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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.
More AIG Execs Threaten to Quit Over Pay; Bernanke Not Raising Rates Anytime Soon; Gold, Oil Fall After Fed Comments; October Consumer Credit Falls Less Than Expected; SEC Charges Former New Century Execs with Fraud; Cadbury to Respond to Kraft Bid Next Week; BlackRock Plans First Debt Offering in Two Years; Commercial Loan Delinquencies at Record High; RIM's BlackBerry to Get Wider Reach in China
- Five high-ranking American International Group Inc. (NYSE: AIG) executives last week said they are ready to resign if U.S. "pay czar" Ken Feinberg cuts their compensation significantly, The Wall Street Journal reported, citing people familiar with the matter. Among the executives is are the company's general counsel, Anastasia Kelly and the heads of AIG's largest insurance businesses, The Journal said. AIG's new Chief Executive Officer Robert Benmosche, who was not among those threatening to quit last week, also threatened to quit last month over pay limitations.
- It's too soon to know whether the United States' recovery will last, U.S. Federal Reserve Chairman Ben Bernanke said in a speech to the Economic Club of Washington D.C. Bernanke also pledged to keep key interest rates at record lows for an "extended period," citing "formidable headwinds" that include a still-weak job market, cautious consumers and tighter credit. These factors "seem likely to keep the pace of expansion moderate," he said. The Fed also said inflation is under control and expected to remain tame.
- Without an immediate inflation threat, gold futures for December delivery yesterday (Monday) fell for their second consecutive session, declining 0.5% to settle at $1,163.40 per ounce in trading on the New York Mercantile Exchange (NYMEX). The yellow metal's record run was halted on Friday, when it fell 4% as the dollar strengthened. Crude oil futures for January delivery dropped by 0.8% to $74.89 a barrel on the NYMEX, while looming cold weather in the Midwest and Northeast United States pushed January natural gas futures up 8.6% to $4.981 per million British thermal units (BTUs). The dollar gave back some of its Friday gain yesterday, falling 0.5% to 75.574.
- Consumer credit fell by $3.51 billion in October, or 1.7% at an annual rate to $2.48 trillion a U.S. Federal Reserve report showed. That was significantly lower than the $9.4 billion drop expected by 34 economists polled by Bloomberg News. "The closer we are to turning the corner in the labor markets, the closer consumers will be to taking on more credit," said Chris Rupkey, chief financial economist at The Bank of Tokyo-Mitsubishi UFJ Ltd. told Bloomberg.
- The U.S. Securities and Exchange Commission (SEC) said it has charged three former executives at now-bankrupt lender New Century Financial Corp. with fraud, alleging they tried to disguise the company's rapidly deteriorating performance during the subprime mortgage crisis while releasing internal reports entitled "Storm Watch." Those named in the civil lawsuit are former Chief Executive Officer Brad Morrice, former Chief Financial Officer Patti Dodge, and former Controller David Kenneally. "New Century shareholders took a double-hit: The company's mortgage assets and business performance became increasingly impaired, and management manipulated its numbers and concealed its deteriorating performance," said SEC Enforcement Director Robert Khuzami.
- Cadbury PLC (NYSE ADR: CBY) will make its formal response to Kraft Foods Inc.'s (NYSE: KFT) $16 billion takeover bid by Dec. 14, the British confectioner said. In spite of widespread speculation that competing offers from various candy makers and other food companies would make a competing offer would be made, that had not come to fruition as of yesterday (Monday).
- Asset manager BlackRock Inc. (NYSE: BLK) is planning to sell $2.5 billion of bonds in three parts, a person familiar with the matter told Bloomberg News. The $500 million of three-year notes may price to yield 110 basis points more than similarly matured Treasuries, the $1 billion of five-year debt may yield 135 basis points above the benchmarks, while the $1 billion of 10-year bonds may pay a spread of 160 basis points, said the person, who declined to be identified because the terms have yet to be set.
- Past-due commercial mortgage-backed securities rose 4.06% from 1.17% a year earlier, the Mortgage Bankers Association (MBA) said yesterday (Monday). That's the most since the body started tracking such data in 1997. Roughly 3.43% of bank-owned loans on offices, apartment buildings, shopping centers and other income-producing properties were at least 90 days past due, up from 1.38% a year earlier, the MBA said. "Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy," said Jamie Woodwell, MBA's vice president of commercial real estate research. "The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans."
- Research in Motion Ltd. (Nasdaq: RIMM) said it inked two new distribution deals with Digital China Holdings (PINK: DCHIF) and China Mobile Ltd. (NYSE: CHL) to market its line of BlackBerry smartphones in China, the world's largest mobile market. The deal is expected to put the BlackBerry in the hands of consumers in the Red Dragon, where use of RIM's smartphone is mostly limited to corporate users, the Financial Times reported.