GM drops plans to sell business to Navistar
General Motors Corp. and Navistar International Corp. said Wednesday that they have dropped immediate plans for GM to sell its medium-duty truck business to Navistar, citing market and economic changes.
GM and the Warrenville, Ill.-based commercial truck maker both said they decided against renewing the sale’s memorandum of understanding, which has expired.
The companies said that Detroit-based GM will keep running the business, while also continuing to review strategic options for it, including continued discussions with Navistar.
The companies originally said in December that they had reached a tentative agreement for the sale. Financial details were never released.
Traders shrug off supply surge; oil prices higher
The price of oil bounced back near $115 a barrel on Wednesday, as traders shrugged off a massive increase in U.S. crude inventories and a stronger dollar and focused on possible supply threats.
It was a volatile day for energy prices, which initially retreated after the U.S. Energy Department said a big gain in imports drove crude inventories up by 9.4 million barrels in the week ended Aug. 15. The figure came in higher than the average analyst forecast for a 1.7 million-barrel increase, according to energy information provider Platts.
Light, sweet crude for September delivery rose 45 cents to $114.98 a barrel on the New York Mercantile Exchange, after rising as high as $117.03 before the inventory data was released, falling as low as $112.61, and then rebounding again. The September contract expired on Wednesday; the October contract finished up $1.01 at $115.56 a barrel.
Crown Ltd. profits fall 29 percent in quarter
Crown Ltd.’s second-half profit fell 29 percent after Australia’s biggest casino owner cut the value of its stakes in U.S. operators, including Harrah’s Entertainment Inc. and Station Casinos Group.
Earnings from continuing businesses fell to A$158.7 million ($139 million) in the six months ended June from A$222.8 million a year earlier. Second-half figures were derived from full-year results released Wednesday. Melbourne-based Crown, which spun off its media assets in December, took a A$181 million charge against 2008 earnings for the U.S. casino stakes.
Six months after increasing his investment in U.S. operators Harrah’s, Station and Fontainebleau Resorts LLC to A$720 million, Chairman James Packer cut their value by 36 percent as cash-strapped U.S. gamblers curb spending and travel to Las Vegas.
The write-downs are in addition to the A$44 million written off when his 37.5 percent-owned LVTI LLC venture axed plans to buy land and build the Crown Las Vegas casino resort.
Fannie, Freddie shares skid on speculation
Fannie Mae and Freddie Mac shares tumbled in New York trading to the lowest levels since at least 1990 and the bonds rose as speculation increased that the U.S. Treasury will bail out the mortgage-finance companies, wiping out shareholders.
Fannie, based in Washington, fell $1.61, or 26.79 percent, to close at $4.40 on the New York Stock Exchange. Shares of McLean, Va.-based Freddie fell 92 cents, or 22.06 percent, to close at $3.25, also on the NYSE, extending its losses to 90 percent for the year.
The companies’ debt yields fell the most in a month against benchmarks in anticipation that the government would fully support the bonds in any rescue.
Fannie and Freddie have $223 billion of bonds due by the end of the quarter and their success in rolling over that debt may determine whether they can avoid a federal bailout.
Auction-rate securities investigation to go on
New York Attorney General Andrew Cuomo will intensify his investigation into auction-rate securities by focusing on Bank of America Corp., Goldman Sachs Group Inc. and Deutsche Bank AG, a person close to the investigation said Wednesday.
The banks are the three biggest players in the auction-rate securities market that have not already reached a settlement with Cuomo, who is seeking deals on behalf of regulators and state authorities. Five major Wall Street firms including Citigroup Inc. and Switzerland’s UBS AG have agreed to $42 billion in settlements.
For the next phase, Cuomo has directed staff to spend more time gathering facts and talking to the three banks about the sale of the risky securities, said a person inside the attorney general’s office who asked not to be identified by name because he was not authorized to speak publicly about it.
Lehman Bros. pressed to forge recovery plan
The pressure is increasing on Lehman Bros. Holdings Inc. to come up with a plan to restore itself to financial health — or possibly face the worst-case scenario of selling itself off in pieces and at bargain prices.
The nation’s fourth-biggest investment house is considered the most vulnerable amid the financial sector’s continuing losses from the credit crisis.
There is rising speculation — most of it negative — about its short-term prospects, leading more investors to bail out of Lehman stock, which closed Wednesday at $13.73, well off its 52-week high of $67.73.
ANN ARBOR, Mich.
Mortgage application volume reported to slip
Mortgage application volume fell last week to its lowest levels in nearly eight years, the Mortgage Bankers Association said Wednesday.
The fall in application volume is the latest sign of a struggling housing market. On Tuesday, a Commerce Department report showed construction of homes and apartments fell in July to the lowest level in more than 17 years.
Although fewer new homes are being built, fewer customers are also refinancing existing mortgages.
Treasury prices up amid speculation of bail-out
Treasury prices rose Wednesday amid market speculation that the government will have to bail out mortgage financiers Fannie Mae and Freddie Mac.
In late trading, the 10-year Treasury note rose 0.38 percent to 101.66. Its yield fell to 3.80 percent from late Tuesday’s yield of 3.84 percent, according to BGCantor Market Data.