Moving the Market

[BRIEFING.COM] Market participants spent the session focusing on word the government may be close to creating a "bad bank" that will purchase risky assets from existing banks. Divesting risky assets would help banks protect against further asset write-downs, and increase cash on their books. That would help limit the need to raise additional capital, which can be dilutive to shareholders.

Helping financial companies restore their health is largely seen as the first step in repairing the financial system and the broader economy. The financial sector responded by gaining 13%, leading the broader market more than 3% higher.

Wells Fargo (WFC 21.19, +5.00) provided the most support to the financial sector and the broader market. It gained 31%, marking its best single-session performance in months. Wells Fargo won kudos after announcing it is maintaining its dividend, and has no plans to ask for additional TARP capital. Wells Fargo reported a loss of $0.79 per share including items, but a profit of $0.41 per share after excluding the items. The consensus called for earnings of $0.33 per share.

Public trusts business, CEOs, less than ever

Edelman's latest business Trust Barometer finds that corporations and their CEOs have lost considerable credibility with the public in recent months.

The company, a large public relations firm, has put out the Trust Barometer for ten years, with this year's survey including the opinions of 4,475 college-educated people who regularly follow current events, or "informed publics."

According to the findings, 62 percent of respondents say that they trust corporations less than they did a year ago, while only 17 percent said that they trust information provided by a company CEO. The poll found that 38 percent say they trust business to do the right thing, down 20 percent from last year's survey. Also, the poll showed only 13 percent who trust corporate or product advertising, breaking last year's record low of 20 percent.

Venture capital investments down in '08

Venture capital investments were mostly down in 2008, although a couple of categories continued to see growth.

In the latest MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, overall venture capital investments were down eight percent from 2007, while fourth quarter of 2008 investments were at their lowest point since early 2005.

"As we emerge from an extremely difficult year, the venture capital industry is holding
its own and taking steps to adjust to the new reality," Mark Heesen, president of the
NVCA, said in a statement.

BOND REPORT: Treasurys Decline As Stimulus Package Grows

By Deborah Levine

Treasurys declined Wednesday, pushing yields up, as the size of the government's stimulus package grew to nearly $900 billion.

Ten-year note yields (UST10Y) rose 2 basis points to 2.56%. A basis point is 0.01%.

A larger spending plan leads to more debt issuance, making investors demand higher yields.

President Barack Obama's stimulus proposal may be voted on by the House of Representatives later Wednesday.

Reports that the government is moving closer to creating a "bad bank" to buy up toxic assets that have wreaked havoc on the global financial system is also reducing investors' desire for the relative safety of U.S. debt.

Wells Fargo Posts $2.55 Billion Loss; Wachovia's Loss $11 Billion

DOW JONES NEWSWIRES

Wells Fargo & Co. (WFC) swung to a fourth-quarter loss on a $5.6 billion credit reserve on slumping loan quality.

The company also reported that Wachovia, the struggling bank it bought Dec. 31 and didn't include in its bottom line, lost $11 billion in the period.

Wells Fargo agreed in October to acquire Wachovia days after federal regulators brokered a deal for the struggling bank to be acquired by Citigroup Inc. (C).

Wachovia has been weighed down by surging credit losses, notably related to its purchase several years ago of California-based mortgage lender Golden West. That saddled Wachovia with more-exotic loans that have been going bad fast as the housing market continues to deflate.

NY Times' 4Q Net Down 48%; May Sell New England Sports Stake

DOW JONES NEWSWIRES

New York Times Co.'s (NYT) fourth-quarter net income plummeted 48% as weak online advertising sales added to its print-advertising woes.

The publisher of The New York Times and The Boston Globe also said it is exploring a sale of its 18% stake in New England Sports Ventures LLC, owner of baseball's Boston Red Sox and Fenway Park as well as 80% of New England Sports Network. It bought the stake in 2002 and is considering a sale as the cash- strapped company looks to raise capital.

It also warned that crumbling equity markets have "adversely" affected the status of its pension plans, leaving it underfunded by an estimated $625 million. It said it will have to fund the deficiency over seven years, assuming harsh conditions continue.

That is not good news for a company already grappling to restructure debt and cut costs in efforts to boost its liquidity. New York Times got a $250 million cash infusion earlier this month from Mexican billionaire Carlos Slim and is nearing a deal to raise as much as $225 million from a sale-leaseback of its share of its midtown Manhattan headquarters.

BOND REPORT: Treasurys Under Pressure Ahead Of Fed Meeting

By Deborah Levine

Treasurys were little changed on Wednesday, recovering from earlier losses as the size of the government's stimulus package grew to nearly $900 billion.

Traders are also focused on what the Federal Reserve will say when the central bank ends its policy meeting later on.

Yields on the two-year note (UST2YR), which move inversely to the price, rose 1 basis point to 0.88%. A basis point is 0.01%.

Ten-year note yields (UST10Y) were little changed at 2.53%.

A larger spending plan leads to more debt issuance, making investors demand higher yields.

President Barack Obama's stimulus proposal may be voted on by the House of Representatives later Wednesday.