by Calculated Risk on 3/10/2009 03:34:00 PM

From Dow Jones: Con-way CEO Sees Evidence Of Bottoming In Volume Slide

Con-way Inc. Chief Executive Doug Stotlar voiced some optimism Tuesday that a persistent slide in freight volumes could be stemming, citing a seasonal uptick so far in March.

"We hope that we're at the bottom," Stotlar said, speaking at a Raymond James conference in Orlando, Fla.
...
But Stotlar, whose comments were broadcast over the Internet, added that he can't quantify the March increase yet nor say for certain that it signifies a bottom.

Tonnage at Con-way's main unit, its less-than-truckload freight business, was off about 13% in January and about 12% last month. Stotlar said the company is getting a seasonal lift so far in March - indicating the trend may have bottomed - although "we're at a much lower level than we were prior to the economic downturn."

The trucking survey should be available soon.

by Calculated Risk on 3/10/2009 01:56:00 PM

From MarketWatch: AT&T to spend up to $18 bln on capital expenditures in 2009

AT&T Inc. said Tuesday it plans to invest $17 billion to $18 billion in 2009. About two-thirds of expenditures are earmarked for expanding the company's wireless and wired broadband networks, AT&T said.

The story doesn't mention that AT&T spent $20.3 billion on capital expenditures in 2008, so the announcement today is in line with AT&T's previous announcement on Jan 28th:

Total capital expenditures for 2009 are expected to be down 10 to 15 percent versus 2008 levels.

I guess the good news is they didn't reduce their plans further!

Note: There will be a significant investment slump in Q1 2009, especially in equipment & software and non-residential structures.

by Calculated Risk on 3/10/2009 11:34:00 AM

From Manheim Consulting: Wholesale Prices Rise in February (ht Brian)

Wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased significantly again in February. Seasonally adjusted, February’s rise was 3.7%, which came on the heels of a 3.8% increase in January. The Manheim Used Vehicle Value Index now stands at 105.5, which represents a year-over-year decline of 2.4%.

Some analysts have suggested that the rapid rise in wholesale used vehicle pricing is a precursor to an improvement in new vehicle sales and may even point to a recovery in the overall economy. It’s more likely, however, that the turnaround in wholesale used vehicle values is a necessary, but not a sufficient, condition for a better new vehicle market. That’s especially true given that the recent rise in auction pricing has been driven in large part by supply dynamics that were created by the unprecedented slowdown in new vehicle sales.
...
Buyers switch to used vehicles. Comments from dealers indicate that potential new vehicle buyers are opting instead to buy used. Evidence that these buyers could have actually afforded a new vehicle is provided by the fact that many of today’s used vehicle customers are making significant downpayments and the shorter loan maturity (relative to new vehicles) means that the monthly payment on their used vehicle loan would often be enough to buy new.

Click on table for larger image in new window.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions (A sample size of over five million transactions annually).

As noted above, buyers have switched from new to used cars - pushing up the prices of used cars. This is a probably a necessary step to higher new car sales.

Also according to Manheim, February’s sales rate new vehicles was only 9.1 million units (SAAR). That would be the lowest rate since early 1967!

by Calculated Risk on 3/10/2009 08:56:00 AM

From the WSJ: U.S. Weighs Further Steps for Citi

Barely a week after the third rescue of Citigroup Inc., U.S. officials are examining what fresh steps they might need to take to stabilize the bank if its problems mount ...

Citi executives said they haven't detected signs of corporate clients or trading partners withdrawing their business ...

Banking regulators and Treasury officials called Citigroup executives over the weekend ... the talks were geared toward future planning and that no new rescue was imminent. ... The discussions include the Treasury Department, Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corp.

From MarketWatch: Citigroup's shares rise as CEO plugs performance

... Chief Executive Vikram Pandit said the hard-hit provider of financial services firm was profitable during the first two months of the year and called its capital position "strong."

Here is a memo from Pandit to employees.

by Calculated Risk on 3/10/2009 12:26:00 AM

From the WaPo: Detox for Troubled Assets

The government's plan to strip banks of troubled assets could force some firms to record large losses, but the painful purge would help restore confidence in the banking system, according to Sheila C. Bair, chairman of the Federal Deposit Insurance Corp.

Bair said yesterday that the effort might require more money than the $700 billion Congress has approved to aid the financial industry ...

This is an interesting interview. It it not clear that Sheila Bair understands that the "public-private investment funds" will overpay for toxic assets because they are receiving low interest non-recourse loans with limited downside risk (a direct subsidy from taxpayers to the banks). She thinks that

"The government, by providing low-cost funding, it will help to tease out that liquidity premium from the pricing and hopefully get the pricing a little higher."

And even at these above market prices, selling these assets will still leave a huge hole in the banks' balance sheets. However Bair sees this as a positive:

Bair emphasized that banks forced to take large losses might not need more government money because, newly cleansed, they would be in position to raise money from private investors. She said the size of the write-downs actually could be a positive, by establishing that banks are free of their problems.

Insolvency is success.