This week in finance brought some bad news. The stock market struggled and we found out we'll be paying for the BP oil spill. On the bright side, however, we're one step closer to driving GM's electric car and welcoming our Google overlords. (Did you miss last week's news? Catch up by reading Water Cooler Finance: The Unrelenting Claw Of Bernie Madoff.)
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BP Passes the Buck
Since news of the largest oil spill in U.S. history hit the markets, BP (NYSE:BP) has lost about 40% of its market value. The company reported $32 billion in charges related to the spill in the second quarter. It also announced that it would offset those charges against its taxes, passing approximately $10 billion on to the American taxpayers. (For more, see The Most Expensive Oil Spills.)
BP plans to sell off $30 billion in assets to reemerge from this PR and environmental nightmare. Part of this plan may include selling off Venezuelan assets to TNK-BP Ltd., the company's Russian joint venture.
BP has replaced CEO Tony Hayward with Bob Dudley, charging him with repairing BP's damaged image. Doesn't your job seem a bit easier now?
In other oil news, Exxon Mobil (NYSE:XOM) saw its earnings leap by 91% as the refining business bounces back. Royal Dutch Shell (NYSE:RDS.A) and ConocoPhillips (NYSE:COP) also posted increased earnings.
Citi Happy With Charges
Speaking of large charges, Citigroup (NYSE:C) will have to pay $75 million to settle allegations that the company failed to disclose subprime exposure to the tune of $40 billion to investors in 2007. The company accepted the terms without admitting or denying the charge, but was quoted in the Wall Street Journal as being happy that the SEC was not charging them with "intentional or reckless misconduct."
Citigroup also announced in a memo that it has hired former Goldman Sachs employee Jo Narita as the bank's head of forex trading in Japan.
Unhappy Consumers, Unhappy Stocks
Consumer confidence fell to its lowest point since February this month and, along with mixed earnings reports, this caused the S&P to fall on Tuesday. On the upside, home prices rose in May. Despite the losses earlier in the week, stocks recovered slightly as Thursday came around, with the Dow and Nasdaq composite rising slightly. Overall, the markets continue their roller coaster ride through the economic recovery (or looming double dip recession, depending on who you are talking to).
Don't Be Shocked
The race for the electric car continues as GM set a price of $41,000 for its Chevy Volt this week. If that price tag is what's keeping you from pre-ordering the car, don't forget the $7,500 tax credit that will reduce the cost to $33,500, bringing it in line with the Nissan Leaf. (For more, check out 10 Steps To Buying A Car (Without Getting Taken For a Ride).)
The 61% government-owned company is expected to file an IPO as early as August according to Reuters. Perhaps then Rush Limbaugh will stop referring to the company as "Obama Motors".
Google Divides and Conquers
Continuing its quest for world domination, the technology giant struck a blow to Microsoft's (Nasdaq:MSFT) presence in Japan this week, Yahoo Japan announced its plans to use Google (Nasdaq:GOOG) to run its internet queries. That means that more than 90% of Japan's internet searches will be done by Google, according to the Wall Street Journal. The partnership between Yahoo (Nasdaq:YHOO) and Microsoft struck earlier this year did not include Japan. Although Yahoo has a significant stake in Yahoo Japan, they are separate companies. Enough Yahoo Japan stock is held in other hands that Yahoo is unable to block the decision.
InformationWeek reported that Microsoft slammed the deal, saying it creates an anti-competitive arrangement in search.
The Bottom Line
While the markets continue to jump up and down, at least you be certain about the news for the foreseeable future. Between BP and Citigroup, we'll have plenty of headlines to keep us busy. It's nice to know you can count on something! (Need some tips to survive this market? Check out How To Retain Your Sanity In A Volatile Market.)
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