by Calculated Risk on 9/16/2008 04:02:00 PM

Morgan Stanley reports decent results: Morgan Stanley Reports Third Quarter Results

Net income for the quarter was $1,425 million, or $1.32 per diluted share, compared with $1,543 million, or $1.44 per diluted share, in the third quarter of fiscal 2007.

For those interested, Morgan Stanley will hold a conference call today:

Morgan Stanley will hold its third quarter investor conference call today, Tuesday, September 16, 2008 at 5pm Eastern time. The call will be hosted by Colm Kelleher, Executive Vice President and Chief Financial Officer and will be available at www.morganstanley.com or by dialing 1-877-391-6850 (passcode 75875470#) within the United States.

by Calculated Risk on 9/16/2008 02:44:00 PM

From Bloomberg: Fed Said to Reverse Stance, Consider a Loan Package for AIG

The Federal Reserve is considering extending a ``loan package'' to [AIG] ... according to a person familiar with the negotiations.

Another heavy news day ...

by Calculated Risk on 9/16/2008 02:39:00 PM

From the Financial Times: Russia halts trading after 17% drop

Russia authorities halted trading on the country’s stock exchange on Tuesday after it plunged 17 per cent in a broad-based sell-off.

At 1700 local time, the rouble-denominated Micex index had fallen 17.5 per cent to 881.17 and the RTS index dropped 12 per cent to 1,131.120 as the falling oil price, margin calls on local investors and a broader sell-off in emerging markets stocks drove shares down.

by Calculated Risk on 9/16/2008 02:14:00 PM

From the Fed:

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Ms. Cumming voted as the alternate for Timothy F. Geithner.

by Calculated Risk on 9/16/2008 01:00:00 PM

UPDATE: The NAHB has updated their site - the NAHB initially reported September at 17.

The NAHB reports that builder confidence was at 18 in Septemer, up slightly from August. Usually housing bottoms look like a "V"; this one will probably look more like an "L". (this refers to activity like starts and sales, but will probably also be apparent in the confidence survey).

Click on graph for larger image in new window.

Current sales activity and Traffic of Prospective Buyers increased slightly.

NAHB Press Release: Builder Confidence Rises In September

Builder confidence in the market for newly built single-family homes rose for the first time in seven months this September, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI gained two points to 18, rising from its record low of the previous two months.
...
“Nearly half of the builders in our September survey indicated that they expect to see a positive impact from the tax credit in their market areas,” said NAHB Chief Economist David Seiders. “Of those respondents, 20 percent said their market has already experienced some of this effect. Meanwhile, consumer confidence has risen and more households are saying that now is a good time to buy a home. All of these factors, along with the recent downward movements in mortgage rates, suggest that new-home sales will be stabilizing in the final quarter of the year.”

by Calculated Risk on 9/16/2008 12:21:00 PM

From Reuters: Washington Mutual stock rises; merger talk disputed

Britain's Daily Mail newspaper, citing no sources, reported that JPMorgan was expected to make a bid for Washington Mutual. But two people familiar with the matter told Reuters that JPMorgan was not in active talks at the moment to buy the largest U.S. thrift.

Here is the Daily Mail article: JPMorgan Chase in new bid for Washington Mutual. The Daily Mail's headlines and stories can be funny. They make most bloggers look calm.

by Calculated Risk on 9/16/2008 11:10:00 AM

From CNBC Headline: New York Fed Meeting Now to Discuss Fate of AIG. A Government Bailout is Back on the Table

Who knows ...

by Calculated Risk on 9/16/2008 10:28:00 AM

Since the Fed is meeting today, here is the latest Fed Fund probabilities from the Cleveland Fed.

Click on graph for larger image in new window.

Until the last couple of days market participants anticipated no change in the Fed Funds rate in Septemeber. Now, because of recent events, there is significant uncertainty.

The Fed will probably leave rates unchanged (although a 50bps cut is possible), but the wording of the announcement will probably show more concern about the slowing economy and credit markets, and less concern about inflation.

by Calculated Risk on 9/16/2008 09:13:00 AM

Still no announcement from AIG. Shares are trading around $2.32, 50% off the close from yesterday.

by Calculated Risk on 9/16/2008 08:59:00 AM

At least they are still making money ...

From the WSJ: Goldman's Net Drops 70%

Goldman Sachs Group Inc. posted a 70% drop in fiscal third-quarter net income on declining client activity and asset valuations as return on equity fell. ... For the quarter ended Aug. 29, [Goldman] reported net income of $845 million ... Net revenues fell 51% to $6.04 billion ... many worries remain as Goldman's latest numbers show even a firm that in the past was seen as golden is being badly hurt by deteriorating market conditions.

Goldman managed to avoid most of the housing and credit related problems, but the overall business is weak.