Wall Street has opened a significant decline Wednesday, the rescue plan announced for the insurer AIG had apparently not long reassured investors on the systemic risk posed by the crisis in credit markets.
In the first exchanges, the Dow Jones thirty core values lost 1.86% or 205.75 points to 10.853,27, the index expanded Standard & Poor's 500 abandons 2.21% (26.85 points) to 1.186,74 and the Nasdaq composite market, a strong technology component, stumbles of 2.03% (44.89 points) at 2.163,01.
Wall Street continues to make the yo-yo over the developments of the crisis in U.S. financial institutions. She Monday experienced its worst quarter since 2001 after the announcement of bankruptcy of the bank Lehman, then rebounded Tuesday in the hope of a rescue of AIG.
This was formalized in the form of a loan of 85 billion dollars over two years made by the Fed in exchange for approximately 80% of the capital of the insurer. The fear that shareholders very diluted by the plan made AIG relapse by 34%.
Most financial values are losing ground, even Morgan Stanley unscrews of 15% despite the announcement the previous evening of the above quarterly expectations.
The continuation of the flight of interbank rates, a sign that tensions persist on the credit market, is also feared a contagion of financial crisis to other parts of the economy. For the industry, General Electric abandoned more than 6%.
Green. The renewed vigour in the face of Dollar Euro restores the strength to export values as well as companies operating in a world where the dollar remains the currency of reference ... This is the case of aeronautics where Zodiac is among the companies quality. The current financial crisis offers investment opportunities in this type of cases at price levels not related to fundamentals. It will however be cautious in the short term because it is very difficult to know how far the game of dominoes will continue after the bankruptcy of Lehman Brothers, the sale of Merrill Lynch and the nationalization of Bear Stearns, Freddie, Fannie and AIG States United. The situation is changing very rapidly and the stock indices panic ...
Accounts. On the year 2007/2008, the company has continued to evolve on a solid pace of growth in billings. The organic growth came out at 10% over the period with an acceleration in the last quarter. The aerospace market remains well oriented with order books filled. Zodiac is thus succeeded in winning contracts nice with customers who are recruited on both sides of the Atlantic. The company is also very active in terms of external growth with the resumption of actors working on niche niche ... Driessen the global leader trolleys, was recently acquired.
Objectives. Zodiac confirmed its annual objectives in terms of profits. The rising U.S. currency represents a very positive point for the group, while parity Euro / Dollar average over the year 2007/2008 was 1.50. Even if the share price has already resumed, the potential remains important on this issue with fundamental quality and value very little demanding. We therefore believe that despite the uncertainties of the stock market, we can keep the action Zodiac portfolio already recommended to lower levels.
After five days of frantic efforts of banking authorities, breaches of the international financial system continued to grow Wednesday, with the emergence of new names on the list of establishments condemned in advance by the markets.
A few hours after the U.S. authorities had taken the historic decision to nationalize the insurer AIG and the British bank Barclays was announced the purchase for a morsel of bread of the best assets of Lehman Brothers, the British HBOS had to accept her redemption emergency.
The avalanche of new stock markets put on the nerves, despite the release of reserves by central banks.
"The turbulence caused by the financial crisis the USA are not about to stop," said Prime Minister South Korean Han Seung-soo, calling for calm local investors.
Wall Street lost nearly 3% in late morning, while exchanges should be suspended on the stock markets in Moscow, where the international crisis came to exacerbate concerns arising from the conflict in Georgia.
After resisted most of the day, the Bombay Stock Exchange craquait and fell below 4,000 points for the first time since May 2005. The London Stock Exchange lost 2.25 close%.
Long incarnation of the seriousness and solidity, the bank HBOS had to resign itself to be swallowed by its rival Lloyds TSB after seeing smoke soar to two-thirds of its market capitalization since the beginning of the year.
Other thunderclap: Barclays announced the acquisition of most of the U.S. operations of Lehman Brothers, the investment bank that has filed for bankruptcy Monday in front of the intransigence of the government.
A strategic coup incredible: for a price (250 million dollars) which would have been considered ridiculous there are only a few months, Barclays will make its subsidiary BarCap the third investment bank on Wall Street.
On the other side of the Atlantic, precisely, Wall Street came to live another historical episode.
The U.S. central bank, the Fed, which had remained inflexible Sunday at the difficulties of Lehman Brothers, made Tuesday turned 180 degrees in assisting unprecedented 85 billion dollars to the insurer AIG to avoid a global financial crisis .
The Federal Reserve has committed to lend itself are necessary for AIG, while the former number one global insurance no longer than a few hours before having to file for bankruptcy, which could cause according to analysts a chain reaction with incalculable consequences.
For Elie Cohen, director of research at CNRS, "this rescue is both bad news because it means that the crisis develops, but it is also good news because it means that the government sits on his convictions to avoid systemic crisis. "
According to the daily New York Post, U.S. authorities would now put to find a buyer for Washington Mutual, the largest bank in Seattle, which croûle under the importance of its outstanding property. The title, beaten for weeks, yet ceded nearly 9%, shortly before 16H00 GMT.
Following the elimination of three of the five investment banks on Wall Street - Bear Stearns, Lehman Brothers and Merrill Lynch, married Sunday at hussar to Bank of America - the speculation turned to the number two in the sector: Morgan Stanley. The action was losing 33%, even though the bank has issued the previous day in advance, an excellent quarterly profit of 1.42 billion dollars, just wave compared to that of a year ago.
Wall Street unscrews on Wednesday with the bank values. Investors had largely anticipated yesterday evening, before the closure, rescue hoped "ordered" the insurer AIG in New York by the U.S. government. Speculation also remains strong, both on further possible failures of large financial players, or building operations sector (Morgan Stanley (NYSE: MS - news) and Wachovia (AWO - news) are mentioned as targets) . Note again in the news business, warning of the Canadian Nortel. Against this background of uncertainty, and as markets feared especially for the health of big names U.S. finance, indices plunging again today. The Nasdaq Composite (NASDAQ: news) abandons 3.90% to 2,122 pts and the DJIA lost 2.85% to 10,743 pts.
On the economic front, the latest housing figures out without relief.
The Department of Commerce and the housing and urban development U.S. officials have released the latest figures on building permits and put in the yards of homes in the USA, for the month of August 2008. Building permits are displayed on a pace adjusted 854,000, down 8.9% compared to 937,000 in July and down 36.4% compared to last year. Starts yards emerged on a pace of 895,000, down 6.2% compared to the previous month (954,000 in July) and 33.1% compared to last year.
The U.S. Commerce Department reported Wednesday that a current account deficit widened to U.S. over $ 183 billion in the second quarter of 2008, representing 5.1% of GDP in the USA.
The Department of Energy U.S. published today its latest weekly report on U.S. stocks for the week to close on September 12, 2008. The commercial stocks of crude, excluding strategic reserve, fell by 6.3 million barrels compared to the previous week, emerging to 291.7 million barrels in the lower half of the average range for this period. Stocks of gasoline fell by 3.3 MB and are below the lower boundary of the traditional range. Stocks of distillates fell by 0.9 MB and are in the middle of the normal range. The barrel of crude resumed to $ 94 on the Nymex on Wednesday.
VALUES OF THE DAY
Lehman (-59%). After breaking Chapter 11 of the investment bank in New York Lehman Brothers (NYSE: LEH - News), Barclays (London: BARC.L - news) has put his hand on the activities of investment banking in North America and operations of capital markets firm devastated. The operation in cash saves approximately 10,000 jobs at Lehman. Of the $ 1.75 billion disbursed by Barclays, $ 1.5 billion represents the amount of the redemption of the New York offices of Lehman in the Seventh Avenue and data centers in New Jersey. $ 250 million will be paid for activities fixed income, trading, research and investment banking and equities sales at Lehman Bros.. The British Barclays will raise $ 1 billion to complete the deal, and anticipates a positive impact on its profits and capital ratios. The operation also accelerates the strategy of geographical and sectoral diversification of Barclays, Judge English, which does not take control of other operations Lehman.
AIG (-37%). The New York insurer AIG has benefited finally a rescue of U.S. authorities, following threats of bankruptcy. This requires a nationalization of the Group, while in exchange for $ 85 billion credit, the USA will take 79.9% of the shares of AIG. The U.S. authorities have held that a bankruptcy disorderly Group could add to the fragility of financial markets and the economy. The advance is paid to AIG for 24 months and must be repaid on the sale of certain assets. The key to the news is the entity leasing Air International Lease Finance Corp., probably the jewel of AIG, which could bring 5 to $ 8 billion of income according to analysts. In fact, according to the Wall Street Journal, President of the subsidiary, Steven Udvar-Hazy, could lead the takeover of California at Los Angeles International Lease Finance Corporation which he founded. Outside the latter and investment funds, sovereign or private equity, the chances of quick redemption seem thin by other specialists ... Finally, later Group at AIG, note that the Wall Street Journal refers to a replacement CEO Robert Willumstad by a tenor Allstate (NYSE: ALL - News), Edward Liddy.
Adobe (+2%). The Californian software Adobe Systems (NASDAQ: ADBE - News) issued last night its accounts for the 3rd quarter of fiscal 2008 ended in late August. Adobe has realized revenue of $ 887.3 million against $ 851.7 million in Q3 2007 and $ 886.9 million in the second quarter of 2008. The Group therefore exceeds the upper range of its earlier guidance of sales through Acrobat and LiveCycle. The GAAP diluted EPS was 35 cents against 34 cents last year and 40 cents on the previous quarter. This is in line with guidance Group housed between 34 and 36 cents, exceeding the consensus of analysts. The GAAP operating profit was $ 219.5 million against $ 255 million last year, and $ 260.2 million in the previous quarter. The GAAP net income amounted to $ 191.6 million, against $ 205.2 million last year and $ 214.9 million in the second quarter of 2008. In non-GAAP, EPS was 50 cents against 45 cents a year before and 50 cents for Q2 2008. The net non-GAAP reached $ 269.1 million, against $ 269.4 million last year and $ 272.7 million in the second quarter of 2008. On the 4th quarter of 2008, Adobe expects revenue ranging from 925 to $ 955 million and an operating margin of approximately 30.5% GAAP, or 39.5% in non-GAAP. The GAAP EPS is expected between 39 and 41 cents and the non-GAAP EPS between 51 and 53 cents.
Morgan Stanley (-37%). The investment bank in New York Morgan Stanley issued Tuesday evening its accounts of the 3rd quarter of 2008. The quarterly revenues totaled $ 8 billion on an EPS of $ 1.32 and an annualized ROE of 16%. The benefit of continuing operations was $ 1425 billion and $ 1.32 per title, against $ 1474 billion and $ 1.38 per share on the 3rd quarter last year. Revenues are up 1% year on year. The net result, at $ 1425 billion and $ 1.32 per title, is compared with a profit of $ 1543 billion and $ 1.44 per title on the Q3 2007. Despite the market environment, investment banking activity has produced $ 1 billion of revenue. In the context of market and industry environment that is known, Morgan Stanley, with a marginal decline of 7% of its quarterly net profit, is more the exception ... The title, however, relapse this day despite the accounts, on rumours of merger disadvantageous to shareholders.
Washington Mutual=======(-9%). Among the remaining sensitive issues of American finance, savings bank Washington Mutual, based in Seattle, major victim of the crisis, is still the subject of speculation for more lifelike. The New York Post refers to the track a potential resumption of WaMu by a U.S. institution, while the federal authorities would hold discussions with major banks to reach a solution. JP Morgan Chase and Wells Fargo have been contacted, as the British HSBC (London: HSBA.L - News). Recall that the three major rating agencies, Moody's, S & P and Fitch, have degraded the case these days, making WaMu even more fragile.
General Mills ======= (+3%). The American food group General Mills announced this day of "robust" accounts for its 1st quarter fiscal 2009. Revenues totaled $ 3.5 billion, up 14% to 4% higher volumes. Net income reached $ 279 million after a reduction related to the valuation of certain positions in raw materials (non-cash). The diluted EPS was 79 cents, 17 cents of non-cash reducing profits. The adjusted EPS would have been 96 cents, up 19% yoy. Profits operational segments showed 9% increase to $ 632 million. According to management, sales and quarterly profits have exceeded internal expectations. The beginning of the fiscal year strengthens the confidence of the Group for 2009, despite inflation on costs. Annual sales are expected to growth of around 5%, with prices and product mix, for a comparable increase in profits operational. The diluted EPS expected to include valuation adjustments on the positions commodities. Adjusted for non-recurring items, EPS is expected between 3.81 and $ 3.85, representing an increase of the previous guidance.
Nortel ========(-45%). The Canadian Ontario Nortel has disappointed on Wednesday by its preliminary accounts of the 3rd quarter (ended in late September) and the revision of its 2008 targets. Nortel, citing a turnaround in the economy and a sustained expansion, said experience significant pressures while its operators reduce their capital spending more than initially planned. In addition, some customers of their activities and "metro ethernet" postpone new IT investments and optics. Similarly, since the second quarter, the Toronto firm sees further pressure on earnings due to the impact of changes and some timely delivery products. Immediate Impact: Nortel now anticipates revenues of the 3rd quarter neighbouring $ 2.3 billion on a gross margin of 39%, mainly due to a postponement of delivery product on the T4 and customer mix in activities "Carrier" . The T3 operational costs are lower than expected $ 60 million in the second quarter. Now, Nortel plans for fiscal revenues decline of 2-4% over a gross margin of 42% and an operating margin improvement of 125 to 175 basis points. Mike Zafirovski, CEO Group, adds that the market environment clearly requires additional shares, "immediate and decisive", and a review of operations is in progress, as well as studying plans additional restructuring and impairment costs. Nortel also affirms its intention to explore disinvestment of activity Metro Ethernet networks (MEN).
SanDisk======== (+39%). The California Milpitas SanDisk, giant flash memory used in consumer electronics, has rejected an offer by $ 5.8 billion Samsung Electronics for its purchase, but does not seem to fundamentally hostile to a better proposal from its major customer of South Korean . The offer as "inadequate" Samsung (000830.KS - news) was made at $ 26 per title SanDisk in cash, which offered a premium enviable by almost 73% to shareholders. SanDisk looks now, from Samsung, a price that better reflects its intrinsic value. Four months of negotiations would have no effect before the public revelation of the offer of Asia. In a letter to the Board of SanDisk, the direction of Samsung critical nevertheless deemed unrealistic expectations regarding the market value of SanDisk and the price of merger. SanDisk, for its part, Samsung has seen at a possible willingness to pay a premium more copious.
Morgan Stanley surprise now fallen sharply from 37% to $ 18 on Wall Street ... despite accounts above expectations published yesterday evening. Investors are reacting to rumours that would like the declining price of a firm force to s'adosser actor to another bank. The title was expected to surge in pre-meeting, before plunging too quickly into a market depression.
The investment bank in New York Morgan Stanley issued Tuesday evening its accounts of the 3rd quarter of 2008. Exceptionally, the company publishes after the close on Wall Street. The quarterly revenues totaled $ 8 billion on an EPS of $ 1.32 and an annualized ROE of 16%. The benefit of continuing operations was $ 1425 billion and $ 1.32 per title, against $ 1474 billion and $ 1.38 per share on the 3rd quarter last year. Revenues are up 1% year on year. The net result, at $ 1425 billion and $ 1.32 per title, is compared with a profit of $ 1543 billion and $ 1.44 per title on the Q3 2007.
The headquarters of Lehman Brothers in New York, September 14, 2008
With bankrupt Lehman Brothers, Merrill Lynch swallowed by Bank of America and the Federal Reserve to the rescue of the banking sector, finance is more American than ever mired in the crisis, the dominos falling one after the other.
The placement of Lehman Brothers under the protection of the Bankruptcy Act (Chapter 11), and formalized Monday, has plunged the financial world who do not, however, gave a panic.
Major European stock markets have dropped sharply Monday after the announcement of investment under the bankruptcy of the U.S. investment bank Lehman Brothers.
The Frankfurt Stock Exchange appears the closing bell, down 2.74%, that of London by 3.92% and 3.78% of Paris.
Towards 17h45 GMT, Wall Street, however limited its losses, starring DJIA index losing 2.5%.
The NYSE had opened sharply down Monday: The Dow Jones lost 2.34% and 2.65% Nasdaq.
U.S. President George W. Bush said Monday that his government was working to "minimize" the impact of financial crisis on the U.S. economy and expressed confidence in the ability of it to cope with the long-term "adjustments" in progress.
The "impact" of the bankruptcy of U.S. bank Lehman Brothers on French banks should be "limited", assured Monday the French Minister of Economy, Christine Lagarde.
Presenting the bank Lehman Brothers
© 2008 AFP (null)
Presenting the bank Lehman Brothers
AIG, the first U.S. insurer, could be the next victim of the financial crisis on Wall Street because of its high exposure to financial risk.
The action of American International Group (AIG) fell by 50% at the opening of the New York Stock Exchange, Monday. Since the beginning of the year, the insurer has lost 90% of its value on the stock market.
AIG must raise $ 20 billion to meet its commitments to investors, she wants to continue to operate.
After a weekend of unsuccessful negotiations with its main creditors, Lehman Brothers had no choice but bankruptcy, however, reaching to preserve some units, including those in charge of market operations.
This did not prevent its collapse under Wall Street, where it does most quoted at around 16:30 GMT as 0.20 dollar, while it was still more than $ 60 a year ago.
The liquidation of Lehman Brothers "could accelerate the necessary reforms of Wall Street", Judge Peter Morici, an economist at the University of Maryland (east).
Quasi-simultaneously with the announcement of Lehman Brothers, Bank of America has formalized the purchase of another big name on Wall Street, Merrill Lynch, for 50 billion dollars.
After the takeover of Bear Stearns by JP Morgan in March, the concentration of U.S. financial sector continues, as pointed out by the Director-General of the International Monetary Fund (IMF) Dominique Strauss-Kahn. "A long process" seems committed to "consolidation of financial sectors," he said to the press during a visit to Cairo.
"In retrospect, once the storm passed, the recomposition (financial sector) could be seen as a beginning of healing and mark the end of the moral hazard that weighed on the sector", say analysts CM-CIC Securities .
Logo of Merrill Lynch in New York
© 2008 AFP (Mario Tama)
Logo of Merrill Lynch in New York
The moral hazard describes the notion that financial operators that the government always intervene at the last moment to avert a crisis, which encourages them to take risks.
In the case of Lehman Brothers, U.S. federal authorities have refused to make any money.
Having spent 29 billion dollars for the purchase of emergency and Bear Stearns have hired up to 200 billion last week to keep up the mortgage agencies Fannie Mae and Freddie Mac, the U.S. government did not open its portfolio.
Without guarantees of the state, potential buyers have all passed their turn. As the Korean KDB and British Barclays.
In an attempt to curb the financial debacle, the U.S. central bank, however, took steps Sunday, accepting securities banking risky and difficult saleable in exchange for cash for banks in trouble.
In addition, coordinated action by ten major banks, American and foreign, who have established a fund of 70 billion dollars in which they can draw if they could find themselves short of cash.
These initiatives have been told the Nobel laureate economist Joseph Stiglitz that the current financial crisis should be less severe than that of 1929.
"One can of course be wrong but the general view is that today we have tools in terms of fiscal and monetary policy to avoid another Great Depression," he told AFP.
An opinion which does not seem shared by the former president of the U.S. Federal Reserve, Alan Greenspan, who said in an interview broadcast Sunday by the television channel ABC that the current financial crisis is the worst since 50 years and probably since a century.
The U.S. investment bank has officially been placed in bankruptcy and explains wish to "protect its assets and maximize its value."
Lehman Brothers bankrupt. The spokesman of the bankruptcy court in New York announced Monday, September 15, the U.S. investment bank had officially placed under the protection of Chapter 11 bankruptcy. Earlier in the day, she announced to be the intent "to protect its assets and maximize its value," and because he has not found a buyer.
The bank said that its customers can continue to negotiate their shares or to take any decision which they seem necessary on their accounts. " As announced last Wednesday it remains "in advanced discussions with a number of potential buyers" to sell its asset management business, wealth management and investment.
One of its leaders in France has explained that Lehman was not a "liquidation": "we are under protection and we have more time to complete, in all serenity, restructuring necessary" he said, adding that it was "totally excluded" the bank so that this state of bankruptcy.
Surveillance close
In the meantime, the bank began to be placed under surveillance even closer, as reflected for example cuts note made by Fitch and Moody's. Constable German markets, Bafin, has frozen the assets of Lehman in Germany for "to safety". A similar operation was conducted in Japan, while the British subsidiary of the bank was placed under receivership. The financial authorities of Japan have ordered the local branch of Lehman Brothers to suspend its activities until 26 September.
Banks have also begun to quantify their "relations" with Lehman. Dexia has evaluated its total exposure to the activity of Lehman to 2.28 billion euros, including 500 million for the party direct and unsecured. The Belgian KBC is valued at 280 million euros at most. BNP Paribas has it indicated that its exposure was "manageable", without quantifying. As for UniCredit, she assured that her exhibition is "very limited", while acknowledging it is "too early today for any specific assessment whatsoever."
The Swedish SEB, however, amounted to 64 million exposure to a risk of failure of the U.S. investment bank. Ditto for its rival Handelsbanken.
Fortis has finally proved to be directly exposed to the tune of 137 million euros in bonds and 270 million in transactions "repo". Its indirect exposure amounted to 117 million.
The pension fund of Norway, one of the biggest sovereign funds in the world, has indicated to his side he has lost at least 500 million kroner (61 million euros) in the bankruptcy.
In free fall for several weeks
Lehman Brothers was in free fall for several weeks with a loss of $ 3.9 billion in the third quarter and an action whose value was divided by 16 in one year.
Amid this morass, it did not even have a chance to find a "white knight", as Bank of America has preferred to buy Merrill Lynch and Barclays as the British withdrew, arguing that a resumption of Lehman was impossible without assistance from the U.S. State comparable to that granted in March to JPMorgan Chase in its acquisition of another bank in difficulty, Bear Stearns.
The total debts of Lehman Brothers amounted to 613 billion at May 31. The total assets amounted to about to 639 billion dollars. The debt payable by the first 30 creditors of the bank reached 158 billion at July 2.
The European markets ended sharply down Monday, the FTSEurofirst 300 index posting its worst close since July 16. According to Reuters, values were down to ten times more numerous than those on the rise.
Financial markets have experienced one of the most turbulent days since the beginning of the financial crisis, after the announcement of bankruptcy of Lehman Brothers and Merrill Lynch redemption, which revive fears of a domino effect on 'entire U.S. financial system.
The stock markets are in steep decline, undermined by fears that still lie the list of victims of the credit crunch. The same fears promote the decline of values shelters, such as loans, gold or yen.
Oil is also a net decline, the financial crisis fuelling concerns over growth and demand for hydrocarbons.
Large squares of the continent have nevertheless finished above their lowest in the day, the relatively small decline on Wall Street have helped to limit the damage. In Paris the Cac 40 index finished down 3.78% to 4168.97 points, also the lowest since July 16, after falling in the morning at 4075.54, a fall of nearly 6 %.
The financial values logically have been the most heavily affected: the DJ Stoxx European banks dropped 6.2% and insurance 6.33%.
Among the big names of these different sectors, BNP Paribas dropped 7.16%, Royal Bank of Scotland 10%, 14.54% UBS, Axa - exposed to Lehman - Allianz 8.52% and 6.11%.
For Adrian van Tiggelen, senior strategist for ING Investment Management in Amsterdam, "the valuation of derivatives and CDO (collateralized debt obligations) at the end of the third quarter will be depreciated and there will be new warnings on results in the banking sector . There will also be other warnings in other sectors dependent on consumer spending. "
The values related to raw materials have suffered the same time reducing exposure to risk and fears for the request. The index of core resources and energy have both dropped around 4.8%. Total ceded BP 5.04% and 3.63%.
The financial news has largely overshadowed that of mergers and acquisitions in other sectors, as the repurchase of the Swiss group Ciba Specialty Chemicals by BASF. Ciba surged by 28.11% to bring the purchase price but BASF lost 4.15%.
