Pressure on Italy
Italy has been sucked further into the sovereign debt crisis because international capital markets investors believe it is the next Spain — unable to sustain its debt and reign in its deficit. Evidence of investor caution showed up today with a vengeance. Borrowing costs reached a six-month high of 3.972% for one-year notes. Most experts believe that rate cannot be sustained by the country as its credit needs increase. The market will watch the yield on 10-year notes closely now to see if they move well above 6%, which was one signal of Spain’s inability to survive without a bailout.
Chesapeake Energy’s Board
Chesapeake Energy (NYSE: CHK) board member Donald L. Nickles, a former U.S. Senator from Oklahoma — the energy company’s home state — said the board is close to naming a new nonexecutive chairman. Why Nickles is on the board, or was elected in the first place, is mystery. He has no qualifications other than his political connections. A change in the board composition comes awfully late for a company that is being investigated for its CEO’s business dealings and the conduct of the old board. New members could force out CEO Aubrey McClendon. Finding a solid replacement in a short time will be difficult, which means the firm’s troubles are far from over.
GM CEO’s Comments
General Motors (NYSE: GM) CEO Dan Akerson used the car company’s annual meeting to make several senseless comments. The first was that politicians in Washington will need to end gridlock about how the government should stimulate the economy while cutting costs. His conclusion about that comes a little late. He also expressed optimism about the earnings of GM’s European operations. He did not say much about the union resistance and objections of some countries there about layoffs. Finally, he suggested Canadian auto workers should take pay cuts. “Canada is the most expensive place to build a car in the world right now,” Akerson said. The CAW probably already knows that.
Douglas A. McIntyre
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