| Market Summary |
Wall Street ended today’s session similar to the previous one. All three major indices shuffled across the flat line to end with small advances. The Dow Jones Industrial Average added 4.76 points to end at 8,183.17. Broader stock indicators followed the same path. The Nasdaq added 5.38 points and the Standard and Poor’s 500 Index added 3.12 points. Bank, tech, and commodity shares helped send stocks higher during afternoon trading. Dow component Alcoa (AA: Charts, News, Offers) kicked off the corporate reporting period. The company managed to beat analysts’ expectations. A new report showing that unemployment claims dropped to 565,000 from 617,000 last week did little to motivate the markets. In other economic news, May wholesale inventories fell 0.8% after falling a revised 1.3% last month. Investors have remained sketchy on how long it will take the economy to truly recover. A number of retailers reiterated that consumers haven’t migrated back to the market just yet. Abercrombie & Fitch (ANF: Charts, News, Offers) said same-store sales fell 32% versus a year ago. Limited Brands (LTD: Charts, News, Offers) also reported that sales fell 12% during the last quarter. U.S. light crude oil for August delivery rose 27 cents to settle at $60.41.
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| Market News |
Citigroup shuffles executives, former CFO leaving
Citigroup Inc. (C: Charts, News, Offers) said Thursday that its former chief financial officer and current chairman of Citi Holdings, Gary Crittenden, is leaving the company as part of the bank's latest shuffling of management. Crittenden took over as chairman of newly created Citi Holdings in March after the New York-based bank separated some of its riskier assets from more traditional banking operations, which became known as Citicorp. "Clearly there's some instability in the executive management," said Jason O'Donnell, a senior research analyst at Boenning & Scattergood Inc. "That's a reflection of the fundamental state of the company." (Source: Yahoo! Finance) Click here to read the full article
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GM Will Exit Bankruptcy With $48 Billion in Debt
General Motors Corp., which is preparing to sell its best assets to a streamlined new entity, will carry with it liabilities of $48.4 billion, a bankruptcy judge said. The new GM agreed to take on those obligations to benefit creditors, U.S. Bankruptcy Judge Robert Gerber in New York said in a ruling on July 7 that denied a quick appeal to opponents of the sale. The debt will be offset by GM’s most competitive assets, such as Cadillac, Chevrolet, Buick and GMC. Gerber previously approved the sale of most of GM’s business to a U.S. Treasury-funded buyer and said the company could complete the deal any time after today at noon. The Treasury has set a July 10 deadline for the sale. (Source: Bloomberg) Click here to read the full article
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Fewer than expected file for unemployment
The number of Americans filing initial unemployment claims fell sharply last week, while those filing ongoing claims rose to another all-time high, according to government data released Thursday. There were 565,000 initial jobless claims filed in the week ended July 4, down 52,000 from a revised 617,000 the previous week, the Labor Department said. It was the lowest number since January and was below the consensus estimate of 603,000 from economists surveyed by Briefing.com. (Source: CNN Money) Click here to read the full article
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| Market Analysis |
The Man Who Crashed the World
Almost a year after A.I.G.’s (AIG: Charts, News, Offers) collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved--the silent, shell-shocked traders of the A.I.G. Financial Products unit--and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees. Six months ago, I received an odd phone call from a man named Jake DeSantis at A.I.G. Financial Product--the infamous unit of the doomed insurance company, staffed by expensively educated, highly paid traders, whose financial ineptitude is widely suspected of costing the U.S. taxpayer $182.5 billion and counting. (Source: Vanity Fair) Click here to read the full article
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Do We Need a Second Stimulus?
In "Brewster's Millions," a comedy starring Richard Pryor, a man is told he can keep $300 million if he manages to spend $30 million in one month. The movie documents -- with a great deal of humor -- his difficulties getting the money spent. The Obama administration is currently facing a similar problem with its "stimulus" spending, only without the humor. With the economy weak and the labor market continuing to decline, there is now talk of a second stimulus (which is actually the third, counting President Bush's 2008 tax rebates). This would be a mistake. The truth is there hasn't been any stimulus to speak of so far this year. Moreover, what's being called stimulus is just a smoke screen for a permanent expansion of government. Let's start with some facts. (Source: Wall Street Journal) Click here to read the full article
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Are Bailouts Part of the Problem?
As the Treasury Department continues to hammer out the details of its plan to buy toxic assets from troubled banks, some on Wall Street are questioning the government’s entire strategy in combating the financial crisis, saying that it has just delayed the inevitable. One of these critics is Daniel Alpert, the managing partner of Westwood Capital, who argued in a note to clients Wednesday morning that the government money and new equity being thrown at the banks have caused them to put off revaluing the trillions of dollars worth of whole loans on their books -- loans he believes are being carried at unrealistically high valuations. (Source: DealBook) Click here to read the full article
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