Circuit City, International Hedge Fund Among Latest Economy Victims
- Nov 04, 2008
In spite of the hype surrounding the presidential elections today and what the outcome will mean for the nation – and the world – in respect to business, the news of the continuing credit crisis still dominates business reports. Circuit City Stores Inc. announced that “due in part to its deteriorating liquidity position and the continued weak macroeconomic environment, the company has decided to take certain restructuring actions immediately, including closing 155 domestic segment stores, reducing future store openings and aggressively renegotiating certain leases.”In a letter to its investors, Blue Mountain Capital Management L.L.C. temporarily halted redemptions at its largest hedge fund after clients asked to withdraw money despite its “distinguished” performance, according to a Reuters report. New York and London-based Blue Mountain said in the letter it had come up with a plan to protect all its investors in the $3.1 billion Blue Mountain Credit Alternatives Fund, which is down 2.4 percent year-to-date.Couple these announcements with the latest manufacturing ISM Report On Business that shows economic activity in the manufacturing sector failed to grow in October for the third consecutive month. Manufacturing contracted in October as the Purchasing Managers’ Index (PMI) registered 38.9 percent, 4.6 percentage points lower than the 43.5 percent reported in September, according to the Report On Business.The news worldwide isn’t much better, The New York Times said that the Swiss banking giant UBS reported a third-quarter net profit but warned that the outlook for the rest of the year was gloomy as the bank is struggling to recover after the collapse of the U.S. mortgage market. The bank reported net profit of $252 million while operating income fell 38 percent. The Guardian reported that Japan’s vehicle sales in October fell 13.1 percent from a year earlier to 233,922 units for the third straight month of decline due to sluggish consumer spending amid worsening economic conditions. The sales figure was the second lowest on record for the month of October since the Japan Automobile Dealers Association started compiling relevant data in 1968. On the bright side, Japan’s minivehicles aren’t included in those numbers. The Japan Mini Vehicles Association said sales of minivehicles in October were up 6.2 percent from a year earlier to 145,444 units, helped by brisk sales of new models including Suzuki Motor Corp.’s fully remodeled Wagon R minicar launched in September, according to the report.