Six months after acquiring the Chicago Board of Trade for $12 billion, the CME Group has confirmed that it has entered a 30-day exclusive negotiating period to consider buying the New York Mercantile Exchange for about $11 billion. The deal would solidify CME's position as the most important futures market in the world.
Purchases of new homes in the U.S. unexpectedly fell to a 12-year low in December, ending the worst sales year since records began in 1963. The S&P/Case-Shiller 20-city home price index fell 7.7% for the year through November. The 10-city index fell even further, declining a record 8.4%. The 20 city index showed yearly price declines in 17 of the 20 cities surveyed and all 20 cities showed monthly price drops. Not only did the 10-city composite index post another record low in its annual change rate, but 13 of the 20 metro areas did the same. The weakest market in November was Miami, where prices fell 15.1% in the past twelve months.
Analysts at Bank of America are warning of trouble for credit default swaps if even a small bond insurer defaults. ACA Capital Holdings may face delinquency proceedings next month from the Maryland Insurance Administration if it can't delay action on $60 billion of CDS contracts. The company guarantees more than $75 billion of debt.
Countrywide Financial Corporation reported a fourth-quarter loss of $422 million, but the results were not expected to hinder its proposed $4.1 billion takeover by the Bank of America. Countrywide’s earnings fell far short of Wall Street estimates. Still, shares rose 36 cents (6%) to $6.31. CEO Angelo Mozilo will voluntarily give up $37.5 million in severance and consulting pay in connection with the proposed takeover by the Bank of America Corporation. His stock and employee equity awards would be treated the same as that of other shareholders and employees if the sale goes through. However, Mozilo sold almost $450 million in stock from April 2004 to August 2007.
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