There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
- On Monday, the Dow Jones Industrial Average dropped by 73 points.
- On Tuesday, the Dow Jones Industrial Average fell by 176 points.
- On Wednesday, the Dow Jones Industrial Average plunged 411 points.
- On Thursday, the Dow Jones Industrial Average surged 553 points.
- On Friday, the Dow Jones Industrial Average dropped 338 points and closed the week at 8497.
- Nineteen Wall Street firms and banks that have received federal bailouts spent $32.4 million lobbying the federal government during the first nine months of 2008.
- Circuit City filed for bankruptcy.
- The second largest mall operator in the U.S., General Growth Properties, warned of its potential need to file bankruptcy.
- Citigroup is reportedly looking at acquiring a regional bank after its efforts to acquire Wachovia failed. Regions Financial, BB&T, Comerica and SunTrust have been mentioned as possibilities.
- Two major hedge funds, Tontine Capital and Tontine Partners, are being liquidated.
- American International Group (AIG) announced a $24.5 billion quarterly loss attributable to investment losses.
- The federal government announced a new $150 billion bailout plan for AIG.
- Investors withdrew about $60 billion from hedge funds in October. These redemptions have forced many hedge funds to liquidate positions in order to fund the withdrawals.
- Major airlines are expected cutback further on flight schedules after the holidays.
- The Federal Reserve approved American Express’ application to become a bank holding company.
- Starbucks quarterly profit dropped 97%.
- Fannie Mae posted a $29 billion loss in the third quarter. The company’s net worth has fallen from $44 billion at the end of 2007 to $9.4 billion as of September 30, 2008.
- Freddie Mac posted a record loss of $25.3 billion in the third quarter. This loss has caused its net worth to fall below zero; it has asked the Treasury for $13.8 billion in funding.
- Television home shopping company QVC plans to cut 5.8% of its workforce.
- Home foreclosures in October, 2008 were 25% higher than in October, 2007.
- Many retailers are getting hit with a double whammy. Not only are sales down significantly, they are experiencing serious delinquencies on outstanding credit card debt.
- Retailers, Macy’s and Best Buy, expressed grim sales projections for the holiday season.
- Moody’s reported that it expects 10.4% of “junk bonds” to default in the next year.
- The number of Americans claiming unemployment benefits has reached a 25- year high.
- Sun Microsystems has announced plans to cut up to 6,000 workers.
- Citigroup reportedly plans to lay off another 10,000 employees.
- San Mateo County, California has sued Lehman Brothers Holdings for fraud. The County is seeking to recover $150 million it lost in investments with Lehman.
- Congress continues to debate a $25-$50 billion bailout for the Big Three Automakers.
- Many large law firms have cut attorneys and staff in the wake of the credit crisis.
- Bloomberg News reports that several U.S. insurers may apply for status as savings and loan associations. This move would give them access to borrowing from the Fed.
- Collectively, U.S. consumers have approximately $14 trillion of outstanding debt.
Page Perry’s Market Monitor is published periodically to give investors an overview of certain recent developments impacting the economy and/or the investment markets.