Wednesday, April 8, 2009

Quick Notes & Articles for the Day - April 8

Wholesale Inventories Drop 1.5% - For the first time in eight months, inventories at U.S. wholesalers declined in relation to sales, a sign that massive inventory liquidation may be having some impact. Inventories at U.S. wholesalers fell 1.5% in February while sales increased 0.6%, the Commerce Department reported Wednesday. The inventory-to-sales ratio -- a key gauge of how lean inventories are -- fell to 1.31 from 1.34, the first decline since June. A year ago, the inventory-to-sales ratio was 1.14. Businesses have cut back on production and new orders as they try to bring their supplies of goods back into balance with demand.

Speculation of Government Aid Lifts Insurers - Shares of U.S. life insurers rallied on Wednesday morning after a published report said the Treasury Department has decided to extend bailout funds to several struggling companies in the sector. According to a report in The Wall Street Journal, an extension of the TARP is expected to be announced in the next several days. Keeping life insurers on solid footing is seen as crucial to maintaining confidence, the report said. Several insurers, including Hartford, Genworth and Lincoln National agreed to buy savings and loans last year so they could call themselves banks, it added. Genworth rose 20%, Hartford added 31%, Lincoln climbed 43%, Principal Financial added 40%, while Prudential Financial and MetLife rose 12% and 10% respectively.

US Oil Inventories Rise Less Than Expected - Crude oil futures rose from their earlier losses Wednesday after the U.S. Energy Information Administration (EIA) reported an increase in last week's crude inventories that was less than analysts had expected. Crude inventories rose 1.7 million barrels in the week ended April 3, the EIA said. Analysts at Platts had expected an increase of 2.3 million barrels. After the data, crude was down 0.5% to $48.91 a barrel, but higher than pre-report trades of down 2%. The EIA also reported gasoline inventories rose 600,000 barrels while distillate stockpiles, which include heating oil and diesel, fell 3.4 million barrels.

Treasury Says GM/Chrysler Plans Will Restore Credit - Auto supplier support programs launched by General Motors and Chrysler will help stabilize the auto supply base and restore credit flows to a critical sector, the U.S. Treasury said Wednesday. The programs began Wednesday and are backed by the Treasury. "The supplier support program will provide supply companies with access to liquidity and protect good-paying American jobs while giving GM and Chrysler reliable access to the parts they need," said a Treasury spokeswoman.

Moynihan May Be in Line to Replace Lewis - Brian Moynihan, the lawyer who took over Merrill Lynch & Co. after the departure of John Thain, is increasingly seen as the right-hand man and potential successor to Bank of America Chief Executive Ken Lewis, according to The Wall Street Journal. In a report published Wednesday, the paper said Moynihan is on the working list of candidates to replace Lewis, who definitely plans to step down within three years. Others on the list include mortgage head Barbara Desoer and Chief Financial Officer Joe Price. The report added that there are tensions inside Merrill, where Moynihan had clashed with top executives.


Bank of America Should Keep Lewis After ‘Mistake,’ Whitney Says - By Sean B. Pasternak - Bloomberg - "Lewis 'has done a great job' except for the Merrill Lynch deal, said Whitney, speaking to reporters today before appearing at a panel discussion in Toronto sponsored by Sprott Asset Management Inc. She called the Merrill Lynch purchase Lewis’s 'one major mistake acquisition.'"

Fraidy-Cat Banker, and Proud of It - By Holman W. Jenkins, Jr. - The Wall Street Journal - "'Build things slowly.' The aphorism comes from a family video of the late Jackson Stephens, co-founder of Little Rock's Stephens Inc., the privately held investment bank that bears his name. The financial world, until recently, was engaged in a different experiment -- build things fast. Use lots of leverage. Let diversification and hedging extract stable, safe returns from a fast-moving, risky world. We all know how that ended."

Sources: The Wall Street Journal, Marketwatch, Platts

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