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.
Treasury Announces More PPIP Investors; Roubini: Market Due For Correction; BofA Planning Emergency CEO Appointment; Goldman Could Fetch $1 Billion From A CIT Bankruptcy; Mazda Raising Money for Hybrids; Nomura Selling $5.1 Billion in Stocks; India Farmers Spurn ArcelorMittal Investment; Brazil Becomes IMF Net Creditor
The U.S. Treasury said yesterday (Monday) that three more funds - AllianceBernstein LP (NYSE: AB)and its sub-advisorsGreenfield Partners LLC and Rialto Capital Management LLC, BlackRock Inc. (NYSE: BLK) and Wellington Capital Management Co. - have raised enough capital to receive government financing to buy toxic assets as part of the Treasury's Public-Private Investment Program (PPIP). The program, which has been scaled back, hopes nine funds will help the government buy up as much as $40 billion in bad assets from banks' balance sheets, Reuters reported.
Nouriel Roubini, the NYU professor who predicted the global financial crisis, said the slow, gradual pace of economic recovery may disappoint investors, leading to a drop in stock and commodities prices. "Markets have gone up too much, too soon, too fast," Roubini told Bloomberg News. "I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U-shaped. That might be in the fourth quarter or the first quarter of next year." The Standard & Poor's 500 Index is up 51% from its 52-week low in March, and Europe's Dow Jones Stoxx 600 is up 48%, Bloomberg reported.
Should Kenneth Lewis' legal issues press too hard against his chief executive duties, Bank of America Corp. (NYSE: BAC) plans to have an emergency CEO ready to replace him, a source told The Wall Street Journal. Bank chairman Walter Massey started the search for an emergency executive before Lewis announced his retirement, the source said. And the new team is separate from the committee formed last week to find Lewis' replacement.
If CIT Group (NYSE: CIT) files Chapter 11 bankruptcy, Goldman Sachs Group Inc. (NYSE: GS) would be owed a $1 billion payment as part of the $3 billion rescue package it gave CIT in June 2008, a source told Reuters. Goldman would also receive a lump-sum payment for the insurance it holds if CIT goes bankrupt.
Japan's Mazda Motor Corp. said it plans to sell $1 billion (96 billion yen) in new shares and treasury stock, most of it to fund development of "environment- and safety-related development," including petrol-electric hybrids, where it lags compared to its domestic competitors Toyota Motor Corp. (NYSE ADR: TM) and HondaMotor Corp. (NYSE ADR: HMC), The Financial Times reported. The rest of the money raised will fund factory upgrades and general capital investment, the company said.
Seeking to finance U.S. expansion, Japan's Nomura Holdings Inc. (NYSE ADR: NMR) will sell as much as 454.4 billion yen ($5.1 billion) in stock on the Tokyo Stock Exchange at a 4.1% discount to yesterday's (Monday's) closing price. This is the second such share sell for Japan's biggest brokerage, which lost money its past fiscal year ended in March from its purchase of Lehman Brothers Holdings Inc.'s operations in Asia and Europe a year ago, Bloomberg reported.
The world's largest steelmaker, ArcelorMittal (NYSE ADR: MT), may scale back its $20 billion investment in India because of delays springing from unsuccessful bids for land from farmers and other property owners in the states of Jharkand and Orissa, Lakshmi Mittal, ArcelorMittal's chairman, told The Financial Times. "If we cannot make progress in these two sites, we will have to abandon the idea of starting the projects there and look for other places in India for our expansion," Mittal said, adding he is committed to building at least one steel plant in India.
Using part of its foreign reserves, Brazil will buy up to $10 billion in two-year bonds from the International Monetary Fund (IMF). Brazil's Finance Minister Guido Mantega said the investment will help diversify the country's reserves, but more importantly, the investment will turn Brazil into a net creditor of the IMF for the first time, Bloomberg reported.