The cynical view is tempting: World leaders have made yet another feel-good, empty pledge they will forget as soon as they return to their domestic concerns.
But the G8’s commitment at the L’Aquila summit to concluding the drawn-out Doha trade talks next year may be more than that.
All the leaders seem to agree that giving in to protectionist pressures in fighting the recession would send the world economy into a tailspin. Protectionism doesn’t protect anyone. Fortunately, its increase has so far been a threat more than a fact. The renewed pledge should keep it that way.
Another reason for guarded optimism is the shift in the political climate since the Doha talks foundered a year ago. A severe rift between India and the U.S. over sugar and cotton prevented progress on lowering tariffs and removing other obstacles to free trade in negotiations that have dragged on since 2001. But elections in both countries have since brought in leaders more inclined to compromise.
Both European and emerging countries still worry that President Barack Obama thinks he faces more pressing matters than trade cheap cash advance. But they can look forward to the next meeting of the Group of Twenty countries — the de facto forum for international crisis fighting — taking place in the U.S. next September. The hope is that Obama, who has a vested interest in the summit’s success, will put trade high on its agenda.
There’s a strong case for him doing so. World trade will drop 10% by volume this year, according to the World Trade Organization. Trade financing is drying up. Western bank bailout plans aggravate the problem by forcing banks to retreat to domestic markets.
Furthermore, G20 countries have been slow to disburse the $250 billion they pledged last April to finance world trade. By September it should be clear to all that switching from pledges to deeds has become a matter of urgency.
On some level, we always knew it: Every company has its price. If someone is willing to pony up enough cash, a reluctant company can be forced to give up and sell.
We knew this.
And yet, it still shocked us a year ago Monday, when Anheuser-Busch’s board of directors — after a month of stiff resistance — yielded to a hostile takeover bid by Belgian brewer InBev.
One year later, St. Louis is still coming to terms with the takeover deal, which became official after shareholders approved the offer last November.
The loss of St. Louis icons wasn’t new. TWA was purchased by American Airlines. Ralston Purina became a unit of Nestl
NEW YORK — Your credit card debt may soon get a lot more expensive.
Two of the biggest issuers in the nation — Bank of America and Chase — say they’re switching some fixed-rate cards to variable rates, which could push up the amount of interest taken out of your monthly payment. The changes will take effect in August for both banks.
Chase and Bank of America wouldn’t give specifics on how many accounts the change will affect but said they will continue to offer some fixed-rate cards. Chase has 159 million credit cards in the U.S. and Canada, while Bank of America has 70 million worldwide.
Fixed-rate cards are generally reserved for the best customers. Fixed-rate cards currently make up 34 percent of credit cards issued by the nation’s largest lenders, according to Bankrate.com.
Despite the name, the terms on fixed-rate cards always could be changed in the past. That allowed banks to make the gamble of offering customers favorable fixed rates — then raising rates if the customers later proved too risky, said Leigh Allen, CEO of Global Consumer Finance Advisory, a consulting firm based in New York business
Wall Street erased most of its losses by the close Wednesday, as investors set aside concerns about the economy to gear up for the quarterly reporting period, which got underway after the closing bell with Alcoa.
The Dow Jones industrial average (INDU) gained 15 points, or 0.2%. The S&P 500 (SPX) index lost 1 point, or 0.2%. The Nasdaq (COMP) ended just above unchanged.
Stocks slipped through most of Wednesday as investors continued to worry about the economy and the quarterly reporting period in the aftermath of a big run up. But after touching fresh multi-month lows in the afternoon, stocks bounced back.
After the close, Dow component Alcoa (AA, Fortune 500) reported a quarterly loss of 26 cents per share as the global recession ate into the price and demand for its precious metals. But the decline was narrower than the loss of 38 cents per share analysts expected, according to Thomson Reuters. Alcoa earned 66 cents a year ago.
Alcoa shares gained 5% in after-hours trading.
But most quarterly reports aren’t due until later this month and the results are expected to be fairly grim. Profits for S&P 500 companies are expected to have fallen 36% from a year ago, according to the latest Thomson Reuters estimates.
"Expectations are reasonably low, like they were in the first quarter, so it won’t be hard for companies to meet or exceed forecasts," said Linda Duessel, equity market strategist at Federated Investors.
"But the market is looking for evidence in the forecasts that there will be a recovery in the second half," she said. "If any major company says something really negative, we’re not going to be prepared."
Stocks have drifted lower since mid-June on worries the economy won’t stabilize as quickly as some had hoped. Those declines followed a three-month stock market rally that propelled the S&P 500 off of 12-year lows by about 40%.
"The market is basically going through what it normally does after a big advance off the bottom," said J. Stephen Lauck, president and CEO at Ashfield Capital Partners. "It’s going to be bumpy as Wall Street sorts out what’s going to happen in the next leg of this economic cycle."
The recent selloff has reflected worries about the economy, punctuated by the weaker-than-expected June jobs report, released last week. Now investors are looking to corporations to provide guidance about their profits and the economic outlook.
Lauck said that the market is nervous about the start of the earnings reporting period and what companies might say about the forecast for the economy and profits bad credit car loans.
Google: Tech behemoth Google (GOOG, Fortune 500) said late Tuesday that it will challenge Microsoft (MSFT, Fortune 500)’s dominant Windows by launching a rival operating system called Chrome OS. The system will be available in the second half of 2010.
On the move: Google shares gained, but other big techs slipped including chipmakers Intel (INTC, Fortune 500), Advanced Micro Devices (AMD, Fortune 500) and Applied Materials (AMAT, Fortune 500).
Bank of America (BAC, Fortune 500), Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) were among the big bank decliners.
Among Dow movers, gains in Boeing (BA, Fortune 500), Johnson & Johnson (JNJ, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500) helped offset weakness in bank, tech and telecom stocks.
Market breath was negative. On the New York Stock Exchange, losers beat winners nearly two to one on volume of 1.44 billion shares. On the Nasdaq, decliners beat advancers by two to one on volume of almost 2.52 billion shares.
Economy: May consumer credit fell $3.22 billion versus a revised decline of $16.7 billion in the previous month. Economists surveyed by Briefing.com thought it would fall by $8.8 billion.
The International Monetary Fund forecast global GDP would shrink by 1.4% in 2009, versus its earlier forecast of 1.3%. However, the IMF also lifted its forecast for 2010 growth to 2.5% from 1.9% previously.
G8: The leaders of the world’s eight foremost industrialized nations met in L’Aquila, Italy Wednesday to discuss the global economy, climate change and world security issues. In addition to President Obama, the leaders of Japan, Britain, France, Italy, Germany, Canada and Russia are also due to speak.
Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.31% from 3.45% late Tuesday. Treasury prices and yields move in opposite directions.
Other markets: In global trade, Asian and European markets ended lower.
Energy prices slipped, with U.S. light crude oil for August delivery falling $2.79 to settle at $60.14 a barrel on the New York Mercantile Exchange.
In currency trading, the dollar gained versus the euro and fell versus the yen.
COMEX gold for August delivery fell $19.80 to settle at $909.30 an ounce.
Stocks plunged Tuesday, falling to two-month lows, as fears that the market has gotten ahead of any economic recovery were ramped up ahead of the start of the quarterly reporting period.
A selloff in commodity prices took its toll on the underlying stocks, adding to the market weakness and worries about the duration of the recession.
The Dow Jones industrial average (INDU) lost 161 points, or 1.9%, closing at its lowest point since April 28.
The S&P 500 (SPX) index lost 18 points or 2%, closing at its lowest point since May 1.
The Nasdaq (COMP) fell 41 points, or 2.3%, closing at its lowest point since May 27.
Stocks have been inching lower since mid-June as a three-month stock market rally has lost steam.
"Investors are grasping the fact that the recovery, when it does come, may not be as robust as what many hope for," said Robert Siewert, portfolio manager at Glenmede. "While positive GDP would seem likely to return in the third or fourth quarter of this year, investors are starting to look out to what growth will look like next year."
The S&P 500 had spiked 40% on bets that the economy is stabilizing, but a recent bout of mixed news has stalled the advance, culminating with last week’s weaker-than-expected June jobs report.
Economic news due later this week includes readings on retail sales, the job market, import and export prices and consumer sentiment.
"This is a very tough recession," said Scott Armiger, portfolio manager at Christiana Bank & Trust Company. "It’s not going to be short and shallow like in 2001. We’re more than 18 months into it and there doesn’t seem to be a catalyst to turn things around."
He said that until the economy shows measurable signs of improvement, stocks are going to be hard-pressed to move much higher.
Underscoring the depth of the recession, a report Tuesday from the Mortgage Bankers Association showed delinquencies on credit cards and other loans jumped to a record 3.23% in the first quarter. That was a modest rise from the previous quarter.
Declines Tuesday were broad-based, with 25 of 30 Dow components sliding. Falling oil prices dragged on Dow oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). The biggest losers were Boeing (BA, Fortune 500), IBM (IBM, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), 3M (MMM, Fortune 500) and United Technologies (UTX, Fortune 500).
Profit reports on tap: Wall Street is also gearing up for the start of the second-quarter reporting period, which unofficially kicks off after the close Wednesday with Dow component Alcoa (AA, Fortune 500) payday loans guaranteed no fax.
The aluminum maker is expected to post a loss of 37 cents per share, according to Thomson Reuters estimates. Alcoa earned 65 cents a year ago. Alcoa shares inched higher Tuesday after the company’s CEO reportedly said that China’s economy has stabilized and that some sectors are coming back.
Next week brings reports from some of Wall Street’s biggest financial firms, including Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500).
However, most quarterly financial reports are due out later in the month. S&P 500 companies are expected to have lost nearly 36% versus a year ago, according to the latest figures from Thomson Reuters.
Market participants will be looking to see not only that companies beat forecasts, but that they provide an encouraging outlook for future quarters.
"People are looking at the second half as an inflection point for economic growth," Siewert said. "Anything that would contradict that would be seen as a negative."
G8: The summit of the world’s leading industrialized nations begins Wednesday in L’Aquila, Italy. President Obama is expected to speak about the economic outlook. The leaders of Japan, Britain, France, Italy, Germany, Canada and Russia will also speak.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.46% from 3.51% late Thursday. Bond markets were closed Friday. Treasury prices and yields move in opposite directions.
Other markets: In global trade, Asian and European markets tumbled.
Energy prices slipped, with U.S. light crude oil for August delivery falling $1.12 to settle at $62.93 a barrel on the New York Mercantile Exchange.
In currency trading, the dollar gained versus the euro and fell versus the yen.
COMEX gold for August delivery fell $4.80 to settle at $929.10 an ounce.
Market breadth was negative and volume was light. On the New York Stock Exchange, decliners beat advancers three to one on volume of 770 million shares. On the Nasdaq, losers topped winners three to two on volume of 1.69 billion shares.
The European Central Bank left its main refinancing interest rate unchanged at a record low of 1% Thursday, as expected by analysts.
Markets are now turning their attention to President Jean-Claude Trichet’s news conference at 8:30 a.m. ET, when he will explain the decision and may fill in some of the missing details of the bank’s plan to buy €60 billion ($84 billion) worth of covered bonds.
The ECB also kept its overnight deposit rate, which is acting as a floor for money markets, at 0.25%, and left its marginal lending rate at 1.7 %.
All but one of the 82 economists polled by Reuters had expected the ECB to leave rates on hold. One said it would cut them by 0 online cash advance.25 percentage point.
The ECB has lowered its interest rates from 4.25% since October after the financial crisis intensified and inflation risks weakened.
Euro zone consumer prices fell for the first time in June and the economy is shrinking fast, although some data has shown signs of improvement.
Markets are also keen to see whether Trichet gives any signals that the ECB plans to keep rates low for a lengthy period, or alternatively, whether they could be reduced further.
Oil fell toward $69 a barrel Wednesday after government data showed a build in U.S. gasoline inventories ahead of the Independence Day holiday, traditionally the peak of the summer driving season.
Gasoline stockpiles in the world’s top consumer rose by 2.3 million barrels last week, above analysts forecasts, data from the U.S. Energy Information Administration showed.
Distillate inventories, including diesel, increased by 2.9 million barrels, while crude stockpiles fell by 3.7 million barrels.
U.S. crude traded down 58 cents to settle at $69.31 a barrel Wednesday, after earlier rising as high as $71.85.
"The fact that gasoline stocks are up 2.3 million barrels ahead of the Fourth of July weekend is huge," said Stephen Schork, editor of The Schork Report, adding, "Demand is low."
The economic crisis has battered fuel demand, sending crude off record highs over $147 a barrel hit last July. But optimism that a potential economic recovery could push demand higher has helped lift crude off lows below $33 a barrel touched in December.
Total U.S. product demand fell 5.8% over the four weeks to June 26 compared to year-ago levels, according to the EIA report fast payday loan no faxing.
The stockbuilds outweighed optimism in equities markets, with U.S. stocks rising on improving prospects for manufacturing around the world and suggestions the global economy was recovering.
Further pressure on crude came after a Reuters survey showed OPEC output rose in June, with members’ compliance with agreed cuts at 72% last month, a fall from 75% in May.
The producer group last year agreed to a series of output cuts aimed at taking 4.2 million barrels per day of crude off the market to help stem the slide in crude prices.
Kuwait’s oil minister said OPEC is unlikely to raise output when it meets again in September if markets remain oversupplied.
Output from OPEC member Nigeria has dropped over the past month due to an escalation of civil unrest in its oil-rich Niger Delta region. Tuesday, oil major Royal Dutch Shell (RDS.A) said attacks by Nigerian militants had cut its onshore output to around half of what it was producing earlier this year.
JPMorgan Chase is grabbing a bigger slice of a smaller dealmaking pie — leaving less for rival Bank of America.
New York-based JPMorgan (JPM, Fortune 500) was the biggest fee earner on Wall Street in the first half of 2009, according to figures released Thursday by markets data firm Dealogic.
JPMorgan generated $2.4 billion in fees for arranging stock and bond sales and mergers worldwide, Dealogic said. That’s down 2% from a year ago.
A small year-over-year drop would hardly be worth celebrating in a typical year. But with Wall Street in steep decline — industrywide fees dropped 30% in the first half, Dealogic said — JPMorgan’s performance stands out.
JPMorgan was the leading arranger of debt and equity offerings in the first half, displacing last year’s No. 1 underwriter, the combination of Bank of America and Merrill Lynch. BofA Merrill fell to second in debt underwriting and fourth in equity underwriting. Its fees plunged 45% from the first half of last year.
The first half declines aside, BofA is hardly starving. BofA earned underwriting fees of $1.6 billion, in the first half, according to Dealogic data.
Neither JPMorgan Chase nor BofA was able to supplant Goldman Sachs (GS, Fortune 500) as the top mergers and acquisitions adviser, though. JPMorgan was second and BofA fifth this year — the same as last year. Goldman was second in fees over all, raking in $1.7 billion — down 23% from a year ago.
JPMorgan’s gains came as merger activity and equity issuance slowed along with the global economy, in spite of a flurry of second-quarter debt and equity sales tied to the bank stress tests and Troubled Asset Relief Program repayments.
Worldwide stock sales in the first half were at their lowest level since 2005, while M&A volume plunged 36% from a year earlier, Dealogic said. The weak equity numbers came despite a record number of follow-on stock offerings as financial firms raised capital.
Still, more than half of JPMorgan’s total fee windfall — $1.3 billion — came from equity underwriting, Dealogic said.
Nothing succeeds like success
Analysts have been gushing about JPMorgan’s success during the financial crisis of the past two years. Led by CEO Jamie Dimon, the bank has benefited from the tumult, having been chosen by the government to buy troubled rivals Bear Stearns and Washington Mutual when they were at death’s doorstep instant personal loan approvals.
Dimon has also boasted of having built a "fortress balance sheet," in contrast to rivals such as Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) that have had to resort to federal assistance to shore up their capital. JPMorgan repaid its $25 billion TARP loan this month.
JPMorgan shares have gained 8% this year, and bulls such as BernsteinResearch analyst John McDonald, who rates the stock a buy, see more good times ahead.
"The market may not fully appreciate the extent to which JPM has spent the cycle not just ’surviving’ — but actually building, investing, and acquiring platforms for future growth," McDonald wrote in a note to clients this month. He said those gains should let the bank "emerge from the recession with greater earnings power and business momentum than it entered."
JPMorgan’s momentum was especially apparent in Dealogic’s rankings of debt underwriters. JPMorgan served as bookrunner, or lead arranger, on debt deals worth $185 billion in the first half. That’s up from $172 billion last year.
By contrast, BofA Merrill’s debt underwriting volume dropped to $140 billion from $243 billion a year earlier, according to the Dealogic report.
The weak underwriting performance comes after a tumultuous period at Charlotte, N.C.-based BofA. CEO Ken Lewis has come under fire for his decision to spend billions buying two struggling financial companies, Countrywide and Merrill Lynch, when their problems were getting worse.
Shareholders stripped Lewis of his chairman’s title in April, though he remains CEO. He has also been questioned on Capitol Hill over the government’s role in the Merrill deal. In January, the government provided BofA with $20 billion in capital and $118 billion in debt guarantees to ensure the bank would complete the purchase.
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