The Wall Street Journal-20080116-The Evening Wrap- Homeward Bound- Online edition
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The Evening Wrap: Homeward Bound; Online edition
President Bush today finished a tour of the Mideast, intended to muster support for an Israeli-Palestinian peace deal, as well as to rally Arab nations against Iran, which he called a "threat to world peace."
The president characterized his trip with optimism, even though the Arab public remains deeply critical of U.S. policies, and many see this trip as too little, too late. Mr. Bush stopped today for just a few hours in Egypt after longer visits to Israel, the West Bank, Kuwait, Bahrain, the United Arab Emirates and Saudi Arabia. Egyptian President Hosni Mubarak met Mr. Bush in Sharm El-Sheik without ceremony, a sign of chillier relations between them. In public, at least, Mr. Bush had few harsh words for Egypt on the matter of democratic reform -- similar in tone to the keynote address he gave in Abu Dhabi on Sunday, where he emphasized "justice" over democracy, a notable rhetorical shift. Earlier this week, Mr. Bush dedicated much more time to ally Saudi Arabia, which also happens to have the world's largest known oil reserves. He spent the night at King Abdullah's ranch, and announced an arms sale. The Bush administration told Congress on Monday that it would let Saudi Arabia buy "smart bomb" technology as part of a $20 billion weapons package for Saudi Arabia. The U.S. aims to boost the defenses of oil-producing Gulf nations against threats from Iran, administration officials say. Mr. Bush also said he asked King Abdullah and other leaders to increase pressure on Tehran over its contested nuclear program. "If we want to solve this diplomatically, there needs to be pressure on the regime," he said.
The president's other major aim was to encourage a peace deal between Israel and Palestine, something he says he will accomplish before leaving the Oval Office. To that end, Mr. Bush visited Israel and the West Bank at the start of the trip, meeting separately with Israeli and Palestinian officials. But a Mideast peace conference held in Annapolis last November had been followed with little progress, and so Mr. Bush arrived to an audience with reservations. While the U.S. president received a red-carpet welcome in Israel, President Shimon Peres immediately underscored the work to be done: "The next 12 months will be a moment of truth," he said. "It must not yield just words." Today, Mr. Bush still sounded positive about deal prospects, despite widespread public skepticism. "When I say I am coming back to stay engaged I mean it, and when I say I am optimistic we can get a deal done, I mean what I am saying," he told reporters in Sharm El-Sheik. Trying his hand at answering questions online on the White House Web site, Mr. Bush said that Israeli and Palestinian decision makers for the first time were "committed to the same goal," namely talks that would yield an independent Palestinian state.
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In the Red
Stocks performed poorly. The Dow Jones Industrial Average fell 34.95 to 12466.16, the Nasdaq Composite Index shed 23, or 1%, to 2394.59, and the S&P 500 dropped 7.75 to 1373.20. Bonds retreated in late-day trade. Oil settled $1.06 lower, or 1.2%, to $90.84. The U.S. dollar gained against the euro and yen. Asian and European markets fell.
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Questions About Antidepressants
Numerous unpublished studies submitted to the Food and Drug Administration by pharmaceutical companies have found that many popular antidepressants have little or no effect on patients, according to a new review of the previously hidden findings. As a result, researchers asserted in this week's New England Journal of Medicine, doctors and patients are getting a distorted view of the effectiveness of blockbuster anti-depressants like Wyeth's Effexor and Pfizer's Zoloft. Separately, in letters dated today and addressed to Schering-Plough, Merck, and the FDA, Reps. John Dingell and Bart Stupak raised questions about the ad campaign for Vytorin, in the wake of a study that suggested the drug may be no more effective than a generic statin at slowing the development of heart disease. The two Michigan Democrats expressed concern that "the study's results may have been available to Schering-Plough and Merck officials, and yet the massive advertisement campaign for Vytorin was allowed to continue."
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Banks Anticipate Credit Losses
J.P. Morgan Chase and Wells Fargo posted lower fourth-quarter earnings this morning, and both jacked up their credit-loss provisions, implying that they expect consumer credit to fray further in 2008 as housing values fall and foreclosures rise. J.P. Morgan's net fell 34% as the company posted $1.3 billion in subprime-related write-downs -- on the bright side, those losses look modest in comparison to some of its peers. J.P. Morgan more than doubled its credit-loss provision to $2.5 billion, while Wells more than tripled its provision to $2.61 billion. Wells's decision to do so contributed to a profit tumble of 38%.
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Tepid Economy, Warm Prices
The Federal Reserve released its so-called beige book, a regular round-up of reports from individual districts that will aid Fed policy makers at their Jan. 29-30 meeting. The central bank offered no sign of impending recession, but rather one of a "slower pace" of growth in the survey period, which ended Jan. 7. The beige book on the heels of data released this morning by the Labor Department, which showed prices on consumer goods rising faster in 2007 than they had in any other calendar year since 1990. Consumer prices rose 4.1% last year, while core prices, which exclude food and energy, rose 2.4%. December's result looked less severe: the CPI rose 0.3%, compared with a 0.8% advance in November. Despite any inflationary concerns, however, the Fed is widely expected to lower official interest rates by one-half percentage point this month.
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Ex-Brocade CEO Gets Prison Time
Former Brocade Communications chief Gregory Reyes, the first executive convicted at trial of backdating stock options, was sentenced to 21 months in prison and ordered to pay a $15 million fine. To date, 17 executives at eight companies have been charged with criminal offenses related to backdating. Eight have pleaded guilty, and one has fled to Namibia and is fighting extradition to the U.S. Two, including Mr. Reyes, have been convicted at trial.
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Presidential Campaigning
The Republican race remains wide open after former Massachusetts Gov. Mitt Romney won last night's GOP primary in Michigan, where his father was governor. After losses in Iowa and New Hampshire, the win keeps the Romney candidacy going. Arkansas Gov. Mike Huckabee won the Iowa Caucus, Sen. John McCain won the New Hampshire primary. "Everyone gets to be hero of the day," said Fred Thompson (R., Tenn.), who hopes to take the prize in South Carolina after weak showings so far. Democratic candidates didn't compete in Michigan, after the Democratic party stripped the state party of nominating-convention delegates, penalized for scheduling a primary ahead of Feb. 5.
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Oracle Gets Even Bigger
Software giant Oracle agreed to buy BEA Systems in an $8.5 billion deal, just a few months after BEA had rebuffed a previous Oracle offer of $6.7 billion. It continues a trend of Oracle's gobbling up smaller business-software companies, including PeopleSoft and Siebel Systems. Also in technology deal news, Sun Microsystems agreed to buy open- source software maker MySQL AB for $1 billion -- $800 million in cash and $200 million in options. Sun has a history of pursuing open-source development.
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Boeing Delays Dreamliner
Boeing announced that 787 Dreamliner customers won't get their orders filled until early 2009, as the aircraft manufacturer falls further behind on the ambitious program. The further delay, which The Wall Street Journal yesterday said was coming, isn't expected to have a "significant" effect on 2008 earnings guidance, the company said. Should the Dreamliner program fall further behind schedule, it may risk having its customers defect to a competing airplane being developed by rival Airbus, which has had its own production problems. The Franco-German company said today that it delivered a record 453 aircraft last year, but fell behind Boeing.
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EU Probes Drug Companies
European Union investigators raided drug companies in several countries as the bloc's antitrust watchdog began an industrywide investigation. The probe's aim is to determine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or colluding to restrain competition, said Neelie Kroes, the EU antitrust chief. AstraZeneca, GlaxoSmithKline, Sanofi- Aventis, and Pfizer said they were among companies contacted, though the EU commission didn't name their targets.
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Court Backs Judge-Selection Process
The U.S. Supreme Court unanimously upheld New York's system of choosing trial judges, reversing a lower court ruling. Primary voters elect convention delegates who choose candidates for the judgeships. Critics had voiced concerns that political party bosses control the system. But "a political party has a First Amendment right to limit its membership as it wishes and to choose a candidate-selection process that will in its view produce the nominee who best represents its political platform," Justice Antonin Scalia wrote for the court.
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AMR Posts Loss
At AMR, parent company of American Airlines, high fuel prices ate into the company's bottom line, driving AMR to a fourth-quarter loss. AMR reported a net loss of $69 million, or 28 cents a share, compared with a net income of $17 million, or seven cents a share, a year earlier. Revenue rose 5.3% to $5.68 billion. Per-gallon fuel costs averaged $2.40 a gallon, versus $1.88 a year earlier.
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Figuring Out Fido
To better understand man's best friend, Hungarian scientists are working on computer software that analyzes dog barks. It could help humans recognize basic canine emotions, Hungarian ethologist Csaba Molnar told Reuters. Mr. Molnar and his colleagues at Budapest's ELTE University have tested software which distinguishes the emotional reaction of 14 dogs of the Hungarian Mudi herding breed to six situations: being alone, seeing a ball, fighting, playing, encountering a stranger or going for a walk. "A possible commercial application could be a device for dog-human communication," the scientist added. The iDog, perhaps?
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The Associated Press contributed to this column.
