TRUTH! On Oct 2, 2:59 pm, Frank <[EMAIL PROTECTED]> wrote: > U.S. Stocks Drop on Economic Data, Rising Bank Rates; GE Falls > By Lynn Thomasson > > Oct. 2 (Bloomberg) -- U.S. stocks dropped for a second day as a jump > in borrowing costs and reports showing a worsening economy spurred > concern that the government's $700 billion bank bailout plan won't be > enough to stimulate growth. > Caterpillar Inc., Alcoa Inc. and Deere & Co. tumbled more than 5 > percent as three-month bank lending rates climbed to the highest since > January, while the government said factory orders declined more than > forecast. General Electric Co. lost as much as 10 percent after > selling $12.2 billion in shares at a discount. Monsanto Co. slid as > much as 21 percent, its steepest intraday loss since going public in > 2000, after Merrill Lynch & Co. said slumping demand will hurt farm > companies. > ``If banks aren't willing to lend money to a bank, are they going to > be willing to lend to an average person? No, they're not,'' said Frank > Ingarra, money manager at Hennessy Advisors Inc., which oversees $1.1 > billion in Novato, California. ``We could be at the start of a pretty > bad recession.'' > The Standard & Poor's 500 Index slid 34.69, or 3 percent, to 1,126.37 > at 1:33 p.m. in New York. The Dow Jones Industrial Average lost > 270.09, or 2.5 percent, to 10,560.98. The Nasdaq Composite Index > slipped 3.3 percent to 2,001.34. Ten stocks retreated for each that > rose on the New York Stock Exchange. > > `Flat on the Floor' > > Billionaire Warren Buffett, the world's preeminent stock picker, > described the world's largest economy yesterday as being ``flat on the > floor'' after a cardiac arrest. > Caterpillar, the biggest maker of earthmoving equipment, lost $3.56 to > $53.38. Deere, the largest producer of tractors, declined 11 percent > to $41.15. > `Liquidity Crisis' > The market for commercial paper plummeted the most on record as banks > and insurers were unable to find buyers for the short- term debt. > Commercial paper outstanding tumbled $94.9 billion, or 5.6 percent, to > a seasonally adjusted three-year low of $1.6 trillion for the week > ended Oct. 1, the Federal Reserve said. Financial paper accounted for > most of the decline. > ``There's a liquidity crisis going on that's putting investors on > edge,'' said Alan Gayle, the Richmond, Virginia- based senior > investment strategist at Ridgeworth Investments, which oversees about > $70 billion. ``Liquidity is like oxygen. Lack of it can cause serious > damage in a very short time.'' > > GE's Offering > > GE, which got a $3 billion investment from Buffett's Berkshire > Hathaway Inc. yesterday, dropped $2.22 to $22.28 and lost as much as > $2.45. The company sold stock today at a 9.2 percent discount to > yesterday's closing price as it seeks to fund its operations. > GE's shares trade at a valuation of 10 times trailing earnings, the > lowest since Bloomberg began tracking the data in 1990. > Raw-material producers in the S&P 500 sank to the lowest since 2006, > falling 6 percent, after Merrill downgraded fertilizer stocks to > ``underperform'' and Mosaic Co., the world's largest maker of > phosphates, reported weaker-than-estimated earnings. > > Mosaic Tumbles > > Mosaic tumbled 35 percent to $43.97, its steepest retreat since its > shares began trading in 2004. CF Industries Holdings Inc., a maker of > nitrogen and phosphate fertilizers, slumped 30 percent to $62.29. > Alcoa slumped 8.3 percent to $19.50 after Goldman Sachs Group Inc. > downgraded the largest U.S. aluminum producer to ``neutral'' from > ``buy'' on concern metal demand will fall along with the weakening > economy. > EBay Inc., the largest Internet auction company, lost 8.4 percent to > $19.11. The shares were downgraded to ``equal-weight'' from > ``overweight'' at Morgan Stanley, which said ``trends deteriorated > more than expected'' in the third quarter. > > Bailout Plan > > ``If I were a congressman I would hold my nose and vote yes, but > people shouldn't be under any illusions about what's going to > happen,'' Charles Bobrinskoy, who helps manage about $13 billion as > vice chairman of Ariel Investments in Chicago, told Bloomberg > Television. > > To contact the reporter on this story: Lynn Thomasson in New York at > [EMAIL PROTECTED] > > Libor Soars, Commercial Paper Slumps as Credit Freeze Deepens > By Bryan Keogh > > Oct. 2 (Bloomberg) -- Interest rates on three-month dollar loans rose > to a nine-month high, short-term corporate borrowing fell by the most > ever and leveraged loans tumbled, exacerbating the credit freeze > that's paralyzing businesses around the world. > The London interbank offered rate that banks charge each other for > loans rose for a fourth day, driving a gauge of cash scarcity among > banks to a record. The biggest drop in financial short-term debt > outstanding since at least 2000 caused the U.S. commercial paper > market to tumble 5.6 percent to a three-year low, according to the > Federal Reserve. > The crisis deepened after the worst month for corporate credit on > record. Leveraged loan prices plunged to all-time lows, short-term > debt markets seized up and even the safest company bonds suffered the > worst losses in at least two decades as investors flocked to > Treasuries. Credit markets have frozen and money-market rates keep > rising even after central banks pumped an unprecedented $1 trillion > into the financial system > > ``The credit window is closed,'' Jim Press, president of Chrysler LLC, > the third-largest U.S. automaker, said today at the Paris Motor Show. > The financial rescue plan must be approved because ``it's important > for us to restore credibility in our banking system.'' > > Interbank Rates > > Interbank rates have soared as financial institutions hoard cash to > meet future funding needs amid deepening concern that more banks will > collapse. Governments in Europe and the U.S. rescued six financial > institutions in the past week. The Libor- OIS spread, the difference > between the three-month dollar rate and the overnight indexed swap > rate, widened to a record 260 basis points today. It was 197 basis > points a week ago and 79 basis points a month ago. > Libor for euros advanced 3 basis points to a record 5.32 percent. > Libor, set by 16 banks in a daily survey by the British Bankers' > Association, is used to set rates on $360 trillion of financial > products worldwide, from home loans to derivatives. > ``We still see upward pressure on maturities from one week,'' said > Patrick Jacq, a fixed-income strategist in Paris at BNP Paribas SA, > France's biggest bank. ``The situation is still blocked and we're > unlikely to see spreads decline before confidence has been restored.'' > > Commercial Paper > > The market for commercial paper plummeted $94.9 billion to $1.6 > trillion for the week ended Oct. 1 as banks and insurers were unable > to find buyers for the short-term debt amid the worst U.S. financial > crisis since the Great Depression. Financial paper accounted for most > of the decline, plunging $64.9 billion, or 8.7 percent, to a two-year > low. > > The market dropped for a third straight week, losing a total of $208 > billion, as money-market funds faced withdrawals from investors, said > Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in > New York. > > ``The purge is broad and is impacting issuers with far more > predictable cash flows -- regular run-of-the-mill companies in need of > working capital,'' Crescenzi wrote today in a note to clients. ``The > declines add to the urgency for fixes to the credit crisis and bolster > the case for a Fed rate cut.'' > > The U.S. market for short-term debt backed by assets including > mortgages and car loans fell $29.1 billion, or 3.9 percent, this week > to a seasonally adjusted $724.7 billion, according to the Fed. > > Lenders are balking at offering cash for longer than a day even as > central banks pump an unprecedented amount of money into the banking > system. The European Central Bank today offered $50 billion of > overnight funds at a marginal rate of 2.75 percent. The Swiss National > Bank awarded $9 billion. The Bank of England sold $8.9 billion. > > Futures traders put the odds that the Fed will cut the target interest > rate at least 25 basis points later this month at 100 percent. The > rate is currently 2 percent. > > Leveraged loan prices tumbled 8.57 cents in September to a record low > of 79.8 cents on the dollar. Price declines will make it harder for > junk-rated companies to borrow as investors may opt to buy existing > debt at distressed levels and as capital- constrained banks restrict > lending. > > Corporate bonds with the highest AAA ratings lost 6.5 percent in > September, the most since at least 1989, according to Merrill Lynch & > Co.'s U.S. Corporates, AAA Rated index. > > A FOND FAIRWELL. THE DOC IS RIGHT, NO DEBATE ON SERIOUS ISSUES IS > OCCURING, BUT BLOGS ARE JUST A FORMAT TO VENT ONES SPLEEN. > > NO MATTER WHAT YOU CHOOSE TO BELIEVE, THE OVERWHELMING EVIDENCE > INDICATES THE BEGINGING OF THE END OF THE NATION-STATE KNOW AS THE > USA. IN 5 YEARS TIME IT WILL NO LONGER EXIST. > > I HAVE GOT EVERYTHING ELSE RIGHT, INCLUDING THIS FINANCIAL MELTDOWN > (WHICH OF COURSE IS NOT REALLY HAPPENING). --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum
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