Swooning and Grayness
Retail Swoon... Women's clothing retailer The Dress Barn lowered its 2008 earnings and same-store sales estimates because of a downturn in the retail sector.
U.S. retailers posted weak sales growth in December, making the 2007 holiday shopping season the worst in 5 years.
Overall December sales at stores open at least a year edged up only 0.9% from a year ago, according to the ICSC.
Two-thirds of retailers reporting December same-store sales missed expectations that in many cases had already been lowered.
Credit card swoon... Capital One said its 2007 earnings will fall short of its previous expectations because of increased loan delinquencies and additional legal reserves in Q4.
Regional Swoon... Regional bank holding company Huntington Bancshares said it expects to report a Q4 loss of $239 million stemming mostly from its exposure to subprime loans.
Countrywide Swoon... Three months ago Bank of America, the 2nd largest US bank, paid $21 billion to buy LaSalle Bank from Dutch bank ABN Amro.
Today, BofA is in advanced talks to buy Countrywide Financial, the largest U.S. mortgage lender, on the verge of insolvency.
FHLMC Swoon... Freddie Mac s credit rating may be downgraded from A- by Moody's Investors Service because
"FHLMC may experience higher credit losses than Moody's previous expectations."
The downgrade would prompt the GSE to raise additional capital by selling shares to meet reserve requirements.
This in turn would mean less money for home loans from the US 2nd largest source.
40 cent Swoon... Lennar, the US largest homebuilder, had a November sale of 11,000 properties in eight states...
Morgan Stanley Real Estate bought an 80% stake in the 32 communities for 40 cents on the dollar.
60% less than the price at which the properties were valued just two months earlier.
Fed Swoon... The ECB and BOE held rates steady, the dollar tanked, Benny & The Ink Jets commented:
"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.
In light of recent changes in the outlook for and the risks to growth, additional policy easing may be necessary.
Incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced.
Notwithstanding the effects of multibillion-dollar write-downs on the earnings and share prices of some large institutions, the banking system remains sound.
Nevertheless, the market strains have been serious and they continue to pose risks to the broader economy."
The Govenator Turns Gray...
Arnold Schwarzenegger released a state budget proposal Thursday that would close a projected $14.5 billion gap by giving schools 10 percent less money, releasing 22,000 inmates early and closing dozens of state parks.
Schwarzenegger declared a fiscal emergency in California because of a $3.3 billion deficit in the current year's budget.
Lawmakers will have 45 days to decide how to fix it.
The $14.5 billion shortfall rivals the one left by his predecessor, former Gov. Gray Davis. Schwarzenegger covered that gap with loans and other fixes shortly after taking office.
He then glided on borrowing and an unexpected surge in state tax revenue, but now has far fewer options to bring the state's spending and revenue in line.
U.S. retailers posted weak sales growth in December, making the 2007 holiday shopping season the worst in 5 years.
Overall December sales at stores open at least a year edged up only 0.9% from a year ago, according to the ICSC.
Two-thirds of retailers reporting December same-store sales missed expectations that in many cases had already been lowered.
Credit card swoon... Capital One said its 2007 earnings will fall short of its previous expectations because of increased loan delinquencies and additional legal reserves in Q4.
Regional Swoon... Regional bank holding company Huntington Bancshares said it expects to report a Q4 loss of $239 million stemming mostly from its exposure to subprime loans.
Countrywide Swoon... Three months ago Bank of America, the 2nd largest US bank, paid $21 billion to buy LaSalle Bank from Dutch bank ABN Amro.
Today, BofA is in advanced talks to buy Countrywide Financial, the largest U.S. mortgage lender, on the verge of insolvency.
FHLMC Swoon... Freddie Mac s credit rating may be downgraded from A- by Moody's Investors Service because
"FHLMC may experience higher credit losses than Moody's previous expectations."
The downgrade would prompt the GSE to raise additional capital by selling shares to meet reserve requirements.
This in turn would mean less money for home loans from the US 2nd largest source.
40 cent Swoon... Lennar, the US largest homebuilder, had a November sale of 11,000 properties in eight states...
Morgan Stanley Real Estate bought an 80% stake in the 32 communities for 40 cents on the dollar.
60% less than the price at which the properties were valued just two months earlier.
Fed Swoon... The ECB and BOE held rates steady, the dollar tanked, Benny & The Ink Jets commented:
"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.
In light of recent changes in the outlook for and the risks to growth, additional policy easing may be necessary.
Incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced.
Notwithstanding the effects of multibillion-dollar write-downs on the earnings and share prices of some large institutions, the banking system remains sound.
Nevertheless, the market strains have been serious and they continue to pose risks to the broader economy."
The Govenator Turns Gray...
Arnold Schwarzenegger released a state budget proposal Thursday that would close a projected $14.5 billion gap by giving schools 10 percent less money, releasing 22,000 inmates early and closing dozens of state parks.
Schwarzenegger declared a fiscal emergency in California because of a $3.3 billion deficit in the current year's budget.
Lawmakers will have 45 days to decide how to fix it.
The $14.5 billion shortfall rivals the one left by his predecessor, former Gov. Gray Davis. Schwarzenegger covered that gap with loans and other fixes shortly after taking office.
He then glided on borrowing and an unexpected surge in state tax revenue, but now has far fewer options to bring the state's spending and revenue in line.
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