The Wall Street Journal off-leads and Bloomberg reports that
Ford Motor Co. (F), the most robust of the Big Three, plans to issue
300 million shares of common stock in a public offering that will
further distance itself from its crosstown rivals and will take
advantage of an 11-week stock rally. The New York Times highlights that dull small-town banks are doing fine just as they are, thankyouverymuch, and the Washington Post
says that retailers, including Starbucks (SBUX) and teen-clothier
American Eagle (AEO), have begun developing low-cost products to help
stay in business in the post-splurge era.
At least some of the money raised by Ford in the impending stock
offering—perhaps up to half—will be used for a union-run medical trust.
The rest will simply be used to stave off federal aid. With the
offering, Ford could raise $1.7 billion to $2 billion. According to the
WSJ, the offering indicates the company believes investors will
pin their hopes on it as General Motors Corp. and Chrysler are consumed
by uncertain reorganizations. Ford also thinks that raising the cash
is worthwhile, despite any backlash from current stockholders who
don't want their shares to be diluted. Ford is facing close to $10
billion in health costs for retired union workers.
At a recent gathering hosted by the Indiana Bankers Association,
community banks played up their own plain vanilla-ness, casting
themselves as diametric opposites to their big-city counterparts, the NYT
says. And they are so fed up with being grouped together in the banking
crisis, they've launched a diffuse public relations campaign to let
consumers and investors know: We ain't like the big guys. In covering
the banking crisis, they said, the media have grouped the 7,630
community banks together—the vast majority of which have watched the
crisis like bystanders at a 10-car pileup. And though they outnumber
the national and regional banks, community banks have barely
registered in any of the fallout from the credit crisis. So, stop
saying the banks when you're only referring to Citigroup (C) and Bank
of America (BAC), and you'll make at least a few Indiana bankers very
Starbucks, in response to penny-conscious consumers, dropped the
price of a medium iced coffee last week, and American Eagle has cut out
the ribbon from the inside waistband of its khakis to lower the cost.
These are just two examples of many that show how retailers are dealing
with a different beast of consumer—one that is less beastly, according
to the WP. The new consumer has curtailed spending and
increased savings to 10-year highs. Smaller houses are newly coveted,
bringing the average size of a new home down in 2008 for the first time
in 35 years, according to the National Association of Home Builders.
So retailers, which revisit their prices and product assortment
seasonally, are being particularly conservative this summer. Whether
lower prices will boost the stores' bottom lines is yet to be seen.
The WSJ leads its business news box with the decline in
stocks Monday after a strong-ish rally as banks pulled out of
financials and economically sensitive holdings.