Spain, Banks receive debt-rating downgrades.
Spain’s Debt Rating Downgraded
Standard and Poor’s downgraded its long-term debt rating for Spain yesterday because of the risks facing the nation’s banks, and the country’s weak economy, The Associated Press reports. High unemployment, tight credit and high levels of private-sector debt are dragging on Spain’s economy. The country is also vulnerable to economic weakness among its trading partners. The ratings agency lowered Spain’s long-term rating to AA- from AA with a negative outlook. Spain’s short-term credit rating of A-1+ was affirmed.
iPhone 4S Pre-orders Top 1 Million
Pre-orders for the iPhone 4S, the first product to be released since Apple CEO Steve Jobs stepped down due to illness, exceed 1 million sales, reports USA Today. The product is scheduled to go on sale in stores at 8 a.m. today. Pricing of the phone starts at $199.
The iPhone 4S is an upgraded version of the iPhone 4 and offers faster processing, voice recognition and a more powerful camera. Apple reports that there are more than 128 million iPhones in use worldwide.
Rajaratnam Gets 11 Years
Described by prosecutors as “the modern face of illegal insider trading,” Raj Rajaratnam was sentenced to 11 years in prison in U.S. District Court in Manhattan yesterday. The term is one of the longest ever awarded for insider trading, Bloomberg News reports.
Rajaratnam, co-founded of the Galleon Group LLC, is at the center of an investigation that U.S. officials call the largest hedge fund insider trading case in U.S. history. On May he was convicted of 14 counts of securities fraud and conspiracy. Prosecutors accused Rajaratnam of making more than $72 million, profiting from illegal tips to trade stocks in such companies as Goldman Sachs, Intel and Google.
UBS Downgraded, Seven Other Banks on Credit Watch
Fitch ratings downgraded UBS AG by one notch yesterday due to economic headwinds, regulatory burdens and challenges in financial markets, the Chicago Tribune reports. Seven other U.S. and European banks were put on a negative credit watch. Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Societe Generale, Bank of America, Morgan Stanley and Goldman Sachs all face further possible downgrades. Fitch also downgraded Royal Bank of Scotland and Lloyds Banking Group two notches from A to AA-.
Google Beats Expectations
Google announced quarterly earnings yesterday that exceeded analysts’ expectations. The Internet search giant reported that revenue climbed 33 percent and net income rose 26 percent, The New York Times reported. The company said that ad revenue from mobile searches was 2.5 times greater than last year and would generate more than $2.5 billion in revenue in the coming year.
Google, which has nearly a 100 percent market share in mobile search, reported a net income of $2.73 billion for the third quarter, said the Times.
Will Justice Department Review Bank Fees?
House Democrats suspect big banks of colluding on fee increases and yesterday asked the Justice Department to investigate whether the banks have violated antitrust laws, the Chicago Tribune reports. Banks are raising fees to make up revenue lost to a cap on debit card transactions fees. Announcements of fee increases by Bank of America, Wells Fargo and JP Morgan Chase may constitute price signaling, Democrats said in a letter to the Justice Department. Meanwhile house Republicans are pushing a bill to repeal the swipe fee rule, which they describe as a form of price control harming both consumers and the banking industry.