• Detroit-based finance company GMAC has filed to become a bank, a shot at getting a slice of the $700 billion Troubled Asset Relief Program bailout. Private equity firm Cerberus Capital Management LP owns 51% of GMAC. General Motors Corp. (GM) owns the other 49%, Reuters reported.

• Initial jobless claims climbed to 542,000 in the week ended Nov. 15, close to a 26-year high. “The economic contraction appears to be worsening,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg. “The stock markets are plunging, people are retrenching and manufacturing activity is virtually falling off a cliff. The increase in layoffs can only worsen the economic downturn.”

• Ricardo Salinas Pliego, a Mexican media and retail mogul, indicated that he may seek a controlling stake in Circuit City Stores Inc. (CCTYQ), Reuters reported. Pliego already has a 28.1% stake in the company, which filed for Chapter 11 bankruptcy protect last week.

• After seven months of negotiations, Banco do Brasil SA, Brazil’s largest government-owned bank, is buying majority control of Banco Nossa Caixa SA for $2.25 billion, “Nossa Caixa has got plenty of liquidity, a decent branch network and judicial deposits of Sao Paulo state which is useful. It’s a good fit and it’s a good asset,” Pedro Fonseca, an analyst at London’s Keefe, Bruyette & Woods Ltd., told Bloomberg.

• Light, sweet crude for December delivery fell nearly 8%, or $4.07, to $49.50 a barrel in afternoon trading on the New York Mercantile Exchange, before settling at $49.65 a barrel.

• JPMorgan Chase & Co. (JPM) the largest U.S. bank, plans to fire about 10% of its investment banking staff, or about 3,000 employees, as the global economy slides into recession, Bloomberg News reported. JPMorgan also plans to freeze base salaries next year for most employees who earn more than $60,000 to $70,000, annually.

• The Dow Jones Industrial Average yesterday (Thursday) shed 445 points, or 5.6%, to close at 7,552.29 – its lowest level since March 12, 2003. Meanwhile, the Standard & Poor’s 500 index lost 54 points, or 6.7%, to close the day at 752.44 – its lowest level since 1997.

Source: Global Investing Roundups Friday, November 21st, 2008

The stunner of the day was administered by the report from the Labor Department showing that the unemployment rate in May rose to 5.5%, the highest since October 2004. The 0.5% jump was the steepest in seasonally adjusted unemployment in 33½ years, and far exceeded economists’ projections for rise to just 5.1%.

Nonfarm payrolls fell by 49,000 last month. It was the fifth consecutive decline and was in line with expectations. Of course, even that negative number may be optimistic, as the Bureau of Labor Statistics net birth/death adjustment added 217,000 phantom jobs to May’s data.

Those trying desperately to spin the data, such as commentators on CNBC, argued that the huge jump in unemployment was seasonal, and due to teenagers and students entering the job market for summer work. But realists pointed out that the same thing happens every year, and that this spike was singularly big.

The implications are clear.

As Sal Guatieri, an economist at BMO Capital Markets, wrote: “The U.S. is in recession. Job losses, along with a plethora of other headwinds, should ensure that the rebate boost to spending is short-lived, and that the Fed refrains from tightening in ‘08.”

Source: Jobs Report Stuns Market

The day’s economic numbers were pretty grim.

The Conference Board reported that its May consumer confidence index fell to 57.2 from a reading in April that had been revised up to 62.8 from a prior estimate of 62.3. That represents a 16-year low, and was far below economists’ expectations for a reading of 59.5. Confidence is off by nearly 50% since last July.

“With home price deflation deepening, the unemployment rate rising, and food & energy costs climbing, there’s little to buoy consumers’ outlook,” wrote Benjamin Reitzes, an economist at BMO Capital Markets. Yet the stock market rose and gold fell. Go figure.

The deflation was confirmed by Standard & Poor’s 20-city Case-Shiller home price index, which fell 2.2% from February to March, for a 16th consecutive decline in prices. Home prices in the 20 major U.S. metropolitan areas have now plunged by a record 14.1% in the past quarter.

Meanwhile, the euro got no lift from comments by European Central Bank Governing Council member Axel Weber. Weber said in an interview that rate cut speculation this year is “wishful thinking,” given high inflationary pressures and robust economic growth.

Source: Dollar Gains Against Euro

Fed, Fed, Fed was all anyone wanted to talk about yesterday, as the Committee, although there had been speculation to the contrary, surprised few by shaving another quarter-point off of interest rates, to 2%.

Those scrutinizing the accompanying rhetoric for a sense of future direction were left wanting.

“During the last several sessions currency traders have begun to question whether the Fed might serve up a warning that monetary policy is on hold. However, there was little in today’s … statement to signal that they are definitely on hold,” said Andrew Wilkinson, senior market analyst at Interactive Brokers.

“They were decidedly quite rightly concerned with the ongoing weakness in the economy, especially labor and housing. The takeaway feeling I get after this is that the Fed is reserving the right to deliver more stimulus at a later date if it’s warranted,” Wilkinson added.

Among the day’s numbers, the Commerce Department said that growth in real gross domestic product for the first quarter was estimated at 0.6% for the second straight quarter. That was grim, but actually higher than the 0.2% growth rate projected by economists.

Despite the higher-than-expected reading, “No one would confuse this with a healthy economy,” wrote Douglas Porter, of BMO Capital Markets.

In fact, as Dow Jones Marketwatch wrote: “With inventory building adding 0.8 percentage points to growth, the headline GDP figure was stronger than the details of the report. Final sales of domestic product fell 0.2%, while final domestic sales dropped 0.4% — the first decline since the recession of 1991.

“The economy produced more goods and services, but the extra output went into warehouses and on ships, not into current consumption or investment. With inventories building up, output in the second quarter could be much softer.”