle at $2.4847 a gallon. Today, gasoline added 8.77 cents, or 3.7 percent."
"Regular gasoline, averaged nationwide, dropped 11 percent in the quarter to $3.633 a gallon, according to AAA, the nation's largest motorist organization. It was the first quarterly decline in a year. The price peaked at $4.114 a gallon on July 16."
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
"Last Updated: September 30, 2008 15:37 EDT"
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Asian Borrowing Costs Rise as Bailout Failure Stalls Lending
By David Yong and Candice Zachariahs
"Sept. 30 (Bloomberg) -- Asian borrowing costs rose, with Japanese and Singapore money market rates reaching the highest in at least eight months, after U.S. lawmakers rejected a banking rescue."
"Japanese short-term rates on yen loans rose to a nine-month high even after the Bank of Japan pumped 3 trillion yen ($29 billion) into the financial system. Domestic lenders charged charged non-Japanese counterparts the highest premiums in more than four years. The three-month interbank offered dollar rate in Singapore jumped 11 basis points, or 0.11 percentage point, to an eight-month high of 3.90 percent as banks hoarded cash."
"``Counterparty fear in the banking sector is at a new extreme,'' said Greg Gibbs, director of currency strategy at ABN Amro Australia in Sydney. ``Credit conditions are as tight as a drum. Unless this settles down, central banks would need to cut rates globally to bring funding costs down.''"
"Credit markets are tightening up, tipping banks toward insolvency and forcing U.S. and European governments to arrange rescues of lenders including Wachovia Corp. and Dexia SA. Asian stocks dropped, led by financial companies such as Japan's Mitsubishi UFJ Financial Group Inc. and Sydney-based Babcock & Brown Ltd., after the U.S. House of Representatives yesterday voted down a $700 billion rescue plan."
"The three-month interbank offered rate in Hong Kong rose by 17.2 basis points, the most in nearly a week, to 3.664 percent."
`Systematic Failure'
"``This crisis is not driven by corporate defaults but by a systematic failure of the banks themselves,'' said Anita Yadav, head of credit and hybrid research at UBS AG in Sydney. ``It's no longer about just paying higher borrowing costs, but also about being able to get the money from the market at all.''"
"The Bank of Japan injected more than 19 trillion yen ($182 billion) into the country's system over the past two weeks, the most in at least six years. The Reserve Bank of Australia added A$1.95 billion ($1.6 billion) today, taking the daily average A$2 billion since Sept. 15, or more than doubled the level for the first half of this year."
"Australian financing costs declined from close to a six- month high, according to a gauge that measures the availability of funds in the market. The difference between the rate Australian banks charge each other for three-month loans dropped 14 basis points to 73 points as of 5:05 p.m. in Sydney, after touching 98 points earlier. The gap, which reached a six-month peak of 98.5 on Sept. 26, has averaged 45 basis points this year."
"The Federal Reserve yesterday said it will pump an additional $630 billion into the global system and expand its Term Auction Facility, the emergency loan program, by $300 billion to $450 billion, it said."
Bank Writedowns
"The Fed will also raised dollar supply via currency swaps with foreign central banks by $330 billion to $620 billion. The swap with Japan will double to $120 billion while those with Australia will triple to $30 billion, the central banks said on their Web sites."
"Banks have incurred $590 billion of writedowns tied to the collapse of U.S. subprime mortgage market as stocks plunged worldwide, erasing $8.9 trillion of wealth this year through Sept. 28. The Libor-OIS spread, which compares the three-month dollar interbank rate with the overnight indexed swap rate, stood at 233 basis points, putting cash scarcity at a record."
"Foreign banks are paying at least twice as much as Japanese peers to borrow overnight funds in Japan, paying between 0.8 percent and 1 percent this morning, according to Tokyo Tanshi Co., a money market brokerage. Local lenders pay 0.4 percent to 0.5 percent for the same loans."
The Bank of Japan's target for the interbank overnight lending rate at 0.5 percent.
"``We can be sure that funding pressures are not going to ease while there is so much uncertainty,'' said Adam Carr, senior economist in Sydney at ICAP Australia Ltd., part of the world's largest inter-bank broker. ``Cash is going to be at a premium. There's really no end in sight.''"
`Bank Closed'
"Banks increased holdings at RBA exchange settlement accounts by A$3.1 billion yesterday to a record A$10.65 billion, as the nation's financial institutions hoard cash."
"Financial institutions are reluctant to fund companies and there are ``signs of a squeeze on commercial property,'' said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney. ``Developers are finding it increasingly difficult to get funding.''"
"Bank lending to Australian home buyers rose 0.4 percent in August from July, the slowest pace in more than 22 years, the central bank said in a report in Sydney today."
"Miners can expect to see ``Bank Closed'' signs for the rest of the year unless they have ``exceptionally robust projects,'' said Rod Hill, head of Asia Pacific metals and mining at WestLB Capital Markets in Sydney."
Tightening Markets
"The tightening of credit markets may have overwhelmed the Reserve Bank of Australia's Sept. 2 interest-rate cut, its first reduction since 2001. The interbank offered rate for Australian banks has climbed 49 basis points to 7.76 percent since policy makers brought down benchmark borrowing costs by 25 basis points."
The cost of protecting Japanese and Australian corporate bonds from default increased.
"The Markit iTraxx Japan Series 10 index rose 17 basis points to 175 at 12:39 p.m. in Tokyo, Morgan Stanley prices show. The benchmark of 50 investment-grade Japanese companies increases as investors' perceptions of credit quality deteriorate. The iTraxx Australia index climbed 23 points to 212.5, Citigroup Inc. prices show."
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
"Last Updated: September 30, 2008 03:53 EDT"
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Australian Dollar Heads for Record Quarterly Loss Against U.S.
By Candice Zachariahs and Tracy Withers
Sept. 30 (Bloomberg) -- The Australian dollar headed for its worst quarterly plunge and New Zealand's currency dropped the most since 2000 against the U.S. dollar as concerns economic growth may slow prompted traders to sell the nations' assets.
Australia's dollar tumbled more than 16 percent against the greenback since June 30 as the central bank lowered borrowing costs for the first time in seven years on Sept. 2. The Australian and New Zealand currencies have slid as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped by a record this quarter.
"``It's a triple whammy of negative factors,'' said Ashley Davies, a currency strategist at UBS AG, the world's second- biggest currency trader, in Singapore. ``We do increasingly look like we're on the verge of a global recession and that's not a good situation for the Aussie dollar,'' he said, referring to the currency by its nickname."
The Australian dollar declined 1.7 percent to 80.13 U.S. cents at 4:47 p.m. in Sydney from 81.50 cents in late Asian trading yesterday. The currency reached a 25-year high of 98.49 cents on July 16. It traded 3.6 percent lower at 83.49 yen from 86.57 yen yesterday.
"The Aussie is the second-worst performer this quarter among the 16 most-traded currencies against the U.S. dollar, with the Brazilian real's 18 percent drop the biggest plunge."
"New Zealand's dollar slid 0.6 percent to 67.20 U.S. cents from 67.60 late in Asia yesterday. It has fallen 12 percent this quarter, the most since September 2000. The currency bought 70.04 yen from 71.79 yen yesterday."
"Davies expects the Australian dollar to reach 87 U.S. cents by year-end if risk appetite improves and the U.S.'s $700 billion rescue package for the financial sector is passed. The currency will trade at 82 cents by the middle of next year, he said."
Rescue Plan Vote
"The Australian and New Zealand currencies slid today as the U.S. House of Representatives voted against authorizing the biggest government intervention in the markets since the Great Depression. The Standard & Poor's 500 Index slid the most since the 1987 crash pushing the VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock market price changes and a barometer of risk aversion, to 46.72 yesterday, its highest close since October 1998."
"``Heavy losses in financial stocks sent global equities sharply lower and the rejection of the proposed banking bailout plan simply exacerbated the losses,'' said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. ``As investors bailed out of risky assets, growth-sensitive currencies were sold heavily.''"
Interest Rates
"Benchmark interest rates are 7 percent in Australia and 7.5 percent in New Zealand, compared with 0.5 percent in Japan and 2 percent in the U.S., luring investors to the South Pacific nations' assets."
"Australia's home-buyers increased borrowing at the slowest pace since 1986 and house-building approvals fell for a second month, reports showed today, underscoring central bank Governor Glenn Stevens' view that the economy's 17-year expansion is slowing. Stevens will cut the overnight cash rate by 0.50 percentage point on Oct. 7, according to a Credit Suisse Group index based on interest-rate swaps."
"``The current backdrop warrants a bigger cut from the RBA because there are now bigger risks to the downside for the local economy,'' said Besa Deda, acting chief economist and strategist at St. George Bank Ltd. in Sydney."
Home Building Slows
"In New Zealand, home-building approvals slumped to a 22- year low in August, Statistics New Zealand said in Wellington today. Approvals fell 7.9 percent from July when they declined a revised 1.7 percent. The 1,284 buildings approved were the lowest since October 1986."
"The figures highlight the ``recessionary state'' of the economy, said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. ``We expect the Reserve Bank of New Zealand to front-load its rate cuts, delivering another 50 basis points in October, with 25 basis point cuts thereafter through to the second quarter of 2009.''"
New Zealand's currency has fallen 10 percent against the U.S. dollar since its central bank reduced rates for the first time in five years on July 24.
Commodities Slide
"The Australian and New Zealand dollars also fell after prices weakened for commodities the nations export on concern that the U.S. financial crisis will stall global growth. The UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped by a record. Crude oil, Australia's fourth most-valuable raw material export, fell the most in almost seven years in New York yesterday."
"Australian government bonds rose. The yield on the 10-year note fell 27 basis points, or 0.27 percentage point, to 5.397 percent, the lowest since March 2006, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 advanced 2.063, or A$20.63 per A$1,000 face amount, to 98.834."
"New Zealand's two-year swap rate, a fixed payment made to receive floating rates, fell to 6.75 percent today from 6.79 yesterday."
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
"Last Updated: September 30, 2008 03:31 EDT"
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Copper Goes From First to Worst as Economies Slow (Update3)
By Millie Munshi
Enlarge Image/Details
"Sept. 29 (Bloomberg) -- Copper, the best-performing industrial metal in 2007, may end this year as a loser for the first time since 2001."
"The metal, used for electrical wire and water pipes, may drop 11 percent to $2.75 a pound in New York by Dec. 31 as demand from the housing industry declines, said Michael Pento, who helps oversee $1.5 billion at Delta Global Advisors in Holmdel, New Jersey. Copper gained about 30 percent annually on average for the past six years as mines from Chile to Australia struggled to keep pace with consumption in Asia."
"Builders use about 400 pounds of copper in a typical U.S. home, so prices may fall more than other industrial metals because the housing market is collapsing. Sales of new U.S. homes fell to a 17-year low last month, the Commerce Department said Sept. 25. Copper dropped 3.2 percent to $3.0745 a pound on the Comex division of the New York Mercantile Exchange last week, making it the biggest loser on the Reuters/Jefferies CRB Index of 19 commodities for the first time since December."
"``People realize that our worst fears about the economy are true, and there's going to be very little demand'' for copper, said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``For gold, and other commodities, people are focusing on this `flight to a safe haven' idea in our financial crisis.''"
Copper Turnaround
"Copper rallied 26 percent in the first quarter, more than any other metal on the CRB index, and reached a record $4.2605 on May 5. The price fell 32 percent since then as U.S. growth faltered and prospects for a rebound were eroded by the failure of banks saddled with subprime mortgage loans. Copper will average $3.28 next year, $2.875 in 2010 and continue its slide through 2012, according to 12 analysts surveyed by Bloomberg."
"Copper futures for December delivery plunged 5.5 percent to $2.9065 today in New York, the first time the metal has fallen below $3 this year. The metal is down 14 percent in September, poised for its worst month since June 1996, and is headed for its biggest quarterly decline ever."
"Aluminum fell 2 percent to $2,441 a metric ton on the London Metal Exchange, while zinc slid 4.4 percent to $1,692 a ton. Platinum declined 2.9 percent to $1,090 an ounce in London over-the-counter trading."
"Economists expect U.S. growth to slow to 1.5 percent next year from 1.7 percent in 2008, according to surveys compiled by Bloomberg."
Financial Bailout
"Government proposals to rescue financial institutions helped gold, not copper. Treasury Secretary Henry Paulson introduced a $700 billion bailout plan on Sept. 19, seeking to revive credit markets through the government purchase of troubled financial assets. The U.S. House of Representatives today voted down the proposal backed by the Bush administration and congressional leaders of both parties."
"Gold gained 20 percent since Sept. 11, including a 0.7 percent gain today, as investors sought alternatives to equities and bet the bank rescue will both increase government borrowing and inflation. Economists estimate consumer prices will rise 4.5 percent this year, the fastest since 1990."
"The price of gold gained 2.8 percent last week to $888.50 an ounce, and silver surged 8.2 percent to $13.503 an ounce."
"``The fact that we need a bailout is pretty indicative of the fact that the economy isn't sound,'' said Pento, who correctly forecast rallies in gold and oil after Paulson made his proposal. ``Base metals are not my favorite play. I'm using this opportunity to accumulate precious metals and energy.''"
Metals Outlook
"Philip Roberts, the chief European technical strategist at Barclays Capital in London, said copper may drop 11 percent on the London Metal Exchange to $6,000 a metric ton ($2.72 a pound) by the end of the year, and gold may top $1,000 in the next month or two. Logic Advisor's O'Neill forecast copper at $2.90 a pound in the next two months."
"As copper fell last week and the MSCI World Index of stocks dropped 2.8 percent, the CRB rose 1.4 percent, the first gain since Aug. 22, led by sugar, crude oil, cocoa and soybeans."
"Copper last had an annual decline in 2001, when a U.S. recession cut demand from manufacturers and stockpiles monitored by the LME were heading to a record high. LME inventories jumped 81 percent since the start of May and reached a 19-month high of 209,800 tons on Sept. 19."
"The government's attempt to cleanse banks of bad mortgages won't stem the slide in home prices, said Robert Toll, chief executive officer of Toll Brothers Inc., the world's largest luxury homebuilder."
"Toll reported its fourth straight quarterly loss this month as builders grappled with the worst housing decline since the Great Depression. While new construction stalled, sales are falling even faster, leaving 10.9 months of supply compared with 10.3 months in July, government data show."
"Rescue, Revival"
Not everyone expects copper to drop.
"Tim Mercer, the chief investment officer at Hong Kong-based hedge fund Musashi Capital Ltd., said the rescue plan may revive copper along with other commodities because the government's cash infusion is ``potentially enormously inflationary.''"
"Investors buy raw materials as a hedge when the dollar weakens and inflation increases, Mercer said. The CRB index surged to its highest ever on July 3 as the U.S. currency sank toward a record low against the euro. When the dollar rebounded 12 percent in the next 10 weeks, the CRB dropped 25 percent."
"Paulson's plan also may help copper by freeing up credit markets and setting the stage for a revival of investment and economic growth, said Donald Selkin, chief market strategist at National Securities Corp. in New York."
Gold Versus Copper
"``If they do what they say they're going to do, and we don't have this credit issue hanging over everyone's head, that means business can expand,'' Selkin said. ``No, it won't put a bottom in for housing, but it could stabilize commercial demand for copper.'' Gold is still a ``better bet'' than copper, he said."
"Gold will gain as the bailout plan weakens the dollar and fuels inflation, said Brian Hicks, who helps manage $1.5 billion at U.S. Global Investors in San Antonio. The U.S. Dollar Index has dropped 1.4 percent since Sept. 18, the day before Paulson introduced the plan."
"``If I had to allocate new money, it would be more on the gold front and not toward any of the base metals,'' Hicks said. ``We've seen copper demand come down, and that will probably continue. Some of the reasons to be bearish on copper are the reasons to like gold. We're at a point where gold will outperform.''"
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.
"Last Updated: September 29, 2008 17:58 EDT"
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"Italian Stocks Update: Fiat, Seat, Telecom Italia, UniCredit "
By Francesca Cinelli
"Sept. 30 (Bloomberg) -- Italy's S&P/MIB Index declined to the lowest in almost five years, losing 273, or 1.1 percent, to 25,530."
The following were among the most active stocks on the Italian market today. Share symbols are in parentheses.
"Banca Popolare di Milano Scrl (PMI IM), the Italian lender climbed 23.1 cents, or 4.1 percent, to 5.92 euros. ``The Italian banking sector is relatively more defensive compared with European markets, thanks to its mainly domestic focus and its traditionally conservative investment and lending policy,'' Alessandra Panella, an analyst at Landsbanki Kepler, wrote."
"Fiat SpA (F IM), Italy's largest manufacturer, dropped to the lowest in 2 1/2 months, losing 25.7 cents, or 2.7 percent, to 9.38 euros. ``Investors are still blinded by both potential liquidity risks and the absence of visibility on 2009 earnings development,'' Pierre-Yves Quemener, an analyst at Landsbanki Kepler, wrote."
"Fiat Chief Executive Officer Sergio Marchionne confirmed targets for Italy's largest carmaker through 2010, even as auto sales fall in Europe."
"Italian car sales won't pick up during the rest of 2008, and may fall by as much as 13 percent this year, as a slowing economy causes consumers to scale back spending, Eugenio Razelli, chairman of the Anfia auto-industry group, said."
"Finmeccanica SpA (FNC IM), Italy's biggest defense company, slumped for a third day, losing 55 cents, or 3.5 percent, to 15.24 euros. ``The shares suffered from the current global liquidity crisis ahead of the rights issue planned for October,'' Luca Sega, a fund manager at Aperta Sgr, said."
"Impregilo SpA (IPG IM), Italy's biggest builder, surged 7.5 cents, or 2.9 percent, to 2.71 euros. The company is considering acquisitions or partnerships ``only'' outside Italy that will allow it to enter new markets or access qualified workers, daily Il Sole 24 Ore cited Chief Executive Officer Alberto Rubegni as saying in an interview."
"Intesa Sanpaolo SpA (ISP IM), Italy's second-biggest bank, added 2.7 cents, or 0.7 percent, to 3.85 euros."
"Natixis Securities recommended ``defensives like BNP Paribas in France, Intesa in Italy, Banco Santander SA in Spain and Alpha Bank AE in Greece,'' analysts including Pascal Decque wrote in a note. Mediobanca Securities reiterated it preference for Intesa Sanpaolo and Unione di Banche Italiane SCPA (UBI IM), Italy's fourth-biggest bank by branches. UBI gained 36 cents, or 2.4 percent, to 15.42 euros."
"Mediaset SpA (MS IM), the television company controlled by Italian Prime Minister Silvio Berlusconi, gained 11.4 cents, or 2.6 percent, to 4.47 euros. ``We believe the dominant player in the dominant media can limit any decline as ad spenders focus their budgets on Mediaset while cutting second and third tiers,'' Citigroup analysts wrote in a note. The brokerage kept a ``sell'' recommendation on the stock, saying ``Mediaset should address our concerns on cost cutting and future strategies.''"
"Prysmian SpA (PRY IM), the Italian energy-cable maker, gained 22.2 cents, or 1.6 percent, to 13.8 euros. Prysmian was awarded a contract of 87 million euros for submarine cables yesterday. Prysmian's share of the contract is about 36 million euros. ``This contract further strengthens Prysmian's footing in a higher added-value and fast growing sector,'' UniCredit Markets & Investment Banking analyst Pierluigi Amoruso wrote in a note. The Royal Bank of Scotland downgraded the stock to ``hold'' from ``buy,'' citing the current liquidity crisis."
"Snam Rete Gas SpA (SRG IM), Italy's gas pipeline operator, rose 12.4 cents, or 3 percent, to 4.27 euros. Snam is the ``the best choice against recession concerns,'' Sergio Molisani and Roberto Larotonda, analysts at UniCredit Markets & Investment Banking, wrote in a note."
"Telecom Italia SpA (TIT IM), Italy's biggest phone company, declined for a second day, losing 2.7 cents, or 2.5 percent, to 1.05 euros. The company has ``enough'' liquidity for the next two years, Chief Executive Officer Franco Bernabe said. The Milan-based company's funds are sufficient ``to live for the next 24 months without going to the market,'' Bernabe told reporters after a hearing in Parliament in Rome today."
"Saipem SpA (SPM IM), Europe's largest oil-field services contractor by market value, added 53 cents, or 2.6 percent, to 20.96 euros as crude oil rose recovered from its biggest drop in seven years on speculation the U.S. government will pass a bank bailout plan."
"Tenaris SA (TEN IM), the world's biggest maker of seamless steel tubes for pipelines, rebounded from a seven-month low, adding 20.1 cents, or 1.6 percent, to 13.15 euros"
"UniCredit SpA (UCG IM), Italy's largest bank, sank to the lowest in almost 11 years, losing 37.7 cents, or 13 percent, to 2.6 euros on concerns the company may need to raise money to strengthen its finances. Short-term funding is 10 times what's demanded by regulators, and sufficient beyond this year, Chief Executive Officer Alessandro Profumo said in a letter to employees yesterday."
"``We see this as a positive but do not expect it will have an impact on UniCredit's stock price,'' Cassa Lombarda analysts wrote. ``Shares will continue to be negatively affected by the global financial turmoil.''"
"Keefe, Bruyette & Woods Ltd. upgraded the stock to ``outperform'' from ``market perform'' while lowering its price estimate to 3.9 euros from 4.2 euros."
To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net
"Last Updated: September 30, 2008 12:27 EDT"
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Consumer Confidence in U.S. Unexpectedly Increased (Update1)
By Shobhana Chandra
Sept. 30 (Bloomberg) -- Consumer confidence unexpectedly rose in September in a survey taken before the recent worsening of the credit crisis and plunge in stocks.
"The Conference Board's confidence index increased to 59.8, a third consecutive increase, from 58.5 the prior month, the New York-based group said today. A separate report showed home prices fell in July at the fastest pace on record from a year earlier."
"Since the confidence survey's Sept. 23 cutoff, the odds have risen that consumers will retrench in the wake of failing banks, evaporating wealth and paychecks that aren't keeping up with inflation. Stocks tumbled yesterday after the government failed to approve a financial-rescue plan."
"``The environment has become pretty negative,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who had forecast confidence would rise. ``The momentum has certainly turned down. If the turmoil continues, the risk of a severe recession goes up.''"
Americans are likely to lose confidence heading into the presidential election on Nov. 4. Today's report is the next-to- last Conference Board sentiment reading before the vote.
Another report showed business activity slowed less than forecast this month. The National Association of Purchasing Management-Chicago's index fell to 56.7 in September from 57.9 the prior month. Fifty is the dividing line between growth and contraction.
Stocks Up
"Stocks extended earlier gains following the reports and Treasury securities fell. The Standard & Poor's 500 index was up 3.2 percent to 1,142 at 10:15 a.m. in New York. The yield on the benchmark 10-year note rose to 3.69 percent from 3.58 percent late yesterday."
"Equities rallied on expectations lawmakers would salvage the bank rescue package. The House of Representatives yesterday voted down a $700 billion plan intended to restore confidence in U.S. banks, sending the S&P 500 Index tumbling almost 9 percent."
"The confidence gauge was forecast to drop to 55 from an originally reported 56.9 in August, according to the median forecast in a Bloomberg News survey of 62 economists. Projections ranged from 48 to 66. The index reached a 16-year low of 51 in June and averaged 103.4 last year."
"Since the cutoff date, Washington Mutual Inc. joined Lehman Brothers Holdings Inc. in bankruptcy, Citigroup Inc. acquired Wachovia Corp. to prevent the collapse of the sixth-biggest U.S. bank by assets, and stocks suffered their biggest drop since 1987."
Home Values Drop
"Earlier today, the S&P/Case-Shiller home-price index of 20 U.S. metropolitan areas dropped 16.3 percent in July from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001."
"``The fact that house prices quickened their slide before the worst point in credit markets hit this month does not bode well,'' said Derek Holt, an economist at Scotia Capital Inc. in Toronto."
"The Conference Board's measure of present conditions dropped to 58.8, the lowest since 1993, from 65 the prior month. The gauge of expectations for the next six months increased to 60.5 from 54.1."
"``These results did not capture all of the tumultuous events in the financial sector this month,'' Lynn Franco, director of the Conference Board's confidence survey, said in a statement. ``Until the dust settles a bit more, we will not know the full impact.''"
Jobs Outlook
"Temporary shocks usually have a detrimental effect on confidence for two to four months unless they are accompanied by job losses, she said."
"The share of consumers who said jobs are plentiful dropped to 12.2 percent, the fewest in five years, from 13.5 percent last month, today's report showed. The proportion of people who said jobs are hard to get increased to 32.8 percent from 31.7 percent."
"Compared with other sentiment measures, the Conference Board's index tends to be more influenced by consumer attitudes about the labor market, economists said. So far this month, 466,000 Americans a week on average filed first-time claims for unemployment benefits, up from 443,000 in August and 363,000 in the first six months of the year."
"A report last week showed the Reuters/University of Michigan final sentiment reading for this month declined from a preliminary figure issued in early September as the credit crisis deepened. The reading was still up from August, reflecting the decline in gasoline prices, economists said."
Payroll Forecast
"The economy probably lost another 105,000 jobs in September, the ninth consecutive monthly decline, according to the median estimate in a Bloomberg survey ahead of a Labor Department report due Oct. 3. Payrolls dropped by 605,000 workers in the first eight months of the year."
"Job cuts may swell as the effects of the financial meltdown ripple through other industries. Fewer jobs and less-available credit indicate consumer spending, which accounts for more than two-thirds of the economy, will weaken further."
"Fewer Americans were able to obtain an auto loan this month, according to CNW Marketing Research in Bandon, Oregon, which analyzes auto-industry data."
"``Given the relatively weak state of the economy, that's obviously impacting the consumer's ability or willingness to come out and buy a new car,'' General Motors Corp. Chief Executive Officer Rick Wagoner said in a Bloomberg Radio interview on Sept. 25 from Flint, Michigan."
"Consumer spending this quarter will be unchanged, the weakest performance since 1991, according to the median estimate in a Bloomberg survey earlier this month."
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
"Last Updated: September 30, 2008 10:18 EDT"
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U.S. Economy: Confidence Unexpectedly Rose This Month (Update1)
By Shobhana Chandra
Sept. 30 (Bloomberg) -- Consumer confidence unexpectedly rose in September in a survey taken before the recent worsening of the credit crisis and plunge in stocks.
"The Conference Board's confidence index increased to 59.8, a third consecutive gain, from 58.5 the prior month, the New York- based group said today. Other reports showed home prices fell in July at the fastest pace on record and business activity slowed less than forecast this month."
"Since the confidence survey's Sept. 23 cutoff, the odds have risen that consumers will retrench in the wake of failing banks, evaporating wealth and paychecks that aren't keeping up with inflation. Stocks tumbled yesterday after the government failed to approve a financial-rescue plan."
"``The environment has become pretty negative,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who had forecast confidence would rise. ``The momentum has certainly turned down. If the turmoil continues, the risk of a severe recession goes up.''"
Americans are likely to lose confidence heading into the presidential election on Nov. 4. Today's report is the next-to- last Conference Board sentiment reading before the vote.
The National Association of Purchasing Management-Chicago's business activity index fell to 56.7 in September from 57.9 the prior month. Fifty is the dividing line between growth and contraction.
Stocks Up
"Stocks extended earlier gains following the reports and Treasury securities fell. The Standard & Poor's 500 index rose 5.3 percent to close at 1,164.74. The yield on the benchmark 10- year note rose to 3.83 percent at 4:30 p.m. in New York from 3.58 percent late yesterday."
"Equities rallied on expectations lawmakers would salvage the bank rescue package. The House of Representatives yesterday voted down a $700 billion plan intended to restore confidence in U.S. banks, sending the S&P 500 Index tumbling almost 9 percent."
"The confidence gauge was forecast to drop to 55 from an originally reported 56.9 in August, according to the median forecast in a Bloomberg News survey of 62 economists. Projections ranged from 48 to 66. The index reached a 16-year low of 51 in June and averaged 103.4 last year."
"Since the cutoff date, Washington Mutual Inc. joined Lehman Brothers Holdings Inc. in bankruptcy, Citigroup Inc. acquired Wachovia Corp. to prevent the collapse of the sixth-biggest U.S. bank by assets, and stocks suffered their biggest drop since 1987."
Home Values Drop
"Earlier today, the S&P/Case-Shiller home-price index of 20 U.S. metropolitan areas dropped 16.3 percent in July from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001."
"``The fact that house prices quickened their slide before the worst point in credit markets hit this month does not bode well,'' said Derek Holt, an economist at Scotia Capital Inc. in Toronto."
"The Conference Board's measure of present conditions dropped to 58.8, the lowest since 1993, from 65 the prior month. The gauge of expectations for the next six months increased to 60.5 from 54.1."
"``These results did not capture all of the tumultuous events in the financial sector this month,'' Lynn Franco, director of the Conference Board's confidence survey, said in a statement. ``Until the dust settles a bit more, we will not know the full impact.''"
Jobs Outlook
"Temporary shocks usually have a detrimental effect on confidence for two to four months unless they are accompanied by job losses, she said."
"The share of consumers who said jobs are plentiful dropped to 12.2 percent, the fewest in five years, from 13.5 percent last month, today's report showed. The proportion of people who said jobs are hard to get increased to 32.8 percent from 31.7 percent."
"Compared with other sentiment measures, the Conference Board's index tends to be more influenced by consumer attitudes about the labor market, economists said. So far this month, 466,000 Americans a week on average filed first-time claims for unemployment benefits, up from 443,000 in August and 363,000 in the first six months of the year."
"A report last week showed the Reuters/University of Michigan final sentiment reading for this month declined from a preliminary figure issued in early September as the credit crisis deepened. The reading was still up from August, reflecting the decline in gasoline prices, economists said."
Payroll Forecast
"The economy probably lost another 105,000 jobs in September, the ninth consecutive monthly decline, according to the median estimate in a Bloomberg survey ahead of a Labor Department report due Oct. 3. Payrolls dropped by 605,000 workers in the first eight months of the year."
"Job cuts may swell as the effects of the financial meltdown ripple through other industries. Fewer jobs and less-available credit indicate consumer spending, which accounts for more than two-thirds of the economy, will weaken further."
"Fewer Americans were able to obtain an auto loan this month, according to CNW Marketing Research in Bandon, Oregon, which analyzes auto-industry data."
"``Given the relatively weak state of the economy, that's obviously impacting the consumer's ability or willingness to come out and buy a new car,'' General Motors Corp. Chief Executive Officer Rick Wagoner said in a Bloomberg Radio interview on Sept. 25 from Flint, Michigan."
"Consumer spending this quarter will be unchanged, the weakest performance since 1991, according to the median estimate in a Bloomberg survey earlier this month."
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
"Last Updated: September 30, 2008 16:33 EDT"
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"Brazil Stocks Rebound, Led by Utilities, Banks; Bolsa Rises "
By Alexander Ragir
Sept. 30 (Bloomberg) -- Brazilian stocks rebounded from the biggest plunge in a decade after U.S. lawmakers said they intend to revive a $700 billion bank rescue and Morgan Stanley advised buying electric utilities as ``defensive'' investments.
"Eletropaulo Metropolitana SA led a rally in utility stocks after Morgan Stanley cited its strong balance sheet and high dividends. Banco do Brasil SA, Latin America's largest bank, gained the most in more than a week as Deutsche Bank said it may be better prepared than rivals to withstand the U.S. crisis."
"``They're going to get something together in Washington that's going to unfreeze the credit markets a bit,'' said Greg Lesko, who helps oversee $900 million at Deltec Asset Management Corp. in New York. ``It will help and if it does I don't think global growth will go into the death spiral that some are expecting, and things will get better.''"
"The Bovespa index gained 3.1 percent to 47,467.99 at 10:38 a.m. New York time. The BM&FBovespa MidLarge Cap index rose 0.5 percent, while the BM&FBovespa Small Cap index climbed 2.2 percent. Mexico's Bolsa index gained 1.8 percent and Chile's Ipsa rose 2.2 percent. The MSCI Latin America Index rose 2.6 percent."
The Bovespa tumbled 9.4 percent yesterday after the U.S. House of Representatives voted down the plan designed to rid financial institutions of bad loans.
"President George W. Bush said yesterday's defeat ``is not the end of the legislative process'' and he warned lawmakers that they must act or damage to the U.S. economy will be ``painful and lasting.'' Christopher Dodd, chairman of the Senate Banking Committee, said senators may deal with the bill as early as tomorrow."
`Pass Eventually'
"The rescue plan ``appears likely to pass eventually, either in its current form or with minor changes,'' Citigroup strategist Geoffrey Dennis wrote. ``These developments, therefore, are likely to trigger, at least, a short-term bounce in Latin America equities.''"
"Eletropaulo gained 8.1 percent to 25.29 reais. The Brazilian utility controlled by AES Corp. was recommended, along with rival Cia. Energetica de Minas Gerais, by Morgan Stanley because of high dividends and strong balance sheets. Cemig, as the electric utility is known, rose 4.3 percent to 36.30 reais."
"Banco do Brasil jumped 3.3 percent to 21.15 reais. The banks dependency on core deposits makes its better positioned than rivals to deal with the rising funding costs and weaker asset quality caused by limited demand for assets and decelerating growth, wrote Mario Pierry, a Deutsche Bank analyst."
To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.
"Last Updated: September 30, 2008 10:50 EDT"
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Crude Oil Rises on Signs U.S. Will Revive Bank Bailout Plan
By Mark Shenk
"Sept. 30 (Bloomberg) -- Crude oil rose, rebounding from its biggest drop in seven years, after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package that may avert an economic slowdown."
Oil fell more than $10 yesterday and global stock markets were battered after the House of Representatives failed to pass a rescue bill and European governments bailed out three banks. The U.S. Senate will try to revive the financial package tomorrow.
"``The market is being totally driven by what is happening in Washington,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``What happens to oil prices depends completely on whether the rescue package is approved or not.''"
"Crude oil for November delivery rose $4.27, or 4.4 percent, to settle at $100.64 a barrel at 2:51 p.m. on the New York Mercantile Exchange, the biggest gain since Sept. 22. Futures are down 32 percent from the record $147.27 a barrel reached on July 11 and 28 percent for the quarter, the biggest drop since 1991."
"``We won't be seeing oil near $150 anytime soon,'' said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. ``Even if we get the bailout, there's no guarantee that it will work.''"
"Oil yesterday fell $10.52, or 9.8 percent, to $96.37 a barrel, the biggest slide in percentage terms since Nov. 15, 2001, as the Standard & Poor's index of 500 stocks tumbled the most since the 1987 crash."
`Follow the Leader'
"``We're playing follow-the-leader,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``When equities plunged yesterday, we followed, and today's stock-market gain is pulling futures higher. The fall of the euro today is limiting the upside of crude.''"
"The euro dropped the most against the dollar since the introduction of the shared currency in 1999 as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. The euro fell 2.5 percent to $1.4068 from $1.4434 yesterday. A falling euro curbs the appeal of commodities as an inflation hedge."
"President George W. Bush said yesterday's defeat of his plan to revive credit markets ``is not the end of the legislative process,'' and warned lawmakers that they must act or the result will be ``painful and lasting'' economic damage to the country."
"``If the legislation is passed, we may avoid another bloodbath in the market,'' Barakat said. ``If it's not passed, prices will easily go below the $90 of a couple of weeks ago.''"
Interest Rates
"Traders are betting the Federal Reserve will cut interest rates next month, potentially shoring up fuel demand. Futures on the Chicago Board of Trade show a 28 percent chance the Fed will trim its 2 percent target rate for overnight lending between banks by 50 basis points on Oct. 29, versus little change last week. The odds on a quarter-point cut are 72 percent."
"Boone Pickens, founder of BP Capital LLC, said 15 percent of holders of his fund have asked for the option to withdraw money by the end of the year. The Wall Street Journal reported last week that Pickens was having his worst performance in 10 years, with the fund losing about $1 billion."
Goldman Sachs Group Inc. maintained its three-month crude oil price target of $115 a barrel and said price volatility will increase in the fourth quarter.
"``We continue to believe that prices will move higher by the end of this year, but the path is likely to be extremely volatile, given the low level of U.S. inventories against a backdrop of financial and demand concerns,'' Goldman analysts, including London-based Jeffrey Currie, said in a report dated yesterday."
"Gasoline for October delivery rose 8.77 cents, or 3.7 percent, to settle at $2.4847 a gallon in New York. Heating oil increased 10.32 cents, or 3.7 percent, to settle at $2.8636 a gallon."
Fuel Inventories
"U.S. gasoline stockpiles probably fell 2.05 million barrels in the week ended Sept. 26 from 178.7 million barrels the week before, according to the median of 13 analyst estimates before an Energy Department report tomorrow. Supplies in the week ended Sept. 19 were the lowest since 1967. Inventory levels prior to 1990 were reported on a monthly basis."
"Refineries, production platforms and ports along the Gulf of Mexico were shut this month because of hurricanes Gustav and Ike."
"``There's potential upward pressure on prices because of hurricanes and how much production has been disrupted,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Gasoline inventories are already at a 41-year low and are expected to decline further.''"
"Brent crude oil for November settlement increased $4.19, or 4.5 percent, to settle at $98.17 a barrel on London's ICE Futures Europe exchange."
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
"Last Updated: September 30, 2008 15:59 EDT"
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Euro Falls Most Against Dollar Amid European Banking Failures
By Daniel Kruger and Ye Xie
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"Sept. 30 (Bloomberg) -- The euro fell the most against the dollar since the introduction of the shared currency in 1999 after France and Belgium led a state-backed rescue of Dexia SA, as the widening financial crisis forces governments to prop up financial institutions across Europe."
"The 15-nation currency also weakened against the British pound after Belgian Prime Minister Yves Leterme said Dexia, the world's biggest lender to local governments, will receive about $9.2 billion to shore up its capital. The dollar rose against the yen on speculation the U.S. Senate will salvage a $700 billion bank-bailout plan as early as tomorrow after Congress rejected it yesterday."
"``The consensus is the U.S. banking system is a little bit further along in its exposure of its toxic assets,'' said Firas Askari, head currency trader at BMO Nesbitt Burns in Toronto. ``It's a case of which is relatively worse. The dollar's going to benefit against the euro because Europe has more to expose.''"
"The euro fell 2.5 percent to $1.4074 at 1:39 p.m. in New York, from $1.4434 yesterday. The euro also slid to 149.56 yen from 150.38. It earlier reached 148.55, the weakest since Sept. 16. The yen weakened to 106.21 per dollar from 104.18, after earlier reaching 103.54, also the most since Sept. 16."
"The capital infusion for Dexia comes two days after Belgium, the Netherlands and Luxembourg rescued Fortis, the largest Belgian financial-services company, Britain took control of Bradford & Bingley Plc, the country's biggest lender to landlords, and Germany bailed out Hypo Real Estate Holding AG."
"Implied volatility on one-month euro-dollar options rose to 16.9575 percent, or the highest in almost eight years. On Sept. 18, it reached 15.55 percent, the same level that triggered the Group of Seven nations to buy euros in 2000 to halt the 27 percent slide from its 1999 debut."
`Fundamentals Are Irrelevant'
"Banks are being squeezed amid a surge in borrowing costs as lenders hoard cash on concern more financial institutions will fail. The euro interbank offered rate, or Euribor, that banks charge each other for one-month loans climbed to a record 5.05 percent today, the European Banking Federation said."
"The London interbank offered rate, or Libor, that banks charge each other for such loans in dollars climbed 431 basis points to an all-time high of 6.88 percent, the British Bankers' Association said."
"``There's a dollar shortage globally,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``Demand for liquidity trumps the fundamentals. Fundamentally, the U.S. is awful, and Europe is awful. Fundamentals are irrelevant today.''"
Cross Currency Swaps
Foreign banks are paying the highest premiums in at least a decade to borrow in dollars in the swaps market even after the Federal Reserve more than doubled the amount of funds available to other central banks yesterday by expanding swap lines.
"The Fed's actions included increasing existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities."
"The price on one-year cross-currency basis swaps between yen and dollars reached minus 70 basis points, the biggest effective premium for dollar funding since Bloomberg began tracking the data in 1997. The highest reached in 1998, during the Asian banking crisis was minus 38.5 basis points in October 1998, according to Bloomberg data."
`Mad Scramble'
"``There is a mad scramble for U.S. dollar funding demand from a global U.S. dollar-based financial system,'' said Claudio Piron, Singapore-based head of Asian currency research at JPMorgan Chase & Co, the second-biggest U.S. bank by market value. ``Central banks have been extending swap lines as lenders of the last resort. The banks access this liquidity, but they hoard it for themselves as they believe it too risky to lend to anyone else.''"
The U.S. Senate will try to revive a $700 billion financial-rescue package after yesterday's defeat in the House of Representatives. The bill would have allowed the government to buy troubled assets from banks. Institutions posted $590 billion of losses and writedowns since the start of last year following the collapse of the U.S. subprime-mortgage market.
"``The U.S. problem has been public for a while, we're dealing with it,'' said Russell LaScala, the New York-based head of foreign exchange trading at Deutsche Bank AG, the world's biggest foreign-exchange trader. ``Traders are very confident something's going to be passed in the next seven days. That's definitely a sentiment that's being priced in the market.''"
Rising Yen
"Higher-yielding currencies recouped losses against the Japanese yen as Europe's benchmark Dow Jones Stoxx 600 Index gained 1 percent. The New Zealand dollar gained 1.7 percent to 71.22 yen after dropping 3.7 percent yesterday. The Australian dollar was little changed at 84.10 yen, after rising as much as 1.6 percent to 85.18 yen after falling 4.9 percent yesterday."
"``I would be very cautious in betting on further near-term dollar-yen losses,'' said Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt. ``Any positive news on the political front would have quite an impact.''"
"The yen typically declines when demand for high-yielding currencies rises, as traders put on so-called carry trades. In such transactions, investors get funds in countries with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 7.5 percent in New Zealand."
The yen rose the most of all 16 most-actively traded currencies yesterday after the Standard & Poor's 500 Index plunged the most since the 1987 crash.
Quarter End
"The Japanese currency is up 12 percent against the euro this quarter. The dollar has fallen 0.3 percent against the yen, paring a 7 percent gain in the previous three months. The euro is down 11 percent against the dollar."
"``It is the last day of the quarter,'' said Daragh Maher, deputy head of global currency strategy in London at Calyon, the investment-banking arm of France's Credit Agricole SA. ``You can get more unusual volatility, and I think we will get back to a more real market toward the end of the week and we can reassess what is happening then.''"
To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net.
"Last Updated: September 30, 2008 13:42 EDT"
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Bank of Japan Adds 3 Trillion Yen to Financial System (Update2)
By Nate Hosoda and Theresa Barraclough
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"Sept. 30 (Bloomberg) -- The Bank of Japan pumped 3 trillion yen ($28.8 billion) into the financial system, adding to its biggest monthly injection of funds in at least six years to keep a credit crunch in dollars from spreading."
"The overnight call loan rate traded at 0.40 percent after the operation at 12:50 p.m. in Tokyo, from 0.5 percent before the addition, according to Tokyo Tanshi Co. Short-term rates on yen loans rose to a nine-month high as domestic lenders charged non-Japanese counterparts the highest premiums in more than four years after a U.S. financial-rescue plan collapsed."
"``People don't want to lend money, especially to foreign institutions,'' said Naomi Hasegawa, a senior bond strategist at Mitsubishi UFJ Securities Co., a securities unit of Japan's largest bank by assets, in Tokyo. ``I don't think there are any credit concerns among domestic participants.''"
"Japan's central bank has pumped more than 19 trillion yen into the system this month, the biggest amount since at least April 2002, and agreed this week with the Federal Reserve to double the amount of dollars it lends to institutions. Japan's Economic and Fiscal Policy Minister Kaoru Yosano said the rejection of the U.S. rescue package will have serious consequences for the U.S. and global economies."
"The Tokyo Interbank Offering Rate for three-month loans rose to 0.866 percent, the highest since December, from 0.865 percent yesterday. The London Interbank Offer Rate, or Libor, to borrow yen for three months rose for a fourth day, climbing 2 basis points to 0.961 percent yesterday, the highest since March 25, according to the British Bankers' Association."
`Spill Over'
"Japan's 10-year bonds gained and Asian stocks tumbled after the U.S. House rejected, by a vote of 228 to 205, the $700 billion measure to authorize the biggest government intervention in the markets since the Great Depression. The Dow Jones Industrial Average fell 778 points, the biggest point drop ever."
"Three-month Libor for dollars climbed 12 basis points to 3.88 percent yesterday, the highest level since Jan. 18 and up from 2.81 percent a month ago."
"We're seeing a ``spill over effect'' in money markets, said Keiko Onogi, a debt strategist in Tokyo at Daiwa Securities SMBC Co., one of the 24 primary dealers required to bid at auctions. ``The BOJ has been trying so hard to keep rates stable.''"
"Foreign lenders pay 1 percent for overnight loans in yen, while Japan's banks pay 0.40 percent, according to Tokyo Tanshi Co. That's the highest premium since May 2004."
Swap Agreement
"The BOJ and the Fed will double their swap agreement to $120 billion to boost the availability of U.S. dollars, the central bank said on its Web site."
"``Central banks will probably have to launch another round of joint-market actions, and they may be forced to devise some new measures to counter the liquidity shortage in money markets, such as allowing financial institutions to use collateral abroad,'' Mari Iwashita, chief market economist at Daiwa Securities SMBC in Tokyo, said."
"Japan's central bank last week said it accepted bids for $29.6 billion in loans at an average rate of 3.448 percent as part of the swap arrangement with the Fed. The operation was held for 40 firms including Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Goldman Sachs Japan Co."
Money held at the BOJ by banks and other financial institutions rose 250 billion yen to 7.86 trillion yen yesterday.
To contact the reporter on this story: Nate Hosoda in Tokyo at nhosoda@bloomberg.net
"Last Updated: September 29, 2008 23:59 EDT"
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Europe Options Index Rises to 5-Year High After Plan Rejected
By Gareth Gore
Sept. 30 (Bloomberg) -- The benchmark index for European options rallied to the highest in more than five years on concern economic growth will falter after U.S. lawmakers failed to agree on a $700 billion bank rescue plan.
"The VStoxx Index rose as much as 8.8 percent to 42.88, the highest since April 2003, and was at 41.86 as of 3:48 p.m. in Frankfurt. The index measures the cost of using options as insurance against declines in the Dow Jones Euro Stoxx 50 Index."
"``The fear factor we're seeing in Europe is a direct result of what is happening in the U.S.,'' said Gerry Fowler, head of trading floor strategies at Citigroup Inc. in London. ``Global growth is slowing and we could see the VStoxx go much higher.''"
"U.S. legislators yesterday rejected the rescue plan in a 228 to 205 vote, sending the Dow Jones Industrial Average tumbling 778 points for its biggest point drop ever and erasing more than $1 trillion in market value. The Standard & Poor's 500 Index fell 8.4 percent, the most since Oct. 26, 1987."
"Today's most-active options contracts were puts expiring in December with a strike level of 2,800 points, 6.9 percent below the Euro Stoxx 50's close yesterday. The gauge slid as much as 2.8 percent today and was last at 2,982.31. European-style puts such as those traded on the Euro Stoxx give the buyer the right to sell at a pre-agreed strike price on a specific date."
"The VIX, which measures the cost of using options against declines in the Standard & Poor's 500 Index, rose to a record high yesterday. That eclipsed the previous closing record of in October 1998, when the collapse of hedge fund Long-Term Capital Management destabilized markets worldwide."
To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net
"Last Updated: September 30, 2008 09:49 EDT"
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Soybeans Futures Have Biggest Quarterly Slide in 35 Years
By Jeff Wilson
"Sept. 30 (Bloomberg) -- Soybeans fell, capping the biggest quarterly decline in 35 years, after the U.S. Department of Agriculture said the oilseed crop and inventories were larger than forecast."
"Reserves supplies on Sept. 1 were 205 million bushels, up 46 percent from 140 million projected by the agency on Sept. 12. Analysts in a Bloomberg survey expected 143 million on average. Last year's crop was 2.676 billion bushels, up 3.5 percent from an earlier estimate, after more acres were harvested and yields rose, the USDA said today in a report."
"``Last year's crop was bigger than most people assumed, so this was quite a surprise,'' said Mark Schultz, a vice president at Northstar Commodity Investments LLC in Minneapolis. ``This supply boost puts the market in a position to fall because it means that even if this year's crop is a little smaller, there will be ample supplies.''"
"Soybean futures for November delivery tumbled 49 cents, or 4.5 percent, to $10.45 a bushel on the Chicago Board of Trade. The price fell 34 percent in the quarter, the most since 1973. Earlier, the price touched $10.39, the lowest for a most-active contract since Nov. 12."
"In the month, the oilseed dropped 21 percent, the most since March. Soybeans rose to a record $16.3675 on July 3."
"The number of acres planted last year was revised to 64.74 million, up 1.7 percent from a year earlier, the USDA said. Harvested acres were 64.14 million acres, up 2.1 percent. The yield was 41.7 bushels an acre, up 1.2 percent from a January forecast."
Annual Forecast
"U.S. farmers will harvest 2.934 billion bushels this year, up 9.6 percent from last year's revised crop, the USDA said on Sept. 12. Yields were forecast at 40 bushels an acre, down from 40.5 bushels estimated in August."
"Soybean usage in the quarter that ended Aug. 31 fell 9.2 percent to 471 million from a year earlier, the government said."
"Index funds that invest in baskets of commodities reduced net-long positions, or bets prices will rise, by 3 percent to 134,607 soybean contracts in the week ended Sept. 23, Commodity Futures Trading Commission data showed on Sept. 26. That was down 32 percent from the all-time high of 198,707 in February."
"``Record prices slowed demand,'' said Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin. ``The supply story is likely to keep people from rushing back into the market.''"
"Soybeans are the second-biggest U.S. crop, valued last year at $26.8 billion, government figures show. Corn is the largest at $52.1 billion."
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.
"Last Updated: September 30, 2008 16:06 EDT"
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Australia Home-Lending Growth Slows to Weakest Pace in 22 Years
By Jacob Greber
"Sept. 30 (Bloomberg) -- Australian home-buyers increased borrowing at the slowest pace since 1986 and house-building approvals fell for a second month, stoking speculation the central bank will cut interest rates by half a point next week."
"Credit provided by banks and financial institutions to home buyers rose 0.4 percent in August from July, the smallest increase in more than 22 years, the Reserve Bank of Australia said in a report released in Sydney today. A separate report showed the number of permits granted to build or renovate houses dropped 3.7 percent."
"Traders boosted bets on the size of the central bank's next rate cut as waning credit growth and falling home approvals add to signs the economy is slowing, just as turmoil on global markets deepens. Governor Glenn Stevens reduced borrowing costs this month for the first time since 2001 on concern domestic demand may ``weaken more sharply than necessary.''"
"Today's figures ``confirm that the Australian economy was weakening going into this crisis,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The Reserve Bank has little choice but to cut official interest rates by half a point.''"
Australia's currency extended declines against the U.S. dollar amid concern delays to a $700 billion plan to rescue the U.S. financial system will slow global economic growth. The Australian dollar traded at 79.89 U.S. cents at 1:33 p.m. in Sydney from 79.99 before today's reports were published.
Home buyers and consumers have pared borrowing after Governor Stevens increased the overnight cash rate in February and March to a 12-year high.
Rate Cut
"Stevens cut the rate on Sept. 2 by a quarter-point to 7 percent after judging the risk of domestic demand slowing too far outweighed the risk of inflation, which has accelerated above the bank's 2 percent to 3 percent target range."
"There is a 97 percent chance that the central bank will cut the benchmark rate by 50 basis points on Oct. 7, according to a Credit Suisse Group index based on interest rate swaps. The index was at 60 percent before today's reports were released."
"The drop in housing approvals in August was almost four times the 1 percent median estimate of 21 economists surveyed by Bloomberg News. Across the Tasman Sea, New Zealand home-building approvals slumped to a 22-year low in August, a report showed today."
"``The overall signal from all leading indicators of housing is that new residential construction activity will be weak well into 2009,'' said Harley Dale, Chief Economist at the Canberra- based Housing Industry Association, which represents builders."
Credit Squeeze
"``It's a concerning situation when you have record population growth from immigration met by declining building activity,'' Dale said. ``Get ready for 15 percent plus growth in private rents.''"
"There is also evidence that banks are rationing credit amid concern about the global financial turmoil. The central bank's half-yearly review of the nation's lenders, published last week, said commercial banks in Australia have taken ``a more cautious attitude to lending,'' and tripled provisions for bad debts."
"Total growth in credit provided by banks slowed to 0.5 percent in August from 0.6 percent in July, cutting the annual increase to 10.5 percent, the smallest gain since June 2002, today's Reserve Bank report shows."
"Lending to consumers for purchases other than housing fell 0.4 percent in August, taking the annual gain to 2.5 percent, the least since March 1994."
Concern about the impact on Australia from global market turmoil is also prompting consumers to spend less at retailers including Harvey Norman Holdings Ltd.
`Serious Problem'
Australia's biggest furniture and electronics retailer last month posted a 5 percent decline in second-half operating earnings.
"``We don't have the same problems as America, but this is serious,'' Harvey Norman Chairman Gerry Harvey said in a telephone interview. ``We've got full employment, we don't have banks going broke, but the contagion has spread so far that we will be really badly affected.''"
"Spending by consumers fell 0.1 percent in the three months through June, the first quarterly decrease in 15 years, slowing gross domestic product growth to just 0.3 percent, the weakest gain in more than three years."
A separate report published today shows retail sales rose 0.3 percent in August as consumer spent more on food.
"``Australian consumers are effectively on a borrowing strike, refusing to take on more debt in these unsettled times,'' said Craig James, a senior economist at Commonwealth Bank of Australia in Sydney."
"Approvals to build private houses fell 0.8 percent to 8,303 in August, today's housing report showed. Approvals for apartments and renovations declined 7.8 percent to 3,550."
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
"Last Updated: September 30, 2008 00:13 EDT"
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"U.S. Stocks Have Further to Fall, Dow Theory Says (Update1) "
By Elizabeth Stanton and Jeff Kearns
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Sept. 30 (Bloomberg) -- Transportation stocks are signaling the market is poised for more losses after the Dow Jones Industrial Average posted its biggest-ever point decline.
"Dow Theory, created by Wall Street Journal co-founder Charles Dow in 1884, holds that the 30-stock industrial average takes cues from the Dow Jones Transportation Average. The gauge of companies such as FedEx Corp. and Ryder Systems Inc. slid yesterday to the lowest since March 17, suggesting the industrials' biggest point decline ever won't mark its bottom, some investors say."
"``When the Dow transports are making new lows, that generally signals more trouble for the markets,'' said Frederic Dickson, who manages $17 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``The transports are really a signal of what Wall Street thinks of overall economic prospects.''"
"According to Dow Theory, weakness or strength in manufacturing will last only if matched in the shipping of products. Until yesterday, when the transports joined the industrials in giving up gains since mid-July, that trend was bullish."
"U.S. stocks tumbled yesterday after Congress rejected the Bush administration's plan to buy toxic mortgages from banks. The Dow industrials plunged 7 percent to 10,365.45, while the transportation index tumbled 5.2 percent to 4,503.89. Shares rose today after lawmakers said they intend to salvage the $700 billion bank-rescue package. The Dow average rose 2.6 percent to 10,637.92 as of 10:16 a.m. in New York."
`Moving in Sync'
"``Both indicators moving in sync to the downside is indicative of an economic issue that would translate into lower corporate earnings,'' said Chuck Carlson, a money manager at Horizon Investment Services LLC in Hammond, Indiana. Horizon oversees $170 million and uses Dow Theory to determine how much cash to hold as insurance against declines in stock prices."
"Companies in the S&P 500 are forecast to report a 3 percent drop in profits this quarter, the fourth consecutive decline, according to estimates compiled by Bloomberg. The benchmark index for U.S. equities lost 8.8 percent yesterday, the most since the crash of 1987."
"Another indicator may show stocks are poised to rally. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 34 percent to a record 46.72. The gauge, calculated from prices paid for options on the S&P 500, is considered the market's ``fear gauge'' because it tends to rise as stocks fall."
VIX Peaks
"Stocks usually advance after the VIX peaks, according to a note to clients by Bespoke Investment Group LLC, a research and money-management company based in Harrison, New York. After the 10 biggest percentage increases for the 18-year-old VIX, the S&P 500 added an average of 0.36 percent the next day and 0.5 percent during the next week, Bespoke analysts wrote."
"Every company in the industrial average dropped yesterday as the measure slid to the lowest since October 2005. Nine companies fell to 52-week lows, including 3M Co., Caterpillar Inc. and United Technologies Corp."
"Dow Theory's last signal, on April 18, was bullish, as the industrial and transportation averages rebounded from declines in March. That changed yesterday as the transport gauge retreated for the fifth time in six days."
"``People are anticipating that if the economy is slowing down people are going to be shipping less,'' said Blake Howells, who helps oversee $2 billion at Portland, Oregon-based Becker Capital Management. ``That would indicate that the market anticipates that the economy is going to slow.''"
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
"Last Updated: September 30, 2008 10:19 EDT"
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Japan Stocks Drop to Near 4-Year Low as Bank Rescue Plan Fails
By Masaki Kondo
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"Sept. 30 (Bloomberg) -- Japan's stocks plunged to a near four-year low after a U.S. bank-rescue package was rejected, unemployment rose and production slumped, raising concern the financial crisis is hurting global growth."
"Sumitomo Mitsui Financial Group Inc., Japan's third-biggest listed bank, and Nomura Holdings Inc., the largest brokerage, sank more than 7 percent. JFE Holdings Inc. dived 7.3 percent, leading steelmakers to the lowest in three years on speculation a slowing economy will sap demand."
"``The global financial market is nearing the brink of collapse, and the only real choice investors have right now is to sell stocks and hold cash,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo."
"The Nikkei 225 Stock Average declined 483.75, or 4.1 percent, to close at 11,259.86 in Tokyo. The broader Topix index fell 40.46, or 3.6 percent, to 1,087.41, the lowest since December 2004. All 33 industry groups on the Topix slumped."
"The U.S. House of Representatives voted yesterday to reject a $700 billion rescue package for the financial system, sparking the biggest drop in the Standard & Poor's 500 Index since the October 1987 crash. Treasury Secretary Henry Paulson said he'll work to salvage the plan that would give him the authority to buy bad loans from financial companies."
"Japan's unemployment rate rose to the highest in two years in August while industrial production fell at the fastest pace in five years, the government said today, signaling the reach of the economic slowdown to households and manufacturers."
"The Topix slumped 13 percent in September, its worst month since November 1993. The gauge is down 40 percent from a 15-year high in February 2007. The Nikkei fell 14 percent this month, its steepest slide in a decade."
Falling Knife
"Sumitomo Mitsui lost 7.1 percent to 630,000 yen, while Mitsubishi UFJ Financial Group Inc., Japan's biggest listed bank, slid 4.7 percent to 893 yen. Nomura sank 7.3 percent to 1,326 yen, leading a gauge of brokerages to its biggest decline in two weeks."
"``Nobody wants to catch a falling knife with their bare hand,'' Fumikazu Onishi, a Tokyo-based senior strategist at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. ``Investors are waiting until they are sure the knife sticks in the floor.''"
"JFE, the world's third-largest steelmaker, tumbled 7.3 percent to 3,180 yen, while bigger rival Nippon Steel Corp. retreated 6.3 percent to 387 yen. A gauge of steelmakers declined 4.9 percent to the lowest since September 2005."
"Japan's Ministry of Economy, Trade and Industry yesterday said domestic demand for crude steel will probably drop in the three months to Dec. 31, the first quarterly decline since December 2005."
Valuations
"The Topix and Nikkei 225 pared losses in the afternoon trading as businesses whose earnings are resilient against an economic slowdown rallied. Yamazaki Baking Co. jumped 5.8 percent, the most since Feb. 27, to 1,269 yen, while Nippon Suisan Kaisha Ltd., a seafood producer, advanced 1.9 percent to 385 yen, making it one of the Nikkei's 10 gainers."
"Shares included in the Topix traded at 13.6 times trailing earnings and 1.2 times book value, the lowest in six months for both measures. Almost two-thirds of 1,716 Topix members were traded lower than their book values, according to Bloomberg data."
"``Once the market calms down, investors may snatch up stocks that are traded at less or almost equal to their book values,'' said Yoshihiro Ito, a senior strategist with more than 40 years experience at Okasan Asset Management Co., which oversees about $9.3 billion. ``Companies that depend on domestic markets, and thus are shielded from the volatility of foreign exchange, will also be attractive.''"
"Electric Power Development Co., Japan's biggest power wholesaler, rose 7.3 percent to 3,390 yen, the steepest leap since it listed on the bourse in October 2004, and making it the biggest winner on the MSCI World Index. The company, known as J- Power, increased its first-half earnings estimate by 64 percent on lower-than-expected fuel costs."
"Nikkei futures expiring in December retreated 3.9 percent to 11,320 in Osaka and slumped by the same degree to 11,340 in Singapore."
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
"Last Updated: September 30, 2008 04:11 EDT"
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Bond Risk Jumps as Rescue Plan Rejection Boosts Funding Costs
By Oliver Biggadike
"Sept. 30 (Bloomberg) -- The cost to protect Asia-Pacific bonds from default jumped after U.S. lawmakers rejected a $700 billion bank rescue plan, sending borrowing costs higher."
"Japan's overnight call loan rate rose to 0.6 percent, the highest in more than six weeks, and the three-month interbank offered dollar rate in Singapore jumped 11 basis points to an eight-month high of 3.9 percent as banks hoarded cash."
"``The focus is squarely placed on banks at the moment because of their heavy reliance on wholesale funding,'' said Anita Yadav, head of credit and hybrid research at UBS AG in Sydney. ``It's not about asset quality, it's not about capitalization, it's about funding. When you need funding, where will you get it from?''"
"The bank rescue plan was intended to restore confidence in the U.S. financial system and lower the cost of borrowing after the bankruptcy of Lehman Brothers Holdings Inc., the government takeover of American International Group Inc. and the failure of Washington Mutual Inc. Lawmakers said it may take days before alternate legislation can be crafted after the U.S. House of Representatives voted against the proposals."
"The Markit iTraxx Japan Series 10 index rose 17 basis points, or 0.17 percentage point, to 175 at 12:39 p.m. in Tokyo, Morgan Stanley prices show. The benchmark of 50 investment-grade Japanese companies increases as investors' perceptions of credit quality deteriorate. The iTraxx Australia index climbed 23 basis points to 212.5, Citigroup Inc. prices show."
Interest Rates
Borrowing costs for Australia's banks rose today even as traders bet funding pressures will force the nation's central bank to lower interest rates.
"The difference between the rate Australian banks charge each other for three-month loans and the overnight indexed swap rate widened as much as 14 basis points to 98, the most in six months, Bloomberg data show. The spread between the two, which has averaged 45 basis points this year, measures bank borrowing costs after adjusting for probable central bank rate changes."
"Credit-default swaps on companies and governments in the rest of Asia also advanced. Markit's index of 50 investment-grade borrowers outside Japan, including the Thai government and Hong Kong-based Hutchison Whampoa Ltd., rose 20 basis points to 233, ICAP Plc prices show. Contracts on South Korean government debt climbed the same amount to 192."
"The U.S. rescue legislation would have given Treasury Secretary Henry Paulson broad authority to buy troubled assets from financial companies to help ease a lending crunch triggered by the decline of the housing market. Opponents of the plan said it was too risky, too costly and created the impression the government would bail out Wall Street banks."
U.S. Risks Rise
"The House yesterday rejected the government's rescue proposals in a 228 to 205 vote, sending the Dow Jones Industrial Average tumbling 778 points for its biggest point drop ever and erasing more than $1 trillion in market value. The Standard & Poor's 500 Index fell 8.4 percent, the most since Oct. 26, 1987."
"The Markit CDX North America Investment Grade Index, a benchmark credit-default swap index linked to 125 companies in the U.S. and Canada, rose 16.5 basis points to 180 yesterday, according to broker Phoenix Partners Group."
"The indexes are benchmarks for protecting bonds against default and traders use them to speculate on changes in credit quality. A basis point is worth $1,000 on a swap that protects $10 million of debt from default."
Credit-default swaps pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements.
To contact the reporter on this story: Oliver Biggadike in Tokyo at obiggadike@bloomberg.net.
"Last Updated: September 30, 2008 02:24 EDT"
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"Gold, Silver Fall in N.Y. as Equities Rebound, Dollar Rallies "
By Halia Pavliva
"Sept. 30 (Bloomberg) -- Gold and silver fell in New York as U.S. equities rallied and the dollar gained the most against the euro since the introduction of the 15-nation currency, cutting demand for the precious metals as alternative investments."
"Major equity indexes gained in New York, rebounding from the worst plunge since October 1987, after lawmakers sought to revive a $700 billion financial rescue plan that was rejected yesterday. The dollar rose the most against the euro since 1999 as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments."
"``Today's bounce in stock futures and a further strong step forward by the U.S. dollar are likely to keep gold prices in check, and under $900 an ounce,'' Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal, said before New York equities markets opened. ``However, fast-moving developments on the crisis-resolution front could prove to be supportive.''"
"Gold futures for December delivery fell $15.80, or 1.8 percent, to $878.60 an ounce at 11 a.m. on the Comex division of the New York Mercantile Exchange. The metal is headed for a third-quarter drop, the first such decline in more than a year."
"Silver futures for December delivery declined 69 cents, or 5.3 percent, to $12.34 an ounce."
"Gold and other precious metals, including silver, may rise as investors seek a haven on concerns that more financial institutions will fail after lawmakers in the U.S. House of Representatives rejected the bailout proposal to help financial companies and ease a spreading credit crunch."
Holding Value
"``Gold continues to hold its value as a protection in adverse market conditions,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said today in a note. ``The world is looking for the other shoe to drop.''"
"The precious metal may gain 5.4 percent over the next year as investors shun equities, bonds and currencies as too risky, delegates to the London Bullion Market Association conference said. Gold rose to the highest in two months after yesterday's House vote, which defied the leadership of both major parties."
Gold surged 14 percent in the past two weeks before today as concern about bank failures and government rescue plans spurred demand for a haven from market turmoil. Federal Reserve Chairman Ben S. Bernanke said last week that the economy faces ``grave threats'' and warned that the credit crisis already is hurting business spending.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.
"Last Updated: September 30, 2008 11:33 EDT"
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Oil Stocks Post Biggest Quarterly Drop in 20 Years (Update3)
By Anthony DiPaola and Tara Patel
Sept. 30 (Bloomberg) -- The Dow Jones Europe Stoxx Oil & Gas Index had its biggest quarterly decline in more than two decades on investor concern the credit crisis will cut economic growth and slow energy demand.
"The 40-member group fell 23 percent since the end of June, the largest three-month drop since a 28 percent plunge in the fourth quarter of 1987. Royal Dutch Shell Plc, BP Plc and Total SA shed about a fifth of their value in the period as crude oil slipped 29 percent."
"``There will be lower oil demand globally in the fourth quarter and 2009 because of the economic slowdown,'' Frederic Potelle, an analyst at Bordier & Cie, said in a telephone interview from Geneva. ``Lower oil prices have pulled down share prices of oil companies.''"
"The index's drop follows a 15 percent gain in the second quarter when oil prices were rising. Crude rebounded today from its steepest one-day retreat in seven years on speculation the U.S. government will salvage plans to bail out banks. Oil for November delivery rose as much 3.8 percent to $100.02 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.27 as of 12:05 p.m. local time."
The U.S. government is seeking to orchestrate a bailout of the nation's banking system after losses on mortgage loans drove Lehman Brothers Holdings Inc. and Washington Mutual Inc. to failure and tightened credit conditions for other borrowers.
Demand Forecast
"The International Energy Agency, an adviser to 27 nations, cut its forecast for global oil demand in 2008 and 2009 as high crude prices and the economic slowdown reduce U.S. consumption."
"The IEA lowered its 2008 forecast for global oil demand by 100,000 barrels to 86.8 million barrels a day, and the 2009 estimate by 140,000 barrels to 87.6 million barrels a day, it said in a report Sept. 10."
"``Volatility in the oil markets remains extreme, reflecting significant uncertainties around some of the crucial inputs to oil market analysis, specifically the outlook for U.S. and Chinese economic and oil demand growth,'' analysts at Citigroup Inc. wrote in a report Sept. 26."
"Citigroup lowered its price forecast for 2009 and 2010 to $90 a barrel from its previous estimates of $122.5 a barrel for 2009 and $100 for 2010. Bordier's Potelle said crude is likely to fall below $90 a barrel while Deutsche Bank AG cut its 2009 estimate to $92.50 from $120, predicting prices will average about $85 a barrel during the next two quarters."
Goldman Unchanged
"In contrast, Goldman Sachs today reiterated its three-month crude price target of $115 a barrel, and forecast increased volatility in the fourth quarter."
Analysts including Paul Andriessen at Fortis Bank in Amsterdam see scope for oil stocks to pick up.
"``This is a sector which will recover quickly as soon as the overall market starts to turn because it's fundamentally bullish,'' Andriessen said in a telephone interview today."
"The worst performer in the oil industry subgroup in the Stoxx 600 group this quarter was Sevan Marine ASA, the Norwegian builder of floating units for offshore use, which lost 63 percent. Dragon Oil Plc, the Dubai-based oil and gas producer operating in Turkmenistan, was down 61 percent while U.K. oil- services company Acergy SA saw 50 percent of its market value wiped out."
There is concern among investors that independent explorers and producers may have the most difficulty funding projects amid lower oil prices and the tightening credit environment.
Financing Concern
"``Some of the smaller producers may have trouble financing projects and may look for help over the next 12 to 18 months,'' Jason Kenney, an ING Wholesale Bank analyst in Edinburgh, said in a telephone interview last week. ``It all depends on the oil price.''"
"Italy's Saipem SpA and Technip SA of France paced losses among oil-services companies on rising costs, falling 30 percent and 33 percent, respectively."
"Citigroup has cut earnings forecasts for European integrated oil companies by 3 percent for 2008, 16 percent for 2009 and 13 percent for 2010."
"BP could outperform rivals in coming months because of plans to have four wells open at the long-delayed Thunder Horse field in the Gulf of Mexico, Citigroup said. BP shares are currently trading at six times last year's earnings, the lowest in at least nine years, according to Bloomberg data."
"``We continue to see substantial value in European oils,'' Deutsche Bank's Lucas Herrmann, who has ``buy'' ratings on Shell, BP and Total, said in a note today. ``Absolute share prices should increasingly find support.''"
To contact the reporter on this story: Anthony DiPaola in Rome at adipaola@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net.
"Last Updated: September 30, 2008 12:22 EDT"
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India Current Account Deficit Widens to Record on Oil (Update1)
By Kartik Goyal
Sept. 30 (Bloomberg) -- India's current account deficit widened to a record in the three months to June as a surge in crude oil prices increased the nation's import bill.
"The shortfall, the amount by which imports exceed exports, remittances and other income from abroad, increased to $10.72 billion from a $1.04 billion gap in the previous quarter, the Reserve Bank of India said in a statement in Mumbai. Analysts expected a deficit of $11.52 billion."
"The rupee has declined 16 percent this year as a near doubling of crude oil prices raised import costs for South Asia's largest economy, which relies on overseas purchases for three-quarters of its energy needs. The gap may further widen as a credit freeze in the U.S. prompts foreign investors to dump Indian shares."
"``The rupee will remain under pressure as the financial crisis spurs the sale of local stocks and Indian refiners seek to buy dollars to meet rising import costs,'' said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd., the local unit of Standard & Poor's."
"India paid an average $8 billion a month this year for oil imports, up from $5.5 billion in 2007, as crude oil costs surged to a record $147 a barrel on July 11. In India, the 35 percent drop in oil prices since July has been offset by the decline in the rupee."
"Oil imports grew by 50.4 percent in the quarter ended June compared with 23.9 percent in the same quarter a year earlier, the central bank said."
Refiners' Losses
"``The sharp increase in oil imports reflected the impact of increasing oil price of the Indian basket of international crude, which increased to $118.8 a barrel in the three months to June, compared with $66.4 a barrel a year earlier,'' the bank said."
That's putting pressure on Indian refiners that are facing as much as $35 billion in losses this year because of restrictions on their selling prices.
"The Indian currency fell to a five-year low yesterday as the credit-market losses in the U.S. prompted overseas investors to sell local shares. The rupee declined to as much as 47.115 per dollar yesterday, the lowest since June 2003."
"Foreign investors, who bought a record $17 billion of Indian stocks in 2007, have withdrawn $9 billion this year, fueling a 38 percent decline in the benchmark stock index."
"The current-account deficit is likely to expand to $41.5 billion in the year to March 2009, equal to 3.2 percent of gross domestic product, according to Prime Minister Manmohan Singh's economic advisory Council."
"``The expansion in the deficit is directly attributable to the doubling of crude oil prices,'' the council said in July."
"India's merchandise exports rose 22.2 percent to $43.7 billion in the quarter ended June 30 from a year earlier, while imports gained 33.3 percent to $75.2 billion. Invisibles, that include software exports and remittances, increased 29.7 percent to $20.85 billion, according to today's statement."
To contact the reporters on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
"Last Updated: September 30, 2008 07:40 EDT"
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Treasuries Decline as Lawmakers Vow to Revive Paulson's Plan
By Sandra Hernandez and Bo Nielsen
"Sept. 30 (Bloomberg) -- Treasuries fell, paring the biggest monthly rally since January, after U.S. senators said they will salvage the government's market-rescue plan."
"Government debt yields also rose after the Irish government guaranteed the deposits and borrowings of six lenders and U.S. stock futures gained. Senators may try to revive the $700 billion bank-aid package as early as tomorrow, Banking Committee Chairman Christopher Dodd said."
"``My general feeling is that there's still a lot of hope that this rescue bill will get passed,'' said Tom di Galoma, head of U.S. Treasury trading at Jefferies & Co., a brokerage for institutional investors in New York. ``The market's a little too high here.''"
"The yield on the two-year note rose 4 basis points to 1.70 percent at 8:11 a.m. in New York, according to BGCantor Market Data. The 2 percent security maturing September 2010 fell 5/32, or $1.56 per $1,000 face amount, to 100 18/32."
Ten-year note yields climbed 4 basis points to 3.62 percent.
"The Dow Jones Stoxx 600 Index of European shares rose 0.8 percent, after earlier dropping 2.7 percent. Futures on the Standard & Poor's 500 Index rose 2.3 percent, indicating a rebound from yesterday's slump, the biggest since the 1987 stock-market crash."
Treasuries had the steepest gain in two weeks yesterday after the House of Representatives rejected the biggest government intervention in the markets since the Great Depression.
Returns Increase
"``The market reacted yesterday as if the package was going to fail,'' said Padhraic Garvey, an Amsterdam-based debt strategist with ING Bank NV. ``That's maybe taking it too far.''"
Senators said they have no choice but to revive the plan to restore confidence in the nation's banking system.
"``We don't intend to leave here without the job being done,'' said Dodd, a Connecticut Democrat. Treasury Secretary Henry Paulson said he was ``very disappointed'' at the House vote and would work with lawmakers ``to get something done.''"
"The Irish government said today it will guarantee all deposits, covered bonds, senior debt and dated subordinated debt of four publicly traded banks and two building societies. Ireland's decision followed actions in Belgium and the U.K., where governments have injected capital into individual banks or seized them."
"Treasuries returned 1.8 percent in September, the most since January's gain of 2.5 percent, according to Merrill Lynch & Co.'s U.S. Treasury Master index. They climbed 3.5 percent for the quarter, the most since the January-to-March period."
Fed Outlook
"Futures on the Chicago Board of Trade show a 78 percent chance the central bank will trim its 2 percent target rate for overnight lending between banks by a half-percentage point at its Oct. 29 meeting, versus zero percent odds a week ago. The odds on a quarter-point reduction are 22 percent. A month ago, traders bet there was a 20 percent chance of a rate increase to 2.25 percent."
Three-month bill rates rose 15 basis points to 0.50 percent.
"``The short-end yield is pricing in a lot of fed rate reductions, and that's not likely to happen,'' said Michael Markovic, a senior fixed-income strategist in Zurich at Credit Suisse Group."
"Yields indicate banks have all but frozen lending. The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 3.52 percentage points, from 1.10 percentage points a month ago. The spread increased to 3.54 percentage points yesterday, the most since Bloomberg began compiling the data in 1984."
Supply
"The cost of borrowing in dollars overnight jumped the most on record, the British Bankers' Association said. The London interbank offered rate, or Libor, rose 4.31 percentage points to 6.88 percent, an all-time high. It was at 2.95 percent a week ago."
Notes also slid because of speculation the government will sell more debt to pay for any rescue.
"``It's going to be hard to sustain those kinds of levels in the front end of the curve as the supply kicks up and invariably some other measures are conjured to try to remedy this,'' Robert Tipp, chief investment strategist for fixed income in Newark, New Jersey, at Prudential Investment Management, said yesterday. The company oversees more than $200 billion of bonds."
To contact the reporters on this story: Sandra Hernandez in New York at shernandez4@bloomberg.net; Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
"Last Updated: September 30, 2008 08:21 EDT"
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"U.S. Heading for Slump, With or Without Bailout (Update1) "
By Rich Miller
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Sept. 30 (Bloomberg) -- The U.S. may face its longest recession in a quarter century no matter what action Congress takes on Treasury Secretary Henry Paulson's $700 billion plan to rescue the battered banking industry.
"Economists including Joseph Lavorgna of Deutsche Bank Securities and David Greenlaw of Morgan Stanley said it now appears the economy shrank in the third quarter as credit- crimped consumers cut spending for the first time since 1991. A further contraction is likely in the next two quarters, some economists predicted, which would make the recession the longest since 1981-82."
"``This has been a body blow to consumer and business confidence,'' said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania. ``The next six months are going to be very difficult.''"
"How bad it gets depends on whether Congress passes some form of assistance for the banks. The Standard & Poor's 500 index plunged 8.8 percent yesterday, its biggest fall since 1987, after the House of Representatives rejected the rescue package. The stock-market rout wiped out a record $1.3 trillion of wealth."
"The defeat of the measure -- and the steep price decline that accompanied it -- set off a scramble among the plan's backers for additional support before another vote, which likely won't come until later in the week."
Long and Steep
"If Congress ultimately fails to approve a bailout, what is shaping up to be a long and moderate recession might turn into a long and steep decline as credit freezes up and stock prices continue to nosedive, said Allen Sinai, chief economist at Decision Economics in New York."
"``We're going through a period of holy terror,'' he said."
"The grim outlook puts pressure on Federal Reserve Chairman Ben S. Bernanke and his colleagues to reduce interest rates, following yesterday's move to pump an extra $630 billion into the global financial system."
"``They should and will cut rates,'' said John Lonski, chief economist at Moody's Investors Service in New York. Economists at Citigroup Inc. told clients today that they see a ``decent chance'' of European central banks following any reduction from the Fed with ``emergency'' rate cuts of their own."
"So far, the economy has largely been able to weather the financial crisis, growing by 2.1 percent during the past year, thanks to well-timed tax relief and healthy corporate cash flow. Both now look to be losing their potency."
Flat Consumer Spending
"Consumer spending was flat in August as the boost from $93 billion worth of rebates faded and households grappled with mounting job losses, declining home prices and a squeeze on credit."
"Morgan Stanley reduced its forecast for third-quarter gross domestic product and now sees it contracting by an annualized rate of 0.6 percent instead remaining unchanged, Greenlaw said in a note to clients yesterday. The economy grew by 2.8 percent in the second quarter."
"Deutsche Bank's Lavorgna also turned more pessimistic after the consumer-spending numbers were announced yesterday, saying the economy looks set to suffer a 0.5 percent decline in the third quarter. He had previously expected a 0.7 percent gain."
"``The spending outlook is even worse going forward, given the dramatic tightening in financial conditions that has occurred in the last couple of weeks,'' he said in a note to clients. The outcome could end up looking like the credit- induced slowdown of 1980, when consumer outlays plunged at a 5 percent annual rate over two quarters, he wrote."
Trimming Purchases
"Consumers are so pinched they're even trimming purchases of basic goods. Walgreen Co., the largest U.S. drugstore chain, reported on Monday that its profits rose less than analysts estimated after it posted its smallest sales increase in a decade."
"Faced with stalling consumer spending and fading profits, companies are also starting to rein in their outlays and pare their payrolls."
"Industrial production fell in August by the most in almost three years as slower car sales prompted automakers to cut back on output. Data coming out Oct. 3 are expected to show that jobs declined another 105,000 this month, after an 84,000 drop in August, according to economists polled by Bloomberg News."
"Tighter credit is also beginning to take its toll on companies as earnings slow, making them more dependent on loans to expand their businesses."
Financing Gap
"The so-called financing gap -- the amount of money companies pay for capital expenditures minus what they generate internally from profits -- rose to an annualized $327 billion in the second quarter from $163 billion in the same period a year earlier, Fed data show."
"``Businesses are starting to be squeezed,'' Lonski said."
"McDonald's Corp., the world's largest restaurant company, told some U.S. franchisees to seek other ways to finance store improvements after Bank of America Corp. declined to increase lending, according to a memo obtained by Bloomberg."
"Even companies that are able to get credit must pay more for it. While Caterpillar Inc. raised $1.3 billion last week in its biggest bond offering ever, it had to offer the highest yields it has paid on such debt in nine years."
Zandi said the combination of strapped consumers and cautious companies may cause the economy to contract by as much as 1 percent in the fourth quarter of this year and again in the first quarter of next.
"A bank-rescue package ``is not going to save us from recession,'' said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``It will only prevent it from getting a lot worse.''"
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net
"Last Updated: September 30, 2008 06:43 EDT"
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"Stocks, Oil Plunge After Congress Rejects Bailout (Correct) "
By Michael Patterson and Lynn Thomasson
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(Corrects scope of MSCI World Index's retreat in second and fourth paragraphs of story published yesterday.)
"Sept. 29 (Bloomberg) -- U.S. stocks lost more than $1 trillion in market value, oil plunged and Treasury bonds rallied after lawmakers rejected the Bush administration's $700 billion financial rescue."
"The Standard & Poor's 500 Index fell 8.8 percent, the most since the crash of October 1987, led by a 16 percent decline in financial shares. Goldman Sachs Group Inc. and Morgan Stanley decreased over 12 percent. The MSCI World Index of 23 developed markets sank 7 percent, the most in 21 years. The euro and the pound sank, while bonds rose as governments raced to prop up banks infected by growing U.S. mortgage losses. Crude futures tumbled more than $10 a barrel."
"``Fear is permeating all markets and everyone is pretty much running for the hills,'' said Jack Ablin, who helps manage about $55 billion as chief investment officer of Harris Private Bank in Chicago. ``We're watching this thing crumble.''"
"The S&P 500 retreated 106.62 points to 1,106.39, as only one company gained, Campbell Soup Co. The benchmark index for American equities slipped to a four-year low. The Dow Jones Industrial Average decreased 777.68 to 10,365.45 for its steepest point drop ever. The MSCI World Index lost 86.84 to 1,163.53. Europe's Dow Jones Stoxx 600 Index sank 5.5 percent to 251.43, the lowest since January 2005."
"The Irish Overall Index slumped 13 percent, the most in its 25-year history. India's Sensitive index tumbled 3.8 percent, Russia's Micex Index fell 5.5 percent and Brazil's Bovespa declined 9.4 percent."
`Potentially Catastrophic'
"The British pound had its biggest intraday drop against the dollar in 16 years and the euro fell after European governments stepped in to save Bradford & Bingley Plc, Fortis and Hypo Real Estate Holding AG. The cost of borrowing in euros for three months soared to a record as banks hoarded cash."
The financial-rescue plan intended to restore confidence in the U.S. banking system collapsed in partisan wrangling as the House of Representatives voted down the proposal backed by the Bush administration and congressional leaders of both parties.
The House rejected the measure by a vote of 228 to 205.
"``It's been treated as though it's a bailout for Wall Street,'' said Jeffrey Caughron, an associate partner in Oklahoma City at Baker Group, which advises community banks on investing over $20 billion. ``that's only half the story. The more important half of the story is the potentially catastrophic liquidity crisis that could result from the negative vote.''"
"Yields Fall, Libor"
"Treasuries rallied as investors sought the relative safety of government debt. The yield on 10-year Treasury notes fell 0.27 percentage point to 3.58 percent. The cost of borrowing in euros for three months rose to a record after government-led bailouts of banks heightened concern that more in Europe will fail, prompting financial institutions to hoard cash. The London interbank offered rate, or Libor, that banks charge each other for such loans climbed to 5.22 percent, the British Bankers' Association said."
The $700 billion package to shore up banks was hammered out by Treasury Secretary Henry Paulson and congressional leaders over the weekend. The crisis that began with bad home loans to subprime borrowers in the U.S. is threatening to push the global economy into a recession as consumers lose confidence and banks cut back on lending.
"``The banking system is moving very close to a complete state of gridlock,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``It doesn't appear that Congress really appreciates how serious this situation really is. The market's telling us that it's extremely serious -- and it is.''"
Company Failures
"The MSCI All-Country World Index has retreated 14 percent in September, the biggest monthly loss since Russia defaulted on its debt in August 1998. This month, the U.S. seized the two largest mortgage-finance companies, Fannie Mae and Freddie Mac; Lehman Brothers Holdings Inc. filed for bankruptcy; Merrill Lynch & Co. agreed to sell itself to Bank of America Corp.; American International Group Inc. was taken over by the Treasury; and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history."
"Canada's S&P/TSX Composite Index has fallen 18 percent in 2008, giving it the best performance among the 23 nations MSCI considers developed markets. Ireland's benchmark index has plunged 53 percent, the steepest loss. Among 25 emerging markets, the 2.1 percent gain in Morocco's Madex Free Float Index counts as the best performance, while the 58 percent drop in China's CSI 300 Index is the worst."
Almost $600 Billion
"Financial institutions worldwide have reported more than $590 billion of credit losses and asset writedowns since the beginning of 2007, according to data compiled by Bloomberg."
Wachovia declined 82 percent to $1.84. Citigroup will absorb as much as $42 billion of losses on Wachovia's $312 billion pool of loans. The Federal Deposit Insurance Corp. will take on losses beyond that amount in exchange for $12 billion in preferred stock and warrants.
Citigroup fell 12 percent to $17.75. The bank halved its dividend and said it will raise $10 billion in capital.
"The S&P 500 Financial Index retreated 16 percent, the most since the measure was created in 1989. National City Corp. plunged 63 percent, the most since at least 1984, to $1.36. Sovereign Bancorp Inc. fell 72 percent to a 16-year low of $2.33."
"Morgan Stanley slumped 15 percent to $20.99, the lowest price since October 1998. It agreed to sell a 21 percent stake to Japan's Mitsubishi UFJ Financial Group Inc. for $9 billion, seeking to shore up investor confidence after borrowing costs climbed and its stock fell by half."
Goldman Sachs Group Inc. retreated 13 percent to $120.70.
Rescues in Europe
"European governments stepped in to rescue Fortis, Bradford & Bingley and Hypo Real Estate as tremors from the U.S. credit crisis were felt around the world. The U.K. Treasury seized Bradford & Bingley, Britain's biggest lender to landlords, while governments in Belgium, the Netherlands and Luxembourg threw an 11.2 billion-euro ($16.3 billion) lifeline to Fortis. Germany guaranteed a loan to Hypo."
"Crude oil fell 9.8 percent to $96.37 a barrel in New York. Copper and corn also helped lead commodities lower, sending the S&P Goldman Sachs Commodity Index to a 7.7 percent decline. Energy and materials shares in the MSCI All-Country World Index retreated more than 8 percent as a group."
"The drop in commodity prices dragged the dollar-denominated RTS Index, a gauge of stock trading on the Russian Trading System, to a 7.1 percent loss. The index is heading for the worst monthly loss since the country's debt default in 1998 after a 27 percent plunge in September."
"Apple Inc., the computer maker whose shares surpassed $200 last year, had the steepest drop since September 2000 after a Morgan Stanley analyst said price cuts will curb profit growth. Apple fell 18 percent to $105.26."
"``This just feels like a wholesale markdown of equity prices across the globe,'' Michael Vogelzang, who oversees $2 billion as chief investment officer at Boston Advisors LLC in Boston, told Bloomberg Television. ``There are not a lot of places to hide today.''"
To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.
"Last Updated: September 30, 2008 06:41 EDT"
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India Should Free Up Cash to Ease Credit Crunch (Update1)
By Subramaniam Sharma
"Sept. 30 (Bloomberg) -- India's central bank should make more cash available to lenders to ease a credit shortage and restore investor confidence, executives at Alok Industries Ltd., Jaiprakash Associates Ltd. and Balrampur Chini Mills Ltd. said."
"The Reserve Bank of India needs to cut the cash reserve ratio, the proportion of deposits banks must hold at the central bank, from an eight-year high of 9 percent before its next meeting Oct. 24, they said, predicting reductions of between 50 and 100 basis points."
"Indian money market rates have risen to near an 18-month high as banks hoard cash and investors pull out from emerging markets to meet a deepening financial crisis. The central bank, seeking to allay concern in the market, said today the nation's second-biggest bank has sufficient cash."
"``It is imperative the Reserve Bank of India should lower the cash reserve ratio to take off the pressure immediately,'' said Sunil Khandelwal, chief financial officer at textile exporter Alok Industries. ``Some industries may not be able to withstand this pressure and make the situation worse than it is. So, timely infusion needs to be made.'' The central bank should cut the cash reserve ratio by 100 basis points, he said."
Commercial banks worldwide are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments to bail out financial institutions in the U.S. and Europe. Banks borrowed the most since 2002 at the European Central Bank's emergency rate and deposited a record 44.4 billion euros ($64 billion) as money markets remained frozen.
`Restore Confidence'
"``There is a need to restore the confidence level and there is no panic,'' said Harish K. Vaid, senior president, corporate affairs and company secretary, Jaiprakash Associates, India's biggest builder of dams. Vaid also expects the Reserve Bank to lower the cash reserve ratio by 100 basis points."
The bank has raised the cash ratio by 400 basis points since Dec. 2006 to prevent excess money in the banking system from stoking inflation. A basis point is 0.01 percentage point.
"Alpana Killawala, Mumbai-based spokeswoman of the Reserve Bank, declined to comment."
"The ratio may be cut by 50 basis points, said Kishor Shah, a director and chief financial officer of Balrampur Chini, India's second-largest sugar producer."
"``The problem with Indian companies is that they are in a huge liquidity crunch,'' said Shah."
Well Capitalized
Finance Minister Palaniappan Chidambaram said today Indian banks are well capitalized and a $700 billion bailout package that was rejected by U.S. lawmakers yesterday would help markets worldwide if approved.
"The rupee closed at an two-year low of 46.985 per dollar yesterday, according to data compiled by Bloomberg. The yield on the benchmark bond rose 3 basis points to 8.62 percent yesterday, near a month's high, according to the central bank's trading system. India's bond and currency markets are shut today for fiscal half-year account closing."
"Overseas investors have sold a record $9.22 billion of Indian shares this year, sending the benchmark Sensitive index down for three straight quarters, the longest losing streak in seven years. The Bombay Stock Exchange's benchmark Sensitive Index gained 2.1 percent to 12,860.43."
"ICICI Bank Ltd., India's second-biggest, rose 9.3 percent to 539 rupees after the lender and the Reserve Bank said in separate statements it has sufficient funds."
SLR Cut
"The central bank will probably cut the statutory liquidity ratio, the proportion of deposits banks have to keep in the form of low-risk securities, before the cash reserve ratio because inflation is still high, Rajeev Malik, regional economist at Macquarie Group Ltd. in Singapore said."
"``Statutory liquidity ratio has been a structural constraint that needs to be addressed,'' said Malik. ``Cash reserve ratio cuts will come but not just yet.''"
"The rate of inflation in Asia's third-largest economy tripled this year to 12.14 percent in the first week of this month. The rate touched 12.63 percent, the highest since 1992, in August."
"``The Reserve Bank would keep a watch on inflation'' before taking a decision on easing monetary policy, Suresh Tendulkar, top economic adviser to Prime Minister Manmohan Singh, said in an interview today. The monetary authority has already started adding liquidity by holding additional daily money auctions."
To contact the reporter on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net.
"Last Updated: September 30, 2008 08:08 EDT"
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Treasuries Decline on Speculation Rescue Plan to Be Salvaged
By Sandra Hernandez and Bo Nielsen
"Sept. 30 (Bloomberg) -- Treasuries fell, paring the biggest monthly gain since January, on speculation that lawmakers will salvage legislation to thaw frozen credit markets, precluding another cut in interest rates by the central bank."
Traders pushed up yields on two-year notes by the most in more than a week as an advance in stocks damped demand for government debt. President George W. Bush said the defeat of the $700 billion rescue plan yesterday was ``not the end of the legislative process.''
"``You're seeing a little bit of optimism that the package will come back and pass, and that lessens the flight-to-safety bid a bit,'' said Jay Mueller, who manages about $3 billion of bonds as a senior portfolio manager at Wells Fargo Capital Management in Milwaukee. ``Presumably if they get this package passed, risky assets are going to become somewhat more attractive, but that's still very much in the air.''"
"The yield on the two-year note increased 26 basis points, or 0.26 percentage point, the most since Sept. 19, to 1.92 percent at 11:28 a.m. in New York, according to BGCantor Market Data. It earlier touched 1.6 percent, the lowest in more than a week. The 2 percent security maturing September 2010 dropped 18/32, or $5.63 per $1,000 face amount, to 100 5/32."
Ten-year note yields climbed 17 basis points to 3.75 percent. They've moved up from a five-year low of 3.25 percent on Sept. 16.
"Mueller said he is ``very close to neutral,'' or holding about the same percentage of Treasuries prescribed by the benchmark he uses to measure the performance of a portfolio, because ``there are big risks in both directions'' for prices as the rescue plan remains in limbo."
`A Lot of Hope'
"``There's still a lot of hope that this rescue bill will get passed,'' said Tom di Galoma, head of U.S. Treasury trading at Jefferies & Co., a brokerage for institutional investors in New York. ``The market's a little too high here.''"
The Standard & Poor's 500 Index gained 2.9 percent after slumping yesterday the most since the 1987 stock-market crash.
"Bush is huddling with Treasury Secretary Henry Paulson and other top economic advisers, along with leaders in Congress from both parties, to chart the next step after the House of Representatives voted 228-205 to kill the credit-markets plan."
"``I realize this is a difficult vote for members of Congress,'' Bush said at the White House. ``But the reality is that we're in an urgent situation, and the consequences will grow worse each day'' that Congress fails to act."
Rate Bets
"Futures on the Chicago Board of Trade showed a 34 percent chance the central bank will lower the 2 percent target rate for overnight lending between banks by a half-percentage point at its Oct. 29 meeting, versus 78 percent odds earlier today. The likelihood of a quarter-point reduction is 66 percent. A month ago, traders bet there was a 20 percent likelihood of a rate increase to 2.25 percent."
"Consumer confidence unexpectedly rose in September in a survey taken before the recent worsening of the credit crisis and yesterday's plunge in stocks. The Conference Board's confidence index increased to 59.8, a third consecutive increase, from a revised 58.5 the prior month, the New York- based group said today."
"``The data doesn't mean anything until we get some clarity of what is going on in Washington,'' said Charles Comiskey, head of U.S. Treasury trading in New York at HSBC Securities USA Inc., one of the primary dealers of government securities that trade with the central bank."
Irish Guarantee
"Treasuries earlier fell after the Irish government said it will guarantee all deposits, covered bonds, senior debt and dated subordinated debt of four publicly traded banks and two building societies. Ireland's decision followed actions in Belgium and the U.K., where governments have injected capital into individual banks or seized them."
"``Europe managed to short-circuit this meltdown,'' said T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York, the investment-banking arm of Canada's biggest lender. ``That definitely managed to put a floor under market sentiment.''"
"Treasuries returned 1.8 percent in September, the most since a 2.5 percent gain in January, according to Merrill Lynch & Co.'s U.S. Treasury Master index. That compares with a 1.4 percent gain by benchmark notes issued by Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the government on Sept. 7, and a 5.5 percent loss by AAA-rated corporate bonds. Treasuries returned 3.5 percent for the quarter, the most since the January-to-March period, and 5.8 percent for the year."
"Treasuries had the steepest gain in two weeks yesterday, with two-year note yields plunging 44 basis points and 10-year yields falling 27 basis points, after the House rejected the rescue package."
TED Spread
"``I'm very bullish on Treasuries,'' said Michael Cheah, who manages $2 billion at AIG SunAmerica Asset Management as a portfolio manager in Jersey City, New Jersey. ``I'm looking for a spot -- if the market sells off for any reason, I would consider adding to my long position.''"
"Yields indicate banks have all but frozen lending. The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 3.34 percentage points, from 1.10 percentage points a month ago. The spread increased to 3.54 percentage points yesterday, the most since Bloomberg began compiling the data in 1984."
"The cost of borrowing in dollars overnight jumped the most on record, the British Bankers' Association said. The London interbank offered rate, or Libor, rose 4.31 percentage points to 6.88 percent."
"Three-month bill rates rose 37 basis points to 0.71 percent. They touched 0.02 percent on Sept. 17, the lowest since World War II, amid concern that the bankruptcy of Lehman Brothers Holdings Inc. and the potential failure of other financial firms would trigger losses in money-market funds that held bank debt."
To contact the reporters on this story: Sandra Hernandez in New York at shernandez4@bloomberg.net; Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
"Last Updated: September 30, 2008 11:36 EDT"
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Industrial Companies Can Thank Banks for Lower Rates (Update4)
By Pierre Paulden
"Sept. 29 (Bloomberg) -- The same credit crunch gripping banks, brokers and insurers is providing industrial companies with the lowest short-term borrowing costs in almost four years."
"Yields on commercial paper due in 30 days sold by manufacturers and retailers fell to an average 2.14 percent last week, while those for financial borrowers rose to 3.15 percent. The spread between the two widened as much as 1.45 percentage points, the most since the Federal Reserve began compiling the data in 1997. Banks historically issued short-term IOUs at yields about 0.02 percentage point less than industrials, Fed data show."
"Money-market funds that gorged on the debt of financial companies are now pouring cash into Treasury bills and corporations which avoided the troubled mortgage bonds that contributed to the failures of New York-based Lehman Brothers Holdings Inc. and Washington Mutual Inc. of Seattle. Yields on 30-day non-financial commercial paper dropped to 1.86 percent on Sept. 24, the lowest since November 2004."
"``Investors afraid of owning financials are buying industrials as a haven,'' said Ira Jersey, an interest-rate strategist at Credit Suisse Holdings USA Inc. in New York."
"Lower short-term rates are proving irresistible to companies that haven't relied on borrowing, or leverage, to pump up profits."
`Good Demand'
"Microsoft Corp., the world's biggest software maker, last week added a $2 billion commercial paper program and said it may sell as much as $6 billion in debt. Standard & Poor's assigned Redmond, Washington-based Microsoft a AAA rating, making it the first company to get the highest possible grade in a decade."
"``I would think there would be good demand'' for the debt because Microsoft isn't a financial company, said Jill King, a senior manager at Horizon Cash Management in Chicago, who oversees $2.5 billion in fixed-income assets."
"Companies sell commercial paper, which matures in nine months or less, to help pay for day-to-day expenses such as payroll and rent. The market slumped $61 billion, or 3.5 percent, to a seasonally adjusted $1.7 trillion in the week ended Sept. 24, Fed data show. The peak came in July 2007, just before the subprime mortgage market collapsed, when $2.22 trillion of the debt was outstanding."
"The U.S. House of Representatives today rejected a $700 billion financial-rescue plan intended to restore confidence in the nation's banking system, dealing a blow to government efforts to contain a lending crisis. The Standard & Poor's 500 Index retreated as much as 7.6 percent. The index fell 91.78 points to 1,121.23 as of 3:24 p.m. in New York."
Failures Accelerate
"Yields on all top-rated issuers rose 43 basis points to 3.72 percent, the highest since Jan. 22, as governments globally propped up banks including Bradford & Bingley Plc, the U.K.'s biggest lender to landlords."
"The greatest demand is for debt with the shortest maturities. Commercial paper maturing in four days or less ballooned to an average of $164 billion a day in the week ended Sept. 26, from $87 billion at the start of the month. Daily sales of debt due in 21 to 40 days fell 35 percent to $10 billion."
"Even though top-rated issuers of commercial paper are getting lower rates, investors are demanding second-tier, or lower-graded borrowers, pay 4.9 percent for overnight debt and 5.5 percent for 30-day loans, according to Fed data."
"Companies with investment-grade credit ratings sold $24.3 billion of bonds this month, compared with $110.9 billion for the same period last year, according to data compiled by Bloomberg."
Run on Funds
"Money funds have been dumping debt sold by financial companies as the pace of failures accelerated in the past month. The government seized Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, the two biggest mortgage finance companies, and took control of New York-based American International Group Inc., the largest U.S. insurer."
Lehman went bankrupt and Washington Mutual was seized by regulators in the biggest bank failure in U.S. history.
"Reserve Primary Fund, the oldest U.S. money fund, became the first in 14 years to see its net asset value fall below $1 a share because of holdings of Lehman debt."
"A run on money funds began after Reserve Primary fell to $0.97 a share. Investors pulled a record $120.5 billion from the funds in the week ended Sept. 23, according to the Money Fund Report, a newsletter based in Westborough, Massachusetts."
"Money funds reacted by selling financial company debt and putting the money in the shortest-term government and industrial company securities. Three-month Treasury bill rates fell to 0.02 percent on Sept. 17, the lowest since Franklin. D. Roosevelt was president."
"``Even with withdrawals there is more than $3 trillion in money market mutual funds that has to find a home,'' Credit Suisse's Jersey said."
General Electric
"General Electric Co., the world's biggest provider of aircraft leasing, jet engines, power-plant turbines, medical imaging machines and locomotives, is having no problems accessing the short-term debt market even though about half of its business comes from lending, Chief Financial Officer Keith Sherin said on a conference call with investors Sept. 25."
"``Even in the last 10 days where you've had some significant disruptive days, we continue to see a flight to quality,'' Sherin said."
"Fairfield, Connecticut-based GE is obtaining funding 25 basis points, or 0.25 percentage point, below interbank lending rates and the average maturity of its commercial paper is 61 days, he said. That works out to be 2.31 percent based on the 2.56 percent overnight London interbank offered rate on Sept. 25. The average 60-day rate for top-rated financial companies is 2.82 percent, according to Fed data."
"Still, the company's General Electric Capital Corp. financing unit plans to reduce commercial paper outstanding to between 10 percent and 15 percent of total debt, or about $10 billion, according to Sherin."
To contact the reporter on this story: Pierre Paulden in New York at ppaulden@bloomberg.net
"Last Updated: September 29, 2008 15:29 EDT"
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Wachovia Choked on Its Outsized Real-Estate Bet: Chart of Day
By David Wilson
"Sept. 29 (Bloomberg) -- Wachovia Corp. pushed harder than its peers to tap into the U.S. housing industry's boom earlier this decade, and paid the ultimate price for that strategy."
"The CHART OF THE DAY shows growth in real-estate loans at five of the country's largest banks during the five-year period ended June 30, according to data compiled by Bloomberg. Wachovia had the group's steepest increase, as lending more than tripled."
"Citigroup Inc., which agreed today to buy Wachovia's banking operations with help from the Federal Deposit Insurance Corp., more than doubled its real-estate lending. Bank of America Corp. and JPMorgan Chase & Co. did the same. Wells Fargo & Co. -- another bidder for Wachovia, according to the Wall Street Journal -- had a 23 percent increase."
"Wachovia's lending swelled after the 2006 purchase of Golden West Financial Corp., a specialist in adjustable-rate mortgages with payment options. Real-estate loans rose 68 percent in the first quarter of 2007, the data shows."
"Citigroup has more leeway to write down the loans and other Wachovia assets than Wells Fargo does, based on data that Vivek Juneja, an analyst at JPMorgan, cited today in a report."
"Citigroup can absorb $35.2 billion of writedowns before its Tier 1 capital ratio, a gauge of financial strength, would fall below 7.5 percent, Juneja's data showed. By the same measure, Wells Fargo could cope with $10.4 billion. Both figures are based on estimated capital at the end of the third quarter."
To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
"Last Updated: September 29, 2008 12:14 EDT"
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Europe Stocks May Trail U.S. Shares on Slower Profits (Update2)
By Michael Patterson and Alexis Xydias
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"Sept. 29 (Bloomberg) -- European stocks may fall further than U.S. equities as profits decline and mortgage-related losses push the region's economy toward a recession, some of the world's biggest investors say."
"Even after plunging 34 percent from its 2007 peak through last week, the Dow Jones Stoxx 600 Index may be a worse bet than the Standard & Poor's 500 Index, which dropped 22 percent, the investors say. Earnings decreased at just 34 percent of companies in the S&P 500 that posted results since the start of July, compared with 46 percent in the European gauge, according to data compiled by Bloomberg. Analysts expect profits in Europe to rally 12.7 percent in 2009, about half the pace predicted in the U.S."
"Fortis Investments, Standard Life Investments and MFS Investment Management, which oversee about $765 billion, say those expectations for Europe are too optimistic because the region's economy will contract. Profit disappointments and more asset writedowns at banks may burn investors lured to shares in the Stoxx 600 by the lowest prices relative to dividends in at least six years, according to Bloomberg data."
"``We don't trust current earnings expectations,'' said Joost Van Leenders, the Amsterdam-based investment specialist for asset allocation at Fortis, which oversees about $305 billion. Europe is his biggest ``underweight'' position in equities. ``If expectations and real profits come down further, it would not be good for stocks.''"
Bear Market
"The Stoxx 600 dropped 5.5 percent today, the steepest tumble in eight months, after bank bailouts accelerated and the U.S. government's $700 billion plan to rescue financial institutions failed to unlock money markets. The S&P 500 lost 4.2 percent at 12:25 p.m. New York time."
"The dividend yield on the Stoxx 600 rose to 4.56 percent last week, the highest since at least January 2002 and 0.39 percentage point above the payout on the region's benchmark government bond, Germany's 10-year bund, Bloomberg data show. When the Stoxx 600's yield topped bunds in 2003, it marked the end of the three-year bear market spurred by the bursting of the Internet bubble."
"This time may be different because profits are falling and investors haven't tempered expectations enough to reflect the credit crisis's drag on earnings, according to Andrew Milligan, head of global strategy at Standard Life."
`Shoot First'
"Credit losses at Zurich-based UBS AG, along with profit declines at technology companies such as Stockholm-based Ericsson AB, helped send earnings lower at 153 of the 332 members of the Stoxx 600 tracked by Bloomberg that reported quarterly results since the beginning of July."
"More than 40 percent of the Stoxx 600's companies trailed Wall Street's estimates, Bloomberg data show, exacerbating a 27 percent slide in the Stoxx 600 this year. In the S&P 500, only 29 percent trailed expectations."
"``When companies come out with statements and it disappoints the markets, the share-price reaction can still be violent,'' said Milligan, who helps oversee about $260 billion at Standard Life in Edinburgh. He's holding fewer European equities than are represented in benchmark indexes. ``Investors shoot first and ask questions later.''"
"The reluctance by the European Central Bank to reduce interest rates may worsen the region's economic downturn and curb profits, said James Swanson, who helps manage about $200 billion as the chief investment strategist at MFS."
Bank Rescues
"Europe's economy contracted last quarter for the first time since the introduction of the euro almost a decade ago, yet the ECB held its benchmark interest rate at a seven-year high of 4.25 percent this month. ECB President Jean-Claude Trichet said Sept. 10 that controlling inflation remains his primary focus."
"``The thing that complicates Europe and makes me less favorable toward it than the U.S. is the notion of maintaining high rates there,'' Swanson said. ``That's putting sand in the gears of their economy.''"
"Treasury Secretary Henry Paulson and congressional Democrats yesterday hammered out a consensus on a bank-rescue plan after the housing slump and freeze in debt markets caused the bankruptcy of Lehman Brothers Holdings Inc. and government seizure of American International Group Inc., both based in New York."
"Separately, Belgium, the Netherlands and Luxembourg invested 11.2 billion euros ($16.3 billion) in Brussels and Amsterdam- based Fortis, Belgium's largest financial-services firm, to restore confidence in the bank. Bingley, England-based Bradford & Bingley Plc, Britain's biggest lender to landlords, was seized by the U.K. government after the credit crisis shut off funding."
`Lower Level'
"Charles Dautresme, a strategist at Axa Investment Managers, says European banks may add to the $231 billion of writedowns and credit losses they've reported since the beginning of 2007."
"``Europe wasn't as aggressive as the U.S.'' in writing down the value of mortgage-related assets, Dautresme said in an interview from Paris, where Axa oversees about $770 billion. ``There's also a need for recapitalization, and each time it's done at a lower level.''"
"American financial companies have reported $299 billion of losses, Bloomberg data show."
"Investors pulled money from European stocks at a record pace over the past 18 months, according to Mislav Matejka, JPMorgan Chase & Co.'s London-based equity strategist. He says the region's stocks are poised to outperform the U.S. as cheap valuations lure investors back."
`Still Too High'
"The Stoxx 600's dividend yield, which topped the bund payout since the end of August, has only been higher during seven other weekly periods since January 2002, Bloomberg data show. In March 2003, it coincided with the start of a 43 percent rally over the next year."
"The Stoxx 600 climbed 14 percent in 12 months when it happened in June 2005, and gained an average of 6.5 percent in a month after occurrences in March and July of this year, only to fall back."
Van Leenders of Fortis says some valuation metrics may prove to be false buy signals because they don't account for the ``rapid'' deterioration in earnings prospects sparked by the credit crisis.
"``We are hesitant to step in on the basis of this argument because of the profit outlook,'' he said. ``Expectations are still too high.''"
To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.
"Last Updated: September 29, 2008 12:40 EDT"
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U.S. Stocks Plunge After House Votes Against Bailout Plan
By Eric Martin
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Sept. 29 (Bloomberg) -- U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after the House of Representatives rejected a $700 billion plan to rescue the financial system.
"The Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in market value was erased from American equities. The MSCI World Index of 23 developed markets slid 6.9 percent, the most in 21 years."
"Wachovia Corp. tumbled 82 percent after the bank was sold to Citigroup Inc. in a deal brokered by the Federal Deposit Insurance Corp., sending shares of Sovereign Bancorp Inc. down 72 percent and National City Corp. 63 percent lower. Goldman Sachs Group Inc. and Morgan Stanley, the two largest Wall Street securities firms, fell more than 12 percent. General Motors Corp., Chevron Corp. and Intel Corp. sank more than 10 percent each as all 30 Dow average stocks lost at least 2.8 percent."
"``We've completely decimated confidence in the markets,'' said James Dunigan, managing executive of investments at PNC Wealth Management, which oversees $66 billion in Philadelphia. ``I appreciate their wanting to be a watchdog. On the other hand, if the kitchen's on fire, you don't want it to spread to the rest of the house.''"
"The S&P 500 decreased 106.59 points, or 8.8 percent, to 1,106.42. The Dow slid 7 percent to 10,365.45. The Nasdaq Composite Index declined 199.61, or 9.1 percent, to 1,983.73, its steepest plunge since April 2000. Twenty-five stocks fell for each that rose on the New York Stock Exchange as 2 billion shares were traded on the floor, 35 percent more than the three- month average."
Four-Year Low
"The S&P 500 sank to its lowest level since October 2004 as all 10 of its industry groups tumbled at least 4.2 percent. Campbell Soup Co. was the only stock in the benchmark index for U.S. equities to advance. The Dow average's retreat was its steepest on a percentage basis since the first trading day after the September 2001 terrorist attacks, sending the 30-stock gauge to an almost three-year low. A gauge of expected stock-market volatility climbed to a record."
"Congressmen voted 228 to 205 against the measure to authorize the biggest government intervention into markets since the Great Depression, extending the S&P 500's decline in September to 14 percent, its worst month since the collapse of hedge fund Long Term Capital Management 10 years ago. The defeat of the legislation set off a scramble among the plan's backers for additional support before another vote, which likely won't come until later in the week."
`Unimaginable'
"``They've got to come up with something or the damage is unimaginable,'' said Henry Herrmann, Overland Park, Kansas-based president and chief executive officer of Waddell & Reed Financial Inc., which manages $70 billion."
Benchmark indexes extended earlier declines spurred when Wachovia joined three European banks in requiring government- orchestrated rescues.
"Sovereign Bancorp, the second-largest U.S. savings and loan, plunged $6.04 to $2.33. National City, Ohio's biggest bank, lost $2.35 to $1.36."
"State Street Corp., the world's biggest money manager for institutions, tumbled 27 percent. Fifth Third Bancorp slid 44 percent and CIT Group Inc. declined 25 percent, while Bank of New York Mellon Corp. lost 27 percent."
"Morgan Stanley dropped $3.76, or 15 percent, to $20.99, a 10-year low. The fifth-largest bank-holding company, seeking to shore up investor confidence after borrowing costs climbed and its stock fell by half, agreed to sell a 21 percent stake to Japan's Mitsubishi UFJ Financial Group Inc. for $9 billion. Goldman Sachs declined $17.29 to $120.70."
`A Nightmare'
"The S&P 500 Financials Index slid 16 percent, its steepest tumble since the gauge's creation in 1989. American Express Co., Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. lost more than 10 percent each."
"``It's pretty much a nightmare,'' said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio. ``This is the worst we've seen it since the credit mess started. Until we know exactly why they didn't pass it, we're going to be selling off for a while.''"
"Wachovia, Citigroup"
"Wachovia sank $8.16 to $1.84. The FDIC helped arrange the takeover of Wachovia's banking operations by Citigroup, the largest U.S. bank by assets. Citigroup will absorb as much as $42 billion of losses on Wachovia's $312 billion pool of loans, the FDIC said in a statement. The all-stock deal equals about $1 a share for the Charlotte-based bank, ranked sixth by assets in the U.S. All depositors will be protected, according to the FDIC"
Citigroup lost $2.40 to $17.75. The New York-based bank plans to cut its own dividend in half and raise $10 billion in capital as it takes on Wachovia's senior and subordinated debt.
An index tracking the performance of stocks the U.S. Securities and Exchange Commission banned investors from selling short retreated 12 percent today.
"Energy producers posted the second-biggest drop among 10 groups in the S&P 500 after financials, losing 11 percent for their steepest tumble since 1989. Crude oil plunged $10.52, or 9.8 percent, to $96.37, leading commodities including copper and corn lower on concern global economies will slow after the failure of the bailout plan in Washington."
"Exxon, Apple Tumble"
"Exxon Mobil Corp., the largest U.S. energy company, dropped $6.59, or 8.2 percent, to $74.06. ConocoPhillips, the third- biggest U.S. oil company, fell $6.93, or 9.1 percent, to $69.31."
"Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, lost $10.60 to $53.22. Copper fell 5.5 percent to $2.9065 a pound on the Comex division of the New York Mercantile Exchange."
"Apple Inc. dropped $22.98, or 18 percent, to $105.26 on the Nasdaq Stock Market, its steepest loss in eight years. The maker of the iPod media player, iPhone and Mac computers was cut to ``equal weight'' from ``overweight'' by Morgan Stanley analysts, who predicted a 10 percent slump in the shares and said the stock's price doesn't yet reflect slowing demand."
"The VIX index of U.S. options, as the Chicago Board Options Exchange Volatility Index is known, rose 34 percent to a record 46.72. The VIX gauges the cost of using options as insurance against further losses in the stock market."
"Today's sell-off extended the S&P 500's decline from an October record to 29 percent. Financial firms in the S&P 500 lost half their value over the same time, dragged down by more than $591 billion in losses from the collapse of the subprime mortgage market. Third-quarter earnings at S&P 500 companies declined 3 percent on average, according to analysts' estimates compiled by Bloomberg, weighed down by a 56 percent slide in profits at financial firms."
`Unwind Into Chaos'
"``There's a real opportunity for this thing to totally unwind into chaos if we can't get some real direction from Washington,'' said Russ Kamp, chief executive officer of Invesco Quantitative Strategies, which manages about $461 billion in New York."
"A gauge of financial-services companies in Europe's Dow Jones Stoxx 600 Index slid 9.8 percent, the steepest retreat since the gauge was created in 1991, after three banks in the region required government-orchestrated rescues."
"Belgium, the Netherlands and Luxembourg invested 11.2 billion euros ($16.3 billion) in Brussels and Amsterdam-based Fortis, Belgium's largest financial-services firm, to restore confidence in the bank. Bingley, England-based Bradford & Bingley Plc, Britain's biggest lender to landlords, was seized by the U.K. government after the credit crisis shut off funding. Hypo Real Estate Holding AG, Germany's second-biggest commercial-property lender, received a 35 billion euro loan guarantee to fend of insolvency."
Borrowing Costs
"The euro interbank offered rate, or Euribor, rose 10 basis points to 5.24 percent, the biggest jump since June, the European Banking Federation said today. Singapore's benchmark rate for three-month U.S. dollar loans rose to the highest level in eight months."
"``It's critical that we get something done here,'' Jeffrey Saut, who helps oversee $190 billion as chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a Bloomberg Television interview. ``The credit system is seizing up.''"
Traders booed on the floor of the New York Stock Exchange as the closing bell rang.
"The Dow average swung by more than 200 points during fifteen trading days in September as the government seized the two largest U.S. mortgage-finance companies, Fannie Mae and Freddie Mac; Lehman Brothers Holdings Inc. filed for bankruptcy; Merrill Lynch & Co. agreed to sell itself to Bank of America; American International Group Inc. was taken over by the Treasury; and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history."
"Treasury prices surged, sending two-year note yields down 39 basis points to 1.71 percent. The dollar fell against the yen, while rising against the euro and climbing the most against the British pound in 16 years."
To contact the reporter for this story: Eric Martin in New York at emartin21@bloomberg.net.
"Last Updated: September 29, 2008 17:08 EDT"
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"U.K. Pound Declines Against Euro, Little Changed Versus Dollar "
By Agnes Lovasz
Oct. 1 (Bloomberg) -- The pound fell against the euro and was little changed versus the dollar.
"The U.K. currency weakened to 79.27 pence per euro as of 8:23 a.m. in London, from 79.13 pence yesterday. It was also at $1.7825, from $1.7805 yesterday."
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net
"Last Updated: October 1, 2008 03:26 EDT"
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Brazilian Real Gains on Speculation U.S. Will Revive Bailout
By Adriana Brasileiro
Sept. 30 (Bloomberg) -- Brazil's real rose for the first time in three days on speculation U.S. lawmakers will try to revive a $700 billion rescue plan for financial markets.
"The real jumped 3.1 percent to 1.9023 per dollar at 3:39 p.m. New York time, after most trading had ended in Brazil. The currency fell yesterday the most in nine years, weakening past the 2-per-dollar level for the first time this year. Brazil's real is the worst performer among the 16 most-actively traded currencies, having tumbled 14 percent this month."
"``Everybody believes that something will happen soon,'' said Fernando Fix, chief economist at Votorantim Asset Management in Sao Paulo."
"Stocks rose as Brazil's benchmark Bovespa index soared as much as 5.7 percent, led by utilities and banks."
"Brazil's fundamentals remain solid, Nick Chamie and a group of analysts at RBC Capital Markets wrote in a report."
"``Foreign direct investment flows are forecast to remain relatively high at $32 billion in 2008, covering this year's current account deficit in full and helping cushion the real from volatile risk appetite and portfolio investment swings in a world of tighter liquidity,'' the analysts wrote."
"They predict the real will hold in the 1.75 to 1.85 per dollar range in the fourth quarter, and weaken to 1.95 by the end of 2009 as the trade surplus shrinks and growth slows, reducing investment flows."
"The yield on Brazil's zero-coupon bond due in January 2010 fell 24 basis points, or 0.24 percentage point, to 14.53 percent. The yield on Brazil's overnight futures contract for January 2009 delivery was little changed at 14.02 percent."
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net
"Last Updated: September 30, 2008 15:48 EDT"
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"Chile Output Falls 3.1%, Biggest Decline in Six Years (Update1) "
By Sebastian Boyd
"Sept. 30 (Bloomberg) -- Chilean industrial output had its biggest decline in six years last month, led down by a plunge capital and durable goods."
"Production fell 3.1 percent in August from a year earlier, the National Statistics Institute announced in Santiago today. The median forecast of 15 economists surveyed by Bloomberg predicted a 2.4 percent gain. The monthly contraction was the biggest since a 3.9 percent decline in August 2002."
"Industrial sales fell 4.0 percent, compared to the forecast of 11 economists in a Bloomberg survey for a 2.5 percent rise. Output of capital goods fell 18.3 percent while durable goods' production slid 9.4 percent, the institute said."
"Chile's peso weakened for a third day, declining 0.7 percent to 555.15 per dollar at 9:55 a.m. New York time from 551.35 late yesterday."
To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net
"Last Updated: September 30, 2008 10:02 EDT"
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European Inflation Slows for Second Month on Oil Drop (Update1)
By Fergal O'Brien
"Sept. 30 (Bloomberg) -- European inflation slowed for a second month in September, easing to the lowest rate since April as oil prices extended declines from a record."
"The inflation rate in the euro area fell to 3.6 percent from 3.8 percent in August, the European Union statistics office in Luxembourg said today. That matched the median estimate of 39 economists in a Bloomberg News survey."
"Oil prices have dropped by more than one-third from their all-time high in the last three months, cutting the cost of gasoline and heating oil. At the same time, stagnating economic growth is reducing the capacity of companies to increase prices. The European Central Bank will probably keep its key interest rate at 4.25 percent on Oct. 2 as it remains ``uneasy about inflation,'' according to governing council member Axel Weber."
"``The fall in consumer-price inflation shows that price pressures in the region are finally receding,'' said Jennifer McKeown, an economist at Capital Economics in London. ``But the ECB has been concerned that core inflation might pick up sharply if wage growth reacts to the still high level of inflation and the previous strength of the labor market.''"
"Crude oil extended declines today after falling the most in almost seven years yesterday as U.S. lawmakers rejected a $700 billion financial rescue plan. Crude was at $98.34 a barrel at 12:15 p.m. in London, compared with it July 11 record of $147.27."
"Wheat, Cotton"
"In addition to oil, commodities including wheat, cotton and corn have fallen in recent months, dragging the Reuters/Jefferies CRB Index of 19 commodities around 28 percent from its record in July."
"The euro fell for a second day against the dollar today, dropping 0.6 percent to $1.4345 as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments."
"Companies and consumers have scaled back their predictions for price growth in the euro area as oil prices have declined. A gauge of company selling-price expectations fell to 12 in September from 17 in August, reaching the lowest in 10 months, according to a monthly European Commission survey. Consumers' outlook for prices dropped to 17 from 22."
"A decline in headline inflation next year ``is likely to be partly offset by rising core inflation, but this should no longer be an issue from 2010,'' said Nick Kounis, an economist at Fortis Bank in Amsterdam. ``Indeed, downside risks to the growth outlook and the implications of weaker growth for the medium-term inflation outlook is likely to increasingly be the focus of the ECB's attention in the coming months.''"
`Magic Away'
"The ECB aims to keep inflation close to but below 2 percent. In Germany, Europe's largest economy, inflation slowed less than economists forecast this month, according to national data published Sept. 26. Prices rose 3 percent from a year earlier, compared with economists' forecasts for 2.9 percent."
"While the ECB is ``aware'' that the economy is in a ``phase of weakening,'' the economic slowdown ``won't magic away the inflation problem,'' Weber said on Sept. 23."
"Still, as consumer-price growth eases and growth cools, economists at banks including Societe Generale and BNP have revised their predictions for ECB interest rates."
"James Nixon, an economist at Societe Generale in London, on Sept. 26 forecast three quarter-percentage-point cuts in 2009, revising a previous forecast for rates to remain unchanged throughout next year."
"Wattret at BNP also forecast three rate cuts next year in a note this month, having earlier predicted no change. Both see the benchmark rate being lowered to 3.5 percent in 2009."
The figures published today are an estimate. The statistics office will publish a detailed breakdown of the data and the core rate on Oct. 15.
To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.
"Last Updated: September 30, 2008 07:17 EDT"
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Woolfolk Sees Crude Oil Prices Dropping to $60 a Barrel: Video
"Sept. 29 (Bloomberg) -- Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp., talks with Bloomberg's Rhonda Schaffler in New York about the impact of the U.S. dollar on global currencies, the Treasury's bailout plan and the outlook for crude oil prices. (Source: Bloomberg)"
"00:00 Equity market outlook, dollar value"
02:32 Impact of dollar on global currencies
"04:31 Interest rates; Treasury's bailout plan, cost"
06:58 Reasons for decline in crude oil prices
08:58 Currency strategy; emerging markets
Running time 11:22
"Last Updated: September 29, 2008 13:26 EDT"
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Malaysia's Ringgit Falls as U.S. Bank Rescue Fails; Bonds Gain
By David Yong
"Sept. 30 (Bloomberg) -- Malaysia's ringgit fell for a sixth day after U.S. lawmakers rejected a bill to rescue financial companies, prompting investors to cut their holdings of emerging-market assets. Government bonds advanced."
The currency headed for a second month of losses after the U.S. House of Representatives yesterday voted 228 to 205 against the plan that would have given the Treasury as much as $700 billion to buy troubled assets from financial firms. U.S. stocks plunged while the MSCI Asia Pacific Index of shares slid for a sixth day.
"``Risk aversion and flight to safety will dominate, and that means almost everyone will be getting out of emerging markets for a while,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The ringgit is heading for weaker levels in the week ahead'' until a bailout plan is passed."
"The ringgit declined 0.3 percent to 3.4555 versus the dollar as of 2:19 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.4595, the weakest level since Sept. 19."
"Non-deliverable forward contracts showed traders are cutting their bets for gains in Malaysia's currency. The contracts show the ringgit will advance to 3.4515 per dollar in the next three months, versus a forecast for 3.403 a week ago, according to data compiled by Bloomberg."
Forwards are agreements in which assets are bought and sold at current prices for future delivery.
Bonds Advance
Ten-year government bonds ended two days of losses on speculation central banks around the world will start cutting interest rates to reduce global funding costs and counter the seizure of credit markets.
"The gain in benchmark bonds pushed yields to the lowest level in more than three months. Ringgit-denominated government debt has returned 0.51 percent this month through Sept. 29, according to indexed compiled by HSBC Holdings Plc. That's a third straight month of gains, the longest streak since February."
"``The safety bids are spilling over from the crisis in the U.S. even though the Malaysian financial industry is mostly insulated,'' said Jamil Baharuddin, a senior treasury dealer at RHB Bank Bhd. in Kuala Lumpur. ``Big funds have been waiting to buy bonds and this event spurred them on.''"
"The yield on the 4.24 percent note fell 11 basis points to 4.55 percent, the lowest since June 18, according to Bursa Malaysia Bhd.'s electronic bond exchange. The price jumped 0.8, or 8 ringgit per 1,000 ringgit face amount, to 97.65. A basis point is 0.01 percentage point."
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.
"Last Updated: September 30, 2008 02:30 EDT"
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Treasuries Rise as U.S. Growth May Slow Whatever Congress Does
By Wes Goodman
"Oct. 1 (Bloomberg) -- Treasuries rose, extending four months of gains, on speculation the U.S. faces a recession no matter what Congress does as it tries to rescue the financial markets."
"Rising unemployment will lead the Federal Reserve to cut interest rates over the next three to six months, according to a report from Goldman Sachs Group Inc. A contraction in manufacturing in the U.S. accelerated and the nation lost the most jobs in September in five years, economists said before an industry report today and government figures later this week."
"``Yields are going to hold at a pretty low level,'' said Adam Donaldson, head of debt research at Commonwealth Bank of Australia in Sydney, the nation's second-largest lender. ``Concerns about inflation will fade as global growth slows. The economic outlook is quite gloomy.''"
"The yield on the two-year note fell 4 basis points to 1.92 percent as of 8:36 a.m. in London, according to BGCantor Market Data. The price of the 2 percent security maturing in September 2010 increased 2/32, or 63 cents per $1,000 face amount, to 100 5/32."
"The 10-year note extended gains, pushing the yield 4 basis points lower to 3.77 percent."
"U.S. yields indicate inflation forecasts approached the lowest in almost six years. The difference between rates on 10- year Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, narrowed to 1.56 percentage points, near the least since November 2002."
"Treasuries returned 3.1 percent in the four months through Sept. 30, according to Merrill Lynch & Co.'s U.S. Treasury Master index, as tumbling stocks and credit markets spurred demand for the safest assets. The Standard & Poor's 500 Index fell almost 17 percent during the period."
Market Volatility
U.S. senators will vote again today on Treasury Secretary Henry Paulson's bail out of the banking system after the proposal was rejected earlier in the week.
"Markets are swinging around as the U.S. Congress works on Paulson's proposed $700 billion rescue plan, demanding extra attention, said Donaldson at Commonwealth Bank of Australia."
"Merrill Lynch's MOVE Index, which measures volatility in Treasuries, rose to 201 on Sept. 29, the most since the data began 20 years ago."
"``My wife gets pretty annoyed with the BlackBerry being a permanent companion by the bedside,'' Donaldson said."
"Two-year yields may rise to 2.25 percent after the bill is passed and the U.S. prepares to sell more debt to pay for it, said Hidehiko Maejima, international bond strategist in Tokyo at BNP Paribas Securities Japan Ltd., the arm of a U.S. primary dealer that trades directly with the Fed."
Recovery in Stocks
"``Stocks will recover somewhat,'' Maejima said. ``Supply pressures will come because of the deterioration in government finances.''"
"Investors should buy at 2.25 percent because corporate and household spending will decline, leading the Fed to trim borrowing costs, he said."
European Central Bank President Jean-Claude Trichet said U.S. lawmakers must approve a rescue package to bolster confidence in the global financial system.
Japanese year government notes declined and Asian stocks rose on speculation the measure will pass.
"The yield on Japan's 1.1 percent bond due September 2013 rose 2 basis points to 1.065 percent, according to Japan Bond Trading Co., the nation's largest interdealer debt broker."
The MSCI Asia Pacific Index of regional shares snapped a six-day losing streak to gain 1.6 percent.
"Futures on the Chicago Board of Trade show a 78 percent chance the Fed will reduce its target rate for overnight bank loans, now 2 percent, by a quarter-percentage point at its next meeting Oct. 29. The odds of a half-point cut rose to 22 percent from zero percent a month ago."
Job Losses
"The Institute for Supply Management's factory index dropped to 49.5 last month from 49.9 in August, according to the median estimate in a Bloomberg News survey ahead of the report. A reading of 50 is the dividing line between expansion and contraction."
"The U.S. probably lost 105,000 jobs in September, the most since 2003, a separate survey showed before the Labor Department issues the figure on Oct. 3. The unemployment rate held at five- year high of 6.1 percent."
"Unemployment will rise to 7 percent late in 2009, Goldman economists led by Jan Hatzius in New York wrote to clients in a report yesterday."
"UBS AG, the European bank with the biggest losses from the credit crisis, may announce plans to eliminate about 1,900 jobs, two people with knowledge of the matter said. Lehman Brothers Holdings Inc., the securities firm that filed for bankruptcy two weeks ago, eliminated 750 jobs."
Money Market
"Demand for the safest, shortest maturities pushed one-month bill yields down to 0.05 percent yesterday from 0.35 percent a week before. They were 0.20 percent today."
"``Despite the improvement in market sentiment, risk aversion remains the dominant theme,'' strategists led by Ajay Rajadhyaksha in New York at Barclays Capital Inc., another primary dealer, wrote to clients today."
"Yields indicate banks are less willing to lend. The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, widened to 3.15 percentage points, more than tripling in a month. The spread increased to 3.54 percentage points on Sept. 29, the most since Bloomberg began compiling the data in 1984."
To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net
"Last Updated: October 1, 2008 03:42 EDT"
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<<2.633_20080930192110Canada's Economy Grew 07% in July Fastest Since
`04 (Update1) .txt>> <<2.632_20081001093556Germany Sept Seasonally
Adjusted Unemployment Summary (Table) .txt>> <<2.631_20081001095611US
Sept Chicago Purchasing Managers' Index Slowed (Update1) .txt>>
<<2.629_20081001090619Japan's 5Year Notes Gain on Rejected Rescue Plan
Stocks Drop .txt>> <<2.629_20081001090359Wheat Rises as US Report Shows
SmallerThanExpected Supplies .txt>> <<2.628_20081001093429UK Economy
Grows at the Weakest Pace Since 1992 (Update1) .txt>>
<<2.628_20080930185519Japan's Factory Output Drops Unemployment Rate
Rises (Update1) .txt>> <<2.628_20080930185108Chile Pension Funds May
Reenter Domestic Stocks JPMorgan Says .txt>>
<<2.627_20081001090455European Notes Drop on Speculation US Will Revive
Rescue Plan .txt>> <<2.625_20081001100009Libor Rises Most on Record
After US Congress Rejects Bailout .txt>> <<2.625_20081001091132Asian
Stocks Decline Yen Gains as US Lawmakers Block Rescue .txt>>
<<2.625_20081001090040Asian Currencies Fall Led by Won as Bank Rescue
Plan Rejected .txt>> <<2.625_20081001085912Ruble Set for Record Monthly
Drop as Stocks Decline Bonds Fall .txt>> <<2.625_20081001085033Natural
Gas Gains on Speculation Financial Rescue Will Proceed .txt>>
<<2.625_20080930190804French Stocks Dexia Gains as Axa BNP Paribas
Natixis Fall .txt>> <<2.624_20081001094815Oil Drops Most in 17 Years in
Quarter on Economy Woes (Update2) .txt>> <<2.624_20081001090647Asian
Borrowing Costs Rise as Bailout Failure Stalls Lending .txt>>
<<2.624_20081001083844Australian Dollar Heads for Record Quarterly Loss
Against US .txt>> <<2.623_20081001094318Copper Goes From First to Worst
as Economies Slow (Update3) .txt>> <<2.623_20080930185720Italian Stocks
Update Fiat Seat Telecom Italia UniCredit .txt>>
<<2.622_20081001095811Consumer Confidence in US Unexpectedly Increased
(Update1) .txt>> <<2.622_20081001095408US Economy Confidence
Unexpectedly Rose This Month (Update1) .txt>>
<<2.622_20081001090840Brazil Stocks Rebound Led by Utilities Banks Bolsa
Rises .txt>> <<2.622_20081001090137Crude Oil Rises on Signs US Will
Revive Bank Bailout Plan .txt>> <<2.622_20080930185554Euro Falls Most
Against Dollar Amid European Banking Failures .txt>>
<<2.622_20080930185236Bank of Japan Adds 3 Trillion Yen to Financial
System (Update2) .txt>> <<2.621_20081001091103Europe Options Index
Rises to 5Year High After Plan Rejected .txt>>
<<2.621_20081001090233Soybeans Futures Have Biggest Quarterly Slide in
35 Years .txt>> <<2.621_20080930192552Australia HomeLending Growth
Slows to Weakest Pace in 22 Years .txt>> <<2.620_20081001095741US
Stocks Have Further to Fall Dow Theory Says (Update1) .txt>>
<<2.620_20081001091200Japan Stocks Drop to Near 4Year Low as Bank Rescue
Plan Fails .txt>> <<2.620_20081001090717Bond Risk Jumps as Rescue Plan
Rejection Boosts Funding Costs .txt>> <<2.620_20081001090205Gold Silver
Fall in NY as Equities Rebound Dollar Rallies .txt>>
<<2.620_20081001084938Oil Stocks Post Biggest Quarterly Drop in 20 Years
(Update3) .txt>> <<2.620_20080930190305India Current Account Deficit
Widens to Record on Oil (Update1) .txt>>
<<2.619_20081001100432Treasuries Decline as Lawmakers Vow to Revive
Paulson's Plan .txt>> <<2.619_20081001093332US Heading for Slump With
or Without Bailout (Update1) .txt>> <<2.619_20081001084559Stocks Oil
Plunge After Congress Rejects Bailout (Correct) .txt>>
<<2.619_20080930190055India Should Free Up Cash to Ease Credit Crunch
(Update1) .txt>> <<2.618_20081001095308Treasuries Decline on
Speculation Rescue Plan to Be Salvaged .txt>>
<<2.618_20081001094146Industrial Companies Can Thank Banks for Lower
Rates (Update4) .txt>> <<2.618_20081001094117Wachovia Choked on Its
Outsized RealEstate Bet Chart of Day .txt>>
<<2.618_20081001092840Europe Stocks May Trail US Shares on Slower
Profits (Update2) .txt>> <<2.618_20081001084503US Stocks Plunge After
House Votes Against Bailout Plan .txt>> <<2.662_20081001085844UK Pound
Declines Against Euro Little Changed Versus Dollar .txt>>
<<2.655_20081001085723Brazilian Real Gains on Speculation US Will Revive
Bailout .txt>> <<2.638_20080930185036Chile Output Falls 31% Biggest
Decline in Six Years (Update1) .txt>> <<2.636_20081001093526European
Inflation Slows for Second Month on Oil Drop (Update1) .txt>>
<<2.636_20081001085224Sept 29 (Bloomberg) Michael Woolfolk senior
currency strategist at Bank of New York .txt>>
<<2.633_20081001090108Malaysia's Ringgit Falls as US Bank Rescue Fails
Bonds Gain .txt>> <<2.633_20081001084748Treasuries Rise as US Growth
May Slow Whatever Congress Does .txt>>
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A blog for global investors, with information about most of the world financial markets. Updated frequently, every day, with my views on these markets. Bear or Bull? Read to discover!
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