Berkshire Hathaway suffered through the company’s worst year on record during 2008, Warren Buffett says. In his widely read letter to shareholders, the billionaire investor sees the U.S. economy in a “shambles” through 2009 but forecasts better days are ahead for the country.
WASHINGTON (MarketWatch) — Heavy rains with the prospect for snow are snarling travel across the Southeast. Thunderstorms and hail were in Saturday’s weather forecast for the region, and a fast-moving storm could result in snowfall overnight as far south as parts of Alabama, Georgia and the Carolinas, forecasters said. In Atlanta, Delta Air Lines said it would fly fewer flights through Hartsfield-Jackson through Sunday to ensure that delays are held to a minimum, and passengers booked to travel through the airport hub on Delta, Northwest or Delta Connection through Monday can make a one-time change to their schedules without a fee if the tickets are changed by March 9. The storm is expected to regroup and move up the Atlantic coast and intensify late Sunday into Monday, with the potential for heavy snow and gusty winds for the mid-Atlantic states stretching up into New England.
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There’s the $8,000 federal tax credit for first-time home buyers. And now California has upped the ante, offering a tax credit worth up to $10,000 to any home buyer, first time or not, of any income level, who buys a home between March 1, 2009 and March 1, 2010.
CHICAGO (MarketWatch) — American International Group Inc. will report fourth-quarter results on Monday, when some observers expect to hear news that the U.S. government will announce an aid package to save the giant insurer from failure. The government, which acquired an 80% stake in AIG in exchange for an $85 billion loan, could swap that stake for even larger interests in three entities that would be split off from the company, according to a story that ran in The Financial Times this week. AIG’s stock closed at 42 cents on Friday.
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WASHINGTON (MarketWatch) — Embattled U.K. prime minister Gordon Brown will address Congress this week as part of a visit to Washington to meet with President Barack Obama. Discussions are likely to center on how next to proceed in dealing with the global economic crisis, according to media reports in London and Washington. Brown, whose Labour Party has been trailing badly in opinion polls to the U.K.’s Conservative Party, will arrive late Monday and meet with Obama on Tuesday morning, ahead of a Wednesday adress to a joint session of Congress.
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WASHINGTON (MarketWatch) — HSBC Holdings reportedly is putting the final touches on what would be a major share issue by the banking giant. A Reuters report citing sources said the size of the offering would be 12 billion pounds ($18 billion). The issue, aimed at beefing up HSBC’s capital base, is likely to be announced Monday, when the company’s also schueduled to report 2008 financial results. Terms of the share issue, including the final price, may yet change, media reports said.
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A MarketWatch rundown of companies whose shares are expected to see active trading in Monday’s session.
Nevada’s Security Savings Bank and Illinois-based Heritage Community Bank are closed by regulators , marking the 16th and 17th bank failures of 2009, the Federal Deposit Insurance Corporation says.
With the market slumping to fresh 12-year lows in the last stretch of February, stocks will kick off the month of March on an increasingly uncertain footing while investors try to determine where the bottom lies for the economy and the bear market alike.
President Barack Obama urges Congress to pass the $3.6 trillion budget he submitted this week, reiterating that the spending plan would reduce health-care costs, improve the education system and cut taxes for 95% of Americans.
Berkshire Hathaway suffered through the company’s worst year on record during 2008, Warren Buffett says. In his widely read letter to shareholders, the billionaire investor sees the U.S. economy in a “shambles” through 2009 but forecasts better days are ahead for the country.
As stocks tally another month of stiff losses, investors are especially focused on the S&P 500 Index, with the broad market gauge closing below its November lows — and also below the 740-to-750 range some had hoped for.
WASHINGTON (MarketWatch) — The Federal Deposit Insurance Corp. has been named receiver for Heritage Community Bank of Glenwood, Ill., which has been closed by Illinois banking regulators. The FDIC announced the move late Friday, saying it entered into a purchase and assumption agreement with Chicago-based MB Financial Bank covering all of the deposits of Heritage Community, whose four offices were to reopen as branches of MB Financial Bank on Saturday. As of Dec. 5, 2008, Heritage Community had total assets of $232.9 million and total deposits of $218.6 million. In addition to assuming all of the deposits of the failed bank, MB Financial Bank agreed to buy about $230.5 million in assets at a discount of $14.5 million. The FDIC said it will retain the remaining assets for later disposition.
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CHICAGO (MarketWatch) — Berkshire Hathaway Chairman Warren Buffett told shareholders Saturday that 2008 was the company’s worst year on record, as the per share book value of both the Class A and Class B stock fell 9.6%. In his annual letter, Buffett said neither he nor Charlie Munger, his partner in running Berkshire, can predict winning and losing years in advance, and that no one else can. “We’re certain, for example, that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond - but that conclusion does not tell
us whether the stock market will rise or fall.” Commenting on the federal government’s actions to resolve the economic crisis, Buffett said: “Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects.”
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In case you missed them, here are the top 10 Personal Finance stories from MarketWatch for the week of Feb. 23-27:
There are two outstanding features here — the incredibly refined, clean burning BlueTEC diesel and the fact that two full-grown adults can actually fit in the third row seat.
Mutual fund investors in 2008 yanked more money out of actively managed stock-funds than they put in for only the third time ever, and index-fund rivals took the spoils.
SAN FRANCISCO (MarketWatch) — Henderson, Nev.-based Security Savings Bank was closed by regulators Friday, marking the 16th bank failure of 2009. The Federal Deposit Insurance Corporation said the failed bank’s deposits have been assumed by Las Vegas-based Bank of Nevada. Security Savings Bank had $238.3 million in total assets and $175.2 million in deposits as of Dec. 31, the FDIC said.
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President Barack Obama’s budget plans riled up the media pundits even before he unveiled it Thursday, in large part because of the tax hikes proposed on higher-income Americans. But most of those tax increases shouldn’t be a surprise, given that back on the campaign trail Obama detailed his intent to let the Bush-era tax cuts expire on higher-income taxpayers.
Warren Buffett’s letter to investors may be the most highly anticipated missive from the legendary investor in almost a decade as his conglomerate suffers from big exposure to the troubled U.S. financial-services sector.
SAN FRANCISCO (MarketWatch) — Amazon.com Inc. said late Friday that while it believes the text-to-speech function included in its Kindle reading device doesn’t violate copyrights, the company is nonetheless implementing technical changes to make it optional. Critics including the Authors Guild have criticized the text-to-speech audio function on the Kindle, saying it violates copyright and could hurt sales of audio books. However, Amazon said in a statement it believes the function is legal. “Nevertheless, we strongly believe many rightsholders will be more comfortable with the text-to-speech feature if they are in the driver’s seat.” The company said rightsholders will now be able to decide if they want the function enabled or not for specific titles.
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Further concerns about banks and the U.S. economy lead Canadian shares broadly lower.
A roundup of political and economic events and happenings in and around the Beltway.
The dollar is higher against most major currencies, gaining ground as safe-haven flows resume amid renewed falls by equity markets.
A wave of corporate bankruptcies triggered by the credit crunch and deepening global recession has pushed the number of credit-defaults swaps auctions to record highs, testing the system as it faces increased pressure to establish structures similar to other trading markets.
Citigroup Inc. shares drop in late trade, adding to steep monthly declines after the U.S. government agrees to take a greater stake in the embattled firm.
The Rocky Mountain News printed its final edition Friday, ending nearly 150 years of news coverage, after parent company E.W. Scripps Co. said it was unable to find a buyer for the paper.
SAN FRANCISCO (MarketWatch) - Standard & Poor’s on Friday said it has pulled its ‘BB’ corporate credit rating on Juniper Networks Inc. at the networking company’s request. Standard & Poor’s did not elaborate on the reason for Juniper’s request. But the credit rating agency said the Sunnyvale, Calif.-based company had been on credit watch with positive implications since Sept. 2008. “Juniper’s CreditWatch placement reflected our view that, based on the company’s performance through the quarter ended June 31, 2008, there was a reasonable prospect of an upgrade,” Standard & Poor’s said in a release. Juniper could not immediately be reached for comment late Friday.
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Mexico’s currency stumbles to a new all-time low, pressured by concerns about the fate of Banamex, one of the country’s largest banks, after the U.S. government agrees to raise its stake in its troubled parent firm, Citigroup Inc.
SAN FRANCISCO (MarketWatch) — U.S. corporate bond issuance jumped to $96 billion in February from about $40 billion in the year-ago month, Dealogic said Friday. Investment-grade volume of $92 billion, also double the year-ago month, ranks February as the fifth-busiest month since Dealogic started to keep records in 1995. Some $15 billion of that investment-grade debt was from financial institutions whose bonds carried guarantees from the FDIC. In the past week, companies including Roche Holdings , Chevron Corp. and Abbott Laboratories brought 21 investment-grade deals valued at $33.2 billion. Worldwide, February marked the fourth- busiest month for investment-grade bonds, with $244 billion. There were only 10 asset-backed consumer and mortgage deals globally, worth $2.4 billion, or 5% of Feb. 2008’s volume.
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The federal government tightens its grip on a battered Citigroup, agreeing to convert its preferred shares into common stock and boosting its direct ownership in the nation’s once-largest bank to 36%.
SAN FRANCISCO (MarketWatch) — Apple Inc. said in a filing with the Securities and Exchange Commission that it has replaced KPMG LLP with Ernst & Young LLP as its independent registered accounting firm. Apple said the decision was made as part of the company’s policy to review its independent auditors every five years. KPMG had been Apple’s independent auditor since its 1997 fiscal year.
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SAN FRANCISCO (MarketWatch) — California Gov. Arnold Schwarzenegger said late Friday the state could lose up to $3 billion in 2009 because of an ongoing three-year drought. Schwarzenegger declared a state of emergency because of the state’s water shortage. Under the declaration, the governor directed state agencies to implement a water reduction plan and conservation actions and urged California residents to reduce their water use by 20%.
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SAN FRANCISCO (MarketWatch) — Bank of America said late Friday it named Mark Linsz as corporate treasurer, effective immediately, to replace Jeff Brown who is leaving the company. Linsz most recently served as risk executive for global banking and securities with responsibility for managing market risk and capital markets credit risk.
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SAN FRANCISCO (MarketWatch) — Standard & Poor’s said late Friday it may downgrade R.R. Donnelley & Sons Co. because of how the slumping economy will likely affect the business support services provider’s revenue and earnings. S&P has a BBB+ long-term corporate credit rating and a A-2 short-term rating on R.R. Donnelley.
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SAN FRANCISCO (MarketWatch) — Moody’s Investors Service on Friday lowered
MGM Mirage’s probability of default rating to Caa1 from B1 and its
corporate family rating to B3 from B1. The downgrade reflects the
difficulty the company faces in shoring up its liquidity profile and follows an announcement from the casino operator that it withdrew the remaining $842 million available under its $4.5 billion senior revolving credit facility. “Moody’s estimates that internally generated cash, net proceeds from the pending sale of Treasure Island together with the revolver draw and cash on hand will be barely sufficient to fund the company’s operations–including its CityCenter obligations–and required bond maturities through year-end 2009,” the ratings agency said. Moody’s downgrade follows similar moves from S&P and Fitch earlier.
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SAN FRANCISCO (MarketWatch) — Moody’s Investors Service said Friday that it may downgrade the credit ratings of student loan company Sallie Mae . The agency put all ratings of Sallie Mae under review for possible downgrade because President Barack Obama’s budget proposals have created uncertainty about the company’s business model. “The rating action also reflects the intensification of the funding and operating risks faced by the company in the face of the deepening financial and economic crises,” Moody’s said in a statement.
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SAN FRANCISCO (MarketWatch) — Textron Inc. said late Friday it will sell HR Textron to Woodward Governor Co. for $365 million in cash. The deal is expected to close in the second quarter. While the sale is likely to generate about $265 million in net after-tax cash proceeds, it will reduce Textron’s 2009 earnings by about 5 cents a share.
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NEW YORK (MarketWatch) — U.S. stocks sunk further in February, with the Dow Jones Industrial Average down for a sixth consecutive month, as the recession and ailing financial system had investors fleeing stocks. The Dow Jones Industrial Average fell 119.15 points, or 1.7%, to 7,062.93. The blue-chip index declined 4.1% for the week and 11.7% for the month. The S&P 500 shed 17.74 points, or 2.4%, to 735.09, leaving it with a weekly loss of 4.5% and a monthly hit of 11%. The Nasdaq Composite fell 13.63 points, or 1%, to finish at 1,377.84, down 4.4% for the week and 6.7% for February.
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SAN FRANCISCO (MarketWatch) — Gov. Arnold Schwarzenegger is expected to declare a drought state of emergency for California soon, according to media reports Friday. Schwarzenegger is expected to sign the proclamation following three dry winters that have left California state and federally operated reservoirs at their lowest levels since 1992, according to The Associated Press. (Corrects to attribute detail to the AP.)
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Today Switzerland’s banking system secrecy comes under fresh international scrutiny. Back in 1997, another confrontation over the nation’s complicity in past misdeeds shook the Swiss sense of self. Christopher Noble looks back at lessons learned.
CHICAGO (MarketWatch) — Standard & Poor’s lowered its corporate credit and issue-level ratings on MGM Mirage, citing concerns about the casino operator’s liquidity and debt covenants. MGM Mirage now has a corporate credit rating of “B-,” down from “B+,” and the ratings remain on “credit watch” with negative implications. “The downgrade reflects heightened concerns around MGM Mirage’s liquidity position and our expectation for meaningful deterioration of credit measures over the next several quarters,” said S&P credit analyst Ben Bubeck in a note to investors. Further, he added that an earlier announcement by the company that it has drawn the remaining funds available under a $4.5 billion revolving credit facility could lead to “a covenant violation in the current quarter.” Shares of MGM Mirage were down 25% to $3.37 in late trading.
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SAN FRANCISCO (MarketWatch) — Standard & Poor’s Ratings Services said Friday it lowered Limited Brands’ long-term corporate credit rating to BB from BB+ and affirmed its B-1 short-term rating. “The downgrade reflects our deepening concern about the impact of the U.S. recession on the increasingly troubled specialty apparel sector, which felt the full brunt of the declining U.S. economy and weakening consumer confidence in 2008,” said Diane Shand, an S&P’s credit analyst. The outlook is negative.
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SAN FRANCISCO (MarketWatch) — Moody’s Investors Service on Friday lowered Citigroup’s senior debt ratings to A3 from A2 and its senior subordinated debt to Baa1 from A3 while affirming its short-term rating at Prime-1. The downgrade coincided with Standard & Poor’s affirmation of Citi’s A/A-1 rating and revision of its outlook to negative. The downgrade is driven by Moody’s expectation that Citi will emerge from the current economic crisis with a different mix of core businesses and a smaller scale, which could diminish its relative importance to the U.S. banking system over the long run. Meanwhile, S&P said its revision of the outlook stems from its concern that if Citi’s turnaround strategies are unsuccessful, debtholders could eventually be required to participate in further government-led restructuring actions. “We believe Citi will face a tough credit cycle in the next two years, which will likely result in weak and volatile earnings. Given the uncertain earnings outlook, we cannot rule out the possibility that further government support may prove necessary,” said Scott Sprinzen, an S&P credit analyst.
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NEW YORK (MarketWatch) — Crude-oil futures fell Friday for the first time in four sessions, dropping from their highest level in one month as newly released U.S. data increased economic worries. U.S. gross domestic product shrank in the last three months of 2008 by 6.2% vs. a 3.8% previously estimated rate, the Commerce Department reported. Crude for April delivery dropped 46 cents, or 1%, to end at $44.76 a barrel on the New York Mercantile Exchange. It slumped more than 6% to as low as $42.39 earlier. Despite Friday’s loss, crude is on pace to end this week with a gain of 12%.
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Among the companies whose shares are seeing active trade in Friday’s session are Citigroup, Gap and Autodesk.
SAN FRANCISCO (MarketWatch) — Fitch Ratings said Friday it downgraded MGM Mirage because it borrowed the remaining funds from a credit line. Fitch cuts the casino operator’s issuer default rating to CCC from B, its senior secured notes rating to B/RR2 from BB-/RR2, its senior unsecured credit facility rating to B-/RR3 from B+/RR3, its senior unsecured notes rating to B-/RR3 from B+/RR3, and its senior unsecured subordinated notes rating to C/RR6 from CCC/RR6. The rating outlook remains negative, Fitch said. “The downgrade reflects MGM’s credit facility draw in the context of the company’s strained liquidity position and the continued expected
deterioration of Las Vegas operating trends,” Fitch said in a statement. “MGM announced this morning that it borrowed the remaining $842 million under the $4.5 billion senior revolving portion of its $7 billion credit facility.”
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SAN FRANCISCO (MarketWatch) — General Electric Co. said its board authorized cutting the quarterly dividend by 68% to 10 cents from 31 cents in a bid to preserve equity. GE said it seeks to preserve $9 billion in capital a year with the move. “After extensive review, we have determined
that reducing the dividend, while still maintaining it at a competitive level, is a prudent measure to further enhance our balance sheet and
provide us with additional flexibility for potential future opportunities,” said GE Chairman and Chief Executive Jeff Immelt in a statement. “With these actions and the others we have taken to keep the company safe and secure, we currently do not have any plans to raise more equity.” Shares of GE fell 3.6% to $8.77 in recent trading.
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SAN FRANCISCO (MarketWatch) — Kimberly-Clark Corp. said Friday its board raised the quarterly dividend to 60 cents from 58 cents. The dividend is payable April 2 to shareholders of record as of March 6.
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SAN FRANCISCO (MarketWatch) — Aetna Inc. said Friday its board authorized a $750 million common stock buyback program. The health insurer had about 456 million shares outstanding as of Dec. 31. Shares of Aetna rose 2.3% to $24.58 in recent trading.
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