July 5 (Bloomberg) -- The plane carrying deposed Honduran President Manuel Zelaya was unable to land in Tegucigalpa, the Central American country’s capital, because of vehicles blocking the runway.
Zelaya, speaking from the plane in an interview on the Telesur network, said the plane will head toward El Salvador where he will meet with allies. He vowed to try to enter Honduras tomorrow or at a later date.
By Mark Deen and Simon Kennedy
July 6 (Bloomberg) -- Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.
“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.
Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar.
The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis.
French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that “we must explore better coordination of exchange-rate policy.”
Questions need to be asked about “the balance of currencies and the role of currencies in a world that has changed because of the crisis and the growing role of emerging countries,” she told reporters.
Bank of France Governor Christian Noyer said at the same conference, “We really need to make sure there is a greater stability between the big currencies in the period to come.”
Dollar Share Grows
For all the concerns about the dollar’s role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007.
China doesn’t support the idea of creating a supranational reserve currency and expects the U.S. dollar to maintain its role for “many years to come,” Deputy Foreign Minister He Yafei told reporters in Rome yesterday.
While Medvedev said he sees “no alternative” to the dollar or euro now, he repeated his proposal that “regional reserve currencies” be developed and again questioned the wisdom of relying on the dollar.
‘Cannot Be Hostages’
“In the long term, we must also think about a single unit of payment such as the International Monetary Fund’s Special Drawing Rights,” a unit of an account linked to a basket of currencies, he told the Italian newspaper. “We cannot be hostages to the economic situation of a single country, as is happening today with the United States.”
Russia has support. India’s Tendulkar said he is advising Singh to diversify India’s $264.6 billion in foreign-exchange reserves and hold fewer dollars.
“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” he said in Aix en Provence. He said big dollar holders face a “prisoner’s dilemma,” a reference to a problem in game theory in which a rational choice for an individual has negative consequences for a group.
The People’s Bank of China, that country’s central bank, said June 26 that the IMF should manage more of its members’ reserves. China said July 2 that it will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking to reduce the reliance of importers and exporters on the U.S. dollar.
Safe Haven
The dollar’s role as a safe haven was highlighted last week when the currency advanced 0.5 percent against the euro, to $1.3894, on speculation the global economic recovery is faltering.
“Some emerging countries have decided to deal more in their respective currencies and trust each other,” Lagarde said in an interview yesterday. “That doesn’t stop other countries from seeing the dollar, and to a lesser extent the euro, as currencies of trading if not reserve currencies.”
Lagarde said that any discussion of currencies needs to encompass the dollar, the euro, the yuan and the yen and that the meetings of the Group of 20 are the right forum.
“The appropriate platform is the one in which all the major currencies are represented,” she said.
Asked in Aix en Provence about currencies, European Central Bank President Jean-Claude Trichet said it is “extremely important” that U.S. officials remain committed to their policy of supporting a strong dollar.
July 6 (Bloomberg) -- Earnings at such companies as Ford Motor Co. and ArcelorMittal may continue to decline in the next three months as the highest unemployment in a quarter-century keeps consumers from spending.
The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets.
Consumers in the U.S., the world’s largest economy, remain concerned about jobs after unemployment reached a 26-year high in June, analysts and investors said. Until Americans start spending again on cars, cell phones and clothes, most U.S., Asian and European companies may keep squeezing out costs.
“So long as unemployment keeps rising, the consumer will continue to be very conservative,” said Walter “Bucky” Hellwig, who helps manage $30 billion at Morgan Asset Management in Birmingham, Alabama. “Any improvement will come from cost cutting, and that’s not sustainable. If you have no anticipation of top-line growth -- it will be a little tougher to generate that enthusiasm into the fourth quarter.”
Consumer Confidence
U.S. consumer confidence slipped unexpectedly in June, reflecting unemployment that rose to 9.5 percent and wealth destruction triggered partly by a drop in property values. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June’s jobless rate was the highest since August 1983.
Almost 67 percent of S&P 500 members topped analysts’ estimates for first-quarter earnings after eliminating jobs and closing plants, Bloomberg data shows. That helped the S&P 500 index rally 15 percent in the second quarter, the most since 1998.
The benchmark MSCI Asia Pacific Index surged 28 percent in the quarter, the largest gain since the gauge started in 1988, while Europe’s Dow Jones Stoxx 600 Index rose 17 percent, the biggest advance since 1999.
The second-quarter earnings barrage begins in the U.S. on July 8 with aluminum producer Alcoa Inc., the first member of the Dow Jones Industrial Average to report results. Alcoa is based in New York.
‘What’s Your Potential?’
“The analysts will probably lowball things once again and the companies will be able to jump over it again,” said Charles Smith, chief investment officer for Fort Pitt Capital Group Inc. The Cleveland-based firm has $800 million assets under management. “If the teacher expected you to get a “C-” and you get a ‘C,’ then the question is: what’s your potential as a student?”
Railcar shipments and other U.S. shipping data provide scant hope that manufacturers are gearing up for increased demand, said Mark Demos, a Minneapolis-based portfolio manager who helps manage $21 billion at Fifth Third Asset Management. Railcar shipments are down 19 percent so far this year and 18 percent in the week ended June 20.
Demand is best described by the title of the 1966 novel, “Been Down So Long It Looks Like Up to Me,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. Technology purchases in the U.S. will decline 5.1 percent this year, with a recovery in the fourth quarter, he said in a report last month.
Slow Profit Growth
Mountain View, California-based Google Inc., the biggest Internet advertising company, may post its second-slowest rate of profit growth since selling shares to the public. Chief Executive Officer Eric Schmidt said June 30 the economy is bottoming and will be better in a month.
Microsoft Corp., based in Redmond, Washington, may report its second straight sales drop, according to a Bloomberg survey of 22 analysts. Prior to the quarter ended in March, sales at the world’s largest software maker had never declined.
Mobile-phone users are trading down toward lower-priced phone plans that don’t require buying a new handset, said Andreas Mark, a Frankfurt-based fund manager at Union Investment GmbH with about 30 billion euros ($42 billion) of equity assets under management.
Espoo, Finland-based Nokia Oyj, the world’s biggest handset maker, may report a 67 percent slide in net income, analysts estimate, as customers concerned about losing their jobs postponed phone upgrades.
“Companies are laying off people and not hiring them back,” said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who forecast payrolls would decline by 450,000. “This leaves us with a weak, irregular recovery.”
Rising unemployment in Europe is trimming as much as 10 percent of industry sales, said Amsterdam-based Simon van Veen, who helps manage a global portfolio of 2.2 billion euros at the Fortis Global High Income Equity Fund.
‘Sluggish’ Consumer Spending
“The outlook for electronics companies isn’t clearing,” said Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo. “Consumer spending continues to be sluggish in the U.S. and elsewhere, pressuring prices.”
Global sales still will bolster results at U.S. multinational companies, said Michael Williams, managing director of New York-based Genesis Asset Management, which has assets of about $2 billion. “The struggling U.S. consumer will be more than offset by the massive number of people in China, Brazil, Russia and India that are moving up the consumption ladder,” he said.
Chinese Economic Growth
China’s Purchasing Managers’ Index climbed for a fourth month in June, the latest sign the country’s 4-trillion yuan ($585 billion) stimulus is reviving its economy. China’s economy is forecast to grow 7.8 percent this year, according to a Bloomberg survey. That compares with a decline of 2.7 percent in the U.S. and 4.3 percent in Europe’s 16-nation euro zone.
PetroChina Co., the world’s largest company by market value, and China Petroleum & Chemical Corp., or Sinopec, may post increased second-quarter profit after oil prices rebounded from December lows and China’s economy grew, said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.
Second-quarter earnings at Exxon Mobil, Chevron Corp. and ConocoPhillips, the largest U.S. oil companies, probably fell after the recession sapped fuel demand, causing crude-oil prices to drop by half from the record set last July.
At Irving, Texas-based Exxon Mobil, net income may drop 64 percent from a year earlier to $4.21 billion, according to analyst estimates compiled by Bloomberg. The profit would be the company’s smallest for any quarter since 2003.
‘Excess Production’
“There’s a lot of excess production and not that much demand,” said Barry R. James, who holds Exxon Mobil, Chevron and ConocoPhillips shares among the almost $2 billion in investments he manages at the James Advantage Funds in Dayton, Ohio. “We don’t see much of a recovery.”
Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Japan’s three largest automakers, will likely post losses in the three months ended June 30 because of the lower demand in the U.S., traditionally their most profitable market, according to three analysts surveyed by Bloomberg. Honda and Nissan are based in Tokyo, and Toyota in Aichi prefecture in central Japan.
“The numbers will look really ugly,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, who expects Toyota to post a loss comparable to the 766 billion yen ($8 billion) loss in the quarter ended in March.
Ford Motor Co., the only major U.S. automaker that hasn’t filed bankruptcy, is gaining market share from its distressed domestic rivals, said Brian Johnson, a Chicago-based auto analyst for Barclays Capital.
No One ‘Sneering Anymore’
Ford, based in Dearborn, Michigan, is boosting third- quarter output 16 percent to meet rising demand. Detroit-based General Motors Corp., which filed for Chapter 11 bankruptcy protection June 1, is selling controlling interest in its European operations. Chrysler LLC, which filed Chapter 11 on April 30, has emerged from bankruptcy as Chrysler Group LLC, 20 percent owned by Italy’s Fiat SpA.
“People used to sneer at me for owning Ford, but no one is sneering anymore,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 300,000 Ford shares. “The market is rewarding them for not going to the government to get money.”
Ford, which had a 33 percent decline in U.S. auto sales through June, may lose $718.3 million in the second quarter, an improvement from an $8.7 billion loss a year earlier, according to the mean estimate of four analysts surveyed by Bloomberg.
U.S. Air Carriers
The nine biggest U.S. air carriers, including Delta Air Lines Inc., American Airlines parent AMR Corp. and United Airlines parent UAL Corp., may have a combined quarterly loss of $1 billion, estimated Michael Derchin, an analyst at FTN Equity Capital in New York. Derchin said he previously expected a $600 million loss. AMR is headquartered in Forth Worth, Texas, and UAL in Chicago.
Delta, based in Atlanta, and American Airlines both plan to trim additional flights when the peak travel season ends after the Labor Day holiday. U.S. carriers have eliminated 31,700 jobs and parked more than 500 jets since the start of 2008 as air travel plummeted amid job losses and tighter credit.
Large banks in general will report lower earnings than in the first quarter, though analysts said companies such as Charlotte, North Carolina-based Bank of America Corp. and New York-based Goldman Sachs Group Inc. will still post profits. Credit losses will offset some gains in trading and underwriting, said Rochdale Securities LLC analyst Richard Bove.
‘Difficult to Decipher’
“You’re going to get a quarter that is going to be very difficult to decipher,” Bove said. “If people look at operating earnings, they’re going to be tremendously pleased with everything associated with the capital markets area, but you also have these losses in the retail banking area.”
Earnings per share will likely decline as many banks sold shares, including Bank of America’s $13.5 billion total, after the government’s stress tests determined 10 of the biggest lenders needed more capital to withstand a prolonged recession. The 19 largest lenders have announced plans to raise more than $100 billion since the stress tests were completed.
In retail, discounters such as Wal-Mart Stores Inc., based in Bentonville, Arkansas, have fared better than higher-priced competitors.
Luxury retailers such as Saks Inc. and Nordstrom Inc. have been among the hardest-hit by the slowdown in consumer spending, said Sarah Henry, an analyst with MFC Global Investment Management. “People are shopping for value, and Wal-Mart’s message is very resonant right now,” she said.
Raw Materials
Sliding consumer demand from the retail sector to manufacturing has ultimately affected raw-materials providers, leaving producers of commodities such as aluminum and chemicals struggling to remain profitable.
Steelmakers are grappling with prices that have yet to rebound after demand plunged the most since World War II. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, may report its third consecutive loss before returning to profit in the third quarter, analysts estimate.
Melbourne, Australia-based BHP Billiton Ltd., the world’s biggest mining company, may report its first profit decline in nine years for the 12 months ended June 30, because of a drop in commodity prices, according to analyst estimates. The Reuters/Jefferies CRB Index of 19 materials has plunged 46 percent in 12 months.
Dow Chemical Co., the largest U.S. chemical maker, may report a second-quarter loss and a 94 percent profit decline in the current quarter, according to analysts’ estimates, as falling demand for paints and plastics prompt the industry to shut factories. The Midland, Michigan-based company announced three plant closures and 2,500 job cuts on July 1.
“There is no pricing power in chemicals,” Fifth Third’s Demos said. “That area is a disaster.”
July 6 (Bloomberg) -- Earnings at such companies as Ford Motor Co. and ArcelorMittal may continue to decline in the next three months as the highest unemployment in a quarter-century keeps consumers from spending.
The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets.
Consumers in the U.S., the world’s largest economy, remain concerned about jobs after unemployment reached a 26-year high in June, analysts and investors said. Until Americans start spending again on cars, cell phones and clothes, most U.S., Asian and European companies may keep squeezing out costs.
“So long as unemployment keeps rising, the consumer will continue to be very conservative,” said Walter “Bucky” Hellwig, who helps manage $30 billion at Morgan Asset Management in Birmingham, Alabama. “Any improvement will come from cost cutting, and that’s not sustainable. If you have no anticipation of top-line growth -- it will be a little tougher to generate that enthusiasm into the fourth quarter.”
Consumer Confidence
U.S. consumer confidence slipped unexpectedly in June, reflecting unemployment that rose to 9.5 percent and wealth destruction triggered partly by a drop in property values. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June’s jobless rate was the highest since August 1983.
Almost 67 percent of S&P 500 members topped analysts’ estimates for first-quarter earnings after eliminating jobs and closing plants, Bloomberg data shows. That helped the S&P 500 index rally 15 percent in the second quarter, the most since 1998.
The benchmark MSCI Asia Pacific Index surged 28 percent in the quarter, the largest gain since the gauge started in 1988, while Europe’s Dow Jones Stoxx 600 Index rose 17 percent, the biggest advance since 1999.
The second-quarter earnings barrage begins in the U.S. on July 8 with aluminum producer Alcoa Inc., the first member of the Dow Jones Industrial Average to report results. Alcoa is based in New York.
‘What’s Your Potential?’
“The analysts will probably lowball things once again and the companies will be able to jump over it again,” said Charles Smith, chief investment officer for Fort Pitt Capital Group Inc. The Cleveland-based firm has $800 million assets under management. “If the teacher expected you to get a “C-” and you get a ‘C,’ then the question is: what’s your potential as a student?”
Railcar shipments and other U.S. shipping data provide scant hope that manufacturers are gearing up for increased demand, said Mark Demos, a Minneapolis-based portfolio manager who helps manage $21 billion at Fifth Third Asset Management. Railcar shipments are down 19 percent so far this year and 18 percent in the week ended June 20.
Demand is best described by the title of the 1966 novel, “Been Down So Long It Looks Like Up to Me,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. Technology purchases in the U.S. will decline 5.1 percent this year, with a recovery in the fourth quarter, he said in a report last month.
Slow Profit Growth
Mountain View, California-based Google Inc., the biggest Internet advertising company, may post its second-slowest rate of profit growth since selling shares to the public. Chief Executive Officer Eric Schmidt said June 30 the economy is bottoming and will be better in a month.
Microsoft Corp., based in Redmond, Washington, may report its second straight sales drop, according to a Bloomberg survey of 22 analysts. Prior to the quarter ended in March, sales at the world’s largest software maker had never declined.
Mobile-phone users are trading down toward lower-priced phone plans that don’t require buying a new handset, said Andreas Mark, a Frankfurt-based fund manager at Union Investment GmbH with about 30 billion euros ($42 billion) of equity assets under management.
Espoo, Finland-based Nokia Oyj, the world’s biggest handset maker, may report a 67 percent slide in net income, analysts estimate, as customers concerned about losing their jobs postponed phone upgrades.
“Companies are laying off people and not hiring them back,” said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who forecast payrolls would decline by 450,000. “This leaves us with a weak, irregular recovery.”
Rising unemployment in Europe is trimming as much as 10 percent of industry sales, said Amsterdam-based Simon van Veen, who helps manage a global portfolio of 2.2 billion euros at the Fortis Global High Income Equity Fund.
‘Sluggish’ Consumer Spending
“The outlook for electronics companies isn’t clearing,” said Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo. “Consumer spending continues to be sluggish in the U.S. and elsewhere, pressuring prices.”
Global sales still will bolster results at U.S. multinational companies, said Michael Williams, managing director of New York-based Genesis Asset Management, which has assets of about $2 billion. “The struggling U.S. consumer will be more than offset by the massive number of people in China, Brazil, Russia and India that are moving up the consumption ladder,” he said.
Chinese Economic Growth
China’s Purchasing Managers’ Index climbed for a fourth month in June, the latest sign the country’s 4-trillion yuan ($585 billion) stimulus is reviving its economy. China’s economy is forecast to grow 7.8 percent this year, according to a Bloomberg survey. That compares with a decline of 2.7 percent in the U.S. and 4.3 percent in Europe’s 16-nation euro zone.
PetroChina Co., the world’s largest company by market value, and China Petroleum & Chemical Corp., or Sinopec, may post increased second-quarter profit after oil prices rebounded from December lows and China’s economy grew, said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.
Second-quarter earnings at Exxon Mobil, Chevron Corp. and ConocoPhillips, the largest U.S. oil companies, probably fell after the recession sapped fuel demand, causing crude-oil prices to drop by half from the record set last July.
At Irving, Texas-based Exxon Mobil, net income may drop 64 percent from a year earlier to $4.21 billion, according to analyst estimates compiled by Bloomberg. The profit would be the company’s smallest for any quarter since 2003.
‘Excess Production’
“There’s a lot of excess production and not that much demand,” said Barry R. James, who holds Exxon Mobil, Chevron and ConocoPhillips shares among the almost $2 billion in investments he manages at the James Advantage Funds in Dayton, Ohio. “We don’t see much of a recovery.”
Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Japan’s three largest automakers, will likely post losses in the three months ended June 30 because of the lower demand in the U.S., traditionally their most profitable market, according to three analysts surveyed by Bloomberg. Honda and Nissan are based in Tokyo, and Toyota in Aichi prefecture in central Japan.
“The numbers will look really ugly,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, who expects Toyota to post a loss comparable to the 766 billion yen ($8 billion) loss in the quarter ended in March.
Ford Motor Co., the only major U.S. automaker that hasn’t filed bankruptcy, is gaining market share from its distressed domestic rivals, said Brian Johnson, a Chicago-based auto analyst for Barclays Capital.
No One ‘Sneering Anymore’
Ford, based in Dearborn, Michigan, is boosting third- quarter output 16 percent to meet rising demand. Detroit-based General Motors Corp., which filed for Chapter 11 bankruptcy protection June 1, is selling controlling interest in its European operations. Chrysler LLC, which filed Chapter 11 on April 30, has emerged from bankruptcy as Chrysler Group LLC, 20 percent owned by Italy’s Fiat SpA.
“People used to sneer at me for owning Ford, but no one is sneering anymore,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 300,000 Ford shares. “The market is rewarding them for not going to the government to get money.”
Ford, which had a 33 percent decline in U.S. auto sales through June, may lose $718.3 million in the second quarter, an improvement from an $8.7 billion loss a year earlier, according to the mean estimate of four analysts surveyed by Bloomberg.
U.S. Air Carriers
The nine biggest U.S. air carriers, including Delta Air Lines Inc., American Airlines parent AMR Corp. and United Airlines parent UAL Corp., may have a combined quarterly loss of $1 billion, estimated Michael Derchin, an analyst at FTN Equity Capital in New York. Derchin said he previously expected a $600 million loss. AMR is headquartered in Forth Worth, Texas, and UAL in Chicago.
Delta, based in Atlanta, and American Airlines both plan to trim additional flights when the peak travel season ends after the Labor Day holiday. U.S. carriers have eliminated 31,700 jobs and parked more than 500 jets since the start of 2008 as air travel plummeted amid job losses and tighter credit.
Large banks in general will report lower earnings than in the first quarter, though analysts said companies such as Charlotte, North Carolina-based Bank of America Corp. and New York-based Goldman Sachs Group Inc. will still post profits. Credit losses will offset some gains in trading and underwriting, said Rochdale Securities LLC analyst Richard Bove.
‘Difficult to Decipher’
“You’re going to get a quarter that is going to be very difficult to decipher,” Bove said. “If people look at operating earnings, they’re going to be tremendously pleased with everything associated with the capital markets area, but you also have these losses in the retail banking area.”
Earnings per share will likely decline as many banks sold shares, including Bank of America’s $13.5 billion total, after the government’s stress tests determined 10 of the biggest lenders needed more capital to withstand a prolonged recession. The 19 largest lenders have announced plans to raise more than $100 billion since the stress tests were completed.
In retail, discounters such as Wal-Mart Stores Inc., based in Bentonville, Arkansas, have fared better than higher-priced competitors.
Luxury retailers such as Saks Inc. and Nordstrom Inc. have been among the hardest-hit by the slowdown in consumer spending, said Sarah Henry, an analyst with MFC Global Investment Management. “People are shopping for value, and Wal-Mart’s message is very resonant right now,” she said.
Raw Materials
Sliding consumer demand from the retail sector to manufacturing has ultimately affected raw-materials providers, leaving producers of commodities such as aluminum and chemicals struggling to remain profitable.
Steelmakers are grappling with prices that have yet to rebound after demand plunged the most since World War II. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, may report its third consecutive loss before returning to profit in the third quarter, analysts estimate.
Melbourne, Australia-based BHP Billiton Ltd., the world’s biggest mining company, may report its first profit decline in nine years for the 12 months ended June 30, because of a drop in commodity prices, according to analyst estimates. The Reuters/Jefferies CRB Index of 19 materials has plunged 46 percent in 12 months.
Dow Chemical Co., the largest U.S. chemical maker, may report a second-quarter loss and a 94 percent profit decline in the current quarter, according to analysts’ estimates, as falling demand for paints and plastics prompt the industry to shut factories. The Midland, Michigan-based company announced three plant closures and 2,500 job cuts on July 1.
“There is no pricing power in chemicals,” Fifth Third’s Demos said. “That area is a disaster.”
Honduras's Ousted Leader Tries to Return Home
Zelaya Backers Clash With Troops at Airport; Provisional Government Pledges to Divert Ex-President's Plane to El Salvador
JOSE DE CORDOBA
TEGUCIGALPA, Honduras -- Ousted Honduran President Manuel Zelaya tried to fly to this Central American nation on Sunday to reclaim his post, accompanied by a small flotilla of other Latin leaders and journalists, in a move filled with political theater but also certain to raise tensions in Honduras's political crisis.
Honduran police guard the airport in Tegucigalpa on Sunday. Flights were canceled at the airport, where ousted President Zelaya intended to arrive.
The country's provisional government pledged to bar the planes from landing and divert them to nearby El Salvador, even as Honduras's interim leaders signaled a new willingness to negotiate a solution to the region's biggest political crisis in years.
The attempted return by Mr. Zelaya sparked the first wave of real violence since shortly after the president was deposed last Sunday. Thousands of pro-Zelaya protesters clashed with army troops guarding the Tegucigalpa airport shortly before the former leader's plane was scheduled to arrive.
Protesters, some wearing bandanas to cover their face, threw rocks at soldiers and tried to break through one of the fences surrounding the runway, TV images showed. Troops responded by firing tear gas into the rowdy crowd. Ambulances turned up soon after, although it was initially unclear if anyone was injured.
Mr. Zelaya, who was forced by soldiers at gunpoint to leave the country last Sunday, flew from Washington to Tegucigalpa along with U.N. General Assembly President Miguel D'Escoto. Traveling in another plane was Argentine President Cristina Kirchner, followed by yet another plane carrying journalists.
While the drama unfolded in the air, another kind of drama was unfolding on the ground, as Honduras's interim leaders accused neighboring Nicaragua of deploying troops along the border. Acting Honduran President Roberto Micheletti said the troop movements were "small." But he asked Nicaraguan President Daniel Ortega as well as Venezuelan President Hugo Chávez, who has threatened to depose Mr. Micheletti if Mr. Zelaya isn't restored to power, to stop from any more threatening actions or words.
Supporters of Honduras' ousted President Manuel Zelaya stand in front of riot police and soldiers outside Toncontin international airport in Tegucigalpa.
U.S. officials said they didn't detect any major movements by Nicaragua's army. Nicaragua and Honduras were Cold War enemies in the 1980s, when Honduras was used as a staging ground for U.S.-backed Contra rebels fighting Mr. Ortega's Sandinista government. Mr. Ortega, who is one of Mr. Zelaya's strongest backers, reportedly said there had been no troop movement.
Even as regional tensions flared, Honduras' provisional government signaled it would be open to talks on the crisis, but it underlined that any solution couldn't include a return of Mr. Zelaya to his post. Deputy Foreign Minister Martha Lorena Alvarado de Casco told a news conference that Honduras would welcome a delegation from the Organization of the American States, which on Saturday voted to suspend Honduras from the body, which has 35 active members.
"We are waiting with open arms for any commission that wants to come," said Ms. Alvarado. But she added that the next delegation would have to come without preconditions, denigrating OAS Secretary General Jose Manuel Insulza's attempt to reach a solution on Saturday.
U.S. officials said they expected Mr. Zelaya to land in El Salvador and then return to Washington on Monday for more meetings with OAS foreign ministers. The Obama administration said it's unclear what Honduras's new government is willing to negotiate, but officials said dialogue is an important first step. Indications are "that the de facto government is offering some sort of dialogue," said a U.S. official. "We think this is positive, and this will be our immediate focus."
Mr. Zelaya, the son of a wealthy farmer who ran for office as a centrist, polarized the country when his politics took a left turn and he aligned his government closely with Mr. Chávez. Honduras joined Mr. Chávez's trade pact, received cut-rate oil from Venezuela, and embarked on an attempt to use referendums to rewrite the constitution that critics say would have let Mr. Zelaya extend his term.
The vote was declared illegal by Honduras' Supreme Court, but the president vowed to press on. Last Sunday soldiers stormed the presidential residence and seized the leader. Congress later swore in Mr. Micheletti, the president of Congress. Honduras's acting leaders have said repeatedly they would arrest Mr. Zelaya if he managed to return, and have accused him of multiple crimes, from treason to drug trafficking.
The ousted president was flying to Honduras on an aircraft owned by Venezuela's government, Honduran officials said. "The blood of Christ sustains me," Mr. Zelaya said in a brief interview aboard the plane with Venezuela's state-run TV network Telesur.
Responding to Mr. Zelaya's call, thousands of his supporters turned up at the Tegucigalpa airport to show their support. But large numbers of Hondurans also are adamant they don't want the president to return.
Honduras's influential Cardinal Oscar Rodriguez, the highest ranking Catholic Church official in the country, urged the exiled president not to come back. "We think that a return to the country at this time could unleash a bloodbath in the country," Cardinal Rodriguez said. "To this day, no Honduran has died. Please meditate because afterwards it would be too late."
The prelate also criticized Mr. Zelaya, suggesting the Church was taking sides. "The day of your swearing in, you clearly quoted the three commandments of the sacred law of God: Not to lie, not to steal, and not to kill," said the Cardinal.
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