With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Fed Holds Funds Rate; Buffett: U.S. May Need More Stimulus; Jobs' Liver Transplant Confirmed; Fewer Americans Traveling on 4th Despite Lower Gas Prices; Monsanto Profits Drop 14%; SEC Proposes New Rules for Money Market Funds; Recession Yields Fewer Millionaires
As unemployment in the United States is expected to keep rising, the world's largest economy may need another stimulus package, billionaire Warren Buffett said in a Bloomberg Television interview. "It looks like we're going to need more medicine, not less," Buffett said. "We're going to have more unemployment. The recovery really hasn't got going." Buffett, who like many economists sees the unemployment rate surpassing 10%, said the economy "hasn't turned yet. There's no telling how long it will take. It will happen."
The Methodist University Hospital Transplant Institute in Memphis, Tenn.confirmed a weekend Wall Street Journal report that said Apple Inc. (Nasdaq: AAPL) Chief Executive Officer Steve Jobs had a liver transplant. The confirmation came with the permission of Jobs, who has an "excellent prognosis." The hospital did not say when the transplant took place, but The Journal puts the procedure at sometime in April, citing an unnamed source. Billionaire investor and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Chairman and Chief Executive Officer Warren Buffett weighed in on the controversy on whether Jobs should have revealed his condition to investors in an interview with CNBC: "If I have any serious illness, or something coming up of an important nature, an operation or anything like that, I think the thing to do is just tell the American public, the Berkshire shareholders about it. I work for 'em. Some people might think I'm important to the company. Certainly Steve Jobs is important to Apple. So it's a material fact."
Although gas prices are significantly lower than they were at this time last year, fewer Americans will be traveling on July Fourth weekend, according to a survey by AAA. The auto club expects 37.1 million travelers, or 12% of the U.S. population to take a trip of 50 miles or more from home this year, a decrease of 1.9% from last year and a 12% decrease from 2007, months before the recession began. Factors such as the rising unemployment rate and sagging personal incomes are to blame for the drop in travel, AAA said.
The world's largest seed maker suffered a 14% drop in profit and disclosed plans to cut 900 jobs, blaming the deteriorating performance of its mainstay revenue source. Monsanto Co. (NYSE: MON) reported a net income of $694 million, or $1.25 per diluted share on revenue of $3.1 billion for the third quarter. That compares to a net income of $811 million, or $1.45 per share on revenue of $3.5 billion in the same quarter last year. Executives were not expecting a drop in performance of the herbicide Roundup, once a primary revenue source for the company. Several generic products hurt the prices for Roundup and profit on the product is expected to drop by half this year, Monsanto said. Shares for the company closed yesterday (Wednesday) at 76.16, down 3.9%.
The Securities and Exchange Commission (SEC) voted unanimously to institute tough new rules for money market funds to help avoid a repeat of what happened when the collapse of the Reserve Primary Fund triggered a flurry of redemptions in the $3.6 trillion market. The proposal will prohibit money market funds from buying illiquid securities and requiring them to hold at least 5% in liquid securities such as cash. "These proposals are designed to increase the ability of money market funds to weather future economic storms," said SEC Chairman Mary Schapiro. "The stability of money market funds in times of turmoil is enormously important both for investors and for the securities markets. The proposals also would improve the operations of money market funds and oversight of their investments during calmer times, which can further protect funds and increase public awareness of potential risks."
The worst recession in 60 years has taken its toll on everyone, including the millionaire's club. According to a report from Merrill Lynch Global Wealth Management and consulting firm Capgemini, the number of people with assets of between $1 million and $30 million fell by 14.9%, BusinessWeek reported. The drop in millionaires represents the largest decline in the report's 13-year history, said Ileana van der Linde, a principal with Capgemini. "We've never seen such a decline in all the years we've been doing the report," she said. The recession has now reduced the cumulative wealth of the world's millionaires by 19.5% to $32.8 trillion.