The S&P 500 clawed its way back after brief Spanic. The index closed up 0.1 per cent at 1,445.71, having lost 0.4 per cent on the Spanish prime minister’s denial of an imminent bailout (Bloomberg).
Deutsche Telekom confirmed it was in talks to merge T-Mobile USA with MetroPCS. Deutsche’s board will meet tomorrow to discussing combining the two businesses in one unit (Bloomberg). A combination – aimed at shoring up T-Mobile USA’s prepaid customer base and giving it access to superior MetroPCS technology – could also result in a US public listing, allowing Deutsche to sell down its equity stake over time (Wall Street Journal).
The New York Attorney General has warned that more lawsuits may follow the state’s suit against JP Morgan over Bear Stearns MBS. Eric Schneiderman said that the suit was a “workable template for future actions against issuers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes” (Bloomberg). The suit alleges that Bear Stearns “systematically failed to evaluate” loans packaged into MBS, although it has come several years after private cases and subpoenas were first filed (Financial Times).
Chrysler posted its strongest sales since September 2007 last month.Sales rose 12 per cent year on year, compared to 13 per cent for the US auto industry overall (Financial Times). Automakers especially touted sales of smaller cars, where the US market has traditionally been weak. The month is on track to record 14.8m of sales, above the 14.5m forecast by analysts. Easier auto loan credit has aided the rebound, with interest rates for a new 48-month loan falling to 3.19 per cent last month, compared to 4.39 per cent a year ago (Reuters).
Vanguard is to switch benchmarks for 22 of its index funds from MSCI. Six of the funds will use benchmarks derived from the FTSE Group. Shares in MSCI fell up to 31 per cent during Tuesday trading after the move, for which Vanguard chiefly cited cost pressures. Standard & Poor’s estimated that business from Vanguard accounted for 3 per cent of MSCI’s revenue base (Wall Street Journal).
AIG is on the brink of being declared a ‘systemically important’ non-bank institution, after regulators said that it had reached the third and final stage of a review process (Financial Times).
Data come in the form of the ADP employment report — consensus 140,000 jobs added last month — and the ISM Non-manufacturing (53.5 forecast).
FURTHER FURTHER READING
– Jonathan Weil on the JPM/Bear Stearns case: “Some of the allegations in the 31-page complaint look like a clip job”
– A grainy picture of David Einhorn (and notes on his shorts).
– Jana, the mobile payments giant you haven’t heard of.
– A mortgage settlement milestone.
– Robert Skidelsky reviews Adair Turner, on growth and happiness.