General News:
Fed notes:
· UCLA Economic forecasting director Leamer said the Fed gets an F for its read on housing.
· Former ECB Head Issing and Fischer, the head of the Bank of Israel, said the Fed should not take a hands off approach.
· NBER Feldstien says Fed may have to cut rates 100 bps to ease a recession.
· Market News’ Beckner says that rate cuts not certain but likely. There are differences that need to be resolved over the coming days to determine the course of monetary policy.
Other credit issues:
· FT says that the credit crunch is a threat to Canadian growth.
· DB head says he is optimistic on the economy and that conditions are stabilizing. However, he said it could take a few quarters before the financial system can process the US subprime crisis. Down plays the Bush program.
· IKB said it will have an E700 mln loss on subprime. Says it will cut investment in securities funding by CP and says future earnings will be lower than previous years.
· UK’s Synapse closes fund due to mortgage exposures. WSJ notes.
– Trimtabs said that $32 bln flowed out of hedge funds in July. August flows may have been larger, but probably stopped mid month. Largest outflows since 2000 noted.
– Manufacturing in the U.S. grew at the slowest pace in five months in August as companies reduced orders after borrowing costs climbed.
– U.S. bank regulators urged mortgage lenders to ease terms on the subprime loans they packaged into bonds, seeking to stem foreclosures that may aggravate what’s already the worst housing slump in 16 years.
Asia/Europe:
Asia:
– Asian stocks fell for the first time in four days, led by Posco and China Mobile Ltd., on speculation recent gains have outpaced the potential for earnings growth.
– The yen fell against the dollar, erasing an earlier advance, on speculation gains in U.S. stocks may encourage investors to borrow the Japanese currency to buy riskier assets.
– Sony Corp. will sell about 332 billion yen ($2.9 billion) of shares in its insurance unit in Japan’s biggest initial public offering this year, raising funds for the consumer electronics and games divisions.
– Nissan Motor Co. named Alain Dassas as its first chief financial officer in four years, as Chief Executive Officer Carlos Ghosn seeks to reverse a slump in sales at Japan’s third-biggest carmaker and parent Renault SA.
– Australia’s economy grew almost twice as fast as economists forecast in the second quarter as business investment surged. The nation’s currency rose.
– Sony Ericsson Mobile Communications Ltd., the mobile-phone joint venture of Sony Corp. and Ericsson AB, said Chief Executive Officer Miles Flint will step down Nov. 1 and be succeeded by Hideki Komiyama.
Europe:
– European stocks rose after Deutsche Bank AG said there are signs that markets are beginning to stabilize and an increase in oil prices lifted energy shares.
– Deutsche Bank AG Chief Executive Officer Josef Ackermann told investors there are signs that financial markets are stabilizing and said Germany’s biggest bank has had no difficulty borrowing.
– Vinci SA, the world’s biggest construction company, said first-half profit climbed more than expected as increased traffic bolstered toll-road unit Autoroutes du Sud de la France SA and as construction work boomed.
– German Finance Minister Peer Steinbrueck said turmoil in credit markets may have made officials in the U.S. and U.K. more willing to consider a code of conduct for hedge funds.
Corporate News:
– MetroPCS Communications Inc., the mobile-telephone company that makes customers pay in advance, offered to buy Leap Wireless International Inc. for about $5.5 billion to create the biggest U.S. cell-phone service for low- income people.
– NovaStar Financial Inc. canceled a rights offering designed to raise $101.2 million for the subprime mortgage lender and said its auditor expressed doubt about the company’s survival. The shares fell as much as 18 %.
– Ford Motor Co., the second-largest U.S. automaker, said its U.S. auto sales fell 14 percent in August, declining for a 10th straight month as its car sales plummeted.