Credit Solution 'Hopes' Boosting Stocks
Stocks are striking a slightly positive tone as investors increasingly believe the credit crunch is being worked out. Tomorrow's jobs report for September remains a top focus.
The U.S. dollar is barely changed against most currencies but slightly weaker against the euro and British pound after the European Central Bank and the Bank of England left rates unchanged this morning, as expected. Traders look ahead to comments from ECB President Jean-Claude Trichet later this morning when he hopefully gives guidance on the economic outlook.
There's also a few U.S. data points, including jobless claims, import and export prices, and factory orders. Jobless claims rose by 16,000, greater than expected. Treasury yields immediately moved higher though stock futures remained firmer after the report.
Bear Stearns holds its investor day in New York today. CNBC's Mary Thompson is reporting from there. Top of mind for Bear Stearns shareholders is whether the firm will soon announce that a major investor is taking a stake in the company, which is still seeing the impact of the subprime mess on its stock price.
Meanwhile, in lower Manhattan, Merrill Lynch says two top executives left from its fixed income area, including Osmar Semerci who headed global Fixed Income, Currencies and Commodities. The two executives exit the firm as speculation swirls that they are leaving behind some big losses.
Sign of Life
Deal activity is clearly picking up, and we see yet another positive for the recovery in credit markets in a report from CNBC's Dylan Ratigan. On "Fast Money" last night, Ratigan reports that financing for the buyout of Texas utility TXU could be in place by next week. Ratigan says bankers and traders are surprised how resilient the financing market is right now after its paralysis during the summer. TXU is being bought by KKR for $32 billion and it is one of the deals the street is monitoring closely to gauge the health of the merger business.
Interestingly, Citigroup is in talks with KKR on funding for the purchase of some the leveraged loans on its balance sheet, according to the Financial Times.
In other deal news, Microsoft's CEO Steve Ballmer reportedly says he won't rule out other acquisitions after the $6 billion deal for aQuantive earlier this year. Ballmer made the comments in Zurich, according to Reuters.
As tomorrow's jobs report is on everyone's mind in the markets today, CNBC's senior economic correspondent Steve Liesman reports that there is high demand for skilled workers in "green" jobs. He says that demand keeps growing, much faster than the labor market as a whole.
We also got an interesting report this morning from Cambridge Energy Research which says large oil and gas projects worldwide are feeling the impact and actual delays from an growing shortage of qualified project engineering workers. The firm reports there could be a "10 to 15% people deficit" for those types of projects by 2010.
Oil is weaker for a fifth day, after falling $0.08 per barrel yesterday to $79.97. Gasoline gained $0.131 to $1.9959 per gallon yesterday, while heating oil also climbed, rising $0.0164 per gallon to $2.1787 per gallon.
Gold is down slightly after a drop of $0.50 yesterday to $729.30. An amazing story in the gold world today is the rescue of workers that were trapped in Harmony Gold Mining's South African mine. About 2,000 of the 3,200 workers trapped a mile under ground were rescued so far in an all night rescue operation.
North Korea's Kim Jong Il and South Korean President Roh Moo Hyun ended their summit with promises of economic projects in shipping, fishing, tourism and other areas. The two leaders also agreed to start talks on defense and try to find a resolution to formally end the 1950-53 Korean War. This comes just after North Korea signs on to an international deal to disable its nuclear facilities.
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