NBER: U.S. in Recession Since Dec. 2007; Fed Reserve Could Buy T-Bills; JP Morgan Sees 0% Interest Rates; Pilgrim’s Pride Files for Bankruptcy Protection; Consumer Credit Crunch in the Making; Crude Slides on Recession Outlook; J&J to Buy Mentor
- It’s official: The United States has been in a recession since December 2007, the National Bureau of Economic Research said yesterday (Monday). Already 12 months into it, this recession is longer than eight of the 10 recessions the U.S. has experienced since World War II, CNNMoney reported. Should it continue past the June 2009, it will be the longest.
- U.S. Federal Reserve Chairman Ben Bernanke said the central bank could buy long-term Treasury securities to help revive the economy. “This approach might influence the yields on these securities, thus helping to spur aggregate demand,” he said in a speech yesterday (Monday) in Austin, Texas, Bloomberg reported.
- A report from JP Morgan Securities (JPM) predicts the U.S. Federal Reserve will lower its benchmark federal funds rate to 0% and hold it there at least until the end of 2009. The current rate is 1.0%, and many analysts predict the Fed will lower it to 0.5% at its December 15-16 meeting, Reuters reported.
- Pilgrim’s Pride Corp. (PPC), the largest U.S. chicken producer, filed for Chapter 11 bankruptcy protection after four consecutive quarters in the red fueled by rising grain costs. The company is the poultry supplier to Wal-Mart Stores, Inc. (WMT) and Kentucky Fried Chicken, a subsidiary of Yum! Brands Inc. (YUM), Bloomberg reported.
- The U.S. credit-card industry could pull back more than $2 trillion of credit lines over the next 18 months due to risk aversion and regulatory changes banking analyst Meredith Whitney said yesterday (Monday). "Already, we have witnessed the entire mortgage market hit a wall, and we believe it will, for the first time ever, show actual shrinkage over the next few months," she wrote. The credit card market will be 18 months behind the mortgage market and will begin to shrink by mid-2010, Whitney said.
- Light, sweet crude for January delivery yesterday (Monday) fell $5.15, more than 9%, to settle at $49.28 a barrel on the New York Mercantile Exchange. Reports showing declines in both manufacturing activity and construction spending also contributed to the decline.
- Johnson & Johnson (JNJ) said yesterday (Monday) that it would buy cosmetic-product and breast-implant maker Mentor Corp. (MNT) for $1.07 billion. J&J will start a cash tender offer for $31 per share – almost double Mentor's Friday closing price of $16.15 a share.