GM's Wagoner dismisses bankrutpcy talk

0 Comments | Oakland Tribune, Jul 10, 2008 | by BAY AREA NEWS GROUP

Automotive

GM CEO DISMISSES BANKRUPTCY TALK: The chief executive of General Motors Corp. dismissed speculation that the largest U.S. automaker might soon seek bankruptcy protection. Comments in the past week about a potential bankruptcy are "not at all constructive or accurate," Rick Wagoner said Thursday. GM has $24 billion in cash and $7 billion in unused credit facilities, he said. Last week, a Merrill Lynch analyst cut his rating on GM stock and said "bankruptcy is not impossible" if the auto market continues to weaken. The bankruptcy speculation has increased and GM stock has been hammered over the past two months, losing more than half its value.

Mortgage financing

Fannie, Freddie sink ON rescue fears: Fears that the government will be forced to rescue Fannie Mae and Freddie Mac could well become a self-fulfilling prophecy. Shares of the government- chartered mortgage finance giants plummeted Thursday and are trading at levels last seen in the early 1990s. If the prices don't recover, it will be harder for the two companies to raise more money through stock sales to compensate for losses from the housing bust. Investors are afraid their stakes will vanish if the government is forced to rescue the companies. Freddie Mac shares fell $2.26 or 22 percent, to $8, after sinking as low as $6.75 earlier in the day. Shares of Fannie Mae fell $2.11, or 13.8 percent, to $13.20, after earlier falling to $11.70.

Oil

Oil rebounds as Iran tensions flare: Oil prices rebounded by more than $5 a barrel Thursday, as another missile launch by Iran stoked worries that escalating political tensions in the Middle East could cut off supplies out of the region. A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch. The mounting hostilities drew buyers back into the jittery energy markets, said John Kilduff, senior vice president of risk management at MF Global LLC.

Economy

Jobless claims dip, labor market weak: Fewer people signed up for unemployment benefits last week, but the dip was not enough to overcome continuing weakness in the country's labor market. The Labor Department reported Thursday that new applications filed for unemployment insurance fell by a seasonally adjusted 58,000 to 346,000 for the week ending July 5. A year ago, the figure was lower, at 304,000, showing a deterioration in employment conditions. A government analyst cautioned that last week's drop did not suggest a sudden improvement in the country's overall economic health.

---Associated Press

Retail

Apple to open store in China: Apple Inc., seeking a wider customer base for its Macintosh computers and iPod music players, will open its first retail store in China next week, taking the number of countries with Apple outlets to seven. The store in Beijing will open July 19, Apple said Thursday on its Web site.

Gaming

MGM, Wynn revenueS drop: MGM Mirage, Las Vegas Sands Corp. and Wynn Resorts Ltd. shares tumbled and options surged in U.S. trading as gambling revenue dropped in both the Las Vegas Strip and Atlantic City. Las Vegas Strip casino revenue fell 16 percent in May, the fifth straight monthly decline in the biggest U.S. casino market, Nevada's Gaming Control Board said Thursday. Revenue in Atlantic City, which trails only Las Vegas in the country, dropped 11 percent in June, the 13th decrease in 15 months, according to the New Jersey Casino Control Commission. MGM plunged $6.44, or 22 percent, to $23.14 and Las Vegas Sands slid $4.12, or 11 percent, to $34.01. On the Nasdaq Stock Market, Wynn dropped $7.62, or 9.8 percent, to $69.94, and Trump Entertainment Resorts Inc. fell 6 cents, or 3.3 percent, to $1.74.

--Bloomberg News