G.O.O.D

Source: washingtonpost.com

U.S. manufacturing fell sharply in December and reports from abroad showed the same for plants in Europe and Asia, as businesses cut production and slashed product orders in response to the global recession.

The Institute for Supply Management’s index of industrial production slipped by 3.8 percentage points in December compared to the month before, to the lowest level since 1980.

The private group’s survey of purchasing executives provides a rough guide to whether manufacturing companies are expanding output and receiving increased numbers of orders, or seeing their business decline. The index for December stood at 32.4, compared to 36.2 in November. An index above 50 indicates that manufacturing activity is expanding, while a reading below 50 indicates a decline.

It is the fifth consecutive month that the group’s measure of industrial production has stalled, a result consistent with declining consumer demand and economic weakness throughout the United States.

The decline was both deep and broad, the ISM reported: none of the industries covered in the survey reported an expansion in their business, and the drop registered not just in the institute’s index of production, but also in its measures of employment, prices and backlogged orders. The group’s index of new orders and prices were at their lowest levels since the late 1940s.

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Source: MarketWatch

Responding to a global recession, Motorola Inc. said Wednesday morning that it will freeze its pension plan and employee salaries, suspend matching 401k contributions and cut the pay of top executives in an effort to reduce costs.

The company has been forced to slash expenses to offset steep losses in its ailing wireless-phone division, whose long-term survival remains in doubt. Motorola’s former flagship business has lost a large chunk of market share in the past few years amid strategic missteps and product snafus.

The Schaumberg, Ill.-based vendor said its latest steps would help it save an unspecified amount of cash on top of $800 million in cost-saving initiatives announced in late October.

“The sustained downturn in the global economy requires that we take these difficult but necessary steps,” said Greg Brown and Sanjay Jha, co-chief executive officers, in a statement.

Both executives have volunteered to accept a 25% salary reduction in 2009. Brown will also forfeit any cash bonus this year and Jha, who joined the company in August, will give up most of his cash bonus. What Jha does receive will be converted to restricted stock options.

Most other company employees, meanwhile, will receive no salary increase in 2009, Motorola said. The company will also suspended matching contributions for workers who put money into their 401(k) retirement plans, starting on Jan. 1.

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Jean-Claude Trichet

Source: Bloomberg.com: Germany

European Central Bank President Jean- Claude Trichet said the euro region’s economy will shrink next year for the first time since 2003 after the bank delivered the biggest interest rate cut in its 10-year history.

“Global and euro-area demand are likely to be dampened for a protracted period of time,” Trichet said at a press conference in Brussels today. The ECB lowered its benchmark by three quarters of a percentage point to 2.5 percent.

The ECB’s decision came after the Bank of England today cut its key rate by one percentage point to 2 percent and Sweden’s central bank lowered borrowing costs by the most since 1992. The Federal Reserve’s benchmark rate now matches a five-decade low as central banks rush to respond to the global recession.

“The level of uncertainty remains exceptionally high,” Trichet said. The euro was little changed after his comments and traded at $1.2634 at 3:16 p.m. in Brussels.

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Source: Reuters

World stocks fell on Tuesday, erasing more than half of last week’s gains, while oil hit a 3-1/2 year low and the yen and government bonds surged as concerns intensified about a deep global recession.

Confirmation that the United States had entered recession in December 2007 and a warning from the Federal Reserve chief that the economy remained under considerable stress triggered a sell-off on Wall Street on Monday, with the S&P 500 index fell 1.5 percent, edging closer to the 5-1/2 year low hit on November 21.

Emerging stocks fell 3.2 percent.

U.S. crude oil fell 2.8 percent to $47.88 a barrel, after hitting the low of $47.36 earlier.

The benchmark 10-year U.S. Treasury yield stood at 2.7155 percent, after falling to about 2.65 percent on Monday — its lowest in 50 years.

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Source: Bloomberg.com

Stocks tumbled around the world and U.S. index futures declined on concern government efforts to stabilize financial markets won’t avert a recession.

Hong Kong’s Hang Seng Index sank 13 percent after money- market rates rose, and the Philippines’ benchmark gauge plunged 12 percent, triggering a temporary trading halt. The yen climbed to near a 13-year high against the dollar as the Group of Seven industrialized nations’ concern over the currency’s “excessive volatility” failed to keep investors from selling higher- yielding assets.

“We’ve gone from financial worries to economic worries,” said Roland Lescure, who manages the equivalent of $128 billion as chief investment officer of Groupama Asset Management in Paris. “We’re looking for direction for the economy. The problem is stock market declines lead to more declines. It’s linked to forced selling.”

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Source: Reuters

Poor economic data around the world and another international barrage of corporate profit warnings and job cut announcements intensified fears of deep global recession on Friday.

Seventy-nine years to the day after the 1929 crash that led into the Great Depression, currencies experienced almost unprecedented volatility, oil and other commodities tumbled on fears of plummeting demand that would accompany a slowdown, and stock markets dropped from Tokyo to New York.

“I sense we’ve moved beyond the credit crisis. There’s a recognition of the damage inflicted on the global economy … by the credit crisis,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London.

“It’s not just limited to the developed world. You can run but you can’t hide anywhere.”

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