WALL STREET JOURNAL: The Wall Street Journal reported that Boeing (BA) and Airbus are facing a problem with the production of their existing planes with a shortage of galleys, seats and toilets that is increasing their manufacturing costs, and slowing down their assembly lines and millions of dollars in payments from aircraft customers…The Wall Street Journal also reported that Royal Bank of Scotland (RBS) was pushed into the red after it said its net loss was GBP802M, compared with a profit of GBP3.56B a year earlier. The bank reported the net less after taking GBP5.93B in write-downs on credit market exposure in the first six months of the year prior to its GBP12B rights issue in the spring…
FINANCIAL TIMES: According to figures published by the Official Airline Guide, the Financial Times reported that in order to offset record fuel costs, airline carriers will offer 59.7M fewer seats in Q4 than in Q407, resulting in a drop of both the number of flights and seats by 7%. The domestic U.S. market will likely account for about a third of the cutbacks, or around 20M seats…BLOOMBERG: UBS (UBS) may have to buy back auction rate securities valued at $25B, an inside source said. Bloomberg reported that the Swiss bank is close to settling state and federal claims that it fraudulently sold the securities by agreeing to purchase them from its retail and institutional clients…
UBS may repurchase $25B in auction rate securities-Bloomberg
UBS (UBS) may have to buy back auction rate securities valued at $25B, an inside source said. The Swiss bank is close to settling state and federal claims that it fraudulently sold the securities by agreeing to purchase them from its retail and institutional clients. If UBS does buy back $25B in auction rate securities, it would easily surpass the value of similar settlements reached by Citigroup (C) and Merrill Lynch (MER).
Asian Markets Wrap-Up for Friday, August 8
Asian stocks retreated and were lead down by Chinese stocks affected by speculation of possible terrorism at the Beijing Olympics…JAPAN: The Nikkei gained 43.42, or 0.3 percent, to 13,168.41, while the broader Topix index rose 1.12, or 0.1%, to 1,259.93. Toyota (TM) was up 5.5% to Y4,830. Mazda Motor Corp. increased 2.6% to Y589. Aisin Seiki Co. added 2.2% to Y2,830. Advantest (ATE) jumped 7.1% to Y2,500. Mitsui O.S.K. fell 5.9% to Y1,200…CHINA: The CSI 300 Index slid 128.98, or 4.7%, to 2,591.46. Citic Securities lost 4.6% to 21.39 yuan. Haitong Securities Co. slumped 8.2% to 21.52 yuan. China Shipping Development Co. declined 8.5% to 16.07 yuan. China Cosco Holdings Co. tumbled 8.6% to 16.17 yuan…AUSTRALIA: The S&P/ASX 200 Index gained 2.90, or 0.06%, to 4,986.20…AROUND ASIA: In Hong Kong, the Hang Seng Index declined -218.99, or -0.99%, to 21,885.21. Lenovo Group (LNVGY) jumped 3.2% to HK$5.41. China Mobile (CHL) fell 1.8% to HK$100.10…In South Korea, the Kospi index advanced 4.72, or 0.3%, to 1,568.72…In New Zealand, Telecom Corp. (NZT) dropped 7.6% to NZ$3.40.
IBM will slash the wages of 3,500 workers-Times Herald-Record
IBM (IBM) announced that it would reduce the salaries of 3,500 workers at its upstate New York and Vermont facilities. The workers will be hit with 10% wage cuts, IBM said. Beginning in January, IBM will discontinue paying 20% bonuses for shift employees who work seven 12-hour days over a two-week period, the company added.
Royal Bank of Scotland credit market write-downs result in net loss-WSJ
For the fist six months of the year Royal Bank of Scotland (RBS) showed a net loss of GBP802M versus a GBP3.56B profit for the same period a year ago, mostly a result of its big write-downs related to the credit markets, reports the Wall Street Journal.
Google said to be buying Sprint Nextel-The Inquirer
Troubled Sprint Nextel (S) is rumored to being bought by Google (GOOG), considered by some analysts to be the best possible candidate.
Georgia downs 2 Russian warplanes; Russian tanks enter South Ossetia-Reuters
President Saakashvili says Georgia has downed two Russian warplanes over Georgian territory; 150 Russian tanks, armored vehicles entered South Ossetia.
Russian planes bomb Georgian military airbase-Reuters
“They have declared war against us,” says Kakha Lamaia, a senior Georgian security official. Russian jets have bombed the Vaziani military airbase outside Tbilisi, Georgia’s capital.
U.S. equity futures now point to a lower open
U.S. equity futures are pointing to a lower open. The futures had earlier been higher until Fannie Mae (FNM) announced its quarterly earnings which were much lower than expected. The company also announced that it would cut its dividend to 5 cents from 35 cents, but they also said that foreclosures and defaults continued to increase. The news was a reality check after yesterday’s news that pending home sales were better than expected. Adding to the weakness in the market was news that Merrill Lynch (MER) and UBS (UBS) offering to buy back billions of dollars of auction rate securities from clients, adding to the length of time it will take to recover from the current financial crisis.
