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FBI Probing Countrywide for Fraud; Japan Machinery Orders up 19.6%; Ronald McDonald Has Reason to Smile; Crude Oil Spouts to Another Record High; Berkshire Bails on White Mountains; $2.2 Billion Buyout of Nationwide; Bear Stearns Cash Poor?; Layoffs for Lehman
- The Federal Bureau of Investigation is probing Countrywide Financial Corp. (CFC) for possible securities' fraud – specifically, whether the largest U.S. mortgage lender misrepresented its financial condition and the quality of its loans in securities filings. This is on top of the array of lawsuits and probes Countrywide is facing over its lending practices. Bank of America, who agreed in January to buy Countrywide for about $4 billion in stock, plans to proceed with its bid.
- January machinery orders in Japan rose 19.6 % from December, the fastest pace in seven years – with orders for train cars, airplanes and a steam generator accounting for half the gain, Bloomberg reported. Much of the demand comes from emerging markets and China, and if they can sustain their growth, Japan's economy can hold up during the global credit crisis.
- McDonald's Corp. (MCD) posted a 12% rise in same-store global sales for the month of February, the fast food giant (Monday). Sales were bolstered by a weak dollar and an extra selling day for the leap year. The fast-food chain's U.S. same-store stores rose 8.3% thanks to a strong performance from its breakfast, coffee and "everyday value" offerings. And the Asia/Pacific, Middle East and Africa region posted an 11% increase stemming from "locally relevant and affordable" menu choices, the company said.
- Crude oil rose to a new record above $108 a barrel in New York yesterday (Monday). Crude oil for April delivery rose $2.75 (2.6%) to $107.90 a barrel during afternoon trading on the New York Mercantile Exchange. Futures climbed as high as $108.21 a barrel, the highest since trading began in 1983.
- Seven years after Berkshire Hathaway Inc. (BRK.A, BRK.B) invested $300 million in White Mountains Insurance Group (WTM), White Mountain's CEO announced that Warren Buffett & Co. would be selling its 16.3% stake in the company. After aiding White Mountains in its acquisition of CGU/OneBeacon in 2001, Berkshire will receive $751 million in cash and a subsidiary containing Commercial Casualty Insurance Company and International American Group.
- Shares of Nationwide Financial Services Inc. (NFS) soared 25.81% yesterday (Monday) after its parent company, Nationwide Mutual Insurance Co. made a $2.2 billion offer to buy all outstanding shares in a move to simplify the company's ownership structure, Reuters reported. The deal offers Class A common stockholders $47.20 per share in cash, which represents a 24% premium over Friday's closing price of $37.93. Shares increased $9.79 to close at $47.72 yesterday.
- The Bear Stearns Cos. Inc. (BSC) shares fell the most in a decade yesterday (Monday) on concerns the firm does not have enough capital to cover its positions. "There's an insolvency rumor and concerns on liquidity, that they just have no cash," Michael Mainwald, head of equity trading at Lek Securities Corp. in New York, told Bloomberg News. "There's been rumors of this for the past week or two." Shares dropped $7.78, an 11.10% decline, to close at $62.30 yesterday.
- Wall Street investment banker Lehman Brothers Holdings Inc. (LEH) will layoff 5% of employees. Cuts are being made company-wide and the affected employees were to be notified yesterday (Monday). As of its most recent annual report dated Nov. 30, Lehman Brothers employed 28,600 people. Shares dropped $3.38, a 7.29% decline, to close at $42.98 yesterday.