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May 14, 2009
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More Wild West?
Don't Think So.
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A big shoutout to a great new sponsor, The Yards in the Capitol Riverfront: DC’s newest neighborhood, with living, working, shopping and dining centered around a world class waterfront park and near the attractions of the baseball stadium, Navy Yard, and Capitol Hill.
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Win McNamee/Getty Images
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They've been traded nearly unregulated for a decade, but derivatives will be under tighter gov't scrutiny according to Tim Geithner's plan announced yesterday. The crackdown includes mandating middlemen, more reporting requirements, and minimum levels of capital on hand for dealers. Yes, the oversight covers everyone's favorite derivative, the credit default swap. (Favorite to say, we don't actually know what it is.) At the end of '08, outstanding derivatives totaled $403 trillion, and—whoa, hang on, our computer just broke.
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Retail sales are down 0.4% in April, bad news for those who think consumer spending is needed for recovery (which is to say, everyone). It's the second drop in a row, tamping excitement after increases in January and February. Ironically, it would have been worse if not for a rise in, you guessed it, automobile sales. (You didn't guess it. Don't lie.) Macy's didn't help, taking an $88M hit this period. Food and beverage, specialty clothing, and furniture stores also fell. Meaning, not only are we poor, but we're thirsty, ragged, and sitting on the floor.
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David McNew/Getty Images
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The Asian market, so reliant on our consumer spending, dipped heavily this morning. Sony reports losses of 98.9 billion yen ($1B) this fiscal year, its first net drop in 14 years. Above, Tom Hanks (star of Sony's Angels and Demons) consoles CEO Howard Stringer. It projects another $1B loss next year, is closing three plants, and pins some blame on a strong yen undermining overseas revenue. Others say rival companies—whether electronics or entertainment — just put out better products (see: iPod; don't see: Sony's The Pink Panther 2). In a sign of solidarity, shares of Japan's Toyota and Canon dropped about 4%.
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Justin Sullivan/Getty Images
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The world's largest retailer fared only a little better. Wal-Mart reports a 0.6% revenue drop from a year earlier. Unlike Sony, which blamed currency for the loss, Wal-Mart blamed . . .oh, wait, currency: It states that exchange rates cost it 4 cents a share. To be fair, quarterly net profits didn't fall (they remained flat) and the company met analyst predictions. Plus, many expect our drop in consumer spending to bode well for a discount retailer.
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Mark Wilson/Getty Images
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The SEC is on the cusp of filing civil charges against Countrywide co-founder Angelo Mozilo; it'd be the biggest action against anyone involved in the financial crisis. The charges: insider trading and failure to disclose to shareholders, much of it tied to cashing out his stocks just before the mortgage lender crumbled. He's not alone: A Houston grand jury indicted Stanford Financial chief investment officer Laura Pendergest-Holt on obstruction charges. The jury is just getting warmed up as chairman Allen Stanford said he expects to be indicted. He seems confident—wonder if he put any money on it.
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Alex Wong/Getty Images
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While credit card companies will get smacked with some new regulation in coming days, a 15% interest rate cap will not be part of it. Bernie Sanders's (I-VT) proposal crashed hard, securing only 33 votes—a number not even Al Franken (or 26 Al Frankens) could fix.
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LOCAL
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We snapped this of former mayor Tony Williams a couple hours ago on his first day on the job at law firm Arent Fox. He’d been in investment banking since leaving office in 2007, but now sees a far better opportunity to assist a law firm in advising local officials around the country on managing balance sheets in times of financial distress. He went through just that experience during his two terms and is credited (for those of you with short memories) with leading DC’s dramatic economic turnaround.
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It seems things keeping getting worse for Freddie Mac and interim CEO John Koskinen. The McLean-based home finance behemoth announced yesterday a $10B (yes, billion) loss for Q1, prompting a $6B investment from Feds to keep solvent and bring the company's total bailout to $51B. John says he's seeing signs of a turnaround as home-price declines and low mortgage rates make a comeback.
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Michael G. Stewart
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Yesterday we were in Rockville as the Montgomery County Chamber (that's U.S. Rep Chris Van Hollen with his hand raised alongside Chamber CEO Gigi Godwin) held its annual congressional procurement forum, with more than 600 government techies in attendance. Gigi's take on the state of business in MoCo: "Just look at all the people behind me!" She tells us the Chamber's goal is "more wins," along with promoting the county's robust technology companies. "Everyone thinks we're just biotech and life sciences, but we've got so much more," she says.
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Given the rise in securities and employment litigation, insurance broker Marsh built up its team specializing in the coverage that addresses this exposure, namely, D&O and EPL insurance. It's added five employees to its 10 person team in the past eight months, including coverage lawyer Marnie Hammel, left. "A couple of years ago, D&O insurance was like auto insurance: Board members were happy to have it, but didn't really know the details," says Marsh SVP Patti Steis, center, here with VP Marnie and SVP Steve Cohen.
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The DC Council voted to split the duties of the city Sports and Entertainment Commission into two existing agencies as part of several moves to close the city's $800M budget gap for FY10. The commission's marketing and administrative arms will operate under the Washington Convention Center Authority while maintenance of RFK Stadium and the DC Armory will fall to the Office of Property Management. The move came after the Sports and Entertainment Commission — that helped in projects like Nationals Park — needed $2.5M last fiscal year to stay in business.
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