Crude oil fell $0.84 to close at $90.00 per barrel for a front month contract, natural gas decreased 7 cents to $8.06 per mBtu, and gasoline futures decreased 1.03 cents to close at 226.800 cents per gallon.
Gold decreased $4.20 in New York trading to close at $877.80 per ounce, silver closed down 4 cents to $15.93 per ounce, and copper for front month delivery decreased 1.50 cents to 315.75 per pound and in London copper futures increased $157.00 to $6,994.50.
Dollar edged lower against euro to $1.46580 and higher to 106.780 yen.
12:00PM New York – Bond insurers fell sharply as worries mount on the capital adequacies.
Bond and mortgage insurance companies took another plunge after MBIA, Ambac Financial, and PMI Group fell sharply.
Ambac Financial (
ABK: chart) fell 51% or $6.56 to $6.32 after it ousted its chief executive. The company’s plan to raise capital of $1.0 billion may not be sufficient. Sub-prime mortgage market continues to deteriorate and obligations of these bond insurers keep rising.
Ambac has insured $555 billion of bonds. To preserve its AAA rating AMbac may have to seek more capital according to the rating agency Moody’s.
MBIA ((
MBI: chart) dropped 33% or $4.41 to $8.99 and the PMI Group fell 14% or $1.11 to $6.66.
MBIA raised $1 billion in the January offering by offering surplus notes with a claim on its future earnings. The notes have fallen sharply in the last three days of trading and now trade below 85 cents to a dollar.
10:00AM New York – Merrill Lynch recorded $15 billion write down related to subprime loans.
U.S. market averages edged higher at the opening despite sharp sub-prime related losses at Bank of New York Mellon and Merrill Lynch.
December housing starts fell to a seasonally adjusted annual rate of 1,006,000, 14.2% below the revised November estimate of 1,173,000 and is 38.2% below the revised December 2006 rate of 1,629,000. The December rate for units in buildings with five units or more was 196,000.
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1,302,000, 7.7% below the revised November estimate of 1,411,000 and is 31% below the revised December 2006 rate of 1,887,000. Single-family housing completions in December were at a rate of 1,009,000, 12.0% below the November 1,146,000 completion.
The December rate for units in buildings with five units or more was 278,000. An estimated 1,500,200 housing units were completed in 2007. This is 24.2% below the 2006 completion of 1,979,400.
Home builders edged higher in the morning after the report. Toll Brothers, D R Horton, Lennar, and Beazer Homes edged between 1% and 3% higher.
Merrill Lynch (
MER: chart) today reported a net loss from continuing operations for the full year 2007 of $8.6 billion, or $10.73 per diluted share, a sharp reversal from net earnings from continuing operations of $7.1 billion, or $7.17 per diluted share for 2006.
Merrill Lynch’s net loss for the full year 2007 was $7.8 billion, or $9.69 per diluted share, significantly below net earnings of $7.5 billion, or $7.59 per diluted share for 2006.
Net revenues for 2007 were $11.3 billion, down 67% from $33.8 billion in 2006, while the 2007 pre-tax loss from continuing operations was $12.8 billion compared to pre-tax earnings from continuing operations of $9.8 billion for 2006.
For the fourth quarter of 2007, net revenues were negative $8.2 billion, down from $8.4 billion in the prior-year period, and Merrill Lynch’s fourth quarter 2007 pre-tax loss from continuing operations was $14.9 billion.
