Macro

Ownit Mortgage Solutions filed Chapter 11 as early-payment defaults surged and Wall Street buyers forced loan repurchases. It was among the first in a wave of subprime originator failures that would accelerate through 2007.

Subprime lenders collapsed in a cascade (Ownit, New Century, American Home Mortgage), home prices went into freefall, and the August credit seizure froze mortgage markets; a deepening disaster for property owners.

Bear Stearns halted withdrawals from two highly leveraged funds loaded with subprime CDOs after mounting losses and margin calls. The episode began the repricing of structured credit and previewed the collateral spiral that would engulf Wall Street.

The finance sector is under significant stress this month, driven by deepening losses in major institutions tied to the unraveling subprime mortgage market, exemplified by Merrill Lynch’s $8.4 billion write-down and UBS’s substantial loss. Citi’s profit warning underscores broadening concerns about near-term earnings across the industry. While the RBS-led consortium’s €71 billion acquisition of ABN AMRO signals aggressive expansion, it also amplifies fears of overreach amid deteriorating credit conditions, contributing to an overall bearish sentiment.

Daimler is divesting 80.1% of Chrysler to private equity firm Cerberus Capital Management for $7.4 billion, marking the end of a failed transatlantic merger. The deal allows Daimler to offload debt and liabilities while Cerberus aims to revitalize Chrysler and integrate its financial arm with GMAC, with market implications for U.S. auto restructuring and private equity's growing role in distressed automakers.

The consumer sector remains neutral this month, with the divestiture of Chrysler by Daimler having minimal broad impact on sector sentiment. While the $7.4 billion sale to Cerberus signals strategic repositioning for Daimler, it reflects a move away from, rather than within, the core consumer space, leaving overall consumer demand trends and spending patterns largely unaffected. The broader consumer backdrop remains stable, with no major shifts in spending or confidence to drive sentiment either higher or lower.

KKR, TPG, and Goldman Sachs are acquiring TXU Corp in a $45 billion leveraged buyout, the largest ever, offering $69.25 per share. The deal includes commitments to cut consumer prices, reduce coal plants, and expand renewables. Regulatory approval is expected, with potential future divestitures or IPOs of restructured units, boosting sector merger speculation.

The utilities sector is trading slightly bullish this month, buoyed by the landmark $45 billion TXU buyout led by KKR and TPG—the largest leveraged buyout in history. This deal underscores strong investor appetite for essential infrastructure assets and signals confidence in stable, long-duration cash flows despite broader rate concerns. The transaction has lifted valuations and sentiment across the sector, reinforcing utilities as a preferred target for private capital.

Singapore Airlines launched the first commercial flight of the Airbus A380, marking a milestone in aviation with the world's largest passenger jet. The aircraft offers increased capacity and efficiency on high-demand routes, boosting SIA's competitive edge while highlighting market competition with Boeing’s 787 Dreamliner. The A380's long-term success remains uncertain amid concerns over cost and resale value.

A global boom and weak dollar powered exports through the first half; the August credit seizure introduced caution and $100 oil raised input costs, but industrials held up far better than financials.

Thomson Corp. has secured initial approval to acquire Reuters for $17.6 billion, forming Thomson-Reuters, a dominant player in financial data with a 34% market share, slightly ahead of Bloomberg. The deal faces antitrust scrutiny and union opposition over potential job cuts, while combining Thomson's legal and financial services with Reuters' global news and data operations. The merged entity will list on Toronto, London, and Nasdaq exchanges, with Thomson's shareholders holding a 53% majority stake.

The iPhone launch transformed wireless value and News Corp won the WSJ, but the August credit crunch cooled the ad outlook late. Positive then softening.

On April 13, 2007, Google agreed to buy display-advertising network DoubleClick for $3.1 billion in cash, its largest acquisition to that point, outbidding Microsoft. The deal fused Google's search-ad platform with DoubleClick's banner-serving tools and immediately drew antitrust and privacy scrutiny from US and EU regulators.

The tech sector is feeling upbeat this month, anchored by strong consumer response to Apple's latest iPhone launch, which drew significant retail demand and signaled robust end-market appetite. This positive momentum has lifted broader sentiment across hardware and consumer electronics, contributing to a +0.30 bullish read for the sector.

A new analysis links GlaxoSmithKline's diabetes drug Avandia to a 43% higher risk of heart attack, prompting an FDA safety alert but no immediate regulatory action. The revelation sparked congressional concern, eroded investor confidence—sending GSK shares down 6.6%—and reignited criticism of FDA's drug approval and safety monitoring processes.

Steady in the bull-market peak, though the 'patent cliff' narrative loomed and GSK's Avandia safety scare hit in May; Merck's $4.85B Vioxx settlement in November finally removed a huge liability overhang.

Crude touched $99 on a weak dollar, OPEC restraint and relentless Asian demand, doubling in under a year. The surge squeezed consumers already hit by falling home prices and complicated the Fed's easing calculus.

Crude closes in on $100 a barrel

China conducted its first anti-satellite missile test, destroying its Fengyun-1C weather satellite and generating over 900 tracked debris fragments. The event poses significant risks to low Earth orbit operations, including the International Space Station, and has heightened global concerns about space sustainability. Financial markets may face implications due to increased insurance costs and risks for satellite operators and space-based service providers.

Iraq surge drives crash MRAP procurement

A weak dollar and sustained Chinese demand drove gold toward $830 and oil past $100 while base metals stayed elevated, keeping revenue booming even as credit markets began to fracture.