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-Caveat Lector-
Dollar hits another record low vs. euro
Weak dollar likely to be hot topic at meeting of G7 finance ministers as
European officials worry about hit to exports.
October 19 2007: 5:52 AM EDT
_http://money.cnn.com/2007/10/19/markets/dollar_vs_euro.ap/index.htm_
(http://money.cnn.com/2007/10/19/markets/dollar_vs_euro.ap/index.htm)
BERLIN (AP) -- The dollar hit a new all time-low against the 13-nation euro
Friday, breaking through the previous record, set a day earlier, as the U.S.
currency remained under pressure.
In morning European trading, the euro bought US$1.4319 - surpassing the mark
of $1.4310 set Thursday - before settling back slightly to $1.4306.
The euro bought $1.4293 in late New York trading on Thursday. The British
pound climbed to $2.0472 on Friday from $2.0448 in New York the day before,
while
the dollar slipped to purchase 114.88 Japanese yen from 115.65 on Thursday.
The further dip in the dollar followed another weak economic report from
Washington.
Currency will be a hotly debated topic at an annual G-7 meeting of central
bank heads and finance ministers to be held in Washington Friday, according to
Michael Woolfolk, senior currency strategist at the Bank of New York.
"The fact that the euro has risen suggests that the negative dollar sentiment
is strong and persistent, due to recent deterioration in interest rate
differentials and growth differentials," Woolfolk said.
European officials are worried that the euro's rise against the dollar will
hurt exports to the U.S. and China. The European Central Bank is expected to
raise interest rates by January, while in the United States, the Federal
Reserve
will likely reduce interest rates at the end of the month, Woolfolk said.
The U.S. Labor Department reported Thursday that applications for jobless
benefits hit 337,000 last week - up 28,000 from the week before and the biggest
one-week surge since claims jumped 42,000 in the week of Feb. 10.
The jobless rate increase in the U.S. was more than four times the gain of
6,000 that economists had been expecting and was taken as a possible sign that
the labor market is starting to weaken under the weight of a severe housing down
turn and tight credit markets.
Earlier this week, both U.S. Treasury Secretary Henry Paulson and Fed
Chairman Ben Bernanke warned that the housing crisis was likely to last longer
than
had been expected.
Already on Wednesday, the U.S. Commerce Department said the construction of
new homes and apartments plunged to a 14-year low in September, while the
National Association of Home Builders' survey of builder confidence fell in
early
October to the lowest level seen in the 22-year history of the survey.
-------------------------
Brutal selloff on Wall Street
Dow down around 367 points, its third worst day of the year, on fears about
credit and housing sector, mediocre earnings, record-high oil prices, the slide
in the dollar, and what the Fed will do next.
By Alexandra Twin, CNNMoney.com senior writer
October 19 2007: 4:15 PM EDT
_http://money.cnn.com/2007/10/19/markets/markets_0405/index.htm_
(http://money.cnn.com/2007/10/19/markets/markets_0405/index.htm)
NEW YORK (CNNMoney.com) -- Stocks tanked Friday as worries about more
problems in the bank sector, slower corporate earnings growth, the weak dollar,
and
record-high oil prices all came to a head.
The Dow Jones industrial average lost around 367 points, according to early
tallies, seeing its third-biggest point loss of the year since the steep
selloff in early August in the midst of the credit and mortgage market mess.
The decline Friday left the blue-chip indicator at its lowest point since
Sept. 17, the day before the Federal Reserve cut interest rates for the first
time in 4 years, triggering a rally that was cut short this week.
The S&P 500 index lost 2.6 percent and the Nasdaq composite gave up 2.7
percent.
Disappointing earnings from Caterpillar, Honeywell and others exacerbated
concerns about weak third-quarter profits. Meanwhile, Wachovia became the
latest
financial services firm to reveal how the credit and mortgage market crisis
had hit its profits.
Stubbornly high _oil prices_
(http://money.cnn.com/2007/10/19/markets/oil/index.htm?postversion=2007101911)
- which briefly topped $90 a barrel - added to
the day's weakness, as did the _dollar_
(http://money.cnn.com/data/currencies/index.html) , which fell to a new record
low against the euro and also
slipped versus the yen. Treasury prices surged, as investors sought safety in
the
comparably safe haven of bonds.
Here's what was moving the market late in the session.
Stock declines were broad based, with all but 3 of the Dow 30 slumping.
Stocks have had a tough week as investors digested a batch of lackluster
earnings reports and tried to put into context what the run up in oil prices
could
mean for consumer spending and the economy.
"We're seeing this kind of selloff because of where oil is and because the
banks are reminding people that we have a lot further to go before we get to
the
bottom of the real estate issue," said John Forelli, portfolio manager at
Independence Investments.
Forelli said that this marks a change in thinking from earlier in the month,
when a rash of billion-dollar writedowns from big banks seemed to give
investors a "the worst is behind us" perception.
The run up in oil prices was also significant in that it revives fears about
whether it will drive up inflationary pressures enough to limit the Federal
Reserve's ability to cut interest rates further, even if the economic growth
deteriorates enough to warrant more cuts.
"You started the day off with trader's superstitions because of the
anniversary of the 1987 crash and meanwhile you've had a bunch of companies
come out
talking about the weakness of the economy," said John Wilson, chief technical
strategist at Morgan Keegan.
Wilson said these were among the factors giving investors a reason to retreat
after pushing the Dow and S&P 500 to record highs last week.
Market breadth was negative. On the New York Stock Exchange, losers beat
winners four to one on volume of 1.10 billion shares. On the Nasdaq, decliners
topped advancers three to one on volume of 1.57 billion shares.
With 24 percent of the S&P 500 having reported, earnings are currently on
track to have fallen 0.1 percent from the same period a year ago, according to
the latest Thomson Financial figures, which combine reported and expected
earnings. Even if overall earnings growth ends up a few percentage points
higher, as
is typical, the third-quarter will still represent the worst quarterly growth
in more than 5 years.
Also adding to the stock turmoil Friday: the 20th anniversary of Black
Monday, the second biggest market crash in history, when the Dow lost 22.6
percent
in a single day for a loss of more than 508 points.
A decline of roughly 23 percent off of Thursday's market close would be
equivalent to nearly 3200 points.
The Dow's 508-point loss was the third worst in history. The worst on a point
basis was Sept. 17, 2001, when the stock market resumed trading after having
been closed for four sessions after the 9/11 terrorist attacks.
The biggest market crash in history happened on Dec. 12, 1914, when the Dow
lost 24 percent, according to Dow Jones indexes. On that day, the New York
Stock Exchange reopened after having been closed for most of the previous 3-1/2
months due to increased selling at the onset of World War 1.
--------------------------
CEOs, Wall Street warn of recession
Fri Oct 19, 2007 2:52pm EDT
_http://www.reuters.com/article/ousiv/idUSN1933582620071019_
(http://www.reuters.com/article/ousiv/idUSN1933582620071019)
By Bill Rigby
NEW YORK (Reuters) - Corporate chiefs and Wall Street investors warned of
recession and rising costs in the United States on Friday, as a clutch of
leading
companies reported mixed quarterly results.
The comments struck the most pessimistic note in recent months as CEOs
assessed the damage on the U.S. economy from a tumbling housing market and
continuing problems in the debt market.
The U.S. economy will be "near to, or even in, recession" next year,
according to Caterpillar Inc, the world's top maker of earth-moving equipment,
in its
earnings report on Friday.
"So we've put (the chance of a) recession in probably a 50-50 type range,"
Caterpillar's Chief Financial Officer Dave Burritt told Reuters in an
interview.
The Peoria, Illinois-based company reported earnings below analysts'
forecasts and cut its full-year profit forecast, despite strong overseas sales
compensating for weakness in the United States.
In a strikingly bleak domestic outlook, Caterpillar described the U.S.
trucking and non-metal mining sectors as already "in recession," and the
residential
building industry as in "severe recession" -- the first time the company has
used the "R-word" in recent years and a categorically downbeat assessment from
a company viewed as a bellwether of the U.S. industrial economy.
Diversified manufacturer 3M Co, which spans the economy with products from
Scotch tape to optical films, also offered a gloomy view.
"I don't know if there's any of us out here that would hold a lot of optimism
in the immediate future for (U.S.) housing," said 3M Chief Executive George
Buckley on a conference call with analysts.
Honeywell International Inc, another wide-ranging industrial corporation,
reported higher quarterly profits on Friday, but stressed that higher raw
material prices are becoming a drag across all its sectors, sparking renewed
inflation fears on Wall Street.
"The inflation theme reared its head again and may be a threat to earnings
for the manufacturing sector," said Peter Sorrentino, portfolio manager at
Huntington Asset Advisors, which holds shares of large-cap industrials
including
General Electric Co, United Technologies Corp and Honeywell.
"Over the next three months, people are going to be taking a real serious
look at their expectations for next year, especially on the cost side," said
Sorrentino. "That's going to put some pressure on operating results next year."
--------------------
Tiger's Robertson Sees 'Doozy of a Recession'
By CNBC.com | 19 Oct 2007 | 04:22 PM ET
_http://www.cnbc.com/id/21382026_ (http://www.cnbc.com/id/21382026)
(http://www.cnbc.com/id/21382026#)
Hedge fund legend Julian Robertson said Friday he expects the U.S. economy is
heading for a "doozy of a recession."
"I think we are going to have a doozy of a recession," Robertson told CNBC's
Erin Burnett. "I think the credit situation is worse than anybody realizes,
and...I think we're getting little inklings of that. I don't think any of the
normal indicators you would look at in the economy are really very strong. As a
matter of fact, they are weak, and not really getting any better."
Robertson, founder of the investment firm Tiger Management, also expressed
some concerns about the devaluation of the dollar.
"I think the Federal Reserve will trash the dollar until such times that
there is some turn around in the economy, or until such time that they see that
as
self defeating," he said.
Robertson explained that a weak dollar helps companies that export products
outside the U.S.
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