Gloomy Beige Book Report; Weak August for Autos; Layoffs at GMAC; Fraud Charges for Former Credit Suisse Brokers; Factory Orders Rise; Staples Profit Squeezed; United Technologies Lands $80m Jet Deal; Liberty Spins Off DirectTV
- The U.S. Federal Reserve released its Beige Book report yesterday (Wednesday), which looks at the economic conditions in the 12 Fed regions. "The pace of economic activity has been slow in most districts," the report said, Bloomberg News reported. "Wage pressures were characterized as moderate by most districts amid a general pullback in hiring."
- August was another weak month for auto sales as most major carmakers reported declines. Ford Motor Co. (F) reported 26.6% decline, while General Motors Corp. (GM) sales fell 20.4%. Toyota Motor Corp. (ADR: TM) fared better with a 9.4% decline, but Japanese rival Nissan Motor Co. Ltd. (ADR: NSANY) had a surprising 13.6% increase, Reuters reported.
- GMAC Financial Services (GMA) announced yesterday that it would close all 200 GMAC Mortgage retail offices and reduce and its Residential Capital LLC unit in an effort to cut costs and streamline operations, The Wall Street Journal reported. Approximately 5,000 employees, 60% of Residential Capital staff, will be let go.
- U.S. government officials charged two former Credit Suisse Group AG (ADR: CS) brokers with fraud and conspiracy yesterday (Wednesday) concerning sales of subprime-related debt, the International Herald Tribune reported. The two brokers gave clients the impression the debt was secured by federally guaranteed loans. "In September 2007, these former employees resigned after we detected their prohibited activity and promptly suspended them," the bank said. "Credit Suisse immediately informed our regulators."
- Orders to U.S. factories rose by a larger-than-expected amount in July, the Commerce Department said yesterday (Wednesday). New orders increased by 1.3%t in July, much stronger than the 0.8% increase economists expected. The July advance follows a 2.1% increase in June and represents the fifth straight rise in orders, The Associated Press reported.
- Staples Inc. (SPLS) the world's largest office supply company, reported profit of $150.2 million, or 21 cents per share, for the quarter ended Aug. 2. Down from $178.8 million, or 25 cents per share, a year ago. Sales climbed 18% from $4.29 billion to $5.07 billion.
- A division of United Technologies Corp. (UTX) received a $78.1 million contract from the U.S. Navy for parts and materials to build propulsion systems for a variant of the Joint Strike Fighter, The Associated Press reported yesterday (Wednesday). United Technologies' Pratt & Whitney will also build 10 propulsion systems for the U.S. Air Force, two of the same for the Royal Netherlands Air Force and three for the United Kingdom's Royal Navy.
- Liberty Media Corp. (LMDIA) will spin off its stake in DirecTV Group Inc. (DTV) and other assets into a publicly traded company called Liberty Entertainment Group SA, according to Reuters. Liberty's 50% stake in DirecTV will be the dominant asset in Liberty Entertainment, accounting for more than 80% of its value.