U.S. Sues UBS; Unemployment Highest Since 1967; BoA Criticizes Housing Plan; Oil Soars Over $39; HP Lowers Forecast; Brazilian Jetmaker Cuts 20% of Workforce
The U.S. government yesterday (Thursday) sued UBS AG (UBS) to force Switzerland’s largest bank to release the identities of 52,000 Americans who allegedly hid their secret Swiss accounts from U.S. tax authorities, Bloomberg reported. U.S. customers failed to report income earned and pay U.S. taxes on accounts that held about $14.8 billion in assets during this decade, according to the court filing. The lawsuit came a day after UBS agreed to pay $780 million and disclose the names of about 250 account holders to avoid U.S. charges that it helped thousands of wealthy Americans evade taxes.
The number of U.S. workers seeking unemployment aid jumped to a record high of nearly 5 million, the government said yesterday (Thursday), as the slumping economy made it increasingly difficult to find jobs. The number of unemployed still on the benefits rolls after drawing an initial week of aid surged 170,000 to 4.99 million in the week ended February 7, the Labor Department said. It was the highest reading on records dating to 1967, Reuters reported.
The benefits of the Obama administration’s housing plan will be limited by restrictions on which mortgages are eligible, according to Bank of America Corp. (BAC) analysts. Only about 50% to 60% of securitized prime jumbo or Alt-A loans meet the loan-modification standards under terms of the $275 billion plan, which includes government payments to lenders, mortgage servicers and borrowers, Bloomberg reported.
Oil prices jumped 14% to top $39 a barrel yesterday (Thursday) after U.S. government data showed an unexpected fall in crude inventories last week due to lower imports and higher demand. The data snapped a seven-week streak of crude buildups in the U.S., where the flagging economy has dragged down fuel use, Reuters reported. U.S. crude futures for March delivery, which expire on Friday, rose $4.86 to settle at $39.48 a barrel, marking the biggest settlement gain since December 31. April delivery contracts traded up $2.77 to settle at $40.18 a barrel.
Hewlett-Packard Co. (HPQ) lowered its forecast for 2009 profit yesterday (Thursday), as revenue in the fiscal first quarter was only $28.8 billion, about $3 billion shy of analysts' expectations. The computermaker showed it isn't immune to the pullback in consumer and corporate spending as sales of personal computers rose at the slowest pace in six years over the holidays, according to research firms Gartner and IDC. Sales of personal computers, which make up about one-third of HP's total sales, fell 19% to $8.87 billion, and sales in HP's revenue and imaging business fell 19% to $6 billion. HP expects revenue of $27.4 billion to $27.7 billion in the current quarter, which would be a 2% to 3% decline from revenue in the second quarter of 2008, MSNBC reported.
Brazilian aircraft maker Embraer (ADR: ERJ) said yesterday (Thursday) it will lay off about 20% of its workforce or about 4,200 employees around the world, citing a sharp downturn in the aviation market amid the global economic crisis, Reuters reported. The company, which also makes business jets and military aircraft, cut its delivery forecast for this year to 242 jets from a previous estimate of 270. With the new delivery forecast, Embraer estimates it will bring in $5.5 billion in revenue in 2009, much less than it had initially expected. It also cut its investment plan for this year to $350 million from $450 million.