Global market 5

- Sebagai akibat nya , banyak hedge fund managers melikuidasi posisi mereka di berbagai pasar ( valuta asing, komoditas, saham dsbnya ).

1. INTEREST RATE DIFFERENTIALS

- dengan pelambatan perekonomian secara global atau bahkan resesi , sudah sangat jelas bahwa bank sentral di eropa, inggris, dan Australia harus menurunkan tingkat suku bunga mereka secara agresif

- mengecilnya perbedaan suku antara dolar AS dan mata uang utama dunia lainnya menyebabkan euro ,puand sterling, dan dolar Australia terdepresi.

2. LOSSES from the HOUSING BUBBLE

- sebagian dari investor juga harus membeli dolar AS untuk menutupi kerugian yang mereka derita di mortgage investment dan credit default swaps.

- Sebagian besar dari kontrak derivative di terbitkan dalam dolar AS , jadi ketika pemegangnya ingin menjualnya , penerbitnya harus melunasi nya dalam dolar AS dan kadang kadang menjual investasi dalam mata uang lain untuk mengumpulkan dolar AS –nya.

3. MOMENTUM

- Saham,obligasi, komoditas , atau private equity sama sekali tidak menguntungkan pada sat ini , jadi uang keluar darinya dan mencari tempat lain untuk ditanamkan.

- Sekarang hanya dolar AS yang lagi cemerlang .tentu saja, makin banyak uang yang di investasikan ke dalam dolar AS main baik untuknya, dan semakin dolar AS menguat makin banyak hot money ( seperti hedge funds ) yang mengikutinya.

Global market 4

great depression

The dow mencatat rekor tertingginya di 14,164.53 pada tanggal 9 oktober 2007.Persis satu tahun kemudian, pada hari kamis 9 oktober yg lalu, the dow di tutup dilevel 8,579.19 dengan kata lain, index saham AS turun sebesar 39.4% atau 5,585 poin.

Bursa saham lainpun kena imbasnya , tetapi belum selesai karena pendapatan perusahaan tetap menentukan harga saham.

- dalam sutau perekonomian yang di dasarkan oleh consumer spending atau pengeluaran konsumen 10 bulan dari September 2007 sampai Juli 2008 naik 29.1 milyar dolar AS

- 10 minggu dari agustus 2008 sampai pertengahan oktober 2008 naik 32.3 milyar dolar AS

Denagan kata lain , jumlah pinjaman lewat kartu kredit telah meningkat lebih banyak dalam 10 pekan tersebut dari 10 bulan sebelumnya.

- sungguh aneh tapi nyata ( dan menyedihkan ) , tetapi pedagang terbesar kedua untuk penggunaan kartu kredit sekarang adalah mcdonalds.

- Ini jelas menunjukan bahwa banyak konsumen sedang sengsara kalau sudah harus bayar untuk big mac dan kentang senilai 4 dolar AS dengan kartu kredit.

Beruang kembali berjaya !!!!

- The worst financial crisis since the untuk hampir 75% pengeluaran yang lebih sedikit pasti mengakibatkan suatu RESESI

- dan apabila pendapatan perusahaan yang tercatat di bursa menurun , harga saham mereka tentu akan anjlok.

Mengapa dolar AS begitu perkasa ????

Dalam 3 bulan terkahir ini dolar AS diperdagangkan berdasar ALIRAN DANA , bukan berdasarkan FUNDAMENTAL .

Adapun 5 alasan utama kenapa dolar AS kembali menjadi raja untuk sementara waktu :

1. LIKUIDASI dari CARRY TRADE

- dari tahun 2002 sampai dengan tahun 2007 , banyak investor telah memanfaatkan pinjaman dalam dolar AS dan juga YEN jepang untuk berinvestasi dalam asset dengan yield yang lebih tinggi .

- pada saat ini , menyusul credit crunch, banyak bank tidak mampu atau mau memperpanjang pinjaman tersebut dan investor terpaksa menjual asset untuk melunasinya.

- Penguatan dolar AS maupun Yen jepang dan penurunan mata uang utama lain pada saat yang bersamaan menegaskan perebutan yang sedang berlangsung untuk mengurangi hutang dan deleverage.

2. INVESTOR REDEMPTIONS

- menurut Nouriel Roubini, professor dari new york , ratusan Hedge funds akan tutup sebab investor tidak puas dengan kinerjanya dan minta uang mereka dikembalikan.

Global market 3

menyususul masalah yang berhubungan dengan resesi menjadi makin berat. Oleh karena itu , tingkat pengangguran naik sampai 6,5 % bulan yang lalu.

Kebanyakan ekonom memprediksi makin banyak pemecatan akan terjadi , dan tingkat pengangguran akan meningkat lebih jauh ke 8% atau bahkan lebih tinggi pada tahun 2009.

Pemandangan ekonomi dunia suram

- inilah krisis keuangan yang paling buruk di AS, eropa , dan sekarang juga di pasar berkembang yang kita alami dalam 40 tahun.

- Jadi situasi akan cenderung lebih buruk sebelum menjadi lebih baik .justru keadaan tidak menyenangkan akan dapat berlanjut.

- Bahkan baru saja ada peringatan dari IMF bahwa perekonomian dari Negara maju secara keseluruhan akan menciut 0.3% tahun depan. Itu senadainya menandai kontraksi pertama secara bersamaan pada Negara maju sejak perang dunia II.

- Menurut the survey of business confidence of the world yang dilakukan oleh Moody’s Economy , sentiment bisnis anjlok pecan yang lalu ke rekor terendah barunya.

- Sentimen pada saat ini luar biasa negative di Amerika Utara maupun Ropa dan mulai melemah dengan cepat di Asia maupun Amerika latin . Panik keunagan yang berawal di bulan September telah memberikan pukulan kepada kepercayaan bisnis dan dengan demikian perekonomian dunia menurut penelitian itu dalam resesi.

Dan perekomian dunia yang parah juga tergambar dalam harga komoditas yang semakin lebih rendah.

Konsumen AS bukan Superman !!!!

Konsumen amerika yang hebat sudah meninggal, semoga ia dapat beristirahat dengan tenang.

- Prekomian AS sangat tergantung kepada konsumsi yang tiada hentinya,tentu saja, apabila konsumen ingin berbelanja , mereka perlu uang. Tetapi itulah masalah yang menjengkelkan , mereka tidak punya uang lagi sama sekali.Mereka tidak punya simpanan.Pemberian kredit mulai diperketat. Dan sekarang…pekerjaan pun sulit diperoleh.

- Sebagai hasilnya , pengeluatan konsumen AS tidak hanya turun tapi runtuh total : pengeluaran konsumen dalam kuartal ketiga turun 3.1% yg merupakan penurunan pertama dalam 17 tahun yg terbesar dalam 28 tahun , pengeluaran untuk Nondurable goods atau barang yang tidak tahan lama turun 6.4% inilah penurunan yang terbesar dalam 58 tahun , penjualan mobil yang sedikit dalam 17 tahun, dan memperparah situasinya penghasilan oaring yg telah di sesuaikan dengan inflasi dan pajak anjlok 8.7% yang merupakan penurunan kuartalan terbesar sejak 1947 !!!

Penjualan toko dalam kuartal ketiga paling lemah dalam hampir 3 tahun DEKADE

Tidak bias pinjam terhadap kenaikan harga rumah??? Coba saja Kartu Kredit !!!!

Global market 2

- Tetapi perusahaan keuangan juga telah banyak berinvestasi dalam derivatif, yang oleh warren Buffet disebut “ financial weapon of mass destruction “ atau senjata pemusnah masal pada tahun 2002.

Selama 6 tahun berikutnya , jumlah derivative ini bertambah sebesar 500 persen menjadi lebih dari 500 milyar dolaar AS. Ukuran sebesar inilah yang menaikan probabilitas atau resiko untuk menjadi suatu bencana.

Terutama pasar CDS ( credit default swap) sebesar 50 triliyun dolar AS yang membahayakan dunia keuangan. Sebagai contohnya , AIG adalah salah satu penjual terbesar CDS dan kita sudah tahu nasibnya, bukankah begitu?

Perekonomian Amerika tenggelam seperti titanic

Perolehan kredit mulai sulit

- karena Bank menderita banyak kerugian , mereka terpaksa mengurangi pemberian kredit.

- Sampai dengan bulan September , jumlah pinjaman telah turun sebesar 154.3 milyar dolar AS, yang merupakan salah satu kontraksi kredit terbesar secara nominal dalam beberapa decade terkahir ini.

- Dengan demikian , uptrend yang bertahan sejak awal tahun 1995 telah pecah !!!!

- Perekonomian yang sehat mempunyai kredit bank yang meningkat, yang merupakan salah satu sumber ekspansi .Ketika bank harus mengurangi pemberian pinjaman , pertumbuhan ekonomi berkurang dan bahkan dapat mengakibatkan suatu resesi

- Penurunan jumlah kredit ( deleveraging) kemungkinan besar akan berlanjut terus sampai tahun 2013 !!!! , deleveraging ini jelas akan menekan pertumbuhan ekonomi dan bursa saham beberapa tahun kedepan.

- Pemerintah boleh saja memompa uang dalam sisitem perbankan tetapi tidak akan ada dampak sama sekali, seperti pepatah lama mengatakan “ Anda dapat menuntun kuda ke air tapi tidak bias membuatnya minum “.

Laporan BNP yang menakutkan

Perekonomian terbesar di dunia melemah dengan 0.3% dalam bisnis tahunan di kuartal ketiga. Inilah kontraksi yang paling tajam di AS dalam 7 tahun terkahir.

Tetapi mulai bulan September perekonomian jatuh ke jurang , dengan BNP yang kemungkinan berkontraksi sekitar 3% dalam kuartal ke empat. Apabila penurunan sebesar ini terjadi, berarti itu akan menjadi kuartal terburuk sejak 1982.

Sektor manufaktur maupun sector jasa terkontaksi

Index manufaktur dari ISM turun 4.6 poin ke 38.9 pada bulan oktober , yang merupakan level terendah sejak September 1982.

Sementara index jasa terjun ke 44. 4 dibulan oktober dari 50.2 pada bulan sebelumnya.level tersebut adalah yang terendah dalam sejarah dr index ini.

Angka pengangguran yang mengejutkan

Perusahaan telah mmemangkas 1.2 juta pekerja dalam 10 bulan pertama tahun ini, dengan lebih dari setengahnya kehilangan dari pekerjaan tersebut dalam 3 bulan terakhir

Global market 1

Global market

Sedikit ttg fundamental agar dapat mendukung teknikal

Fundamental ini kami dapatkan pada tgl 28 september 2008 pada saat pertemuan antara kami dengan mr. Nico Omer Jonkheere di Hotel merdeka madiun dalam rangka mendukung promotion. Mr. Niko berasal dari swedia dan jabatannya adalah sebagai vice President Research & analysis.

Dalam pertemuan itu kami membahas berbagai macam hal dan juga bagaimana us kedepan.

Mengapa AS masuk resesi?

Spekulasi di pasar perumahan telah usai

Untuk membangun kembali kesehatan ekonomi di Amerika Serikat,di butuhkan suatu resesi hebat yang berlangsung beberapa tahun “ menurut marc faber “

Pasiennya yang menjadi melalui pertumbuhan kredit harus masuk rehabilitasi .

Memberikan lebih banyak alcohol , seperti yang dilakukan the fed dan the treasury pada saat ini, adalah obat yang salah.

Harga rumah secara nasional telah menurun sebesar 22% dari harga tertingginya yang tercapai pada tahun 2006.

- banyak orang yang sebetulnya tidak layak mendapatkan KPR diberikan pinjaman tanpa dokumentasi yang lengkap ( subprime mortgage ).

- Satu dari setiap lima rumah di AS telah turun begitu banyak sampai nilai KPR-nya lebih besar dari pada nilai rumah itu sendiri.Oleh karena itu , jumlah foreclosures atau penyitaan rumah kini 71% dibandingkan satu tahun lalu.

Harga rumah di AS kemunngkinan masih akan turun 10% lagi dalam beberapa kuartal berikutnya sebelum mulai stabil tahun 2010.

Petumbuhan ekonomi yang semu.

- sekitar 2% dan bahkan kadang-kadang lebih dari 3% dari pertumbuhan BNP di tahun2002 sampai tahun 2006 merupakan dari hasil kenaikan harga rumah.

- Jadi penyehatan dari resesi pada awal decade ini di dorong oleh mortgage equity withdrawal , yang mengijinkan konsumen menggunakan rumahnya sebagai mesin ATM dan pinjam uang terhadap apresiasi rumah mereka.

Baik pada 2005 dan 2006 terjadi penarikan KPR sebesar hampir 700 milyar dolar AS, yang meningkatkan consumer spending dan menambah 3% ke BNP.

Tetapi tahun 2007 , MEW sudah turun ke 470 milyar dolar AS, dan tahun ini kecil sekali.

Produk derivatif mengancam system keuangan

- Bank telah kehilangan lebih dari 680 milyar dolar AS selama 2 tahun terakhir setelah housing bubble pecah.

disiplin

sebenarnya kalau kita mau di siplin kita bisa untuk mendapatkan profit yang konsisten juga

very bad - weekend

Minggu ini emang cukup susah , hanya bisa capai 50% dalam waktu 3 hari.....semoga minggu depan akan lebih baik.

G20 Leaders at economic summit eye detection plan

WASHINGTON – World leaders at an emergency economic summit are moving to sharpen detection of risky investing and regulatory weak spots, hoping to avoid future financial meltdowns like the one now threatening the global economy.

In the largest gathering of its kind here in nearly a decade, President George W. Bush and some two dozen foreign leaders were to meet Saturday behind closed doors as they prepared to adopt an action plan for more openness in financial markets and an early warning system for problems like the speculation frenzy that fed the U.S. housing bubble.

"The stakes are indeed high," Bush said Friday. "Billions of hardworking people are counting on us to strengthen the financial system for the long term."

Behind the urgent rhetoric, the steps taking shape were modest.

The action plan would include measures aimed at making the global financial system more accountable to investors and more transparent to regulators, diplomatic officials said.

It also would improve international monitoring of markets and bolster rules governing how companies value their assets, a current weakness seen as partly responsible for the financial crisis at hand. The officials spoke on condition of anonymity because leaders had yet to agree on their final communique.

While the emerging plan would boost oversight of fragile financial markets, it fell short of the sweeping set of tough new regulations some Europeans want.

The summit, meant to be the first in a series, has a two-pronged agenda: reviving the ailing global economy, which has pushed up unemployment and shrunk people's savings, and exploring options for overhauling the global financial system to prevent similar financial crises in the future.

A follow-up summit is envisioned for the spring, after Barack Obama becomes president.

A new "college of supervisors," made up of financial regulators from many nations, was among the ideas likely to be included in the leaders' final communique issued expected at the summit's conclusion late Saturday.

Heads of major industrialized powers, including Britain, Germany, France and Japan, are attending the summit as are developing countries such as China, India and Brazil.

As leaders descended on Washington Friday, Bush warned for a second day of the dangers — in his view — of too much government intervention. Strict new regulation of financial firms or products, such as some European leaders have advocated, would crush the global economy instead of protect it, he said.

While striking a similar note of caution, British Prime Minister Gordon Brown also underscored the need for leaders to forge agreements to safeguard against future problems. "Instead of just muddling through dealing with the crisis, we have to show how we are making the adjustments in the proper way to this global age," Brown said.

Brown has been among the leaders pushing for a global coordination of country-by-country stimulus spending packages to combat the economic hard times that are straining millions of families and businesses.

The Bush administration, however, has been cool to the idea of another stimulus package and opposes a bailout of the teetering U.S. auto industry. Democrats are pushing for aid to Detroit automakers amid reports that the largest of them, General Motors Corp., could be forced into bankruptcy by the end of next month.

Critics blame lax oversight and failures by U.S. and other regulators to detect problems as prime reasons for the financial crisis.

The crisis, which erupted in the United States around August of last year as mortgage investments soured with the housing market's collapse, quickly spread to other countries. Banks and other financial companies suffered huge losses and foreclosures skyrocketed. Troubles then snowballed to other areas, crimping auto and student loans and locking up lending for many consumers and businesses worldwide. The root causes of the crisis also was being discussed by the leaders.

Although Obama is staying away from this summit, he has designated high-level representatives — former Secretary of State Madeleine Albright and former Republican Rep. Jim Leach of Iowa — to meet with leaders on the sidelines.

Mexican President Felipe Calderon met Albright and Leach, and stressed that a return to protectionism would only complicate economic recovery efforts, according to the Mexican leader's office. Albright and Leach also saw the leaders of Argentina and South Korea on Friday and had talks scheduled with lower-level representatives from other nations Saturday.

Europeans had hoped the summit would produce stronger measures to close loopholes that allow some financial institutions to evade regulation. They also called for government supervision for all major financial players, including credit ratings agencies or funds carrying high amounts of debt.

Resesi hantui pertemuan G20

Angka resmi yang akan dikeluarkan Uni Eropa diperkirakan akan menunjukkan fakta bahwa wilayah Eropa telah memasuki resesi.

Para pengamat memperkirakan perekonomian wilayah yang berisi 15 negara anggota Uni Eropa akan menurun dalam kuartal ketiga tahun ini, mengikuti penurunan 0,2 persen kuartal sebelumnya.

Hari Kamis kemarin pemerintah Jerman memperlihatkan data yang membenarkan negara mereka telah memasuki resesi.

Sementara Prancis masih mengalami pertumbuhan perekonomian walau dengan sangat tipis, 0,1 persen.

Namun demikian perekonomian Prancis mengalami penurunan 0'3 persen di kuartal kedua tahun ini.

Eropa yang suram

Italia sementara itu sudah menyusul Jerman. Perekonomian negara itu terus menyusut. Dikuartal kedua penyusutan terjadi lebih besar dari perkiraan, 0,5 persen menyusul penyusutan 0,4 persen tiga periode tiga bulan sebelumnya.

Di Spanyol penyusutan ekonomi terjadi untuk pertama kalinya sejak tahun 1993.

Selama tiga bulan menjelang September, perekonomian terbesar ketiga di wilayah Eropa itu menurun 0,2 persen.

Pengamat mengatakan resesi di Spanyol sekarang tidak terhindarkan, didorong oleh hancurnya pasar properti di negeri itu.

Wartawan BBC Ben Shore mengatakan perkembangan ini membuat masa depan 320 juta tenaga kerja di Eropa menjadi suram.

Namun apa yang terjadi di Eropa ini akan mendorong para pemimpin negara-negara maju anggota G20 dan negara berkembang yang akan bertemu akhir pekan ini di Washington untuk lebih memusatkan perhatian mereka.

Pertemuan puncak ekonomi

Kelompok yang merupakan perwakilan dari 85 persen perekonomian dunia serta dua pertiga penduduk dunia, berkumpul untuk membicarakan cara mengatasi krisis keuangan dan melakukan reformasi perekonomian untuk mengurangi kemungkinan krisis.

Menjelang pertemuan, PM Inggris Gordon Brown, menyerukan pemotongan pajak di seluruh dunia dan meningkatkan pembelanjaan untuk mencegah resesi global.

''Kita perlu menyepakati pentingnya koordinasi kebijakan keuangan dan fiskal,'' kata Brown.

''Sangat diperlukan kesegeraan. Dengan bertindak sekarang, kita bisa mendorong pertumbuhan ekonomi. kalau kita tidak melakukan apapun, ongkosnya terlalu mahal.''

Presiden Bush sementara itu menekankan bahwa krisis keuangan kali ini bukanlah disebabkan oleh kegagalan pasar bebas dalam sistem kapitalismne.

Berbicara di New York ia mengatakan cara terbaik untuk menjaga pertumbuhan ekonomi adalah bukan membuat sistem baru tetapi memperbaikinya.

''Jawabannya..... kita harus mencari jalan keluar dari persoalan yang kita hadapi, melakukan reformasi, dan bergerak maju dengan prinsip pasar bebas yang telah memberi kemakmuran dan harapan bagi semua orang di seluruh dunia,'' katanya.

Pengritik Bush mengatakan ucapan itu tak akan mampu meyakinkan mereka yang melihat kejatuhan perekonomian Amerika sebagai akibat dari kebijakan perekonomiannya.

Data terbaru menunjukkan tunjangan pengangguran Amerika menyentuh yang tertinggi selama 25 tahun terakhir diangka 3,9 juta.

Stocks stage huge rebound; Dow jumps 553 points

Thursday November 13, 6:25 pm ET
By Madlen Read and Joe Bel Bruno, AP Business Writer

Wall Street rebounds from selloff, sending major indexes up over 6 pct ahead of G-20 meeting NEW YORK (AP) -- Investors did an abrupt turnaround on Wall Street Thursday, muscling the Dow Jones industrial average up more than 550 points after driving it down near its lows for the year on a stream of negative economic and corporate news.

After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about a prolonged economic downturn, appeared convinced the market had priced in enough bad news. So when the Standard & Poor's 500 index -- the indicator most watched by traders -- managed to recover from multiyear trading lows, buyers swarmed back in.

It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher -- and you don't want to be the last one on the boat."

The market was following in dramatic fashion its pattern of huge price reversals, one that was set early in the now 15-month-old credit crisis and that has become almost the norm on Wall Street.

Some analysts said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system. The G-20 includes the U.S., Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

There was "some anticipation that we'll hear some good news from that meeting," said Jack A. Ablin, chief investment officer at Harris Private Bank. Thursday's rally was "part hopeful, part technical. But certainly welcome."

As stocks rallied, so did oil prices, sending shares of energy companies higher. The biggest gainer among the 30 Dow companies was Chevron Corp., which rose $8.43, or 12.5 percent, to $75.71. Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain Thursday.

The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange, after falling to the lowest levels since January 2007. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.

Stocks sold off early after the Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks. There was also more evidence of a severe pullback in consumer spending -- a worsening trend that had pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast.

But then the S&P lifted above its Oct. 10 trading lows, and a Treasury auction of 30-year bonds got lower than average but still decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co. The auction results alleviated some fears about the government having a hard time financing its costly bailout.

Many analysts had predicted the stock market would retest the multiyear lows it reached last month. They also still forecast volatility for some time to come, as Wall Street tries to rebuild from October's devastating losses and gauge the severity of the economy's downturn. During past recoveries from bear markets, a great deal of turbulence in the market became commonplace -- so it's possible that Thursday's gains will get erased if more gloomy reports pour in.

But Hogan called the market's resiliency a "great sign."

The Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.

The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.

The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 -- well below its previous intraday low of 839.80 set Oct. 10.

The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.

The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.

The stock market gained back $700 billion Thursday, after losing about $1 trillion during the first three days of the week, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. At its lowest trading level Thursday, the market value of the Wilshire index fell below $10 trillion for the first time since April 2003.

Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume came to 7.67 billion shares, up from 5.67 billion shares Wednesday.

Government bond prices fell as investors fled back into stocks. The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.85 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.

Wal-Mart shares rebounded $2.31, or 4.4 percent, to $54.93. The discount retailer's shares had traded lower in earlier trading after it cut its profit outlook because of the flagging global economy and renewed strength of the dollar. Wal-Mart is the only company among the Dow industrials that is up for the year.

Intel also slashed its outlook, initially driving down shares on concerns that consumers are shying away from big purchases like computers. But its shares recovered to trade up 91 cents, or 6.7 percent, at $14.43.

General Motors shares, however, remained weak as the nation's automakers wait for President-elect Obama to push Congress to approve a bailout of the struggling industry. There are also reports that Obama will move to appoint a czar or board to oversee the companies. GM dropped 13 cents, or 4.2 percent, to $2.95. Ford shares rose 6 cents, or 3.3 percent, to $1.90.

The dollar was mixed against other major currencies. Gold prices rose.

Overseas, Japan's Nikkei closed down 5.25 percent and Hong Kong Hang Seng fell 5.15 percent. In European trading, Britain's FTSE 100 was down 0.31 percent, Germany's DAX rose 0.62 percent, and France's CAC-40 added 1.10 percent.

Soros, Falcone Defend Hedge Funds at House Hearing

By Katherine Burton and Lorraine Woellert

Nov. 13 (Bloomberg) -- George Soros and Philip Falcone, in a rare appearance by hedge-fund managers before Congress, defended their industry's practices and profits while splitting over whether more government regulation is needed.

``This is not a case where management takes huge bonuses or stock options while the company is failing,'' Falcone, senior managing director of New York-based Harbinger Capital Partners, said in written testimony to the House Committee on Oversight and Government Reform.

Falcone urged Congress to oversee the industry and require more disclosure of investments, while Soros, founder of Soros Fund Management LLC in New York, cautioned Congress against ``ill-considered'' regulations because the managers are reeling from market losses and client defections.

Soros, Falcone, Paulson & Co.'s John Paulson, James Simons of Renaissance Technologies LLC and Kenneth Griffin of Citadel Investment Group LLC, who are among the world's richest hedge- fund managers, were called to testify today as part of a congressional investigation into the credit crunch that has slowed the global economy.

Committee Chairman Henry Waxman began questioning the men today about their bets against subprime mortgages and whether their industry is a risk to the financial system. Waxman's hearing is one of many Democrats are convening to explore the causes of the global financial crisis. They are examining issues such as regulation, disclosure and compensation.

`Unimaginable Success'

Hedge-fund managers have had ``unimaginable success'' and, while being ``virtually unregulated,'' many enjoy special tax breaks, Waxman said. Today's witnesses, he said, earned on average more than $1 billion last year, profits they were able in many cases to treat as capital gains rather than as ordinary income, which is taxed at a higher rate.

``That means at least some portions of their earnings could be taxed at rates as low as 15 percent,'' Waxman said. ``That's a lower tax rate than many school teachers, firefighters, or plumbers pay.''

Waxman and Representative Thomas Davis of Virginia, the panel's top Republican, suggested the need for more oversight of the industry.

``Greater standardization, registration, disclosure and some regulatory limitations could help the industry mature and survive,'' Davis said.

Main Street Impact

He said there are as many as 8,000 funds managing as much as $1.5 trillion and could account for up to 30 percent of trading volume in U.S. stocks.

``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' promises of steady, above-market returns. That means public employees and middle-income senior citizens, not just Tom Wolfe's Masters of the Universe, lose money when hedge funds decline or collapse.''

Falcone said he supported more public disclosure and transparency. Investors ``have a right to know what assets companies have an interest in -- whether on or off their balance sheets -- and what those assets are really worth,'' he said.

Soros, in written testimony, warned the committee against ``going overboard with regulation.''

``Excessive deregulation has inflicted enormous losses on the general public and there is a real danger that the pendulum will swing too far the other way,'' especially while the sector is in decline, Soros said.

``The bubble has now burst and hedge funds will be decimated. I would guess that the amount of money they manage will shrink by between 50 and 75 percent. It would be a grave mistake to add to the forced liquidation currently dislocating markets by ill-considered or punitive regulations,'' Soros said.

Earning Salaries

In their written statements delivered to the committee, the hedge-fund managers also defended their multimillion-dollar salaries, saying they earned money only when their investors did.

``In our business, one of the most fundamental principles is alignment of our interests with those of our clients,'' Paulson said. His fund shares profits with its investors, taking 20 percent. ``All of our funds have a 'high-water mark', which means that if we lose money for our investors, we have to earn it back before we share in future profits.''

Waxman, who last month grilled Richard Fuld, chief executive officer of Lehman Brothers Holdings Inc., about the bank's demise, doesn't have jurisdiction over securities- industry legislation. Even so, his interest suggests the $1.7 trillion industry faces increased scrutiny and regulation next year after President-elect Barack Obama takes office.

Regulator Actions

``In an attempt to respond to public outcry and political demand, the industry expects lawmakers to implement new rules that will limit leverage, restrict the ability to short securities and increase taxes on the wealthy,'' said Ron Geffner, a lawyer at New York-based Sadis & Goldberg LLP, which represents hedge funds.

Regulators have already taken some steps. In September, the U.S. Securities and Exchange Commission temporarily banned the short sale of some stocks. The agency now requires funds to disclose the shares they are wagering will tumble, though those reports won't be made public. In a short sale, a trader borrows shares and then sells them immediately in the hopes they can be bought back later at a cheaper price.

The witnesses, all longtime fund managers, earned more than $1 billion last year according to a list compiled by Institutional Investor's Alpha Magazine.

Waxman asked the managers to provide documents, including e-mails, that discussed the likelihood that their own, or other, hedge funds would collapse and the risk to the financial system if they did.

Borrowing

He also asked for their levels of borrowing and their investments in mortgage-backed securities, collateralized debt obligations and credit-default swaps going back to the beginning of 2005. Some managers used these securities to wager on subprime mortgages and on the credit-worthiness of investment banks.

Soros, 78, is the chairman of $19 billion Soros Fund Management. He has called credit-default swaps the next crisis area because the market is unregulated, and he has recommended the creation of an exchange where these contracts could be traded.

Paulson, 52, runs a New York-based fund that manages about $36 billion. His Credit Opportunities Fund soared almost sixfold in 2007, primarily on wagers that subprime mortgages would tumble. Paulson's Advantage Plus fund has climbed 29 percent this year through October while many managers are enduring the worst year of their careers.

Griffin Struggles

Hedge funds lost an average of 15.5 percent this year through Oct. 31, according to data compiled by Chicago-based Hedge Fund Research Inc.

Falcone, 46, also profited from a drop in subprime mortgages last year, when his fund, now about $20 billion, doubled. This year the fund was up 42 percent at the end of June and has since tumbled to a loss of about 13 percent.

Simons, 70, runs his $29 billion fund out of East Setauket, New York. The former academic makes money by using computer models to trade. His Medallion Fund, made up of his own money and that of his employees, is up more than 50 percent this year.

Griffin, 40, runs the $16 billion Citadel Investment Group LLC in Chicago, and has faced the toughest year out of the five billionaire managers. His funds dropped 38 percent this year through Nov. 4.

German Economy Enters Worst Recession in 12 Years

Nov. 13 (Bloomberg) -- The German economy, Europe's largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years.

Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters -- the technical definition of a recession -- in 1996.

German companies are scaling back production as slower global growth erodes export demand. Siemens AG, Europe's largest engineering company, reported a profit decline today and plans to cut 16,750 jobs by 2010. Germany's benchmark DAX Index has tumbled more than 40 percent this year, business confidence fell to a five-year low last month and manufacturing orders plunged in September.

``The German recession has begun in earnest and it's very serious,'' said Holger Schmieding, chief European economist at Bank of America Corp. in London. ``It raises the risk of a German contraction of more than 1 percent next year and we will have to revise down our forecast for the euro area as well.''

Eurostat, the European Union's statistics arm, will publish third-quarter growth data for the euro region tomorrow.

Exports Hurt

The euro dropped more than a cent to $1.2388 after the German report. European notes rose, pushing the yield on the two-year security down 5 basis points to 2.22 percent, the lowest level in three years.

In the year, the economy grew 0.8 percent when adjusted for the number of working days, the statistics office said. The third- quarter slowdown was led by trade as exports weakened and imports rose. Consumer and government spending improved ``slightly.''

The Organization for Economic Cooperation and Development today joined the International Monetary Fund in predicting advanced economies including the U.S. and euro area will contract simultaneously next year for the first time since World War II.

Federal Reserve Chairman Ben S. Bernanke, Bank of England Governor Mervyn King and European Central Bank President Jean- Claude Trichet have all signaled they're ready to cut interest rates further to stem the deepening economic slump.

The European Commission said on Nov. 3 that the 15-nation euro region is probably already in a recession. Just over 40 percent of German exports go to other euro-area nations.

`Shock Waves'

Households may spend less and save more as companies retrench. Continental AG, which makes auto parts, plans to jettison 5,000 temporary workers and extend holiday production breaks. General Motors Corp.'s Adam Opel brand closed plants in Eisenach and Bochum for three and two weeks respectively to reduce production, forcing workers to take a vacation.

``The shock waves pushed out by the financial crisis have hit Germany full on, if later'' than other countries, the government's five independent economic advisers said yesterday. They called on Chancellor Angela Merkel to expand a 50 billion-euro ($63 billion) fiscal stimulus package to help revive growth.

Siemens Chief Executive Officer Peter Loescher today said next year's profit goals have become ``more ambitious'' after the company reported a bigger decline in fourth-quarter earnings than analysts had expected.

Deutsche Lufthansa AG, Europe's second-biggest airline, said it filled fewer seats on its aircraft last month as the cooling economy deterred business and leisure travel.

`Final Push'

Ralph Solveen, an economist at Commerzbank AG in Frankfurt, expects a ``marginal'' recovery in the second half of next year.

``The German economy would have cooled regardless of the financial crisis, which just gave it the final push into recession,'' he said. ``The factors that slowed German growth earlier this year such as high inflation, a strong euro and tight monetary policy are all disappearing, which should feed through to the economy next year.''

The statistics office revised first-quarter growth to 1.4 percent from 1.3 percent and raised its second-quarter estimate from a 0.5 percent decline. It will publish a detailed breakdown for the third quarter on Nov. 25.

The turmoil that began with the U.S. housing slump drove Lehman Brothers Holdings Inc. into bankruptcy in September and caused the biggest global stock sell-off in 70 years. The world's largest financial companies have posted almost $1 trillion in writedowns since the start of last year, when the collapse of the U.S. subprime mortgage market triggered a credit shortage.

ECB Rates

With growth slowing around the world, oil prices have collapsed to $56 a barrel yesterday from a peak of $147 in July, easing inflation pressure and giving central banks from Washington to Beijing room to slash interest rates. The euro has dropped 20 percent against the dollar in the past four months.

Investors expect the European Central Bank to lower its benchmark rate by at least half a percentage point at its next meeting on Dec. 4, Eonia forward contracts show. That would be the sharpest rate reduction in the bank's 10-year history after its two half-point cuts in the past month to 3.25 percent.

Germany still faces ``a long, drawn-out recession,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt, who forecasts the economy will shrink 1.5 percent next year. ``Unfortunately, we don't see any respite any time soon. Where should the growth come from?''

Wal-Mart's 3Q profit rises 10 percent

Thursday November 13, 7:19 am ET

Wal-Mart's 3Q profit increases 10 percent as low prices attract shoppers in weak economy NEW YORK (AP) -- Wal-Mart Stores Inc. reported a 10 percent increase in third-quarter profit as the world's largest retailer's renewed focus on low prices is attracting financially squeezed shoppers around the world.

The company, however, trimmed its profit outlook amid a weak economy and unfavorable exchange rates.

The Bentonville, Ark.-based retailer said Thursday that profits rose to $3.14 billion, or 80 cents per share, in the quarter ended Oct. 31. That compares with $2.86 billion, or 70 cents per share, a year earlier.

Earnings from continuing operations were 77 cents per share.

Analysts surveyed by Thomson Reuters expected 76 cents per share.

Net sales for the third quarter were $97.6 billion, up 7.5 percent from $90.8 billion in the year-ago period.

"At a time when our customer is feeling the pressure of a tough economy, Wal-Mart's price leadership is more important than ever," said Lee Scott, Wal-Mart's president and chief executive officer, in a statement.

He noted that the company's international division remains the company's fastest-growing division.

In the quarter, Wal-Mart's U.S. division posted a 7.3 percent increase in sales, while its international business saw business soar 10.6 percent. It's Sam's Club division posted a more modest 1.7 percent sales gain.

But Wal-Mart Stores trimmed its profit outlook amid a weak economy and unfavorable exchange rates.

It also offered a modest projection for same-store sales for the fourth quarter, predicting sales at stores opened at least a year will be up anywhere from 1 to 3 percent. In the third quarter, Wal-Mart's same-store sales rose 3 percent. Same-store sales are considered a key indicator of a retailer's health.

The retailer now expects earnings per share from continuing operations for the full year ending Jan. 31 to be within a range of $3.42 to $3.46. In August, the retailer had said it expected $3.43 to $3.50 per share for the year. Analysts surveyed by Thomson Reuters expected $3.49 per share.

For the fourth quarter, the company estimates earnings per share from continuing operations will be between $1.03 and $1.07 per share. Analysts expect $1.11 per share.

"The rapid changes in currrency exchange rates during the last few weeks are projected to negatively affect this year's fourth-quarter results by approximately six cents per share," said Tom Schoewe, executive vice president and chief financial officer of Wal-Mart Stores, in a statement. "In U.S. dollar terms, strong operating performance in international may be overshadowed by these currency fluctuations."

Europe stocks down on signs of global slump

Wednesday November 12, 6:29 am ET
By Carlo Piovano, AP Business Writer

European stock markets decline fragile as signs of global economic slump mount LONDON (AP) -- European stocks were mostly lower Wednesday, with investors still hurting from Tuesday's heavy losses, and as earnings reports and economic data showed the global gloom is thickening.

Britain's benchmark FTSE 100 was 0.2 percent lower at 4238.34 points, while Germany's DAX was down 0.1 percent at 4755.42. In France, the CAC 40 was flat at 3338.73.

Although the indexes were higher on the open, they soon fell back into the red, looking for direction after sharp losses Tuesday, when the FTSE 100 closed 3.6 percent lower and the DAX a massive 5.3 percent lower.

"Whilst perhaps not in the 'crisis' situation of a few weeks ago, nervousness continues to undermine risk appetite," said Stuart Bennett, a senior foreign exchange strategist at Calyon in London.

Stocks also fell in Asia, where Japan's benchmark closed down 1.3 percent at 8695.51 and Hong Kong's Hang Seng closed 0.7 percent lower at 13,939.09.

Investors remain wary of stocks as the financial crisis takes its toll on the wider economy. This was clear from both economic data as well as earnings reports.

In Britain, unemployment shot higher, with the number of individuals claiming jobless benefits rising 36,500 in October alone to reaching almost 1 million. The euro zone's industrial production fell 1.6 percent on the month in September, with weakness across all sectors and countries.

In Germany, the government's independent panel of economic advisers Wednesday forecast Europe's largest economy will slow to a standstill next year.

Earnings reports were not much better, with Unicredit SpA -- Italy's largest bank -- reporting net profit dropped 54 percent in the third quarter due to write-downs on financial assets.

In Russia, the currency and stock markets continued to drop plummet after the central bank said it would back off defending the ruble and hiked interest rates by a full percentage point. This caused the ruble-denominated MICEX, where most of Russia's trading takes place, to lose 12.6 percent on Tuesday, prompting regulators to shut the exchange down until Thursday.

The other index, the RTS, lost 10.7 Tuesday and was down 6 percent in morning trade Wednesday.

News overnight in the U.S. also failed to provide much reason to buy stocks.

Starbucks Corp. reported lower sales across the coffee chain, homebuilder Toll Brothers Inc. posted a sharp drop in revenue and said it was to difficult to forecast next year's results. Aluminum producer Alcoa Inc. announced production cuts due to lower prices.

On Tuesday in New York, the Dow Jones industrial average shed 176.58, or 2 percent, to 8,693.96 after falling by more than 300. Tuesday's close was the Dow's lowest since its 5 1/2-year closing low on Oct. 27 of 8,175.77.

Corporate Asia only added to the gloom as leading Japanese energy explorer Inpex cut its forecasts amid slumping oil prices and a stronger yen. There were also signs that Chinese shoppers were holding back after figures showed a softening in the country's retail sales in October compared with a year earlier.

There was also caution ahead of this weekend's summit of leaders from 20 major economies in Washington, where they will discuss how to tackle the global financial crisis.

"People are wondering if their expectations for the G20 are met or exceeded," said Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities in Tokyo. "But there is so much uncertainty at this point."

Bucking the regional decline in Asia, the benchmark Shanghai Composite Index added 0.8 percent to 1,859.11 as the country's $586 billion stimulus plan continued to lift sentiment.

In Japan, a grim outlook for the U.S. economy continued to drag on exporters such as automakers and consumer electronics firms. Nissan Motor Co. fell 5 percent, and Canon Inc. was off 3.5 percent.

A drop in commodities and crude oil prices added to anxieties about slowing global growth. Oil prices were hovering near 20-month lows, with light, sweet crude for December delivery down $1.13 to $58.24 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

In currencies, the dollar fell slightly to 97.24 yen from 97.85 yen in earlier European trading. The euro stood at $1.2529, down from $1.2630.

Europe markets follow Asia down on economic fears

Tuesday November 11, 6:09 am ET
By Pan Pylas, AP Business Writer

Europe's markets follow Asia down on economic fears stoked by worrying US corporate news LONDON (AP) -- Europe's stock markets opened lower Tuesday following losses in Asia amid mounting concerns about the world economy following downbeat corporate news in the U.S.

The FTSE 100 index of leading British shares was down 70.43 points, or 1.6 percent, at 4,333.49, while Germany's DAX was 101.08 points, or 2.0 percent, lower at 4,924,45. France's CAC-40 index was 67.87 points, or 1.9 percent, lower at 3,437.88.

Earlier, Tokyo's Nikkei 225 index dropped 272.13 points, or 3 percent, to 8,809.30, while the Hang Seng benchmark in Hong Kong lost 703.73 points, or 4.8 percent, to 14,040.90.

"The overall market remains strongly focused on the continuing flow of bad news coming from the U.S. economy in particular," said Sebastien Barbe, an analyst at Calyon.

Analysts blamed the latest bout of selling on fears that the economic recession in the U.S. will be deeper than anticipated and could lead to some high-profile casualties. Electronics retailer Circuit City Stores Inc. was the latest company in the U.S. to report mounting difficulties as it filed for bankruptcy protection.

Investors are also speculating about the fate of automakers General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with lawmakers last week in hopes of securing financial help. Shares of GM, which announced a $2.5 billion third-quarter loss on Friday and warned that it could run out of cash next year, plunged 23 percent overnight to levels not seen since shortly after World War II.

"Worrying corporate news from the U.S. plus suggestions that the recession will be longer and deeper than previously thought are adding to the downside," said Matt Buckland, a dealer at CMC Markets.

Those fears are weighing on Wall Street too, where the Dow Jones index closed Monday down

73.27, or 0.8 percent, at 8,870.54, after rising by 215 points in early trading.

A further sell-off is anticipated at the opening bell as Dow futures were down 59 points, or 0.7 percent, at 8,828. Trading in the U.S. though is expected to be modest as the bond market is on holiday for Veterans' Day.

Worries about the global economy are taking their toll on oil prices and energy stocks too. By early morning London time, the cost of a barrel of oil was down $1.60 cents at $60.81, fueling further selling pressure of heavyweights BP PLC and Royal Dutch Shell, both down nearly 3 percent.

In Europe, financial stocks were doing particularly badly with Swiss bank UBS AG down 6 percent and Deutsche Bank 4 percent lower, and Allianz nearly 6 percent down.

Elsewhere in Asia, China's Shanghai Composite index fell 1.7 percent to 1,843.61 while Australia's index tumbled 3.6 percent and India's Sensex fell 5 percent. Markets in Singapore, Taiwan and South Korea were also hit with heavy selling.

The losses in Asia are in stark contrast to Monday when trading was rejuvenated by China's 4 trillion yuan ($586 billion) stimulus package. Other countries, including the U.S. and Britain, are expected to unveil fiscal packages soon.

In a speech Monday night, British Prime Minister Gordon Brown called for "better co-odination of fiscal and monetary policy".

Howard Wheeldon, senior strategist at BGC Partners in London, said markets should be ready for this weekend's meeting of the G-20 group of leading industrial and developing countries to agree tentatively to "fiscal expansion amongst the participant countries, more joint action, plans from each to boost domestic consumption and commitments to ensure protectionist barriers are not put up, more plans to foster life into the moribund WTO (World Trade Organization) trade talks."

The dollar weakened 0.2 percent to 97.82 yen, while the euro was 0.2 percent higher at $1.2774.

AP Business Writers Jeremiah Marquez in Hong Kong, Joe McDonald in Beijing and Elaine Kurtenbach in Shanghai contributed to this report.

Wall Street falls, unable to shake economic woes

Monday November 10, 6:14 pm ET
By Madlen Read, AP Business Writer

Stocks turn lower as concerns about US economy dampen enthusiasm over China stimulus plan NEW YORK (AP) -- Wall Street caved in to its economic anxieties and closed lower Monday, giving up an early rally over a stimulus package in China and refocusing on the acute pullback in spending that is pummeling U.S. companies.

Stocks got only a short-lived boost from China's $586 billion plan to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts. The package could benefit multinational companies with business in China such as General Electric Co. and Caterpillar Inc.

But Wall Street's optimism quickly waned, as it has tended to do since the mid-September downfall of Lehman Brothers Holdings Inc. and government takeover of the troubled insurance giant American International Group. Market participants realized that while China's stimulus is a positive sign that governments around the world are working to fix the global economy, the stimulus itself will likely have only a limited effect in the United States.

There was little news Monday to placate investors concerned about the health of corporate America. AIG got more money from the U.S. government, but the nation's struggling automakers have yet to hear whether they, too, will get federal aid. And electronics retailer Circuit City Stores Inc. filed for bankruptcy protection.

With few signs of recovery in the economy, investors aren't confident enough to make big bets on stocks, although they look cheap; the major indexes are down about 40 percent from their October 2007 peaks.

"They'd like to be optimistic, but individual investors are still very worried," said Hugh Johnson, chief investment officer of Johnson Illington Advisors. Uncertainty about the economic outlook is "likely to hold any recovery somewhat in check. We're arguably undervalued, so we can work our way higher. But it's not going to be with a lot of gusto."

Still, while trading was uneven, it was also fairly orderly, especially in the last hour, the time when Wall Street has seen some of its most intense volatility. And it was just the sixth session in eight weeks that the Dow Jones industrials did not close with a triple-digit move.

The Dow fell 73.27, or 0.82 percent, to 8,870.54, after rising by 215 points in early trading and tumbling by as many as 183.

Broader indexes also ended lower. The Standard & Poor's 500 index fell 11.78, or 1.27 percent, to 919.21, and the Nasdaq composite index fell 30.66, or 1.86 percent, to 1,616.74.

The U.S. government said it would invest $40 billion into AIG, which also reported a nearly $25 billion third-quarter loss Monday. AIG, which got its first bailout in September, has so far received a total of $150 billion in government aid. The government's investment Monday helped the insurer's stock rise 26 cents, or 12 percent, to $2.37, but raised worries that problems in the financial sector might be worse than anticipated. Most bank shares fell.

On Friday, the major indexes rallied, but ended about 4 percent lower on the week after large mid-week losses.

"The fact is, we haven't been holding rallies very well," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group. He said investors appeared be cashing out the gains made Friday ahead of what's expected to be a dismal retail sales report this week, and the bond market's Veterans Day holiday Tuesday.

Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said "we're in that bottoming process," but that trading is apt to be volatile at least until Nov. 15 -- the last day that hedge funds and mutual funds can get calls for redemptions for 2008. Redemptions are when investors ask for their money back.

With stocks trading erratically, investors moved to the relative safety of government bonds.

The Treasury auctioned three-year Treasury notes for the first time since May 2007, and the auction saw strong buying. Meanwhile, the three-month Treasury bill's yield fell to 0.22 percent from 0.28 percent late Friday, and the yield on the benchmark 10-year Treasury note fell to 3.76 percent from 3.79 percent late Friday.

Lower yields indicate stronger demand.

Investors are also watching for developments with General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with congressional leaders last week in hopes of securing financial help.

GM -- one of the 30 companies that make up the Dow -- fell $1, or 23 percent, to $3.36. Ford shed 9 cents, or 4.5 percent, to $1.93.

Democratic leaders in Congress on Saturday asked the Bush administration to provide more aid to the struggling auto industry, which is losing money and shedding jobs as sales have dropped to their lowest level in a quarter century. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout program to include car companies.

On Monday, Circuit City filed for bankruptcy protection about a week after it said it would close 20 percent of its stores. The electronics retailer, based in Richmond, Va., has been struggling as nervous consumers spend less and credit has become tighter. Shares sank 15 cents, or 60 percent, to 10 cents.

In other corporate news, Tribune Co., the owner of the Los Angeles Times and Chicago Tribune, said it swung to a third-quarter loss of $121.6 million due to falling newspaper advertising sales.

Citigroup Inc. is in talks to acquire a regional bank to boost the bank's presence in areas it already operates, including the Northeast, California and Texas, according to a report in The Wall Street Journal. The report did not name a potential target. Citigroup shares fell 61 cents, or 5.2 percent, to $11.21.

The Russell 2000 index of smaller companies fell 12.69, or 2.51 percent, to 493.10.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 4.45 billion shares, down from 4.80 billion shares late Friday.

A barrel of light sweet crude rose $1.37 to settle at $62.41 on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices rose.

Overseas, Japan's Nikkei stock average closed up 5.81 percent, and Hong Kong's Hang Seng index added 3.52 percent. In Europe, the Britain's FTSE 100 rose 0.89 percent, Germany's DAX added 1.76 percent, and France's CAC-40 rose 1.06 percent.

Democrats want Bush to help ailing automakers

Sunday November 9, 3:50 am ET
By Deb Riechmann, Associated Press Writer

Reid, Pelosi ask Treasury to provide temporary help to automakers facing economic struggles

WASHINGTON (AP) -- Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."

There was no immediate comment from the Bush administration about the request to broaden the $700 billion financial industry bailout so automakers could get a share.

Automakers already want an additional $50 billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month.

Top executives of General Motors, Ford, Chrysler LLC and the president of the United Auto Workers met with congressional leaders Thursday to discuss the loans. The money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

"We left the meetings convinced that our nation's automobile industry -- the heart of our manufacturing sector -- and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.

Automakers want the new loans included in an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month. If Congress approved more loans, it would come with strings attached. Potential protections include limits on executive compensation, awarding the government preferred stock in the companies and a suspension of dividend payments to investors.

GM, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate. GM's chairman and chief executive, Rick Wagoner, said the company will take every action possible to avoid bankruptcy. GM has planned more job cuts, including another 5,500 salaried and factory workers, but company officials warn that those measures alone would not be enough and that federal aid was essential.

Ford, which recently announced it would slash more than 2,000 white collar jobs, also has seen a rapid decline in its cash supply. But it is in better shape because the company borrowed billions of dollars in 2007 by mortgaging its factories. The company said it had enough cash to make it through 2009.

"We must safeguard the interests of American taxpayers, protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy," the Democratic leaders in Congress wrote.

President-elect Obama said Friday his transition team would explore policy options to help the auto industry. Obama's economic transition team includes two allies of the U.S. auto industry -- Michigan Gov. Jennifer Granholm and former Rep. David Bonior, D-Mich.