Commerzbank outlined its plans to cut 9,000 jobs and shrink investment bank Dresdner Kleinwort to a rump after buying Dresdner Bank, but investors were unhappy about the $14.5 billion deal.
Allianz is selling the bank in two tranches to create a stronger German number two behind Deutsche Bank. It is a deal that will trigger one of the biggest rounds of job cuts in banking since the markets crisis began.
It is also an admission from Allianz — after seven years and billions in losses — that it does not need its own bank in order to sell insurance to bank customers.
In Germany, investors were skeptical that Commerzbank Chief Executive Martin Blessing could make the deal work.
Dieter Ewald, a fund manager with Frankfurt Trust, which owns shares in Commerzbank said: “I think this is a real heavy-lifting exercise for Commerzbank and they might not make it.”
Dirk Becker, an analyst with Landsbanki Kepler said: “It is good for Allianz faxless payday advance. In the seven years they have owned Dresdner they have learned that they don’t have a clue about running a bank.
“But it is a huge integration. We will see in half a year that something will go wrong.”
Commerzbank shares tumbled almost 12 percent, lopping more than $2 billion off its market value, after it said it would buy 60 percent of Dresdner now and the rest in 2009.
The Bank of Korea may keep interest rates unchanged tomorrow after the economy grew at the slowest pace in more than a year and oil retreated to a three-month low.
Governor Lee Seong Tae and his six colleagues will leave the seven-day repurchase rate at a seven-year high of 5 percent tomorrow, according to 13 of 19 economists surveyed by Bloomberg News. Six expect a quarter-point increase.
Lee must balance signs of a slowdown in domestic demand against his objective of controlling inflation that is running at the fastest pace in a decade. Ssangyong Motor Co. and Hyundai Motor Co. are among companies that have reported declining sales as Korean consumers rein in discretionary spending because of a surge in fuel and food costs.
“The central bank still faces a big dilemma between growth and inflation,'' said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “A rate hike seems unlikely this year as oil prices fall and domestic demand weakens.''
Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11.
The Federal Reserve yesterday kept its benchmark rate at 2 percent and signaled that weak employment and financial instability will delay any increase in borrowing costs. The European Central Bank and Bank of England, also beset by faster inflation and slower growth, are forecast by economists to stand pat this week.
The won rose 0.2 percent to 1,016.10 won versus the dollar at 9:30 a.m. in Seoul. The five-year government bond yield declined 5 basis points to 5.75 percent. The Kospi stock index climbed 2.2 percent to 1,568.66.
Economy Weakens
South Korea's economy grew 4.8 percent last quarter from a year earlier, the weakest pace in more than a year. Spending by households, which are burdened with record debt, fell 0.1 percent in the quarter, the first decline in four years.
Reports since the Bank of Korea's July meeting have provided more evidence of a slowdown. Households were at their most pessimistic in almost four years in June and manufacturers' confidence for August sank to the lowest in three years easy fast cash.
Factory output advanced 6.7 percent in June from a year earlier, the smallest gain in nine months. A leading index of economic indicators, a gauge of future business activity, rose 1.2 percent, the least in five years.
Ssangyong Motor, the South Korean unit of China's biggest automaker, reported that domestic sales slumped 67 percent in June from a year earlier. Local sales at Hyundai Motor, the nation's largest car producer, slipped 0.6 percent in the second quarter.
Increase Expected
Still, six of the 19 economists surveyed expect the Bank of Korea to raise interest rates tomorrow to keep inflation expectations in check.
Consumer prices in South Korea surged 5.9 percent in July from a year earlier. That was the ninth consecutive breach of the central bank's target of keeping inflation between 2.5 percent and 3.5 percent, on average, for the three years to 2009.
Policy makers in India, Indonesia, Taiwan, the Philippines and Thailand have all raised interest rates this year even as the Asian region faces fallout from a global slowdown.
“We expect one token rate hike in August as a reaction to the massive inflation pressure in July,'' said Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. “A further rate hike is unlikely as downside risks to the economy will be more severe going forward.''
Shipments to China, the Middle East and Latin America, buoyed in part by a weaker won, have helped South Korea weather the domestic slowdown and a U.S. economic slump. Exports surged 37.1 percent in July from a year earlier, the most in four years.
The won has fallen 8 percent this year against the dollar, helping Korea's exporters by making their products cheaper overseas.
Following is a summary of the June housing starts report from the Commerce Department. ===========================================================================
June May April March Feb. Jan. Dec. Nov.
2008 2008 2008 2008 2008 2008 2007 2007 =========================================================================== Housing starts 1.066 0.977 1.004 0.988 1.107 1.064 1.000 1.179 3-mo. average 1.016 0.990 1.033 1.053 1.057 1.081 1.151 1.213 Single family 0.647 0.683 0.681 0.711 0.722 0.750 0.779 0.816 Multi-family 0.419 0.294 0.323 0.277 0.385 0.314 0.221 0.363 ————————————————————————– Housing permits 1.091 0.978 0.982 0.932 0.981 1.052 1.111 1.187 3-mo. average 1.017 0.964 0.965 0.988 1.048 1.117 1.160 1.215 Single family 0.613 0.635 0.649 0.621 0.646 0.675 0.714 0.767 Multi-family 0.478 0.343 0.333 0.311 0.335 0.377 0.397 0.420 ————————————————————————– Under construction 0.965 0.983 1.006 1.013 1.024 1.034 1.055 1.077 3-mo. average 0.985 1.001 1.014 1.024 1.038 1.055 1.076 1.094 Single family 0.507 0.528 0.550 0.563 0.580 0.590 0.608 0.623 ===========================================================================
June May April March Feb. Jan. Dec. Nov.
2008 2008 2008 2008 2008 2008 2007 2007 =========================================================================== Multi-family 0.458 0.455 0.456 0.450 0.444 0.444 0.447 0.454 ————————————————————————– Housing completed 1.167 1.153 1.033 1.192 1.251 1.331 1.329 1.404 3-mo. average 1.118 1.126 1.159 1.258 1.304 1.355 1.378 1.394 Single family 0.859 0.885 0.808 0.909 0.906 0.998 1.026 1.140 Multi-family 0.308 0.268 0.225 0.283 0.345 0.333 0.303 0.264
———————-MOM%—————– -YOY%- Housing starts 9.1% -2.7% 1.6% -10.7% 4.0% 6.4% -15.2% -26.9% Single family -5.3% 0.3% -4.2% -1.5% -3.7% -3.7% -4.5% -43.0% Multi-family 42.5% -9.0% 16.6% -28.1% 22.6% 42.1% -39.1% 30.1% ————————————————————————– Housing permits 11.6% -0.4% 5.4% -5.0% -6.7% -5.3% -6.4% -23.9% Single family -3.5% -2.2% 4.5% -3.9% -4.3% -5.5% -6.9% -39.7% Multi-family 39.4% 3.0% 7.1% -7.2% -11.1% -5.0% -5.5% 14.6% ————————————————————————– Under construction -1.8% -2.3% -0.7% -1.1% -1.0% -2.0% -2.0% -17.0% Single family -4.0% -4.0% -2.3% -2.9% -1.7% -3.0% -2.4% -30.0% ===========================================================================
June May April March Feb faxless payday advances. Jan. Dec. June
2008 2008 2008 2008 2008 2008 2007 YOY% =========================================================================== Multi-family 0.7% -0.2% 1.3% 1.4% 0.0% -0.7% -1.5% 4.3% ————————————————————————– Housing completed 1.2% 11.6% -13.3% -4.7% -6.0% 0.2% -5.3% -21.7% Single family -2.9% 9.5% -11.1% 0.3% -9.2% -2.7% -10.0% -30.1% Multi-family 14.9% 19.1% -20.5% -18.0% 3.6% 9.9% 14.8% 17.6% ————————————————————————– Ratio M/S Starts 64.8% 43.0% 47.4% 39.0% 53.3% 41.9% 28.4% 44.5% Ratio M/S Permits 78.0% 54.0% 51.3% 50.1% 51.9% 55.9% 55.6% 54.8% =========================================================================== NOTE: All figures in millions of units and seasonally adjusted at an annual rate. Percent changes are seasonally adjusted.
*New York City enacted a new set of construction codes effective for permits authorized as of July 1, 2008. In June there was a large increase in building permits issued for multifamily residential buildings in New York City.
SOURCE: U.S. Commerce Department.
General Motors employees yesterday ramped up their protest efforts outside the automaker’s truck and car plants in Oshawa, but union representatives say it’s only the beginning.
"We’ve got all kinds of things up our sleeves," said Keith Osborne, union chair for GM’s Oshawa complex, though he wouldn’t comment on future plans for fear of tipping off the company.
Early yesterday morning, members of the Canadian Auto Workers Local 222, which represents the Oshawa workers, staged a three-hour motorcade through the truck and car plants to show GM executives they mean business.
The union set up a blockade there Wednesday after the company announced it would close the truck plant and three assembly operations in the U.S payday advance lender. and Mexico within two years. The closing in Oshawa would end more than 2,000 plant jobs and several thousand others at parts suppliers.
"This is about all of us – all our jobs, all our community," CAW Local 222 president Chris Buckley told hundreds of cheering union workers as he announced plans for the motorcade, described as "phase two" of the rally.
The slow-moving motorcade cost each plant about 45 minutes in production by cutting off their supply of parts, Osborne said yesterday afternoon.
Osborne wouldn’t rule out the possibility of job action, should other legal recourses fail.
Melvyn Weiss, who built the New York law firm that turned U.S. class action litigation into a multibillion-dollar business, was sentenced on Monday to 30 months in federal prison after admitting to paying secret kickbacks to clients.
Weiss’s plea bargain and sentencing cap a seven-year federal investigation of America’s top class action firm and the lawyers who built it. They were considered heroes by many investors and extortionists by the U.S. companies they sued.
In a brief, somber statement to the court, Weiss, 72, apologized to his family, his former colleagues and his former firm “for my wrongful conduct.”
“My remorse and contrition are beyond my ability to express,” Weiss told the judge. “I promise that my contrition is honest.”
The sentence was less than the 33 months requested by prosecutors and more than the 24-month maximum sought by Weiss.
Assistant U.S easy payday loans. Attorney Doug Axel urged the judge to hand down the maximum under the plea deal, saying Weiss could have saved his law firm from the losses of cases and lawyers it suffered as the investigation dragged on.
“He could have done the right thing and stepped forward and deflected (harm) from the firm,” Axel said.
Weiss also agreed to pay $10 million in fines and forfeiture under a plea agreement with federal prosecutors in Los Angeles.
The Supreme Court on Monday upheld long-standing state tax exemptions for municipal bonds.
In a 7-2 ruling in a case from Kentucky, the justices permitted states to exempt interest on their own bonds from taxation while taxing residents for interest on bonds issued by other states.
In the $2.5 trillion municipal bond market, 42 states exempt some or all interest on their bonds from income taxes, while taxing interest on bonds from other states.
The states have said that throwing out the system of exemptions that began 90 years ago would have a devastating impact on state finances payday loans.
Industry groups warned of possible turmoil in the municipal bond market if the existing setup were dismantled.
In the majority opinion, Justice David Souter said that Kentucky’s version of the tax exemption — similar to that in most other states — does not violate the Constitution’s commerce clause.
In dissent, Justice Samuel Alito said the majority decision is protectionist and "invites other protectionist laws."
Novartis AG (NOVN.VX: Quote, Profile, Research) has agreed to buy Nestle AG’s (NESN.VX: Quote, Profile, Research) 77 percent stake in U.S. company Alcon (ACL.N: Quote, Profile, Research) in a deal worth up to $39 billion to boost its eye care business, the Swiss drugmaker said on Monday.
Novartis will acquire a first, 25 percent stake in Alcon for $11 billion and is set to buy Nestle’s remaining 52 percent for a fixed price of $28 billion between January 2010 and July 2011.
“The margins are higher than our pharma business and are obviously very attractive,” Novartis Chief Executive Daniel Vasella told reporters.
Novartis is keen to broaden its business from prescription drugs, which face increasing competition from generic medicines and a tougher path to markets, to non-traditional areas like vaccines, eye care and generics cheap payday loans.
The price of the first stake is at a 4 percent discount to Alcon’s closing price on Friday.
Novartis, Europe’s second-largest pharmaceuticals company by market capitalization, would pay a 22 percent premium to Alcon’s closing price if it went ahead with the purchase of the second tranche.
Nestle can force through the purchase of the second tranche, but Novartis can opt out if there is a material change in the business, Novartis said.
The acquisition of the first stake values Alcon at 22.8 times expected 2008 earnings and the possible second step at a 2010 multiple of 22.5, according to Novartis.
Software giant Oracle announced fiscal third-quarter earnings rose 30% from a year ago, in line with Wall Street expectations. But sales missed forecasts, a possible sign that big businesses may be starting to pull back on tech spending.
Shares of Oracle plunged more than 8% in after-hours trading. The company said in a conference call Wednesday that it expected a strong fourth quarter.
Net income for the three months ending in February rose 30% to $1.3 billion, or 26 cents per share.
Excluding certain one time items, the company reported a profit of 30 cents per share, meeting analysts’ forecasts, according to estimates from Thomson Financial.
Sales rose 21% from a year ago to $5.35 billion, below consensus expectations of $5.42 billion.
Oracle (ORCL, Fortune 500) has been aggressively scooping up smaller software companies in order to compete with rivals Microsoft (MSFT, Fortune 500), IBM (IBM, Fortune 500) and SAP AG. (SAP) The company is in the process of purchasing BEA Systems (BEAS), an acquisition which is expected to close in the coming quarter and should give Oracle a dominant position in the middleware software segment.
In the company’s conference call with analysts Wednesday, Safra Catz, Oracle’s president and chief financial officer said she expects non-GAAP fourth-quarter revenue to rise between 14% and 18%. She also expects earnings between 43 and 44 cents per share and new software licenses to rise between 10% and 20%.
Oracle president Charles Philips said in a written statement that new software license revenues continue to grow rapidly, taking market share from companies like IBM credit scores. And CEO Larry Ellison boasted in the statement that Oracle has higher operating profit margins than its competitors, including Microsoft.
Despite that good news, new license sales were only up 16%, not as high as some analysts would have liked. This could be an indication that the economic slump is taking its toll on Oracle.
Some of the deals that started in the third quarter have already closed, according to Catz, but she said Oracle customers acted a bit more cautious than usual, due to the current economic slowdown. "Deals are getting done, but they are taking a little bit longer."
In a weakening economy, business managers may wait to install new software, says Damon Ficklin, an analyst for Polen Capital Management, a money management firm that owns shares of Oracle. Oracle is the firm’s third largest holding.
Ficklin points out that Oracle is not immune to a pullback in corporate spending but he does think Oracle will probably do better than other technology companies in the coming months because the software giant is so diversified.
In addition, Ficklin says Oracle is a global company that will profit from the weak dollar. Oracle has a large presence in the Middle East, Europe and Asia and international sales account for half of the company’s total revenue.
Oracle Corp (ORCL.O: Quote, Profile, Research) posted disappointing quarterly software sales on Wednesday and said its customers had become more cautious, quashing the idea that the software sector would be immune to the economic turmoil that has roiled the rest of the tech sector.
Oracle shares fell 8 percent on the news, which also pulled down the stocks of other software makers like SAP (SAPG.DE: Quote, Profile, Research).
Chief Financial Officer Safra Catz warned that businesses had delayed approving purchases of Oracle’s software toward the close of its fiscal third quarter, which ended on Feb 29. The company would likely have a tougher time closing sales this quarter than it did a year ago, she added.
“Customers got a little more cautious toward the end of the quarter,” Catz said on a conference call with analysts following the results.
Oracle’s stock had gained 10 percent in the month leading up to Wednesday’s fiscal third-quarter earnings report, on expectations the results would be a bright spot among an increasingly disappointing flow of corporate results.
“People have turned to the software sector in general as somewhat defensive, but it’s not immune,” said Charles DiBona, an analyst at Sanford C free credit report .com. Bernstein & Co who has a “market perform” rating on Oracle shares.
As Oracle’s fiscal quarter closes a month earlier than the typical March 31, investors look to it as an indicator of how other software makers will perform.
While profit matched market expectations, Oracle’s sales of new software — which investors look to as an indicator of future financial performance — rose 16 percent, near the low end of its December forecast of 15 to 25 percent growth.
I’m trying to decide whether to sell my condo now and move into an apartment or try to hold out until the market is better. I want to sell because the condo is costing too much and my brother, who used to do repairs, passed away. In three years, when I retire at 66, I will move into an independent, senior apartment.
As long as you will not go into financial distress, hang on as long as you can. You probably will find that your cost of living in the condo will not differ much from what you will spend in a comparable apartment. Continuing to own also gives you benefits like tax deductibility.
Keep in mind that while you remain in your condo, your association fee takes care of most of the exterior and common elements pay day loans. The only luxury an apartment would afford you would be the service calls you can make for an interior repair.
If you feel the need to explore selling, I would suggest consulting with a seasoned Realtor for a competitive market analysis of your property. This will allow you to make an educated choice.
Powered by WordPress -- XHTML 1.0