| Nippon Steel says on course to record year
TOKYO : Nippon Steel Corp. said on Tuesday its first-half net profit rose 7.5 percent, keeping it on course for another record year thanks to strong demand in emerging economies for its high-end steel. The Japanese company, which became the world's second largest steelmaker after last year's creation of the Arcelor-Mittal behemoth, predicted further growth in its bottom line despite a slight slip in interim operating profits. Nippon Steel said it was putting more production facilities on line and teaming up with foreign partners as it keeps up its focus on making medium-high grade steel used to build cars, airplanes and machinery. "Demand for high-grade steel products continued to expand at a rapid pace, while demand for common-grade steel products remained firm," Nippon Steel executive vice president Kiichiro Masuda said at a news conference.
Merrill Lynch hires new CEO from NYSE
Merrill Lynch & Co. named NYSE Euronext CEO John Thain as its chief executive, a move that acknowledges it needed an outsider with a Goldman Sachs pedigree to repair an image battered by wrong-way bets on subprime mortgages. Thain, 52, replaces Stan O'Neal, who was ousted as Merrill's CEO and chairman last month after the company wrote down $8.4 billion in assets during the third quarter. Thain's appointment is effective Dec. 1, Merrill said. One of his first tasks will be to assess Merrill's risk management procedures, which analysts said clearly failed in evaluating exposure to subprime mortgages and collateralized debt obligations. The New York Stock Exchange named Duncan Niederauer chief executive, replacing Thain. Niederauer, 48, joined the NYSE in April after serving as co-head of equities trading at Goldman Sachs.
Future looking bleak for home builders
Home builders such as Centex, Pulte Homes and Hovnanian Enterprises are trying to survive an in dustrywide slump by selling houses at bargain prices, slashing jobs and scrapping growth plans. But as the housing downturn worsens, experts say at least a few major home builders may end up in bankruptcy court. Builders constructed more than 2 million housing units nationwide in 2005, the year the boom peaked. So far this year, housing starts have fallen to an annual rate of 1.2 million units through September, and economists expect the number to drop to an annual rate of 1 million by mid-2008 -- a 50 percent drop over three years. Some analysts foresee a shakeout similar to that of the early 1990s, when numerous builders went through bankruptcy protection, including Reston, Va.-based NVR and U.S.
Subprime's Return
There are now daily reports of US and other financial groups reporting billions of dollars in losses from dodgy US subprime mortgages and associated credit derivatives. Financial groups in Europe, Britain, Japan and even the US have been affected. but the main damage is appearing in the US where cash management accounts, the investment funds of states, towns and counties, not to mention corporate pension funds and the big names in finance like Merrill Lynch, Bank of America, Citigroup, Barclays, UBS are being revisited by big losses and the prospect of more to come. It's the credit crunch mark two, a replay of the August freeze, but without the drama of financial markets being hurt so violently. Instead its a steady erosion of value and earnings. We in Australia, facing towards Asia, will hopefully escape the full impact as China booms.
Mortgage crisis infects credit-card, auto loans
The malaise in the mortgage market is starting to spread to credit-card and auto loans in what one analyst has dubbed consumer credit "contagion." It's an ominous warning signal for the economy. Many of the nation's big banks and credit-card companies have begun acknowledging that they are seeing a shift in consumer behavior, including more people unable pay off their debts. Things are unraveling faster than expected for some like Capital One Financial Corp., which on Tuesday boosted its estimates for credit losses next year to potentially above $5 billion in part because of elevated delinquencies on its cards. No one is calling this problem the next debt-related land mine yet, but it is still important to watch what happens, especially as the holiday shopping season gets under way.
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