The fourth largest US bank cut its dividend, slashed 500 jobs and raised $7bn through a share and note issue. CEO Kennedy Thompson said he was "deeply disappointed" having had the first quarterly loss since 2001. This latest cash injection comes after a total of $140bn raised by major banks and other lending institutions since last year and after a total of $245bn of losses resulting from the subprime crisis.
The CEO also said the housing slump will not end until sometime next year. Late payments on loans are at a record 3.1%. It looks like the deterioration in financial business in the last Q has caught everyone by surprise including GE and Wachovia. The question now is who else? The results are about to cascade in, so we'll know soon enough. Either way the risk appears to be on the downside. Newscorp fell the most in five years – down 4.6%. Analysts cut their estimates on Newscorp citing slower upcoming growth. The NASDAQ closed 0.6% down.
The minutes of the RBA Meeting are out. There is a lot of detail which we have summarised in the newsletter. But the main message is that the RBA are on a "Wait & See" strategy and interest rates are on hold for the foreseeable future. Some brokers saying the next move will be down.
Both BHP and RIO down slightly in ADR form overnight, 0.3% and 0.4% respectively. British brokerage firm Liberum Capital believe BHP Billiton (BHP) could significantly lift its chances of winning over Rio Tinto's (RIO) board if it offered a cash sweetener to its $160bn takeover offer. BHP up 21c to 4186c but RIO down 30c to 13800c.
Metals mostly down, Aluminium down 1.5%, Copper down 1.1% and Zinc down 0.4%. Nickel up 1.4%. Zinifex up 17c to 952c.
Oil price up $1.57 to $111.71. Woodside up 170c to 5600c. Gold up $1.70 to $928.70. Newcrest up 41c to 3300c and Pan Australia (PNA) down 3c to 115c after putting on nearly 10% yesterday on no announcement. US Bonds down with the 10 year yield up to 3.51%.
