NEWS AT A GLANCE
Citigroup loses $5.11 billion
Citigroup, the largest U.S. bank, posted a $5.11 billion quarterly loss, its second in a row, after writing down at least $15 billion in assets tied to mortgages and leveraged loans. Revenue fell 48 percent. (MarketWatch) The results were worse than analysts expected, but Citigroup shares rose in early trading. (Reuters) CEO Vikram Pandit, nearing the end of a comprehensive companywide review, has replaced his chief risk officer, cut 6,000 jobs, and replenished capital reserves to return the bank to fiscal health. "It was a difficult quarter," said Peter Kovalski at Alpine Woods Investments, but "Pandit is doing what needs to be done," given the tough market.
Google beats expectations
Google reported a 30 percent rise in quarterly profits, to $1.31 billion, easily topping analysts' forecasts. Google said it didn't see any impact yet from the U.S. economic slowdown, but much of its growth came from a strong push into international markets. For the first time, more than half of Google's revenue came from outside the U.S. Google's stock, down sharply this year, shot up 18 percent in extended trading, to $529.38 a share. "It's a good time to be a Google bull," said analyst Colin Gillis at Canaccord Adams. "The boys delivered." If Yahoo! similary beats expectations next week, analysts say, it could help it demand a higher bid from Microsoft.
RBS exploring stock sale
Royal Bank of Scotland, the U.K.'s No. 2 lender, said it is considering selling shares to raise capital, reversing earlier assertions that it didn't need fresh capital. RBS's reserves have been depleted by more than $5 billion in writedowns and its part in the $114.5 billion acquisition of Dutch bank ABN Amro. (Bloomberg) The details of the rights offer are expected next week. Analysts said RBS could bring in as much as $18 billion. "After all the denials by RBS that there was a need for any capital raising initiatives, it's unlikely that the market will take this as a positive," said Martin Slaney at GFT. (Reuters)
Iceland's credit freeze
Iceland is a country of extremes, and it is now on the verge of swinging from a period of remarkably robust growth to its first recession since 1992. The trouble started in Iceland's banking sector, which holds assets worth more than 10 times the country's GDP. Questions about their liquidity started hitting the banks early this year, even though they never bought the risky U.S. mortgage-back securities that got other countries in trouble. Icelanders and outside investors agree that things are getting bad, but disagree on why, with the foreigners arguing that Iceland is due for a steep correction and locals alleging market manipulation by speculators.
Fighting food inflation
U.S. shopper are facing the "worst food-price inflation in more than a decade," says Jeffrey Strain in TheStreet.com. Other household costs are rising too, but the grocery bill at least has "some wiggle room," if you know how to "exploit some areas within the system." Some examples: Make a database of good prices, so you'll know a good sale and can stock up. Buy in bulk, as long as you use all of the item, but not at a faster-than-normal rate. Buy only what you need, so no soda or desserts, say. Go ahead and "play the coupons game" -- you can save hundreds -- and only buy the sale items. And this "may seem obvious," but "don't throw food away."
Fighting starvation
"Tossed food" is the "third most common refuse found at landfills" in the U.S., says Thomas Kostigen in MarketWatch. And that is especially shameful when an unprecedented "food crisis" has left "millions of people living on the brink of starvation." While U.S. shoppers face higher prices with "little more than a grimace and a shrug," other countries have met the three-year doubling of food prices with "violent protests." The $200 million in emergency food aid released by President Bush is an "admirable" start, but it is "a Band-Aid." We need to commit more food aid. The U.S. is the most overweight country in the world, and "we need to stop eating and start feeding."
GOOD DAY FOR: Korean BBQ, after South Korea agreed to ease its mad-cow-driven embargo of U.S. beef. Korea imported $815 million worth of U.S. beef in 2003, before imports were stopped, putting it only behind Japan and Mexico. Some imports resumed in 2006. The easing could help passage of the $29 billion free-trade pact between Korea and the U.S. (Bloomberg)
BAD DAY FOR: Green living, as rising food prices are making organic-minded shoppers rethink their commitment to already-higher-priced natural foods. The organics market has grown 126 percent in five years, to $16.7 billion. But "man, $6.99 for a gallon of milk is pushing it," said Perry Abbenante at Whole Foods. "We have to be very careful about not pricing organics out of the market."
NOTED: Nalgene, the maker of hard polycarbonate water bottles, said it will stop using that plastic due to customer concerns over the chemical bisphenol-A, or BPA. The Canadian government is reportedly moving to label BPA as a toxic chemical, and Wal-Mart Canada is pulling items with BPA, like baby bottles and toddler sip cups, from its shelves this week. U.S. Wal-Mart stores will replace bottles containing BPA by next year.
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