Budget Cuts Force Phoenix to Cut Back on Bus Runs

PHOENIX--As part of its unprecedented budget cuts, the city of Phoenix plans to end early-morning and late-night bus runs while cutting back on Saturday service.

The City Council Tuesday voted unanimously to eliminate all trips before 5 a.m. and after 10 p.m.

Saturday service will be reduced to match Sunday levels, a reduction of 24 percent.

Bus riders have until Dec. 29 to find new ways of getting from place to place.

Phoenix officials said they hope to restore the routes when the economy improves.

The cuts were disappointing to transit advocates and bus riders, who say that eliminating bus service would disproportionately affect the poor and residents with disabilities.

Donna Powers, who uses a wheelchair, said cutting bus service would make it harder for transit-dependent people to work and shop and help the city recover economically.

"If people can't ride, there's going to be less buying," Powers said.

"We tend to overlook the fact. The weekday routes being eliminated account for 3,600 boardings per day."

Council members said they didn't have much of a choice but to accept the staff's recommendation to cut.
"It's very painful," Councilwoman Peggy Neely said.

The move, which will save an estimated $7.4 million between now and July 2010, comes as collections from Phoenix's Transit 2000 tax have fallen 6.9 percent over the past year.

The transit tax paid for a large expansion of Phoenix's bus service in 2000, but that's not the case now, city officials said.

"Our problem is that there is not enough money coming in to pay for the services we have," City Manager Frank Fairbanks said.

Further bus reductions will be made in July, as Phoenix attempts to close a $250 million budget deficit, officials said. An additional $10 million may need to be cut from the transit budget, said Tom Callow, a deputy city manager.

The Regional Public Transportation Authority that oversees the metro-area service is considering increasing fares as well, but they would not take effect until next year if approved.


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Procter & Gamble's Net Jumps 9% in 1Q

Consumer products giant Procter & Gamble (PG) posted a 9% increase in first-quarter profit, driven by price increases and double-digit developing markets.

Still, instability in the commodity, energy and foreign exchange markets led the company to lower the bottom end of its fiscal year earnings outlook by 3 cents.

P&G said its net income for the quarter jumped to $3.35 billion, or $1.03 a share, from $3.08 billion, or 92 cents a share, the year prior. The results were in line with those put forth by analysts polled by Thomson Reuters.

The Cincinatti-based household products company said sales came in at $22 billion, driven by growth in the Beauty, Fabric Care, Home Care and Baby Care & Family Care segments. Some of the top-performing products for the quarter include Gillette Fusion razors, Head & Shoulders hair products, Cover Girl and SKII cosmetics and Gain detergent, which all saw double-digit growth.

The company said 3% of its net sales were as a result of price increases, while another 5% were attributed to favorable foreign exchange rates.

Looking ahead, P&G said it expects to take a 1-2% hit from foreign exchange, and now projects its fiscal year earnings to fall between $4.15 and $4.25, as opposed to earlier estimates of $4.18 to $4.25. The forecast includes an estimated 50 cents a share gain from its Folgers divestiture and a hit of 12 cents per share in restructuring charges.

Chairman and Chief Executive A.G. Lafley believes consumers’ daily reliance on P&G’s products strengthens his confidence that the company “will deliver target growth over the long term, even in a challenging economic environment,” according to a release.


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Western Union’s Net Rises 11%; Outlook Tightens

Fed to Extend New Swap Lines

WASHINGTON--The Federal Reserve says it will supply new lines of credit to the central banks of Brazil, Mexico, South Korea and Singapore to help those countries deal with the global credit crisis.

The Fed says it will provide up to $30 billion to each of the central banks. It is the latest in a series of "swap" arrangements where the Fed provides dollars in exchange for reserves of the other nations' currencies.

The Fed said Wednesday that the new credit lines, like those already established with other countries, were designed "to help improve liquidity conditions in global financial markets" by increasing the global availability of U.S. dollars.



G7 Officials Vow to Stem Financial Crisis
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Rework of bailout plan revives hope

Mixed Verdict to Fed Day

Stocks suffered a late selloff on Wednesday, ending mixed as another rate cut from the Federal Reserve apparently wasn't enough for Wall Street to post a rare two-day win streak

Today's Market

The Dow Jones Industrial Average lost 74.16 points, or 0.82%, to 8990.96, the broader S&P 500 fell 10.42 points, or 1.11%, to 930.09 and the Nasdaq Composite picked up 7.74 points, or 0.47%, to 1657.21. The consumer-friendly FOX 50 slid 11.69 points, or 1.60%, to 718.35.

The late-day tumble erased gains of more than 300 points on the Dow, sending the benchmark U.S. index back below the 9000 level.The chances of Wall Street's first two-day win streak in more than a month also vanished in the selloff.

The interest rate cut by the Fed was highly anticipated but failed to produce a sustained rally on Wall Street.

"The economic problems that existed yesterday still exist today and will tomorrow," said Kenneth Polcari, managing director at ICAPEquities, who attributed the earlier rally to an oversold market. "There is plenty of money on the sidelines waiting to be invested and moves like this cause people to [try] not to miss the bottom. They won’t -- trust me."

Calls for a bottom grew louder on Tuesday after the Dow surged 889 points -- the second best one-day jump in the index's history. However, Wednesday's late losses could damper that sentiment.

“In our view, valuations have gotten very cheap. We’re in the bottom range. I don’t know if we’ve seen the bottom but we should be bottoming out," said Paul Nolte, director of investments at Hinsdale Associates.

Intel (INTC) and JPMorgan Chase (JPM)led the percentage decliners on the Dow, which ended at session lows. On the other hand, General Motors (GM) and Alcoa (AA) posted the largest percentage advances on the index.

All eyes were on the Fed on Wednesday as the markets largely ignored a $5 jump in crude oil prices, a mixed batch of earnings reports and a surprise jump in durable goods orders.

Stocks were highly volatile before and after the Federal Open Market Committee's unanimous decision to slash the Federal Funds rate by half a percentage point to 1% -- the lowest level since June 2003.

"The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures," the FOMCsaid in a statement. The Fed didn't close the door to the possibility to another interest rate cut despite the historically low current rates.

The rate cut was the latest in a series of emergency actions that began more than a year ago to counter a slowing economy and nearly frozen credit markets.

Market participants argued an interest rate cut was needed to fight an onslaught of ugly economic headlines and market sentiment that has been overwhelmingly gloomy.Then again, inflation hawks and others said the Fed should have held off on cutting interest rates again to save ammo for another potential financial disaster.

Meanwhile, crude oil futures ended sharply higher Wednesday following a mixed inventory report. The price of a barrel of crude rose $4.77 to close at $67.50.The government report showed a lower-than-expected build of 500,000 barrels of crude last week.

The rally marked the largest dollar and percentage gain for crude since September 22.Still, oil prices remain off more than 53% from all-time records of $145 a barrel in July.

A number of major companies reported earnings onWednesday, including better-than-expected profits from Dow components Kraft(KFT) and Proctor & Gamble (PG) as well as disappointing profits from energy company Hess (HES) MGMMirage (MGM).

Corporate Movers

General Motors (GM) and Chrysler LLC cleared major stumbling blocks to a possible merger, however a deal still hinges on government help and financing, Reuters reported. The auto makers reportedly agreed that GM CEO Rick Wagoner would lead the combined company. Also, GMAC LLC, the finance arm owned by GM and Chrysler’s parent, is considering transforming into a bank holding company to access the government's $700 billion bailout funds, The Wall Street Journal reported.

Yahoo! (YHOO) and Time Warner’s (TWX) AOL are engaged in “meaningful” due diligence on a possible deal, though no transaction is imminent, Reuters reported.

Kraft Foods (KFT), the world's largest food processor, more than doubled its third-quarter profit thanks to an asset sale. Excluding one-time items, Kraft earned 45 cents per share, topping expectations by a penny. The company also backed its 2008 and 2009 forecasts.

Procter & Gamble (PG) posted a 9% rise in fiscal first-quarter earnings to $1.03 per share, matching Thomson Reuters expectations. The consumer products maker said revenue jumped 9% to $22 billion. The company also lowered the bottom end of its full-year forecast.

Moody’s (MCO), the credit ratings company, disclosed an 18% decline in third-quarter earnings but managed to top expectations. However, the company cut its outlook for the rest of the year due to challenges in the credit markets.

CVSCaremark (CVS) completed its tender offer to acquire Longs Drug Stores (LDG). The retailer expects the merger to be completed on or about Thursday.

Comcast (CMCSA) fell sharply even though it posted a better-than-expected profit of 24 cents per share in the third quarter. Shares were hurt after Comcast, largest U.S. cable provider, reported a video subscriber decline of 147,000 in the quarter.

Qwest Communications (Q) disclosed an in-line 93% plunge in third-quarter profit and announced plans to cut 1,200 jobs, or 3% of its workforce. The company also said its full-year earnings would be at the lower end of its forecast.

Hess (HES) posted a near-50% jump in profit to $2.37 per share, missing analyst expectations by 6 cents.

Legg Mason (LM) soared 30% after the No. 2. public U.S. asset manager said it lost a wider-than-expected 74 cents per share in the third quarter. The company saw $20 billion of client money pulled during the quarter and wrote down $191.1 million related to bailouts of money-market funds.

Sony (SNE) suffered a 72% dive in quarterly profit thanks to the soaring yen. Sony earned $214 million on a 0.5% decline in sales to $21.4 billion.

Kellogg (K) easily beat the Street with third-quarter earnings of 89 cents per share on a 9% jump in revenue to $3.29 billion. The company also said its full-year profit should be at the high end of its previous forecast.

Data Dump

The Commerce Department said durable goods orders, which measure demand for products designed to last three years or longer, unexpectedly rose 0.8% last month. Amid a slowing economy, economists had expected a decline 1.1%.

Global Markets

European stock markets extended sharp gains from Tuesday, with London’s FTSE 100 closing up 316.16 points, or 8.05%, to 4242.54 and France’s CAC 40 Index jumping 287.65 points, or 9.23%, to 3402.57.

In Asia, Japan’s Nikkei 225 jumped 589.98 points, to 7.74%, to end at 8211.90. The index has surged 14.6% over the past two days. Hong Kong’s Hang Seng Index saw more modest gains, rising 105.78 points, or 0.84%, to 12707.07.


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Consumer Confidence Plunges Amid Financial Turmoil

Consumer confidence plummeted to an all-time low in October as Wall Street turmoil hit consumers on Main Street.

The Conference Board Consumer Confidence Index plunged to 38 in October from 61.4 in September, falling far below economists' expectations of 55.

The decline was due mostly to the turmoil that has hit the financial sector in recent months.

"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," said Lynn Franco, Director of The Conference Board Consumer Research Center.

According to High Frequency Economics Chief U.S. Economist Ian Shepherdson, the "astonishing plunge in gas prices" could offset some of the decline in consumer confidence caused by market turmoil. Still, Shepherdson remains pessimistic about consumer sentiment.

"Make no mistake ... these [consumer confidence] numbers are extraordinarily awful," Shepherdson wrote in a research note.

WATCH: Improving Consumer Confidence


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Cavuto: McCain's Got the Courage, Not the Conviction

Missed tonight's Cavuto? Catch "The Deal" right here on FOXBusiness.com

John McCain, I figured out today why you're losing.

Your positions are always changing.

You voted for the $700 billion rescue package.

Yet today lumped your opponent with the Bush Administration for essentially pushing the same package.

Here's the deal:

What's the deal with the straight talk express?

He voted for this rescue, but now says Barack Obama and the White House, who voted for the same rescue, apparently voted for something different.

Specifically, McCain wants to target the $700 billion into solving the mortgage crisis, not helping Wall Street banks.

Look, I wasn't for this rescue, but I kind of knew what it was about...shoring up the banks.

If Senator McCain didn't know that, he shouldn't have voted for that...maybe he should have read that.

Because he is smarter than this, and the verbal gymnastics that rival anything John Kerry was ever for before he was against...way, way before this.

Not that Barack Obama's positions are any more encouraging...but they are consistent.

I don't like the left-leaning, spread-the-wealth approach, but it's a consistent approach and the Democratic nominee has never veered from it.

You can accept him and his views or not.

With John McCain I’m not so sure.

But I am sure I'm not the only one confused.

...confused by a man who says he hates government spending, but supports pushing $300 billion to bail out folks behind on their mortgage.

You can't say you're against earmarks when you're earmarking that kind of dough, Senator.

Or adding more than $50 billion to a stimulus plan you cannot pay for...all the while blasting your opponent for coming up with programs he can't pay for.

Frankly, neither of your numbers adds up.

But I’ve come to see a consistent pattern in Obama's.

For the life of me, Senator Straight Talk, I see no such straight thing with yours.

Obama argues big government and spells out why we need it...accept it or reject it.

You rail against big government, yet continue to push cockamamie spending plans that make a mockery of it.

That's why you're losing right now, Senator McCain.

Not because you don't have the courage of your convictions.

But because on economic matters you apparently don't have convictions, period.


Obama: There Will be a Bailout
Bailout probably will put upward pressure on rates

Week in Review: Oct. 19-25, 2008

A review of the last week in business news. Here's your chance to catch up on what you might have missed.

Monday, Oct. 20, 2008

BernankeTestifies on Second Stimulus Package
Federal Reserve ChairmanBernanke tells Congress a second economic stimulus package might help the weak economy.
-WATCH: Second Stimulus Plan?
-WATCH:Millionaire Investor Wilbur Ross on Bailout Flaws

Fed ChairBen Bernanke testifying before Congress

Paulson Unveils $250Billion Recapitalization Plan Specifics
Treasury SecretaryHenry Paulson speaks about the plan to buy stakes in financial institutions. He says, "There is no reason to expect this program will cost taxpayers anything," and that it is an investment that should be paid back with a "reasonable return."

WATCH: GM-Chrysler Merger Hits Snags
The funding issues the auto makers may face in a deal.

WATCH: Cavuto's The Deal: The Grinch vs. Bernanke
WATCH:Cavuto Capper: When the Rich Recoil

Tuesday, Oct. 21, 2008

Fed Announces it WillBuyCommercial Paper From Mutual Funds
Federal Reserve began using its emergency powers and created a new facility to buy commercial paper from troubled money market mutual funds.

WATCH:CDS Market Regulation
The investigation of the credit default market and what resulted from the Lehman bankruptcy.

Wednesday, Oct. 22, 2008

Oil Falls Below $70 a Barrel
Oil breaks below the $70 mark, an important support level, as the dollar strengthens. Experts say it could fall even lower.
-WATCH: Commodities Reaction

Google's G1 Phone Launches at T-MobileStores
The first phone to feature Google's highly anticipated open-source Android OS hits shelves.
-WATCH:Walt Mossberg's First Look at the G1

Google's G1 Phone, sold by T-Mobile

WATCH: Renters Victimized by Unpaid Mortgages
Should renters be penalized when their landlords neglect to pay their mortgages?
-WATCH:TVPersonality Ed McMahon Discusses his MortgageProblems

WATCH: ChumpChange:Dollar Coin
U.S. Government estimates the country could save millions if we went to dollar coins rather than bills.

WATCH: Sarah Palin's Wardrobe, Who Cares?
Radio talk show host Tammy Bruce talks about comments made on Palin's new wardrobe
-WATCH:Cavuto Capper: Fashion Senseless

WATCH: Northwest CEO onAirlines andEarnings
Northwest Airlines CEO DougSteenland speaks about company earnings, oil prices, and the merge withDelta Airlines, which he says will be very positive.

WATCH:Nationwide Going Private
CEO Jerry Jurgensen speaks about the company's share repurchase plan to take publicly traded subsidiary Nationwide Financial Services private.

Greenspan: Financial Crisis is a 'Once-in-a-Century Credit Tsunami'
Former Federal Reserve Chairman Alan Greenspan says the current financial crisis is a "once-in-a-century credit tsunami" which will have a severe impact on the U.S. economy, driving unemployment higher.
-WATCH:Ron Paul on Greenspan's Place in History
-WATCH:Greenspan Knew Nothing?
-WATCH:Financial Crisis? Bank CEO in Texas Says His Company's Doing Great
-WATCH:Devastation of Wealth:Has the WealthGap Narrowed?

Former Fed Chairman Alan Greenspan

WATCH:Cavuto's The Deal:A Lot Can Happen in 13 Days
WATCH:Cavuto Capper: Fashion Senseless

Thursday, Oct. 23, 2008

Report:Goldman Sachs to Cut Work Force by 10%
The Wall StreetJournal reports the company is planning to make cuts to its staff of 32,500, despite the company's chief financial officerlast month saying employment would stay even for the rest of the year.

WATCH:Cavuto's TheDeal:Greenspan, the Father of Defeat?

Friday, Oct. 24, 2008

Stock Futures Trading Halted in Early Morning
Premarket futures see massive selloffs, causing trading to be halted in the early morning -- ironically, on the 79th anniversary of the 1929 stock market crash. The Dow ended up closing over 300 points down.
-When Automatic Trading Halts Kick in

PNC to Buy National City
Pennsylvania's largest bank announces it will acquire National City for about $5.58 billion

Oil Prices Fall After OPEC Announces Production Cuts
In an effort to halt the falling price of oil, the Organization of Petroleum Exporting Countries announces it will cut production beginning in November by 1.5 million barrels a day. That doesn't stop oil from settling at $64.15 a barrel, however.

Oil prices continue to fall this week.

Cavuto: We’re at a Loss
Cavuto: ‘RTC the Sequel’ Will Cost Us Big Money
Wells Fargo makes bid for Wachovia

Asian Stocks Tumble, European Stocks Follow

World stock markets slumped again Monday with the Nikkei index in Japan closing at its lowest in 26 years as the financial crisis drove up the yen, piling the pressure on the country's exporters.

Tokyo's Nikkei 225 index closed down 6.4% to 7,162.90 -- the lowest since October 1982. Hong Kong's Hang Seng Index tumbled 12.7% to 11,015.84, its lowest close in more than four years and biggest daily decline since 1991.

European markets followed Asia lower, with benchmarks in Britain, Germany and France trading down more than 4% in early trading. The FTSE 100 index was 190.31 points, or 4.9%, lower at 3,693.05, while Germany's DAX was down 182.81 points, or 4.3%, at 4,112.86. France's CAC-40 was the worst performing European index, down 184.65 points, or 5.8%, at 3,009.14.

"Worries about the impact of the surging yen on Japanese export earnings have hit the Nikkei hard," said Julian Jessop, chief international economist at Capital Economics.

"This in turn has led to sharp falls in European markets even when, as on Friday, the U.S. had closed higher the day before," he added.

Dow futures were down 268 points, or 3.2%, at 7,994. Standard & Poor's 500 futures were down about 4%.

Mounting concerns about the yen and the effect of the financial crisis on currency markets prompted the world's seven leading industrial nations to issue a statement Sunday warning about the "recent excessive volatility" in the value of the Japanese currency, which is rising against the U.S. dollar towards the 90 yen level and near 13-year highs.

"We continue to monitor markets closely, and cooperate as appropriate," the G7 said.

The statement has raised the prospect of coordinated intervention to stem the yen's appreciation.

"Although action could emerge at any time, it seems to us that it would achieve its maximum impact were it seen to be led by the U.S. Treasury," said Simon Derrick, currency strategist at Bank of New York Mellon.

"The New York morning today may therefore provide an ideal opportunity for them to make a clear statement of intent," he added.

The euro and the pound continued to drop, with the pound 3.4% lower at $1.54 and the euro down 1.8% down at $1.24. The euro is under pressure from fears about banks' exposure to emerging markets and expectations the European Central Bank will cut interest rates.

As well as potentially coordinating action in the currency markets, there's growing speculation that the world's leading central banks may cut interest rates together soon to help calm markets and provide some impetus to the stalling global economy. The U.S. Federal Reserve is already expected to cut its benchmark interest rate a half percentage point to 1% at a two-day meeting that ends Wednesday.

Economic data this week is likely to further stoke concerns about the global economy. Earlier Monday, the well-respected Ifo Institute in Germany reported that its main activity index fell to a five-year low 90.2 in October.

Monday's sharp stock market declines came amid another round of government measures to boost markets. In South Korea, the central bank slashed its key interest rate Monday by three-quarters of a percentage point -- its biggest cut ever -- to prevent Asia's fourth-largest economy from lurching into recession.

And Australian and Hong Kong central bankers injected funds into their markets to ensure liquidity.

In Europe, the International Monetary Fund said Sunday it had reached a tentative agreement to provide Ukraine with $16.5 billion in loans and announced that emergency assistance for Hungary had cleared a key hurdle.

Only South Korea's market managed to eke out gains, perhaps in part because of the big rate cut there. The benchmark Kospi ended 0.8% higher at 946.45.

In mainland China, the benchmark index slumped to its lowest level in more than two years as investors reacted to dismal earnings reports. The Shanghai Composite Index lost 6.3%, or 116.27 points, to 1,723.35. It is now down about 72% from its peak about a year ago.

In the Philippines, the key index plummeted 12.3% to 1,713.83 points, triggering a circuit-breaker that automatically halted trading for 15 minutes. The biggest one-day drop since February 2007 was caused by "big fund players" withdrawing investments to get cash and meet redemptions at home, traders said.

In Japan, stocks fell despite a report that the government was considering massive capital injection into struggling banks in a bid to calm jittery financial markets.

"The reported plan by the government hardly cheered investors. What the market really wants is a package of stimulus measures to boost the Japanese economy," said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd.

Citing unidentified sources, the Yomiuri newspaper said Monday the government is considering injecting public money worth 10 trillion yen ($108 billion) into struggling banks in a bid to stabilize the financial market hit by sagging stocks and a soaring yen.

In oil, crude prices weakened after OPEC's move to cut production in an attempt to halt the declines. Light, sweet crude for December delivery was down $2.24 to $61.91 a barrel. Oil prices have plunged more than 57% from a record $147.27 in mid-July.

AP reporters Jeremiah Marquez in Hong Kong and reporters Tomoko A. Hosaka in Tokyo, Elaine Kurtenbach in Shanghai, Hrvoje Hrankski in Manila and Kelly Olsen in Seoul contributed to this report.


Stocks dive, oil soars on wobbly Wall Street
Global Stocks Tumble Amid Gloomy Earnings, Recession Fears

Global Markets Plunge on Recession Fears

World stock markets tumbled Friday morning, with many benchmark indexes down in the 2% to 8% range, as signs that the global economic downturn might become a prolonged recession plagued the financial system.

Redemptions appeared to be a large part of the problem all over the globe, as jittery investors called back their bets with money managers. Poor profit reports from international titans such as Sony (SNE) exacerbated the trouble.

At this point, almost no country appears to be immune. The developed nations are struggling with a banking crisis, resource-rich nations are hurt by tumbling commodity prices and less-developed countries may find it even tougher to advance if cash and deals with established countries aren’t available.

However, there were some positive signs, including a deal the International Monetary Fund reached with struggling Iceland. In addition, as the trading day went on, markets in Europe and the U.S. appeared to be stanching the bleeding as they reined in some of the losses.

“The shift from credit market weakness to stability in the face of equity weakness signals a new chapter for financial markets,” Jeffrey Rosenberg, Bank of America Securities’ head of credit-strategy research, wrote in a research note. “Credit spreads in cash high grade more than price in the deepest recession and high yield reflect a more typical recession. To the extent global equities do not yet reflect this scenario, equity prices will need to continue to decline.

“The signs of the bottom are here” in credit markets, Rosenberg continued. “We would count a limit down day in equities as one more of those signs.” A limit down day would be a session in which many countries trade down to their circuit breakers or other maximum decline limits allowed in one day.

Asia-Pacific

Asian markets were hit hard by lowered company profit expectations, with India’s Bombay Sensex ending down 11%, Hong Kong’s Hang Seng was off 8.3% and Japan’s Nikkei closed down 9.6%. The DJ Asia Pacific Index declined 5.9%.

The Asian economies didn’t get as involved with the credit bubble as many of the Western countries did. But they tend to rely on exports or commodities to fuel their economic growth; so as commodity prices tumble and consumer spending in the U.S. and Europe falter, Asian countries are suffering.

Asia "may not be levered in the strict sense of reliance on global credit," Stephen Roach, Morgan Stanley’s Asia chairman, told The Wall Street Journal. "But it's certainly levered to the global economy."

Japan was hurt in particular after tech giant Sony cut its full-year profit estimate by nearly 40%, which combined with a rising yen to pummel investor sentiment. South Korea’s Seoul Composite declined 10.6% after profit reports from Samsung Electronics and Kia Motors came in worse than expected, and its Kospi index is now down 35% in October alone.

A Korean securities firm trader told Dow Jones Newswires that "players are aiming to secure liquidity rather than profit. All they consider now is, 'how will I survive this crisis?'"

Europe

Fears of recession and weak industrial activity plagued the European markets after the U.K.’s economy contracted more than expected and automotive companies came out with dismal news.

The U.K.’s Office of National Statistics reported that the country’s economic output fell 0.5% in the third quarter, greater than an expected 0.2% drop. It was the first time since 1992 that Britain’s economy had contracted. The benchmark FTSE 100 closed down 5%.

Auto makers were depressed after Swedish truck maker Volvo AB announced that its truck orders in Europe totaled 115, down from 41,970 last year, and French auto makers Renault and Peugeot-Citroen issued full-year profit warnings.

The DJ Euro Stoxx Index closed down 4.5%.

One of the biggest downers in Europe was Russia, where the DJ Russia Titans Index plunged 14.1% amid concerns that falling commodity prices could severely hurt the economy, in addition to the global crisis. Both of the country’s major stock indexes had trading halted until Tuesday, though regulators can restore trading anytime Monday. Russian markets are down about 75% from their May peak.

Iceland, one of the countries that has been hardest-hit by the mortgage and financial crisis because its banks overindulged in leverage, has reached a $2.1 billion loan deal with the International Monetary Fund, the country’s government announced. The loan is under a two-year stand-by arrangement, and the country will be able to draw on about $830 million almost immediately. That loan could pave the way for other countries that have sought such loans, such as Hungary, Ukraine, Belarus and Pakistan, to arrange similar deals.

Americas

The DJ Americas index fell 4.4% as countries that have already been buffeted by big selloffs took it on the chin again. Argentina’s benchmark Merval Index was down 8.3%, and Brazil’s Bovespa Index was off 5.9%.

Argentina’s markets have been spiraling downward ever since the government made a move to nationalize private pension plans. The central bank there, along with its counterpart in Brazil, has been intervening heavily in recent days to try to maintain order.

Peru’s stock market was halted around 11:06 Eastern time, with Lima’s broad general index down only about 0.8%. A trader told Dow Jones Newswires that there were concerns the market could be driven lower by fear-induced selling. Stocks resumed trading, and were off 6.9% by late afternoon. That happened despite the Peruvian central bank forecasting 2008 gross-domestic-product growth at 9.3% and 2009 growth of 6.5%.

In the U.S. prior to the open, index futures hit “limit down,” meaning they were not allowed to be traded any lower. However, the major indexes ended down just a little more than 3% each, so the situation wasn’t as bad as it was in many other countries – or, indeed, as bad as many had feared heading into the opening bell.


Stocks dive, oil soars on wobbly Wall Street
G7 Officials Vow to Stem Financial Crisis
Markets are battered again
Global Stocks Tumble Amid Gloomy Earnings, Recession Fears

Citadel Investment Group Stamps Out Rumors

Citadel Investment Group told FOX Business that any rumors about liquidation, Fed intervention, or forced selling are “categorically false.” Rumors swirled that both the Federal Reserve and U.K. Financial Services Authority visited Citadel’s offices today, discussing how to deal with a potential collapse of the $20 billion alternative investments giant.

The spokesperson also said the Chicago-based hedge fund maintains 30% of its capital in cash. The recent market turmoil has been rough for hedge funds with many of them reporting record losses. Citadel has taken a hit and has reported returns that have dropped 26% to 30%, according to the Wall Street Journal.

Earlier in the month Kenneth Griffin, head of Citadel, sent a letter to investors saying September was the "single worst month, by far, in the history of Citadel. Our performance reflected extraordinary market conditions that I did not fully anticipate, combined with regulatory changes driven more by populism than policy."

Cavuto: We’re Bad, But Europe’s Worse
Buffett’s $5 billion investment boosts Goldman’s capital

Credit Markets Get Squeezed Again

NEW YORK--The credit markets showed renewed signs of stress Friday as investors, worried about plunging stocks and the possibility of companies defaulting on their debt, fled once again to the safety of Treasury bills. Another dip in bank-to-bank lending rates offered little relief.

Fears are growing that the world could suffer a serious, widespread recession, and large investors -- particularly hedge funds -- are responding to the turmoil by deleveraging, or trying to pay off their debts. Deleveraging involves selling stocks and other assets, and in turn, causing them to plunge in value.

The cost of insuring against investment-grade corporate bond defaults surged to a record level Friday, according to broker Phoenix Partners Group, citing the Markit CDX North America Investment Grade Index. That indicates that the fear that highly-rated companies won't be able to pay back their debt has reached an all-time high.

Investors' flight to Treasury bills and a 400-point drop in the Dow Jones industrial average in early trading also suggested the modest improvements in the credit markets seen over the past several days might be hitting a plateau.

The three-month T-bill's yield fell to 0.78 percent, down from 0.94 percent Thursday and down from 1.01 percent Wednesday. A low yield indicates that demand is high, and that investors are willing to earn meager returns in exchange for a safe investment.

Three-month lending rates among banks in the U.S. and Europe slipped again Friday -- but just barely -- amid fears over global economic growth.

The London Interbank Offered Rate, or Libor, on three-month loans in dollars dipped to 3.52% from 3.54% on Thursday. The so-called European Interbank Offered Rate for three-month euro-denominated loans eased to 4.918% from 4.921%

The drop in Libor has been welcome, but banks are still hoarding cash. The Federal Reserve reported late Thursday that banks' excess reserves more than doubled in the two weeks ended Wednesday to $282 billion from $136 billion in the two-week period ended Oct. 8. That is up from $68.8 billion in the period ended Sept. 24, and up from $2.3 billion in the period ended Sept. 10.


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History Lesson: Major DJIA Milestones

The last time the DJIA closed below 8,000 was on March 31, 2003, when it closed at 7992.13.

The last time the DJIA had an intraday low below 8,000 was on Oct.10, 2008, when its intraday low was 7882.51.

The last time the DJIA closed below 7,500 was on Oct. 9, 2002, when it closed at 7286.27

The last time the DJIA had an intradaylow below 7,500 was on March 12, 2003, when its intradaylow was 7416.64.

The last time the DJIA closed below 7,000 was on May 1, 1997, when it closed at 6976.48.

The last time the DJIA had an intradaylow below 7,000 was on Oct. 28, 1997, when its intradaylow was 6971.32.


Capitu What? Defining Capitulation
Written proposals are critical to success
Markets are battered again

Markets End Red, Avoid Meltdown

Wall Street suffered another ugly day of losses on Friday but the selloff failed to live up to the hype provided by scary overnight plunges in the global and futures markets.

Today's Market

The Dow Jones Industrial Average dove 312.30 points, or 3.59%, to 8378.95, the broader S&P 500 lost 31.34 points, or 3.45%, to 876.77 and the Nasdaq Composite tumbled 51.88 points, or 3.23%, to 1552.03. The consumer-friendly FOX 50 slid 23.00 points, or 3.32%, to 669.69.

While the selling at the open was ugly, it wasn't quite as severe as some had predicted. The markets closed well off session lows but still solidly red.

By the time the dust settled, the major markets ended another turbulent five days of trading with a weekly loss and yet more uncertainty. The Dow lost nearly 500 points while the Nasdaq plunged 9% this week. The benchmark U.S. index is now off by 23% this month.

“We’ve got a global market meltdown going on right now and it's indiscriminate of geography and sector," said Art Hogan, chief market strategist at Jefferies & Co.

There were few places to take cover from the selling onslaught as the equities tumbled further, oil prices ended at 17-month lows and global currencies weakened significantly. Market participants fled to ultra-safe Treasuries.

Market sentiment deteriorated significantly overnight, sending the pre-market futures to such extreme losses that trading had to be halted at 5 a.m. EDT.

“Fear is ruling this market, clearly," said Ryan Detrick, equities analyst at Schaeffer's Investment Research. "People just want their money back. They want out of this market.”

All 30 stocks on the Dow ended the day in the red. The percentage losers were led by General Motors (GM) and Bank of America (BAC). Citigroup (C) and DuPont (DD) also saw steep declines.

The Nasdaq Composite didn't fall as far as the broader market but still lost about 3%. Big-name tech stocks like Dell (DELL), Yahoo!(YHOO) and eBay (EBAY) fell sharply.

In a piece of ominous trivia, Friday's trading session marked the 79th anniversary of the 1929 stock market crash.

Global Markets Plummet

The wave of selling began in Asia, where Tokyo's Nikkei plummeted nearly 10% to its lowest level since 2003 and Hong Kong's Hang Seng plunged 8.3% to four-year lows. Developing nations weren't spared as India's market dove 11% -- its second-largest fall ever, ending at the lowest level since late 2005.

Europe's stock markets recovered from earlier plunges with London's FTSE 100 and Germany's DAXIndex closing about 5% lower each.

What Capitulation?

While some may cheer the fact Wall Street didn't follow plummeting global markets, many traders were disappointed Friday didn't mark a moment of capitulation.

“I would have liked to have... gotten it over with. It’s very different this time around. It’s a slow bleed," said Frank Davis, director of sales and trading at LEKSecurities. Traders have said for weeks they were looking for a massive capitulation selloff before they would be assured the worst is over.

Others say the lack of a major meltdown on Friday provides evidence the markets have already reached a bottom.

“These people that don’t think we’ve seen blood in the streets, I don’t know what they are looking at,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald, citing steep selloffs earlier this month. “I think we’ve seen the bottom… Valuations have already discounted a major recession globally.”

Markets Slammed by Forced Liquidations

Market participants blamed some of the losses on forced selling by mutual funds and hedge funds whose customers have demanded their money back.

“A lot of babies are intentionally being thrown out with the bath water,” Steve Wood, senior portfolio strategist at Russell Investments, told FOX Business. “You can still sell something and get money for it… The stock market is like this huge ATM for a lot of levered investors.”

The selling on Wall Street came despite a lack of major negative developments in the U.S.

Still, late Thursday tech bellwether Microsoft issued a bearish earnings outlook, which followed a string of gloomy guidance given by major companies this week.

Also, the U.K. government said the nation's GDP tumbled by a worse-than-expected 0.5% in the third quarter, its worst performance since 1990.

Currency, Energy Markets Selloff

Currency markets continued to play a role on the stock markets as the BritishPound plummeted as much as 6% -- a dramatic move for a major currency -- to touch $1.5264. The euro plunged to a two-year low against the dollar, falling as low as $1.2494.

Global recession fears and forced liquidation were most evident perhaps in crude oil prices, which plummeted to their lowest level since May 2007 despite an emergency measure by OPEC to slash production by 1.5 million barrels a day.

The OPCE announcement did nothing to stop the losses as crude settled $3.69 lower at $64.15 a barrel.Crude lost more than 11% of its value this week, outpacing the losses in the equities markets. Crude is now off by 40% over the past four weeks alone.

Corporate Movers

PNC Financial (PNC) acquired struggling National City (NCC) for $5.58 billion in a deal that will make PNC the nation’s fifth largest U.S. bank. PNC also announced plans to issue $7.7 billion of preferred stock and related warrants to the U.S. Treasury under the government’s new rescue program.

Chrysler LLC announced plans to slash 25% of its salaried workforce starting next month. General Motors (GM) has intensified talks to buy Chrysler even as Chrysler’s parent Cerberus Capital Management shops the auto maker to Nissan and other companies, Reuters reported.

Data Dump

The National Association of Realtors reported a 5.5% jump in existing home sales in September to an annual rate of 5.18 million -- the highest level in 13 months. Economists had expected a more modest increase of 0.2% to 4.92 million units. Sales rose by 1.4% from a year ago, the first year-over-year rise in three years.


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U.S. Developing Plan to Help Homeowners Avert Foreclosure

WASHINGTON--The federal government is working on a loan-guarantee plan that could help many homeowners escape foreclosure, a banking regulator told Congress Thursday. At the same time former Federal Reserve Chairman Alan Greenspan said the financial crisis will get worse before it gets better.

Accused of contributing to the meltdown, but denying that it was his fault, Greenspan told a House panel the crisis left him -- an unabashed free-market advocate -- in a "state of shocked disbelief."

Federal regulators told Congress they were making steady headway in confronting the worst financial crisis since the 1930s as committees in both the House and the Senate held hearings on a contagious financial collapse that has infected global markets.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that the government can do more to help tens of thousands of home borrowers avert foreclosure. She suggested the government set standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them.

"Loan guarantees could be used as an incentive for servicers to modify loans," Bair said. "By doing so, unaffordable loans could be converted into loans that are sustainable over the long term."

The FDIC is working "closely and creatively" with the Treasury Department on such a plan, she said.

While Bair, a Bush appointee and independent regulator, has publicly nudged the administration in recent months to go further on remedies for troubled home borrowers, Democrats have voiced vigorous support for her and have applauded her public pleas on this front.

On the other side of the Capitol, Greenspan, who stepped down in February 2006 after serving as Fed chairman for 18 1/2 years, was asked to explain his role in the crisis.

Some critics have blamed Greenspan for contributing to the problem by leaving interest rates too low for too long and for failing to regulate risky banking practices such as the issuance of subprime mortgage. But he put the blame on soaring mortgage foreclosures on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.

Greenspan called the global financial crisis is a "once in a century credit tsunami" that policymakers did not anticipate.

He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a "state of shocked disbelief." And Greenspan also blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.

"Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment," Greenspan said. "Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity."

He told the House Government Oversight and Reform Committee that a necessary condition for the crisis to end will be a stabilization in home prices but he said that was not likely to occur for "many months in the future."

Committee Chairman Henry Waxman, D-Calif., suggested that Greenspan contributed to "irresponsible lending practices" by rejecting appeals that the Fed intervene to regulate a surging subprime mortgage industry.

"The list of regulatory mistakes and misjudgments is long," Waxman said of oversight by the Fed and other federal regulators.

In other testimony, Neel Kashkari, a Treasury Department official who is overseeing the government's $700 billion bailout program, told the Senate Banking Committee that the administration was making "tremendous progress" in carrying out the bailout program enacted earlier this month.

There have been "numerous signs of improvement in our markets and in the confidence in our financial institutions" since the program was started, he said.

Still, Kashkari cautioned that "while there have been recent positive developments, the markets remain fragile."

The administration must move to resolve the deepening financial crisis as swiftly and aggressively as it has so far addressed only the symptoms of the debacle, said Sen. Christopher Dodd, D-Conn., the Banking Committee chairman.

Otherwise, continued "volatility and paralysis" will reign in the markets, he warned.

Dodd said he was troubled by recent reports that some major banks receiving multibillion-dollar cash injections from the government under the rescue plan are weighing using the money to buy up other institutions rather than making loans.

Just as it is crucial to stabilize U.S. banks, "it is absolutely imperative" that homeowners be helped to avoid foreclosure, he said.

Sen. Charles Schumer, D-N.Y., said that by not setting conditions on banks in return for the government injections of money, "We're feeding them a little too much dessert and not making them eat their vegetables."

Schumer said he's "still not convinced" that banks receiving the government money should continue paying dividends to their shareholders.

Greenspan said that when home prices finally stabilize "the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk."

"Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment," Greenspan said. "Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity."

Greenspan called the $700 billion rescue package passed by Congress on Oct. 10 "adequate to serve the need" and said that its impact was already being felt in markets.

Greenspan's critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed's powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.


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UPS Profit Drops 9.9% on Global Economic Downturn

High gas prices and a hurting global economy pushed United Parcel Service (UPS) profits down in the third quarter. The package delivery company, which recently announced shipping-rate hikes, reported a net income of $970 million, a 9.9% drop from $1.08 billion in the same quarter last year.

UPS’s chief financial officer, Kurt Kuehn, said the business environment “proved substantially worse than we initially anticipated, with significant slowing toward the end of the quarter.”

He added that the company expects overall 2008 earnings per share to be around “the lower end” of its mid-year forecast of $3.50 to $3.70, based on “very conservative” consumer spending in the forecasted challenging economic environment.

UPS also reported diluted earnings per share of 96 cents for the third quarter, a decrease from $1.02 in the same quarter of 2007. This is higher than the 89 cents per share expected by analysts polled by Thomson Reuters.

However, Chairman and CEO Scott Davis said the company continues to see growth in international and supply chain businesses and is controlling costs, while making investments that will help UPS come back stronger when the economy rebounds. "UPS managed the business well in this very tough economic climate.”

Shipping companies have been affected by the global economic downturn as well as high gas prices, causing them to tighten budgets. Competitor FedEx (FDX) also reported a drop in earnings per share in its quarterly release last month, as it cut costs.


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Dow Chemical’s Net Jumps 6% Despite Big Increase in Materials Costs
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Dow Chemical's Net Jumps 6% Despite Big Increase in Materials Costs

GRAND RAPIDS, Mich.--Dow Chemical Co. (DOW)reported a 6% increase in third-quarter profits as price increases passed on to customers offset a nearly 50% jump in its raw materials and energy costs.

Adjusted for one-time items such as hurricane-damage expenses, Dow beat Wall Street profit estimates.

Midland-based Dow reported earnings of $428 million, or 46 cents per share, in the three months that ended Sept. 30, up from $403 million, or 42 cents per share, a year ago.

Excluding cleanup and repairs at Gulf Coast operations from Hurricanes Gustav and Ike, research and development costs and acquisition-related expenses, its profit was 60 cents per share.

Analysts polled by Thomson Reuters expected, on average, earnings of 57 cents per share. Analyst estimates typically exclude one-time items.

Shares rose 2.8 percent, or 64 cents, to $23.20 in premarket trading.

Sales rose 13 percent to $15.4 billion, edging estimates averaging $15.6 billion. Its Agricultural Sciences division set a new third-quarter sales record of $976 million, a 24 percent jump.

"Dow performed well in the third quarter despite a difficult economy and increased costs," Andrew N. Liveris, chairman and chief executive, said in a written statement released by the company. "Our ability to take proactive measures, including the implementation of two broad-based price increases and aggressive cost controls, allowed us to post solid results against worsening market conditions, record-high raw material costs and two hurricanes on the U.S. Gulf Coast."

Costs for raw materials and energy surged 48%, or $2.6 billion more than the same quarter in 2007. It was the largest year-over-year increase in company history and the third consecutive quarter in which these costs hit record highs, Dow said.

For the first nine months of the year, Dow earned $2.1 billion, or $2.26 per share, compared with $2.4 billion, or $2.49 per share, during the same period last year.

While "a global recession through most of 2009" is likely, Liveris said, the company is "well positioned" to weather the economic downturn.

Dow reaffirmed that it was moving forward on two recently announced initiatives: a joint venture with Petrochemical Industries Co., a subsidiary of state-owned Kuwait Petroleum Corp., and its $15 billion acquisition of competitor Rohm and Haas Co.


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Global Stocks Tumble Amid Gloomy Earnings, Recession Fears

European stock markets opened sharply lower Wednesday following losses in Asia and Tuesday's reversal on Wall Street amid spreading pessimism over corporate earnings around the world.

Britain's FTSE 100 index of leading shares was down 128.26 points, or 3.0%, at 4,101.47, while Germany's DAX was down 158.71 points, or 3.3%, at 4,625.70. The CAC-40 in France, Europe's best-performing index on Tuesday, was 105.80 points, or 3.0%, lower at 3,369.60.

Europe's losses echoed those in Asia. Japan's Nikkei 225 stock average fell for the first time in three days, dropping 631.56 points, or 6.79%, to 8,674.69, while Hong Kong's Hang Seng sank 5.2% and South Korea's main index shed 5.1%.

On Wall Street, the Dow Jones index fell 2.5% to 9,033.66, while the technology-heavy Nasdaq composite index shed 4.1% to 1,696.68 as a host of companies such as chemical manufacturer DuPont Co., Sun Microsystems and Caterpillar Inc., downplayed their prospects for the coming months.

"Wall Street tumbled before the close last night and then with Yahoo! posting some poor Q3 numbers, this is certainly the sort of news that is setting the mood right now," said Matt Buckland, a dealer at CMC Markets.

Fears about the economic outlook around the world have become the markets' primary concern as worries over the banking system have been assuaged, for now at least, by concerted government attempts to shore up banks, as well as massive liquidity boosts from the world's leading central banks.

"The credit crunch seems to be behind us, and we are shifting focus to corporate earnings and economic conditions, and clearly both are deteriorating," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.

Commodity and oil stocks have been particularly hit in Europe. Mining company BHP Billiton PLC was down more than 6% after it warned of uncertain economic conditions in China, the main driver of global economic growth in recent years. Another major mining firm, Anglo American PLC, was also down over 4% following BHP's warning.

Oil stocks were also weighed down by another $2.50 fall in oil prices to $69.67 a barrel despite expectations that the OPEC oil cartel will cut production later this week in an attempt to shore up prices, which have fallen by 50% in just three months.

Total SA was down 5%, while BP PLC was 4% lower.

Repsol YPF SA in Spain was also sharply lower, down 14%, over mounting concerns about the state of the Argentine economy. Argentina's President Cristina Fernandez proposed on Tuesday that the government take over nearly $30 billion in private pension funds, saying retirees must be protected from the global financial crisis. Her move spooked investors and triggered steep falls in Argentine stocks and bonds. Repsol has a large bulk of its business in South America.

Some relief to the growing earnings gloom has been provided by the continuing fall in interbank lending rates. Overnight, the Hong Kong interbank offered rate, also known as Hibor, for three-month loans dropped to 3.14% from 3.35%. Hibor's continuing declines follow similar falls for equivalent dollar and euro lending.

The rate on three-month loans in dollars slumped 0.23 percentage points Tuesday to 3.83%, while the so-called European Interbank Offered Rate for three-month euro-denominated loans fell 0.03 percentage points to 4.968%.

Abnormally high interbank lending rates have been the catalyst for the crisis in the financial markets over recent weeks, raising fears they would choke off credit to businesses and individuals.

Earlier, Asian markets suffered as markets fretted about the profit outlook ahead. Particularly hard hit were Japan's megabanks, which slumped after The Nikkei financial daily reported that Mitsubishi UFJ would miss its net profit projection for the April-September period by about two-thirds due to higher bad loan costs and the falling value of its shareholdings. Mitsubishi UFJ Financial Group Inc. shed 8.8% and Sumitomo Mitsui Financial Group Inc. dived 8%.

A stronger yen added to the misery in Japan, dragging down exporters such as automakers and consumer electronics firms. A stronger yen reduces the value of overseas profits when repatriated to Japan. Sony Corp. plunged 9.3%, Canon Inc. was off 6.1% and Panasonic Corp. stumbled 8.4%.

In Hong Kong, conglomerate Citic Pacific Ltd. plunged another 25% as local securities regulators announced a formal investigation into the company. Shares in the the firm, the Hong Kong arm of the Chinese government's main investment company, crashed more than 55% in the prior session after it revealed HK$15.5 billion (nearly $2 billion) in possible losses due to unauthorized currency bets made by a top executive.

In China, the benchmark Shanghai Composite Index fell 3.2% to 1,895.82.

In the currency markets, the euro was down to near two-year lows below $1.30, while the British pound slumped to near five-year lows around US1.63 after Bank of England governor Mervyn King hinted at further rate cuts to come.


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Allstate Swings to 3Q Loss on Hurricanes, Credit Crunch

Allstate (ALL), the nation’s largest publicly traded personal-lines insurer, swung to a loss in dramatic fashion in the third quarter as catastrophes and the credit crunch took their toll.

“Catastrophes, including two of the ten costliest hurricanes in U.S. history, and the impact of a global financial crisis contributed to a quarterly net loss for our company. In this environment, our proactive and decisive approach to risk reduction has benefited Allstate,” Thomas J. Wilson, Allstate’s chairman, president and CEO, said in the company’s press release.

Allstate said it lost $923 million, or $1.71 a share, in the third quarter. It had made a profit of $978 million, or $1.70 a share, in the same period a year earlier.

Revenue was $7.32 billion, down 19% from $8.99 billion in the third quarter last year.

Catastrophe losses were $1.82 billion, up from $343 million in the third quarter last year. That reflected losses from 35 events, the company said, including Hurricane Gustav and Hurricane Ike, which were two of 10 costliest hurricanes in U.S. history.

Net realized capital losses were $1.3 billion that “reflect unprecedented declines in credit markets,” the release said.

Net unrealized losses, “primarily reflecting depressed valuations from widening credit spreads,” the company said, were $4.1 billion. The company continued, “Given its current level of liquidity, the Company intends and believes it has the ability to hold these assets to recovery and therefore does not anticipate significant conversion from unrealized to realized losses.”


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New York Town Bakes 6,600 Cookies for Troops

An upstate New York town has rallied 'round the ovens, baking 6,600 cookies that were mailed Tuesday to members of the military deployed overseas.

The head of the Hyde Park Chamber of Commerce, Liz Rogers, says the 550 dozen chocolate chip and oatmeal cookies were all made on Monday in "The Great Cookie Bake Off" for the troops.

The care packages included notes from children and adult volunteers and disposable cameras to be mailed back, so the bakers can see the troops enjoying their treats.

Rogers' only has one regret; "I wish we could have sent them milk."

Volunteers included a children's cooking school, The Young Chef's Academy; Coppola's Italian-American Restaurant; the Anderson Center for Autism and the Poughkeepsie Moose Lodge.


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Western Union's Net Rises 11%; Outlook Tightens

Money-transfer giant The Western Union Company (WU) reported an 11% rise in profit in the third quarter, but said it expects a weak fourth quarter and lowered its outlook for the year.

Western Union reported earnings of $240.8 million, or 33 cents per share, compared with $216.3 million, or 28 cents per share, a year ago. The company’s revenue climbed to $1.38 billion, up 10% from last quarter.

The results were in line with Wall Street’s estimates, as analysts polled by Thomson Reuters were expecting a profit of 34 cents per share on $1.38 billion in sales.

The consumer-to-consumer business, which spans 200 countries and accounts for 85% of the company’s revenue, stalled a bit as China and some European nations suffered slowing growth. The company said that the softening was partially offset by strong growth in the Middle East, India and Philippines.

The company’s consumer-to-business segment, which represents 13% of revenue, was down 2% from a year ago. Western Union said its U.S. bill payment business is declining, “as many more American consumers who would use this service are currently unable to pay their bills and unable to obtain new credit.”

Citing a tempering of transaction growth rates and weakness in the fourth quarter, the company now expects its earnings per share to fall between $1.23 and $1.25 for the year. Its prior forecast was $1.22 to $1.26 per share.


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GM Bans Unscheduled Overtime

DETROIT--General Motors Corp. (GM) has told local union officials at two factories that it will not allow any more unscheduled overtime. That could help the automaker further cut costs as it burns through $1 billion in cash every month.

The officials at factories in Orion Township, Mich., and Lordstown, Ohio, say they were told of the ban Friday. They didn't know if it affects just their plants or if it is companywide.

A GM spokesman said Monday that the company has not told employees of any ban but is looking at ways to conserve cash.
The Orion Township and Lordstown plants make small and midsize cars, including the Chevrolet Malibu and Cobalt, and the Pontiac G5 and G6. Those have been some of GM's hottest-selling cars, even as the auto industry's U.S. sales overall fall by double digits.

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Markets Search for a Bottom in Coming Week

As the stock market zigs and zags in dramatic fashion every day, investors are waiting for a sign of when they can see a bottom, while most experts think the economy is already in the grips of a recession.

“Last week’s economic releases pointed to recessionary conditions,” Banc of America economists said in a research note. “The housing collapse continues and by some dimensions accelerated anew in September.”

Market watchers have been predicting the bottom for stock for months now, so it’s proven a tougher task than many had thought -- especially since the credit markets have been frozen for so long, with banks hesitant to lend to each other after Lehman Brothers filed for bankruptcy and left many other financial institutions on the hook for losses.

“The economic damage from the current crisis will be significant,” James Glassman, JPMorgan Chase economist, said in a research note Saturday. “Forces that are cyclical and structural and domestic and global are ushering in a period of disinflation… Markets ‘know’ this.”

Indeed, some people are saying that the Dow, which closed on Friday at 8852.22 (and at its height was over 14100), could go down to 7500 -- and a few think even lower, maybe 4000 -- before it hits its true bottom. People have been trying to call the bottom for months now, but as new revelations come out about credit-market woes, the indexes have headed inexorably lower.

Third-quarter earnings results from U.S. companies, which come out in force this next week, could provide a glimpse into what the future holds for American firms.

In particular, a number of components of the Dow Jones Industrial Average -- the 30-stock index meant as a representation of the entire U.S. economy -- will reveal their profit reports. Those include American Express (AXP) on Monday; 3M (MMM), Caterpillar (CAT) and DuPont (DD) on Tuesday; AT&T (T), Boeing (BA), Mcdonald’s (MCD) and Merck & Co. (MRK) on Wednesday; and Microsoft (MSFT) on Thursday.

Also, there are a number of financial firms, which are at the heart of the current crisis, that could offer indications of how things are going.

Investors will be able to dissect profit reports from UnionBanCal (UB) and credit-reporting agency Eqifax (EFX) on Monday; Fifth Third (FITB), KeyCorp (KEY), M&T Bank (MTB) and USBancorp (USB) on Tuesday; Wells Fargo (WFC) takeover target Wachovia (WB) and JPMorgan (JPM) takeover target Washington Mutual (WM) on Wednesday; and TD Ameritrade (AMTD) on Thursday.

Other notable companies reporting earnings include tech names Texas Instruments (TXN), Apple (AAPL), Yahoo (YHOO) and Baidu.com (BIDU). Then, there’s oil company ConocoPhillips (COP), and auto makers Daimler (DAI) and Ford Motor (F).

And, there were several pieces of economic news due out that could influence events.

Stock futures were slightly higher on Sunday evening, as traders sought to find some good news in the government programs being enacted around the world that are intended to help the private sector reinvigorate itself.

Of course, market trading in Asia and Europe on Sunday night and Monday morning will set the tone for the U.S., even if it doesn’t always determine what happens here. Those indexes were generally slightly higher also.

Still, many investors are hopeful that amid the volatility -- which is typical of a bear market -- stocks are carving out a bottom, and will be heading higher soon.

But as the past predictions have shown, it isn’t as easy to call the bottom as it may seem.


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Cavuto: Wearing Blinders to the Voting Booth

Missed tonight's Cavuto? Catch "The Deal" right here on FOXBusiness.com

Signed, sealed...Just about delivered.

Talk of a big election night bash.

A party to rival all parties.

For the "Ddemocratic" party.

And the "Democratic" nominee.

Polls show him doing well...In battleground states...Very well.

It ain't even close.

It ain't even a contest.

CEOs sucking up.

Conservatives hunkering down.

After the big debate, no debate.

It's as if the contest has ended and Barack Obama has been coronated.

Everyone says so. So it must be so? Right?

Be careful, my friends, just be careful.

Here’s the deal:

It's a done deal. Everyone says President Barack Obama is now a done deal.

The same folks who said President Hillary Clinton was a done deal last year.

And John McCain was finished that same year.

The consensus crowd that had us believing real estate was forever hot, then it wasn't.

And banks were forever secure, then they weren't.

Look, we all make mistakes, and I’ve made some doozies.

But forgetting those mistakes? Well that's an even bigger doozie.

Because history is punctuated not by things we expect but by events we do not.

That's why I get nervous, as I did watching another network last night, saying John McCain should resign himself to saving Republican seats in the House and Senate.

...that it's over for him...So, save them.

And get this, all the panelists nodded in agreement.

All of them!

I kid you not.

Look, none of this is to say Barack Obama can't win.

Just be very careful assuming he can't lose.


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Asian Stocks Plunge, European Markets Follow

European stock markets were lower Thursday after Japan's Nikkei tumbled more than 11% overnight amid mounting anxiety that the world economy is plunging into a deep and protracted recession.

The latest bout of selling in the markets was stoked by a record percentage fall on Wall Street Wednesday after weaker-than-expected U.S. retail sales data and a downbeat assessment from the U.S. Federal Reserve indicated that the world's largest economy is already, or about to fall, into recession.

"Once again a market rally is brought to a juddering halt by dramatic falls across global markets," said Matt Buckland, a dealer at CMC Markets.

"The persistent fear of a global recession shrugged off the cheer about banking rescue plans in the previous session with the Dow down 7.9% and the S&P500 off 9%, their worst one-day percentage falls since 1987, as U.S. retail sales were weaker than expected and the Fed's Beige Book showed weakening economic activity across the country," he added.

The FTSE 100 index of leading British shares was down 114.03 points, or 2.8%, at 3,965.56, while Germany's DAX was 121.13 points, or 2.5%, down at 4,750.50. The CAC-40 in France was 113.04 points lower, at 3.3%, at 3,268.03.

The renewed selling means that the world's stock markets are more or less back where they were at the start of the week, before they breathed a sigh of relief on the unveiling of a series of bank rescue packages from governments around the world to restore confidence.

The Swiss government Thursday became the latest to announce its plans to support its banking system with billions of dollars. The main recipient will be UBS AG, which is being offered up to $54 billion so that it can part with securities that have gone bad since the start of the worldwide financial crisis. Credit Suisse said it had also been offered government assistance but would not make use of it at this time, choosing instead to raise about 10 billion Swiss francs ($8.75 billion) on the open market.

On Tuesday, the U.S. government followed Europe's lead and announced it is to pump some US250 billion into shares of its leading banks as part of the $700 billion package passed by Congress earlier this month.

The U.S. plan was criticized overnight for being insufficient by Japanese Prime Minister Taro Aso. He blamed the renewed drop in markets on an "insufficient" U.S. bailout plan totaling $700 billion. "Since it was insufficient, the market is again falling sharply," Aso told lawmakers.

The long-term key is whether the flurry of activity by governments can actually break the logjam in credit markets. Despite the coordinated interest rate reductions announced last week, and massive liquidity boosts, the rates at which banks lend remain abnormally high, despite some easing in rates and spreads this week. That could in turn make it harder for businesses and consumers to get the credit they need and hurt the economy.

The Hong Kong interbank offered rate, known as Hibor, for three-month loans actually ticked up slightly overnight to 4.35% after easing the past couple of days.

Though the rescue packages have helped alleviate the pressures on the banking system, they will do nothing to prevent a serious economic slowdown. Fed Chairman Ben Bernanke warned in a speech Wednesday that patching up the credit markets won't provide an instantaneous jolt to the economy.

"Everyone is very worried about the economy in the U.S and around the world," said Jacky Choi, a Hong Kong-based fund manager at Value Partners Ltd., which manages about $5 billion in Asia.

Concerns about the global economic outlook are clear also in the price of oil, which has fallen another $1.88 to $72.66, a new 13-month low.

Commodity stocks are also in retreat after Rio Tinto PLC, one of the world's biggest mining giants, warned of slowing raw material demand from China, the world's biggest growth engine over the last few years. "The Chinese economy is pausing for breath after spectacular GDP growth," the company's chief executive Tom Albanese said.

Earlier, Tokyo's Nikkei 225 stock average slid 1,089.02 points, or 11.41%, to 8,458.45, its biggest drop since the 1987 stock market crash.

In South Korea, the main index dropped 9.25% after Standard & Poor's said it may downgrade the credit ratings of some of the country's leading banks. The ratings agency warned the credit crisis could make it difficult for the companies to refinance maturing debt.

And Hong Kong's key index trimmed losses, closing down 4.8% after falling more than 8% earlier. Australia's main share index fell 6.7% while India's was down 4%.

The panic selling in Asia hit many sectors. Export-linked shares such as top Japanese automaker Toyota Motor Corp., which was off 9.3%, retreated on worries about declining U.S. demand.

Resource firms slumped along with global commodity prices, with BHP Billiton Ltd., the world's largest mining company, losing 13%. In financials, KB Financial Group Inc., the holding company for top South Korean lender Kookmin Bank, lost almost 15%.

Meanwhile, insurance policies against companies failing to make good on their debt, known as credit default swaps, were more expensive -- a signal that firms believe the risk of default is growing.

The U.S. dollar edged up to 100.43 yen, while the euro rose to $1.3473.


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Bush: Government Not Moving to Nationalize Banks

The government’s move to buy preferred shares in banks is not a step toward nationalizing financial institutions, said President George Bush.

The program is designed to ensure government involvement in banks is limited in size, scope and duration, said Bush during a speech at the U.S. Chamber of Commerce.

The $700 billion rescue planned approved earlier in October is “not a government takeover. Its purpose is not to weaken the free market. It is to preserve the free market,” said Bush, addressing concerns that have been swirling ever since the government announced it plans to buy equity in banks and approved the bailout.

Bush said the government won’t exercise control over private firms. “Federal officers will not have a seat around your local banks boardroom table,” said the president.

According to Bush, every dollar used in the bailout will be subject to strong oversight. The rescue plan, he said will prevent executives from receiving a windfall and could ultimately cost the government “significantly” less than the initial investment.

Bush said many of the troubled assets the government buys will increase in value, enabling the government to eventually resell them at a higher price. What’s more Bush said the government will receive quarterly dividends from the banks it buys shares in. If the banks don’t buy back the shares in five years, that dividend would increase “substantially.”

Had the government not acted the “hole in the financial system would have grown larger,” said Bush, noting that families and companies would have had an even tougher time and the government would have had to respond later on with more drastic measures.

Bush said the plan is designed to make it easier for Americans to borrow money and to help banks get money flowing again to small and big businesses. “To help the American people is the goal of this plan,” said Bush.

While many had hoped the actions on the part of the government would have some immediate impact Bush warned that it will take some time.

“It took a while for the credit system to freeze up its going to take awhile for the credit system to thaw,” he said, noting the actions are big enough that it will work.


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Cavuto: Money Will Buy Time, Not Cure

Missed tonight's Cavuto? Catch "The Deal" right here on FOXBusiness.com

So what's the deal?

Severe recession or just your run-of-the-mill one?

As we end another week of wild swings, swinging to this conclusion:

Tough times are coming. The only debate...how tough?

And that's pretty much the focus right now.

Not whether the financial rescue works but whether it will do anything at all to help the economy.

Two words: probably not.

But even the bailout's most severe critics say the sheer size of all that government spending will stave off what could have been a far worse recession.

I don't know about that...money can buy you time, it doesn't buy you cures.

But I do know about this:

Certainly all this contraction in stocks will contract the economy.

Sales will slow, homes will still go begging, and jobs will still be lopped off.

I guess I'm just not in the camp that says sales will stop, and homes will not move at all and so many jobs will be lopped off, that our very economy will fall off a cliff.

But that's the debate...a turn? Or torture?

I see the former. I don't see the latter.

What I do see is a world press convinced there is no former, and only the latter.

That's what gives me pause, and should give you pause too.


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In Volatile Session, Stocks Move Lower

In another volatile trading session, the major stock indexes ended down Friday as investors digested two grim economic reports: one related to the housing market, the other consumer confidence.

Today's Markets

At the 4 p.m. market close in NewYork, the Dow Jones Industrial Average fell 127.20 points, or 1.42%, to 8852.06. The broader S&P 500 Index was down 5.94 points, or 0.63%, to 940.49, while the Nasdaq Composite fell 6.42 points, or 0.37%, to 1711.29. The consumer-friendly Fox 50 Index slipped 6.54 points, or 0.91%, to 710.65.

The Dow veered back and forth, covering a range of nearly 600 points. Drug maker Merck (MRK),food company Kraft (KFT) and four others led gains, while 24 Dow components ended lower.

Despite Friday's loss, the Dow closed up for the week - the first time in five weeks. A 900 point surge on Monday and another 400 points on Thursday took care of that. Those gains were nearly offset by a Wednesday drop of more than 700 points.In all, the Dow gained 4.75% this week.

In the commodity markets, oil was up $2.23 to $72.09 a barrel, while gold was down $18.10 to $786.50 ounce.

Many long-term investors, notably billionaire Warren Buffett, have said stocks may continue to trend lower, but long-term bargains are out there and that some stocks look attractive.

In an Op-Ed piece in The New York Times, Buffett said he has been buying U.S. companies for his personal account. "I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he wrote.

The biggest weight on Friday's market were two economic reports.

The U.S. Commerce Department said housing starts and building permits fell for the third month in a row.

Another disappointing economic report was related to consumer confidence. The University of Michigan consumer confidence survey fell to a historical low of 57.5 in mid-October, down from the September reading of 70.3. The fall is directly related to the ongoing financial crisis.

The Michigan survey is watched closely by investors, especially near the end ofyear as the holiday shopping season begins since consumers will not shop without confidence that the economy will recover.

As it has been the case all week, volatility remained high across all the major stock, bond and commodity markets. The VIX, a measure of volatility often referred to asWall Street's "fear gauge," was up 5 points to a near-record high of 73.50.

“Traders are just jumping in and then jumping out an hour later," said David Henderson, a floor trader at the NewYork Stock Exchange. "People aren't interested in finding investments - they just want short term trades."

Technology Stocks

The technology companies traded heavily after giants Google (GOOG) and IBM (IBM) posted earnings Thursday afternoon.

For its third quarter ended September 30, Google reported net income of $1.35 billion or $4.24 a share, compared with net income of $1.25 billion or $3.92 a share in the year ago third quarter. Excluding items Google had earnings of $4.92 a share. Analysts, according to Thomson Reuters had expected Google to post earnings of $4.76 a share and revenue of $4.06 billion. Shares of Google were trading up 7% in early-market trading.

IBM (IBM), which preannounced its earnings last week, officially said its net income rose to $2.8 billion, or $2.05 per share, from $2.36 billion, or $1.68 a share, a year earlier. Shares of IBMwere mostly flat.

Technology heavyweights like Apple (AAPL), Research in Motion (RIMM) and Qualcomm (QCOM) were all trading broadly lower.

Company News

United Parcel Service, commonly known as UPS (UPS), said it will raise its shipping rates in 2009 by 5.9% for ground and 4.9% for air shipping.

Honeywell (HON), the diversified industrial conglomerate and former Dow component, said it earned a third quarter profit of $719 million, or 97 cents a share, up from $618 million, or 81 cents a share, from a year ago.

Oil company Schlumberger (SLB) reported a profit of $1.53 billion, or $1.25 a share, up from $1.35 billion, or $1.09 a share, from a year ago.That matched the profit expectations of analysts interviewed by Thomson Reuters.

General Motors (GM) and privately-held Chrysler are accelerating merger talks amid strong support from potential lenders, according to a report in The Wall Street Journal.

Drug giant Pfizer (PFE) has agreed to settle litigation related to the pain drugs Celebrex and Bextra. Pfizer will pay $894 million, the bulk of that will go to personal injury claims.

Nasdaq Stock Market (NDAQ) will replace the department store Dillard's (DLS) in the S&P 500.

Global Markets

The Dow Jones Euro Stoxx 50 Index, the gauge that tracks the 50 largest companies in Europe, closed up 108.37 points, or 4.47%, to 2532.17.In London, the FTSE100 gained 201.62 points, or 5.22%, to 4063.01.

In Asia, Japan's Nikkei rose 235.37 points, or 2.78%, to 8693.82. HongKong's Hang Seng dropped 676.31 points, or 4.44%, to 14554.21.


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