Markets Suffer Bailout Hangover

Could the rally be over so soon? Stock markets across Asia edged lower on Wednesday, BBC reports, following up with a whimper from Tuesday's historic one-day gain on the Nikkei. All European bourses were down as well at the start. The global stock markets are taking their cue from the U.S. right now. Despite the U.S. Treasury's historic $250 billion move on Tuesday to nationalize, partly, precarious banks—the British press is delighting in this latest U.S. import, first minted in the United Kingdom a week ago—the Dow closed yesterday down 0.86 percent, a far cry from Monday's 936-point moon shot. Analysts are puzzling over what's needed to keep a sustained rally going. "We haven't really solved anything," strategist Howard Simons of Bianco Research in Chicago told the Wall Street Journal. "We try a new program a day, and we have no idea if any of it is going to work."

Equities may have been weak (well, all but the financial stocks) on Tuesday, but, the WSJ reports, there were promising signs the credit market is beginning to thaw out. Thanks to the latest banks bailout, "corporate bonds issued by banks jumped in value and their yields fell sharply, while interest rates on short-term IOUs known as commercial paper decreased," the WSJ writes. Treasury Secretary Henry Paulson tells the Financial Times the $250 billion capital injection plan was a "major step" needed to shore up the country's banks. And, the Treasury is prepared to spend even more if needed. "We have clearly got more room to inject more capital and more capital will need to be injected over time using the variety of tools at our disposal," he told the newspaper.

From "resuscitation" to another R-word now: recession. Yes, Tuesday's underwhelming market performance has reignited talk of a global recession, "perhaps the deepest one in decades," the New York Times writes. The steady diet of government stimulus packages is unlikely to save us, dubious economists warn. “Everything the government has done is not going to prevent further deterioration in the economy,” Stuart Hoffman, chief economist at PNC Bank, tells the NYT. “At the end of all this, what matters is what the economy does.” Bill Gates, the NYT adds, speculated the country could be headed for "a fairly significant recession" that pushes the jobless rate to a European-like 9 percent. The latest figures out of Europe show all signs are saying Europe is, technically speaking, already in a recession, the NYT reports in a separate story. Back Stateside, Business Week lists which cities are likely to fare okay from the pending downturn. Top of the list? Arlington, Va. Naturally, the government is the most stable employer these days.

Apple unveils a bunch of shiny new laptops that aren't as affordable as some people thought they would be, and we're writing about it. Why, you ask? Well, because it's Apple, of course. Now gadgetheads might be interested in the new MacBook's aluminum casing or its new Nvidia chip that "help[s] with chores like playing movies" (it's a tough life) but Fortune is fixated on the price. It writes that despite widely published rumors that Apple would unveil a $800 PC-priced new product, the compay has decided to maintain its pricing structure, "sticking with the strategy that has worked for the company since [CEO Steve] Jobs came back to Apple in 1997: building high-end, high-margin computers and selling them at a premium to discriminating users."

Intel also was in the news yesterday. The world's largest chip maker posted record third quarter earnings (net income rose 12 percent, to $2.01 billion) and "issued a surprisingly upbeat sales outlook" writes Business Week. Or did it? "It is clear that the financial crisis is creating some signs of stress that may impact our business, but the extent of that is difficult to quantify," Intel's Paul Otellini told analysts as he explained why the company had "projected an unusually broad revenue range for the fourth quarter and took the unexpected step of scheduling a midquarter update, which will be held in December," the WSJ reports.

Commercial real estate, once considered General Electric's "honey pot," is proving a bit of a burden nowadays. GE's $88.7 billion real-estate portfolio is one of the world's largest and it just "posted a 62% decline in its third-quarter profit ... one of the largest percentage declines for any of its business units," writes the WSJ. The company bought a raft of properties at the top of the market—just last year it acquired real estate worth $16.6 billion. "We're not counting [on] any gains in the real-estate business in 2009," said Keith Sherin, GE's chief financial officer.

The next Redstone family is bound to have its awkward moments. According to the WSJ, Shari Redstone, daughter of media mogul Sumner Redstone, fired off a statement on Tuesday saying her movie-theater business is not to blame for the forced sale on Monday of $233 million in assets by the family's holding company, National Amusements Inc., amid the biggest stock market rally in history. Citing sources, the WSJ said the fire sale was executed to cover covenants on a $1.6 billion loan meant to pay for, in part, theater expansion at Ms. Redstone's company. Not true, she counters, adding it was last week's market tank job that forced the sale. Daddy declined to comment.