Automakers Struggle; Pound Falls, Carrefour Down

123jump.com Staff
18 Dec, 2008
New York City

U.S. automakers struggle while the White House and Treasury avoid bailout plan endangering the industry and 3 million jobs in the industry. The U.S. Congress is deeply concerned in how Treasury has handled TARP. The British pound drops again. Carrefour SA lowers sales guidance for the second time.

[R]9:40AM New York – U.S. automakers struggle while the White House and Treasury avoid bailout plan. The British pound drops again. Carrefour SA lowers sales guidance for the second time.[/R]

Chrysler, Ford and GM announced to shutter 59 plants for the next four weeks as auto sales continue to fall. December sales are expected to be between 25% and 35% lower for the most auto makers from a year ago. Industry sales for the year are likely to drop to 13.5 million from 17 million at peak.

Automakers are likely to face another round of layoffs if the White House does not act quickly. Treasury Secretary Paulson and President Bush despite showing interest in bailing out the automakers show no urgency to provide funds to automakers.

Paulson’s credibility is at a low after he switched his plan to invest in banks and not make sure that homeowners are helped from the $700 billion TARP funds. Paulson continues to be the biggest hurdle for automakers in getting the funds.

The Congress suggested in a recent hearing that Chrysler and GM may need to merge and save annually $7 billion. However, GM is not interested in a merger at a time the industry is going through its worst sales decline in 25 years.

The British pound fell for the ninth trading day in a row and reaches to parity with the euro. The pound has been on the decline on speculation that the Bank of England will be forced to lower rates to zero. The latest report indicated the UK budget deficit is on the rise on a fall in tax revenues as economy slips into a recession.

The pound sinks to 95.56678 pence for one euro and against the dollar declines to $1.53089. The BoE lowered its key rate to 2% and the ECB has lowered its benchmark rate to 2.5% and the Fed has lowered its target rate range to between zero and 0.25%.

Carrefour SA, hypermarket retailer dropped 2.19 euros or 7.5% to 27.10 euros after it lowered sales and earnings estimates for the year. In a press note the company said, “Over the last weeks, Carrefour has observed deteriorating global consumption trends, particularly in Europe.”

The company now estimates constant currency sales growth of around 6.5% in the current year and operating cash flow of 1.5 billion euros. The company plans to release fourth quarter sales on January 15.

Europe Markets Review

In London FTSE 100 Index traded higher 4.94 or 0.11% to 4,329.13, in Paris CAC 40 Index decreased 22.11 or 0.68% to 3,219.81 and in Frankfurt DAX index traded higher 40.35 or 0.86% to 4,748.73. In Zurich trading SMI increased 35.99 or 0.65% to 5,584.19.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 54.71 or 0.64% to 8,667.23, Hang Seng index in Hong Kong increased 37.29 or 0.24% closed to 15,497.81 CSI 300 index in China higher 43.68 or 2.18% closed to 2,045.10. ASX 200 index in Australia increased 10.60 or 0.30% to close 3,581.20. The KL Composite index in Malaysia higher 18.00 or 2.09% closed to 880.50.

The Kospi Index in South Korea increased 6.16 or 0.53% to close at 1,175.91. SET index in Thailand closed higher 5.78 or 1.30% to 451.72 and JSE Index in Indonesia decreased 12.22 or 0.90% to 1,351.76. The Sensex index in India increased 361.14 or 3.72% closed to 10,076.43.