U.S. Consumer Confidence Ticks Up Again
The Reuters/University of Michigan preliminary index of consumer sentiment rose to 70.2 in September from 65.7 in August. Economists had expected a smaller rise, to 67.5. Analysts opined that the bigger jump resulted from job losses slowing down and the economy showing many signs of turning around.
The university’s measure of current conditions, which tracks how Americans size up their financial situation and evaluate whether it’s a good time for big-ticket purchases, also rose substantially, to 71.8 from 66.6. Meanwhile, a government report showed that wholesalers’ inventories fell by 1.4%, more than expected, in July as higher sales helped distributors. And the number of Americans filing first-time claims for unemployment benefits dropped last week to the lowest level since July.
FedEx More Upbeat
In another harbinger of an economic upswing, Federal Express boosted its profit outlook for its fiscal first and second quarters. FedEx said profit in the just-ended quarter would come in 50% above the midpoint of its previous forecast, thanks partly to better-than-expected deliveries overseas. The company is seen as a key indicator of the economy’s direction. Investors boosted its shares by nearly 6% as of 2:30 p.m.
Delta May Buy into Japan Airlines
Delta Air Lines is in preliminary talks to buy a stake in Japan Airlines, according to a person familiar with the negotiations. A deal would boost the carrier’s presence in the Asia/Pacific region and fill a gap in the SkyTeam alliance headed by Delta. JAL is currently a member of a rival grouping, OneWorld. A Delta spokesman denied the report of deal talks.
Source: Wall Street Journal
Morgan Stanley’s CEO Exiting
Morgan Stanley Chief Executive John Mack will step down in a move that ends a four-year tenure marked by controversy over his strategic decisions and a near-death experience during last year's financial crisis. Mack will stay on as chairman when he leaves the chief executive post in January, 2010. He will be replaced by James Gorman, the bank's co-president in charge of global wealth management, investment management, and operations. Mack has overseen Morgan Stanley during one of the toughest periods in the bank's history. It slashed the assets on its balance sheet by almost a third to $677 billion in June in an attempt to cut its reliance on financial leverage. The firm's average value-at-risk -- a measure of how much the company estimates it might lose in a day's trading -- was $154 million in the second quarter compared to $245 million at rival Goldman Sachs.
Source: Financial Times, Bloomberg
Investors Stick with Equities
The last two years have tested people's confidence in the stock markets. But despite most equities still well below their pre-credit crunch highs, investors have stuck with equities. Indeed, participation in 401(k) plans held steady in 2008, even as the average account lost 28% of its value, according to Hewitt Associates, which tracks retirement plans.
Source: New York Times
Chrysler Resumes Auto Leasing
Struggling U.S. automaker Chrysler is planning to resume auto leasing, according to a dealer briefed on the plans. That comes more than a year after the carmaker was forced out of the business -- and three months after it emerged from bankruptcy. Chrysler will make a decision next week on the timing of the return, though new leases may not be offered until later in the month.
Source: Wall Street Journal
Obamacare Still Lacking Specifics
Despite U.S. President Barack Obama's well-received speech on healthcare, administration officials still struggle to explain how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit. The White House has released few specifics on proposed legislation, including new taxes, changes in malpractice statutes, a new national high-risk insurance pool, and a commission on eliminating Medicare fraud.
Source: Washington Post
Oracle Has Customers Over a Barrel
After spending $30 billion to buy 56 companies, Oracle Chief Executive Lawrence J. Ellison has doubled the software giant's revenues to an estimated $24 billion this fiscal year and sent the company's stock surging. But the Oracle's growing power, coupled with a surge in consolidation by other major players in the technology industry, has frustrated some corporate customers.
GM Selling Opel to Magna After All
After mulling over Opel’s fate at length, General Motors confirmed that it will sell 55% of the German carmaker to Canadian car-parts maker Magna International and Russian bank OAO Sperbank. But financing issues remain that won’t be resolved for “the next few weeks.” Under the deal, GM will retain a 35% stake in Opel and sister company Vauxhall, while employees will take a 10% stake. GM, under heavy pressure from the German government to resolve the question before upcoming elections, had pondered other options, including holding on to Opel or selling it to Belgian investment firm RHJ International. The decision was welcomed by Chancellor Angela Merkel. Berlin has provided $2.16 billion in bridge loans to keep Opel going while the deal was being hammered out.
Source: Wall Street Journal
Obama Makes His Case
Declaring that "the time for bickering is over," U.S. President Barack Obama delivered a highly-anticipated address to the U.S. Congress on Sept. 9 laying out his proposals to reform health care and urging lawmakers to move forward on legislation. Over boos and shouts from some Republicans, Obama cast many of his opponents as cynical and called some of the criticisms of reform proposals lies. He pledged to keep reforms from adding to the deficit, and attempted to reassure a worried and confused public with his own determination. In his emotional, sometimes contentious speech, Obama combined tough talk to opponents with olive branches on policy in a bid to break the impasse on revamping the health-care system. The president promised to tackle the problem of medical malpractice insurance and reiterated his backing for a so-called "public option" for healthcare coverage, estimating the cost of the plan at $900 billion over 10 years. Some business groups immediately attacked the proposals.
Sources: Washington Post, BusinessWeek, Wall Street Journal
Brazilian Oil Find Could 'Dwarf' BP's Mexico Strike
The potential for Brazil to become one of the biggest oil producers in the world was highlighted Sept. 9 when BG, the former exploration arm of British Gas, reported a "supergiant" field with up to two billion barrels of recoverable reserves. The Guara discovery builds on a series of other major successes in very deep waters off Brazil and dwarfs rival strikes such as Tiber in the U.S. Gulf, which was announced with great fanfare by BP last week.
Kraft Calms Cadbury Bid Speculation
Kraft has played down speculation it will raise its offer for Cadbury after the British chocolate company rejected its $16.7 billion offer. Cadbury shares have climbed 38% on talk the American firm could increase its bid, and that there may be a bidding war with rivals such as Hershey or Nestle.
Merger Reshapes British Telco Landscape
France Telecom and Germany's Deutsche Telekom announced plans early Sept. 8 to combine their British Orange and T-Mobile units into a new operator that will take the top spot in Britain's fiercely competitive mobile phone services market, unseating Telefonica's O2 unit and posing a stronger competitive challenge to Vodafone. The companies expect to reap $5.7 billion in savings from the combination.
Sources: Times of London, New York Times, Wall Street Journal
Abu Dhabi Buys Chartered Semiconductor
In a sign of growing consolidation as the chipmaking industry emerges from its worst-ever downturn, Singapore-based contract manufacturer Chartered Semiconductor will be acquired for $1.8 billion by Abu Dhabi-based sovereign wealth fund ATIC.