Thomson Reuters Union Taking Its Complaint to the Streets

The union representing U.S.-based employees at Thomson Reuters Corp. today launched a multimedia campaign that asks whether the company’s imposition of nearly 10 percent in pay cuts on its journalists and other employees will reduce the quality of Reuters news and information.

In its press release, the union announced that billboard trucks will roll daily through Manhattan’s financial district and midtown with the message: “Reuters is bad news for its employees. Is it bad for your bottom line?” The billboards refer readers to reutersexposed.com for information about the profitable global media company’s refusal to continue contract talks with the Newspaper Guild of New York, which represents about 420 of the company’s journalists, technicians and support staff throughout the country.

The Guild also launched a targeted online campaign informing Thomson Reuters financial clients about the dispute and questioning whether the company’s strategy of attacking its staff would hurt news quality.

Union officials said that Thomson Reuters is financially strong, saying that its third-quarter 2009 underlying operating profit rose 3 percent, beating analysts’ forecasts, while underlying operating profit margin rose to more than 22 percent. The union said that Thomson Reuters chief executive officer Tom Glocer was paid $36 million in 2008.

“Company managers seem oblivious to the contradiction of asking journalists to make extraordinary efforts to cover the news clients need for crucial financial decisions, while asking them and their families to make do with less,” said Guild President Bill O’Meara.

The Guild, Local 31003 of the Communications Workers of America, represents U.S.-based staff in print, photo, video, technical and related work at Thomson Reuters, which employs about 50,000 people worldwide and was formed when Thomson Corp. acquired London-based Reuters Group Plc in 2008.

Dow Up More Than 400 Points at Opening Bell

The Dow Jones Industrial Average continued its roaring rebound this morning, opening 409.71 points in the first 15 minutes of trading today. The S&P 500 jumped up 52.79 points in that time as well.

Bloomberg's market chart is here.

"The ban on the short sales is what's having the immediate impact on the market. That should calm the market down," Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt., told Reuters. "Anybody who has been shorting these financial stocks is going to get burnt in here. What authorities are trying to do is just buy enough time for the market to settle down and for the details of the Paulson plan to be understood, how long it would take to implement and what it means for the banks."

Stocks Soar 617 Points From Day's Low on Paulson's Resolution Trust Corp. Plan

Stock traders were euphoric yesterday after a CNBC reported late Thursday afternoon that that Treasury Secretary Henry Paulson is considering creating an entity like the Resolution Trust Corp., which was formed after the failure of savings and loan banks in the 1980s, to stabilize the financial markets. Stocks immediately rallied, posting the largest gain in six years.

Elizabeth Stanton of Bloomberg reported tonight:

Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.

Wachovia Corp. soared 59 percent, Citigroup Inc. added 19 percent and Bank of America Corp. jumped 12 percent, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley erased a 46 percent tumble and Goldman Sachs Group Inc. recovered most of a 25 percent slide after the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.

"Any actions regulators or other entities or players take to try to slow down the bear raids will be received positively," said David Katz, chief investment officer of Matrix Asset Advisors in New York, which manages $1.4 billion. "There's no reason a Goldman Sachs or a Morgan Stanley should be forced to sell themselves in a shotgun wedding if they've got economic models that work, and they do."

The S&P 500 advanced 50.12 points to 1,206.51, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69. Both the S&P 500 and Dow posted their biggest percentage gains since October 2002. The Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1. Seven stocks climbed for each that fell on the NYSE, its broadest rally since April.

The Chicago Tribune described a resolution trust corporation this way:

The best solution appears to be the creation of a new Resolution Trust Corporation. This was the mechanism used to resolve the savings and loans crisis approximately 15 years ago. The trust could either buy selected distressed assets through fair and transparent prices or create an orderly market for the disposition of assets from failed institutions. This would hopefully stabilize the market for mortgages and distressed assets. It would be designed to stop the current fire sales of assets which have a snowball effect as relatively healthy institutions mark their assets to lower and lower levels pushing more financial companies to the point of bankruptcy. Badly needed confidence would be restored.

Richard Cowan and Kevin Drawbaugh of Reuters elaborated on the Paulson proposal, and one by Sen. Charles Schumer (D-NY) :

A possible federal plan to calm financial markets and address the housing crisis began to take shape on Thursday, with rival proposals from U.S. Treasury Secretary Henry Paulson and Sen. Charles Schumer.

Paulson has been talking with congressional leaders about possibly setting up a federal agency to deal with the broken mortgage debt instruments that are choking global capital markets, said a congressional aide and a lobbyist.

"It's a modernized version of the Resolution Trust Corporation (RTC), which was used after the S&L crisis," said the aide, declining to be further identified.

Schumer offered a different idea in a speech urging that future federal capital infusions for banks be conditioned on their making loan modifications and other terms.

The New York Democrat proposed setting up a federal agency that would "provide capital to struggling financial institutions in exchange for an equity stake in the banks," similar to the Depression-era Reconstruction Finance Corp (RFC).

Lehman, Listing $613 Billion in Debt, Files Biggest Chapter 11 Bankruptcy Ever; Global Markets Plummet

Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history, writes Yalman Onaran and Christopher Scinta of Bloomberg this morning.

The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Chief Executive Officer Richard Fuld, who turned the New York-based firm into the biggest underwriter of mortgage-backed securities at the top of the U.S. real estate market, joins his counterparts at Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn't survive this year's credit crunch.

"There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown," said Charles "Chuck" Tatelbaum, a bankruptcy lawyer with Lauderdale, Florida-based Adorno & Yoss and former editor of the American Bankruptcy Institute Journal. "The whole thing is frankly frightening for the U.S. economy."

Lehman shares dropped 81 percent in Frankfurt trading to 75 cents from their $3.65 close in New York on Friday. UBS AG, HBOS Plc, and Axa SA led a decline of more than 3 percent for European stock markets on speculation a forced sale of Lehman's assets could lead to further writedowns at other banks.

Shares in U.S. banks trading in Frankfurt tumbled, with Lehman plunging 80 percent and Morgan Stanley, Citigroup and others all in retreat. Frankfurt-listed shares in AIG fell almost 30 percent, Reuters reported.

Merrill's shares offered a rare bright spot and its Frankfurt-based shares jumped 36 percent. Bank of America said it had agreed to buy Merrill in an all-share deal for the equivalent of $50 billion, or $29 a share, almost $12 a share above Friday's closing price.

Ike Forecast: Most Likely Target Is Texas

Hurricane Ike seems to most likely be heading for the Texas Gulf coast, Kyle Peveto and Blair Dedrick Ortmann of the Beaumont (Texas) Enterprise are writing for Tuesday's paper.

Texas Gov. Rick Perry has already declared the state a disaster area in order to start the deployment of resources to the 88 counties that might be affected by the storm.

The National Hurricane Center said at 11 p.m. Eastern Monday that the center of the hurricane was near latitude 21.8 north and longitude 89.8 west, or about 20 miles southeast of Playa Giron on the southern coast of west-central Cuba, and about 140 miles southeast of Havana.

Ike is moving west-northwest near 13 mph. It should enter the southeastern Gulf of Mexico on Tuesday. Maximum sustained winds are about 80 mph, making the storm a category 1. The minimum central pressure is 967 mb. The storm is expected to gain strength as it enters the Gulf.

Reuters reported Monday night that state-run Cuban media says eastern portions of the island have experienced widespread damage, including toppled trees, destroyed homes, downed power lines and flooded towns. The area had up to 10 inches of rain, flooding and a surging sea.

The wire service also reported that Cuban television said four people died, including two men who were electrocuted when they tried to take down an antenna that fell into an electric line, a woman who was killed when her house collapsed and a man who was crushed when a tree blew over onto his home.

Brian K. Sullivan and Camilla Hall of Bloomberg reported Monday night that personnel from 10 rigs and 202 production platforms in the Gulf have been evacuated, the Minerals Management Service said yesterday on its Web site. There are about 717 manned production platforms in the Gulf. The report said the price of crude oil for October delivery dropped 60 cents, or 0.6 percent, to $105.63 a barrel as of 12 p.m. on the New York Mercantile Exchange. Prices are up 38 percent from a year ago.

Eye on Gustav

All of a sudden there is concern that tropical storm Gustav (satellite image above) could develop into a hurricane and make landfall near New Orleans. Reuters reports that officials in New Orleans will consider an evacuation if there are indications that it could become a Category 3 storm:

Not since Katrina and Hurricane Rita, which followed in its wake, have residents faced government orders to evacuate their homes and businesses. Many are still struggling to rebuild their lives in a city famed for its jazz clubs and Mardi Gras festival.

On Wednesday, two days before the third anniversary of Katrina's Aug. 29, 2005, landfall, Gustav drifted away from Haiti and the Dominican Republic after killing 22 people. It could hit the U.S. Gulf Coast around Monday.

Here is the National Hurricane Center's bulletin:

http://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/271147.shtml

The storm has already affected our pocketbooks as the price of sweet crude oil edged up to $118.28 a barrel, settling there after reaching $120 during trading today. The storm is threatening U.S. oil platforms in the gulf, Bloomberg reports:.

Energy producers will evacuate ``several thousand'' employees from offshore rigs yesterday because of the storm, said Ted Falgout, the director of Louisiana's Port Fourchon. Almost 20,000 workers are on offshore platforms, about one-quarter of which are needed to maintain output, Falgout said in an interview.