New jobless claims drop unexpectedly posted: 12-04-08
WASHINGTON -New claims for jobless benefits fell unexpectedly last week but the number of people continuing to claim benefits reached a 26-year high.
The Labor Department reported Thursday that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That's significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters .
But other figures showed the labor market remains weak due to the recessionary economy. The National Bureau of Economic Research said Monday that the economy fell into a recession in December 2007.
The number of people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, when the economy was in a steep recession. More workers continuing to claim benefits is an indication that unemployed workers are having a harder time finding new jobs.
The four-week average of initial claims, which smooths out fluctuations, increased to 524,500, also the highest level since December 1982, the department said.
The U.S. workforce is roughly 50 percent larger than it was in the early 1980s. The department said the proportion of workers continuing to receive jobless benefits has reached its highest level since September 1992, when the economy was slowly recovering from recession.
Jobless claims have soared in recent months as the housing slump and financial crisis caused consumers and businesses to cut back their spending. Initial claims last month reached a 16-year high of 543,000.
A year ago, initial claims stood at 340,000.
Employers have eliminated jobs every month this year, shedding 1.2 million positions through October. That has sent the unemployment rate to a 14-year high of 6.5 percent. Economists expect the Labor Department will report Friday that the rate increased to 6.8 percent in November and that companies cut another 320,000 jobs.
Large layoffs are occurring across many sectors of the economy. JPMorgan Chase & Co. said this week it will eliminate 9,200 positions at failed thrift Washington Mutual , which it acquired in September.
Jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., financial services firm State Street Corp. and mining company Freeport-McMoRan Copper & Gold Inc. also announced layoffs this week.
posted: 12-03-08
HONG KONG -China's sovereign wealth fund, which last year poured $5 billion into
Morgan Stanley , is reluctant to plow more money into foreign banks until governments hash out coherent policies to cope with the global economic and financial turmoil, the fund's head said Wednesday.
The remarks by Lou Jiwei, chairman of the $200 billion China Investment Corp., represent a new blow for ailing banks that were hoping the Chinese government investment fund would use its deep pool of cash to bail them out.
Lou said that he was unwilling to invest in foreign banks amid so much turbulence and uncertainty. Confidence in financial institutions is lacking because foreign governments seem to be changing their policies every week, he said.
"Right now, we do not have the courage to invest in financial institutions," said Lou, speaking on a panel discussion in Hong Kong at a conference organized by former President Bill Clinton.
He added, "We have to wait for the time when there won't be massive collapses of financial institutions."
The Chinese government investment arm was set up to make profitable use of Beijing's foreign reserves, which totaled $1.9 trillion by the end of September.
Most of those funds are kept in U.S. Treasuries and other safe but low-yielding securities. But there have been complaints about the performance of some of the fund's higher profile investments amid the recent market turmoil.
CIC's biggest investment to date was a $5 billion investment in Morgan Stanley in December 2007 — one of nine major banks that subsequently sought relief from the deepening credit crisis through the U.S. overnment's $700 billion banking bailout. That investment gave CIC a 9.9 percent stake in the investment bank.
The Chinese sovereign wealth fund was also said by Chinese media to have invested more than $100 million in Visa Inc.'s $19.1 billion initial public offering in March and has invested in a fund managed by J.C. Flowers, a U.S. private equity firm.
Last month, the private equity firm Blackstone Group said in a regulatory filing that it has agreed to raise CIC's ownership limit from 9.9 percent to 12.5 percent. CIC paid $3 billion for a stake in Blackstone's June 2007 initial public offering, but it has seen the value of that investment plunge — a major sore point for many Chinese officials and citizens.
Also speaking on Wednesday's panel, called "Moving Forward: Coping with the Financial Crisis," was Laura Tyson, professor of the Haas School of Business at the University of California, Berkeley. Tyson argued that governments needed to spend more money to stimulate the global economy and speed up recovery.
"China is one of the countries in the world that is well positioned to be part of the solution," she said.
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Goldman Said Facing $2 Billion Loss12-02-08
Goldman Sachs Group Inc is likely to report a net loss of as much as $2 billion for the fourth quarter, the Wall Street Journal said, citing industry insiders.
The quarterly loss, equivalent to about $5 a share, will be Goldman's first ever as a public company, as it faces writedowns on everything from private equity to commercial real estate, the paper said.
Analysts on average are expecting a loss of $1.27 a share, excluding items, for the quarter ended November 28, according to Reuters Estimates.
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Oil falls to 3-year low on bleak US economic news
12-02-09
-Oil prices fell to a 3-year low below $48 a barrel Tuesday as more bleak U.S. economic news and plunging stock markets darkened investor expectations for energy demand.
By midday in Europe, light, sweet crude for January delivery was down 71 cents to $48.57 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, prices briefly fell to $47.36, the lowest since 2005.
In London, January Brent crude slid 54 cents to $47.43 on the ICE Futures exchange.
The Nymex contract plummeted overnight $5.15 to settle at $49.28 after more signs of a weakening U.S. economy sent the Dow Jones industrial average down 7.7 percent.
Most Asian markets also sank Tuesday, with Japan's benchmark Nikkei 225 index falling 6.4 percent, the Korea Composite Stock Price Index sliding 3.4 percent and Hong Kong's Hang Seng index dropping 4.8 percent.
In Europe, markets were mixed, with London's FTSE 100 index down 0.1 percent, Germany's DAX index up 1.1 percent and the CAC-40 index in Paris lower by 0.2 percent at midday.
Oil investors have looked to equity markets as a barometer of economic growth sentiment.
"The basic story remains the same; consumption worries continue to depress the oil market," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "Recent data out of the U.S. and other countries backs up the view that consumption is weakening."
The National Bureau of Economic Research said that the U.S. economy has been in a recession since December 2007 and that the current downturn will last until the middle of 2009, the most severe slump since the 1981-82 recession.
What began as a financial crisis in the sub-prime mortgage sector has spread throughout the U.S. economy, including industrial production. The Institute for Supply Management said its gauge of manufacturing activity fell more than expected to 36.2 in November. A reading below 50 indicates the sector is contracting.
The Commerce Department reported that construction spending dropped by 1.2 percent in October, bigger than the 0.9 percent decline many analysts expected.
Meanwhile, expectations of another production cut by the Organization of Petroleum Exporting Countries has failed to spark a rally in prices.
OPEC Secretary-General Abdullah El-Badri said the group would likely reduce output quotas by between 1 million and 1.5 million barrels at a meeting on Dec. 17 in Algeria, according to a report on Iranian state television Monday.
____________________________________________________________Sears suffers 3Q loss on weak US, Kmart sales
12-2-08
HOFFMAN ESTATES, Ill. -
Sears Holdings Corp. said Tuesday hefty charges and weak results at its U.S. department stores and Kmart locations drove it to post a much wider-than-expected third-quarter loss, and the retailer withdrew its operating profit outlook due to the severe economic downturn.
The Hoffman Estates, Ill.-based company, led by financier Edward Lampert, also boosted its stock buyback plan by $500 million to $572 million.
Sears reported a loss of $146 million, or $1.16 per share, compared with year-ago profit of $4 million, or 3 cents per share. Excluding a hefty charge related to 14 store closings and gains on Sears Canada hedges, Sears posted a loss of 90 cents per share in the latest period.
Revenue dropped 8 percent to $10.66 billion from $11.62 billion as Sears U.S. same-store sales slid 10.6 percent and Kmart same-store sales slipped 7 percent. Total same-store sales, or sales at stores open at least a year, a key retail gauge, fell 9 percent.
Analysts surveyed by
Thomson Reuters expected a much smaller loss of 49 cents per share on higher revenue of $10.93 billion.
Sears said it will take a pretax charge of $21 million in the fourth quarter, related to the closing of eight underperforming stores. The company said it will continue to evaluate additional store closings or divestitures, remodels, acquisitions and stock and debt repurchases to boost financial flexibility.
Sears withdrew its forecast for earnings before interest, taxes, depreciation and amortization, citing the severe economic slowdown.
In August, the company had said EBITDA in the second half of the year would exceed 2007 levels, but full-year results would be comparable year-over-year. However, the forecast had assumed flat to modest same-store sales declines in the third and fourth quarters, but third-quarter same-store sales ended up falling off sharply and in November, domestic Sears and Kmart same-store sales dropped a combined 8.7 percent.
Year to date, adjusted EBITDA totaled $722 million, less than half the $1.52 billion reported as of Nov. 30, 2007.
Aside from closing underperforming stores, Interim Chief Executive and President W. Bruce Johnson said in a statement that Sears has prepared for a challenging holiday season by cutting inventory and reducing expenses. The company also has resurrected layaway programs at both Kmart and Sears locations to provide consumers with another payment option. Layaway programs enable customers to make small payments toward the purchase over a set period of time.
Sears, whose proprietary brands include Kenmore and Craftsman, repurchased 1.4 million shares during the quarter. The company had about 123.6 million shares outstanding as of Nov. 28. The retailer runs about 3,900 stores in the U.S. and Canada.
