Daily Highlights: 12.9.09

• Asian shares were down Wednesday in the wake of weak US closing, Japan GDP nos.
• Dubai companies' bonds decline as credit swaps display 33% risk of default.
• Japan's economy grew 1.3% last quarter, less than initial estimate of 4.8%.
• China plans to require all the nation’s steel mills to have at least 1M tons of capacity
• Oil rises above $73 after expected US crude supply drop suggests demand recovery.
• 3M's 2010 profit forecast meets analysts’ estimates, says recovery is occurring “slowly.”
• Aeon Co. gained the most in 6 months after company said it would divest its stake in Talbots.
• Brown-Forman Q2 profit rises 3% to $147.3M, revs fell to $892.9M from $934.7M a year ago.
• Chesapeake Lodging Trust’s $250M IPO shelved, after its underwriters failed to get support.
• CIT Group says judge approves reorganization plan; to exit bankruptcy protection Thurs.
• Dexia SA said to join European firms weighing sale of private banking assets.
• Diedrich Coffee to be acquired by Green Mountain for $35/sh cash ($290M).
• Dr Pepper Snapple Group said it will get $900M to license certain brands to PepsiCo Inc.
• Dubai Utility may face £1.2 B debt bill
• GE said earnings from its finance unit would be flat next year as credit losses peak.
• Intl Rectifier sees Q2 revs tracking toward high end of prev guidance of $185-200M.
• Kimco Realty expects $300M from share issue, money to be used to repay some debt.
• Kroger swings to a quarterly loss of $874.9M, hurt by $1.05B in asset write-downs.
• Lukoil's Q3 earnings falls 41% to $2.06B on lower oil prices; revs down 32% at $21.94B.
• Marriott to sign deal that will add 36 new Fairfield Inn hotels throughout Mexico.
• McDonald's Corp.'s global same-store sales rose a scant 0.7% last month.
• Men’s Wearhouse Inc. forecast a fourth-quarter loss of at least 15 cents a share.
• Mortgage, credit-card delinquencies expected to gradually retreat next year: TransUnion.
• Nakheel posts 1H loss of $3.65B as revenue fell and it wrote down the value of land.
• Simon Property Group to buy Prime Outlets Acquisition Co. for $2.33B including debt.
• Standard Chartered sees no `material' impairment from exposure to Dubai
• Texas Instruments raises 4Q profit and sales targets
• Volkswagen to buy 20 percent stake in Japan's Suzuki for $2.5B.
• Wells Fargo Chief Executive said he expects the bank's credit losses to peak in 2010.
• Xilinx sees raises Q3 sales up 16-20% QoQ (prev 6-10%) vs. cons est. of 8.6%.

Economic Calendar: Data on Wholesale Inventories, Crude Inventories to be released.

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Comments

[Anonymous]

good work. Thax

[Anonymous]

good work, thanx

[SWRichmond]

Now we see the role that Volcker was called on to play: the Honest Central Banker.  See, we really CAN trust the banksters, we only have to pick the right one!

[ht Jesse for the linked article]

http://www.telegraph.co.uk/finance/economics/6764177/Ex-Fed-chief-Paul-V...

Paul Volcker, the chairman of President Obama's Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is "little evidence innovation in financial markets has had a visible effect on the productivities of the economy".

By Louise Armitstead
Published: 9:41PM GMT 08 Dec 2009

The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful".

Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."

Reading between the lines, you can see Volcker chastising the banksters for going too far, exposing their hubris and ruining the game for everyone.  Soros joins in.  Shocker.  But by playing the honest banker, maybe Volcker can save the Fed.

This entire bunch are criminals and must be expunged.

[aaronvelasquez]

With Wells Fargo and GE predicting peak credit losses in 2010, perhaps it becomes clear why banks are hoarding cash.

[mannfm11]

I don't believe banks as a whole have any cash.  The Federal Reserve Notes that make up the primary liabilities of the Fed prior to this crisis have been gone for years.  These were the banks cash reserves.  Once they were gone, there was nothing between them but their credit to each other.  There were some banks, big ones who might be investment grade, but their credit wasn't and isn't worth 2 cents.  Neither were a lot of their securities that would need to be sold to produce liquidity between banks.  There haven't been reserve requirements for years because there haven't been reserves.  Witness the cashless society where banks could carry on this fraud nearly forever. 

Here is the question and few ask it because they are either uneducated in what goes on or are too stupid to figure it out.  Banking is nothing but an accounting ledger once the fracional reserve game is played.  THERE IS NO CASH FOR MOST OF THE DEPOSITS.  Not only that, lets say a bank has $10 billion in assets and it has 9.5 Billion in deposits, but all but 2% of its assets are loans.  The Fed buys $500 million of these assets and gives the bank exchangable credit with the fed for funds to exchange between banks or cash if they need it.  This basically moves the banks liquid reserves to 7% of it balance sheet, but only 5% of the 7% belong to the bank. The bank already owes the other 2% and the Fed money is now the banks asset,but they still have the liability.  If they reloaned the Fed money, the cash would still have to stand for much of the prior liability. 

This problem is a problem of poor bank assets and the involvency of banks.  If banks don't expand the credit base, more loans go bad.  This is one reason Japan has been so persistent in their policies, hope that the next expansion catches in the banking system or the rest of the economy.  Problem is the banks are accouting systems and not money systems and the numbers can't fix themselves in a compound interest game with no mathematical solution.