Wednesday, April 1, 2009

Today's Top News

Bondholders and the White House now have a CEO they want running GM
New GM Chief Bends to U.S. Pressure
DETROIT -- Facing heavy government pressure, General Motors Corp.'s chief executive spent his second day on the job making a public break from his predecessor, sending a sharply different message of willingness to shake up the ailing auto maker.

What's Going On Here - Aren't Things Suppose to be Getting Better?
Global Slump Seen Deepening.
The outlook for the global economy worsened on the eve of a summit of the world's 20 biggest economic powers, as two international agencies warned that global output will fall in 2009 for the first time since World War II. Fresh evidence of the deepening slowdown came from around the world. Euro-zone data Tuesday showed inflation at 0.6% in Europe's single-currency area for the year through March, the lowest level since official records began in 1996. In the U.S., home prices fell 19% in January compared with a year earlier. Japan's business-confidence fell to an all-time low in data released by its central bank early Wednesday, a day after the jobless rate there rose to a three-year high.

States Push to Raise Taxes on Richest Taxpayers
The governor and Democratic lawmakers in New York will attempt to patch an $18 billion budget deficit by imposing much higher taxes on the richest residents, joining several states considering such a move this year. Under a proposal by Gov. David Paterson, New York would follow California and Maryland in pushing its top earners into higher tax brackets that are several percentage points more than what most earners pay. And New Jersey is considering raising its top-tier income taxes even higher, to more than 10% compared with the 5.25% marginal rate paid by most household.

What Are the Implications For Lower Oil Prices and Is Oil Headed Back Up?

Oil Falls Below $50 a barrel

Oil prices slipped below $49 Wednesday as new signs of deterioration in the world's three biggest economies -- the U.S., Japan and China -- undermined crude's recent gains. Benchmark crude for May delivery was down $1.22 to $48.44 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. That fall nearly wiped out overnight gains, when the contract rose $1.25 to settle at $49.66. In London, Brent prices fell 96 cents to $48.28 a barrel on the ICE Futures exchange.

Home Sales are followed closely - is this a leading or lagging indicator?
Home Prices Drop, but Homes Still Not Cheap

Homeowners are watching anxiously for any signs of housing market stabilization. So, too, are all those who believe the market may hold the key to the economy.
And yet the most recent data makes for more gloomy reading.The closely watched Case-Shiller index, which tracks prices across twenty major cities, shows that through January the crash was getting worse, not better. And yet, even after these declines, homes overall still may not be that cheap relative to wages. More on that later.

Investors follow the Stock Market closely - is this a leading or lagging indicator?
Stock Bull Still Breathing, But Dow Loses 13% Overall in Period.
For investors, the first quarter was a case of one step forward but two steps back.
As the Federal Reserve, Treasury and governments around the world stepped up efforts to address the financial crisis, fears of a systemic collapse abated and investors showed glimmers of willingness to take on more risk. It wasn't enough to prevent stocks from posting their sixth consecutive losing quarter and dashing the hopes of many investors by setting lows in the process. Even a 20% rally over the span of three weeks -- putting the market into a bull market by common definition -- faded in the final days of the quarter as bad news out of the auto industry reminded investors that challenges remain.

How Much Lower Can Car Sales Go?

Vehicle-sales data for March will print Wednesday and once again the numbers will look depressing. But, just maybe, auto sales have bottomed. Car buyers are expected to have purchased in March roughly 9.5 million new cars on a seasonally adjusted, annualized basis, according to Moody's That will mark the third consecutive month in the sub-10 million range. The past decade saw monthly new-car sales annualized at about 16 million to 17 million a year, spiking at times above 20 million. But what follows "could be less, because if you reason there was a bubble in housing, then there was some degree of bubble in durable consumption," such as car sales, says Peter Kretzmer, senior economist at Bank of America.

What Does this Mean for Microsoft?

PC Makers Test Laptops Running Google Software

Hewlett-PackardCo. and other PC makers are considering using free software developed by GoogleInc. to run some small computers, a move that would open a new front in the battle between the Internet giant and MicrosoftCorp. PC makers are testing Google's Android operating system—which has so far been used to power mobile phones—for use in new models of so-called netbooks, inexpensive laptops that have become the fastest-growing segment of the PC industry. Google, which dominates Internet search, already challenges Microsoft on other fronts, including with its free word-processing and spreadsheet software, neither of which has succeeded in denting Microsoft's Office suite. The effort to move Android to netbooks targets Windows, which generated more than 60% of Microsoft's operating profit in its last fiscal year.

If the Dollar Loses its Status - What does that Mean for the U.S. Economy?

Dollar Losing its Status as a Safe Haven
The dollar surged out of the gate in the first months of 2009 only to stumble as the quarter drew to a close. Further obstacles could lie ahead. There are two main impediments in the dollar's path: the latest efforts by the Federal Reserve to jump-start the U.S. economy, and investors' tentative return to riskier types of assets. Both developments mean that investors are less likely to seek out the dollar as a safe port in a storm, something they have done relatively consistently since the global financial crisis intensified last year. Still, the dollar ended the quarter on a positive note. It strengthened 5% against the euro, 9% against the Japanese yen and 4% against a trade-weighted basket of 16 currencies tracked by J.P. Morgan Chase.

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