September 2009

CIC invests $2 billion in Goldman fund, others: sources

September 29, 2009

the $200 billion sovereign fund, is set to pour a total of $2 billion into three U.S. distressed asset-focused funds, including one managed by Goldman Sachs (GS.N), sources said on Tuesday. CIC plans to invest around $600-$700 million each in three

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Kelyniam Appoints Mr. Roger Findlay to the Board of Directors

September 29, 2009

LITTLE ROCK, AR–(Marketwire – September 29, 2009) – Kelyniam Global, Inc. ( PINKSHEETS : KLYG ), an advanced Engineering and Rapid Prototyping Company specializing in the use of CADCAM technology, announces that Mr. Roger Findlay has been appointed a position on the company’s board of directors. Mr. Findlay is presently and has been since their inception in December 2008, a Managing Director of each of Medical Capital Advisors, LLC and Medical Capital Management, LLC which are the general partner and investment manager, respectively, of the Partnership. Mr. Findlay is also presently and has been since its inception in February 2008, the President and a member of the management committee of MSA Management Companies, LLC, a company specializing in the development and management of surgical centers. Mr. Findlay is the President and member of each of MSC Management, LLC, which manages and holds an interest in an ambu

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GLG launches fund to buy European company debt

September 29, 2009

GLG Partners, one of London?s largest hedge funds, has launched a new fund to invest in the debt of troubled UK and European companies. The fund is notable as a growing number of hedge fund managers and investors turn to so-called distressed strategies

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CIC invests $2bn into three US distressed funds

September 29, 2009

Corp, the $US200 billion sovereign fund, is set to pour a total of $US2 billion into three US distressed asset-focused funds, including one managed by Goldman Sachs, according to sources. CIC plans to invest around $US600 to $US700 million each in three

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Rothschild Paired Chateau d’Yquem Snow Cone With Blue Cheese: John Mariani

September 29, 2009

Review by John Mariani Sept. 29 (Bloomberg) — The late Baron Philippe de Rothschild of Chateau Mouton-Rothschild once told me that whenever he ate Roquefort, he’d stick a bottle of Chateau d’Yquem Sauternes (“and only Yquem!”) in the freezer till ice crystals formed. I’ve tried that, and it is really, really good, like a cheese course with the world’s most expensive snow cone. The marriage of wine and cheese has been an honorable one for centuries, and there are at least a dozen books available on the subject, one of the best being “ Cheese: A Connoisseur’s Guide to the World’s Best” by Max McCalman & David Gibbons (Clarkson Potter, $35). Most focus on which wines to drink after choosing your cheeses, but that shouldn’t always be the case. “If you plan to serve wine with your cheese course, choose the wine first,” said Carolyn Stromberg, maitre d’fromage at Old Hickory Steakhouse in the Gaylord National Resort & Convention Center in National Harbor, Maryland, which offers diners 20 cheeses on a cart. “If you have five cheeses on your plate, they might be entirely different in flavor,” said Stromberg, 30. “One might go best with cabernet sauvignon, one with a white wine, one with a sweet dessert wine. A common denominator doesn’t work with them all. If you choose wine first, you can pair cheese to the wine.” She said drinking a big red like a cabernet would “run right over” a delicate young goat’s cheese, which would be better served with a white sauvignon blanc, whose typical grassy taste evokes the freshness of the cheese. Buttery Chardonnay She also recommended a rich, buttery chardonnay with a “mountain-style” cheese like an equally buttery Emmental. For blue cheeses, she prefers a sweet dessert wine like Port. I share Stromberg’s sentiment, especially at dinner when I may not want to invest in another bottle or glasses of wine just to go with the cheeses I’ve chosen. When I buy cheese to bring home for dinner, however, I’m likely to choose a wine I think specifically goes with that cheese. When guests do have a wine on their table prior to the cheese course, what’s the most sensible approach to an array of cheeses on a cart? In the case of New York restaurant Picholine, the cart will have between 45 and 60 cheeses on any given night, and at its sister restaurant Artisanal, 100 or more are kept in perfect condition in a temperature-controlled, humidified “cave.” “When we approach a table we see how much wine they have left over, or we may ask them if they have another wine in mind,” said Jason Miller, 36, beverage director at the Artisanal Group , which owns Picholine and Artisanal and opened two cheese stores in Seattle on Sept. 12. Big Red “The problem is that the wine limits what cheeses may go stylistically,” he said. “I find the dinner wine is usually not the best choice with cheeses, because the guests like to try the unfamiliar, fragrant cheeses that do not pair well. If they do stick with a big red wine, we try to guide them toward complementary cheeses.” Miller said he prefers guests to choose the cheese first as the restaurants offer many wines by the half-glass or half- bottle to pair with each cheese. “White wines are definitely the most versatile,” he said. “The saltier the blue cheese, the sweeter the wine should be.” I don’t think my own ideas on the subject differ much from most fromageurs’ and sommeliers’, but I do have a few, general, pet preferences that have worked for me. Hard Cheese I believe that a fine white Burgundy or sauvignon blanc goes very well with almost any cheese, except blues, from mild goat’s cheese to Camembert. Big reds like cabernet, pinot noir, and merlot I would only serve with harder, granular cheeses like Parmigiano-Reggiano and Cheshire. Syrah and Beaujolais go nicely with medium-soft cheeses like Cantal, Gouda, and Mahon. I hate herbed cheeses — they always taste like acrid rosemary or thyme — and can’t think of any wines worth wasting on them. Very strong cheeses like Epoisses and Munster, and blue cheeses like Roquefort, Gorgonzola, and Stilton really cripple red wines, unless they are sweet, like the dessert wines Sauternes, Barsac, or late harvest Riesling, or a ruby or tawny Port. As for a vintage Port? Save that for sipping on its own. ( John Mariani writes on wine for Bloomberg News. The opinions expressed are his own.) To contact the writer of this column: John Mariani at john@johnmariani.com .

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Vacation Timeshares Plunge at Record Pace as Americans Scale Back Spending

September 29, 2009

By Nadja Brandt Sept. 29 (Bloomberg) — U.S. vacation timeshare sales may fall the most this year since the industry gained popularity in the 1970s as consumers forego spending to ride out the recession. Sales may drop 30 percent this year from 2008, said Howard Nusbaum , president and chief executive officer of the American Resort Development Association , a Washington-based trade group. The market “will be a challenge for at least the next 18 months,” Patrick Scholes , senior equity research analyst at FBR Capital Markets & Co. said this month. “Timeshares are just very, very discretionary items,” said Chris Woronka , an analyst at Deutsche Bank Securities in New York. “It’s the perpetual vacation. I am prepaying for the ability to take a vacation every year. Under the current circumstances, people are more reluctant to pay for that.” U.S. timeshare sales dropped 8.5 percent last year to $9.7 billion from a peak of $10.6 billion in 2007, excluding the luxury fractional business and private residence clubs, according to an Ernst & Young LLP study prepared for ARDA. The decline was the industry’s first since 1975 and is being driven by tighter credit, a higher personal savings rate and the loss of 6.9 million jobs since the recession started in December 2007. Marriott’s Charge Marriott International Inc., the largest U.S. hotel chain, said last week it will take a third-quarter pretax charge of $760 million in its timeshare business. The company will cut prices, halt development at some residential resorts and at some luxury fractional ownership properties, and sell some undeveloped land. “We have enough inventory to last a few years,” Laura Paugh , senior vice president of investor relations at Marriott, said in a telephone interview. “Prices are not likely to turn around in the near term. Given the development risk, we plan to complete the inventory we have under way, but not develop any more.” Wyndham Worldwide Corp., the largest seller of timeshare vacation units, in December said it would cut 40 percent of those sales in 2009. Timeshares give owners the right to use a property for a set period of time each year, typically a week. Fractional ownership plans usually offer longer stays at a property and tend to include more services and amenities, according to ARDA. For hotel companies, the businesses can build customer loyalty, Marriott’s Paugh said. ‘Buy the Hotel’ Timeshares first emerged in the 1960s, according to Group RCI , Wyndham’s vacation rental and timeshare unit. According to RCI’s Web site, a hotelier in the French Alps marketed the world’s first timeshare development with the slogan, “No need to rent the room, buy the hotel — it’s cheaper!” The concept moved to the U.S. in the 1970s, initially in Florida, the state with the most timeshare resorts, according to RCI. “The main obstacle for the industry is that there will be a semi-permanent reduction in demand because developers would sell to people with relatively low credit scores,” said Deutsche Bank’s Woronka. “That won’t be possible anymore. Your pool of buyers will be much smaller from now on.” Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. lodging company, may also have to “recognize significant timeshare impairments” since it has more high-end timeshares than Marriott, David Loeb , an analyst at Robert W. Baird & Co., said in a note this month. Demand Drops Starwood’s fourth-quarter timeshare sales fell 48 percent, the company said in January. It closed nine sales centers and cut 900 employees from the division since the start of 2008. K.C. Kavanagh, a Starwood spokesman, declined to comment. “Our sense is that the timeshare industry is less optimistic about any near-term recovery than is the hotel industry, as the timeshare industry’s hands are tied by the availability — or lack — of financing,” Scholes said in a note this month. On Sellatimeshare.com , a one-bedroom, one-week timeshare at the Marriott Aruba Surf Club is being offered for $25,900. The Web site includes the testimonial of a client who sold her unit at the Renaissance Aruba Beach Resort and Casino for $5,000. On Timeshareadventures.com , a two bedroom, two-bath one- week timeshare at Marriott’s Canyon Villas at Desert Ridge in Arizona was for sale for $25,000. The annual maintenance fees and taxes are $900. The property includes a golf course, tennis courts and spa. Plenty of Ads A one-week, every-other-year unit at Marriott’s Ko Olina Beach Club timeshare resort in Oahu, Hawaii, is advertised for $15,999. The annual maintenance and taxes on the two bedroom, two bath are $728. Mark Massarelli, who runs Dynasty Limousine in Boston, has been trying to sell one of two timeshares in Hollywood, Florida, that he and his sister inherited from their mother. He has been advertising a one-bedroom, one-bath unit on Craigslist.org for six months. It’s at a full-service oceanfront property with access to an 18-hole golf course. Massarelli, 46, hasn’t received any inquiries even after cutting the price twice. “I am offering it at $3,995 but its value right now is probably around $8,000,” Massarelli said in a telephone interview. “I tried to sell it a couple of times for a higher price but nobody bit. The maintenance and taxes on the unit are getting expensive. So I cut the price to attract more buyers, but nothing so far.” Hotel Deals The average sales price for timeshares in the U.S. climbed to $20,152 in 2008 from $15,790 in 2004. Occupancy remained little changed from 2005 to 2008 at about 82 percent, according to Ernst & Young. Average maintenance fees increased to $646 from $471 from 2005 through 2008. “This year in particular, timeshare sales are down because hotel deals have been so good,” said Woronka. “Owners may think ‘I could have stayed at a luxury hotel for $150 a night and I am paying much more for this timeshare.’” The luxury timeshare segment, where units can sell from $100,000 to more than $1 million, also is being hit, according FBR’s Scholes. Demand for such rooms “was soft in 2008 and weakened further in 2009,” Arne Sorenson , Marriott’s president and chief operating officer, said on Sept. 23. “I don’t think timeshares are out of style,” said Marriott’s Paugh. “Customers really do like it. But the returns we currently receive on our investment are disappointing. For us it’s probably not the place we want to put our money.” To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

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Blame Barney Frank If a Pool Isn’t in Your Future: Amity Shlaes

September 29, 2009

Commentary by Amity Shlaes Sept. 29 (Bloomberg) — Home buyers are infants. They can’t think ahead and don’t try to. That’s the attitude of President Barack Obama , House Financial Services Committee Chairman Barney Frank and even the folks at Fannie Mae, whose Web site is headlined “Helping You.” Our leaders seem to believe that U.S. home buyers stumbled because they were allowed to enter the fast-moving waters of the treacherous secondary mortgage market without a lifeguard. As Frank argued recently: “If in fact residential mortgage loans were made only by banks or thrifts or credit unions, then we would not have a subprime crisis.” In this view the only way to get the country to a recovery is to protect these infants and, of course, jolly them and other consumers into spending and borrowing again. Special treats are in order, including one-time house tax credits or auto clunker programs.   Maybe the U.S. home buyer is not an infant but a grown-up who thinks. Someone who does plan ahead, though he may have been wrong on, say, the direction home prices were heading in 2005. This is the profile that emerges from a forthcoming paper in the Journal of Finance, written by Kristopher Gerardi , Harvey Rosen , and Paul Willen , economists with the Federal Reserve Bank of Atlanta, Princeton University and the Boston Fed, respectively. Rich Database Gerardi, Rosen and Willen wanted to test Milton Friedman’s permanent income hypothesis, which says that consumers do try to see ahead and act on what they see. The scholars turned to the University of Michigan’s Panel Study of Income Dynamics , which has been tracking home buyers for about four decades. The PSID collects multiple details about home purchasers — their level of education, their income the year of a house purchase, the purchase price and what those buyers earn three or five years post-purchase. The paper’s authors looked first at the 1970s, the period when a mortgage was a plain vanilla 30-year fixed contract with a local banker of the very sort Frank longs for. They discovered that sometimes a home buyer who resembled his peer on paper, with similar education and income, bought more house than the peer. This extravagant fellow splurged on a garage, French doors in the kitchen or even a swimming pool. A few years out, and Mr. Splurger was sometimes earning more than his old peer with the smaller house. So he wasn’t Mr. Splurger at all, but rather someone whose purchase reflected an accurate private forecast. Inefficient Market There were also those who bought precisely what their peers did, and then went on to earn more than the rest. Their house was smaller than what they turned out to be able to afford. Maybe this mismatch wasn’t due to buyer caution. Maybe it was because that local bank hadn’t offered this buyer the right kind of mortgage at the right rate. Perhaps that market of plain 30- year products from the local bank wasn’t efficient enough. In the 1980s, the 1990s and this decade, something changed. Americans got better at matching their house purchases with their own future income. The statistical correlation between initial house purchase price and later income levels strengthened mightily, by 80 percent. The data suggest that deregulation and securitization were a key part of this shift. As a result of this much-maligned phenomenon, the mortgage market began to broaden and deepen, offering buyers ample supply and a cornucopia of products, including some that suited their own career better. Here’s a counterintuitive notion: Perhaps the story of American housing is not that couples in the 1990s bought too much house. It is that their parents bought too little house, and didn’t know it. Imperfect Forecasts But if consumers are so smart, why did they slip up so badly in this decade, taking out unaffordable home-equity loans, or signing contracts for subprime mortgages? The answer is that consumers can’t always predict the future. They may get two factors right, such as their own house purchase price and their personal lifetime earnings, and then guess wrong on a third factor such as house price movement, the soundness of Fannie Mae, or the reliability of certain credit rating companies. What matters is not whether home buyers are always brilliant forecasters. What matters is that they forecast at all. The implication of Gerardi-Rosen-Willen is that short-term stimulus measures such as rebate checks (President George W. Bush ) or first-time home-buyer tax credits (President Obama) won’t have much long-term effect. The consumer is too sensible to be tricked into buying something more than he otherwise would. What looks like an extra purchase (clunker program) is merely a purchase moved up, or postponed. Safer Markets Congressman Frank’s idea of making mortgages safe for America sounds cozy. But making a market “safe” involves reconfiguring it in a way that will probably yield more primitive and fewer mortgages — the kind that can’t entirely capture buyer potential. That means no French doors and garages, and, for some, no mortgages at all. It is heresy to say this in the week that Michael Moore’s “Capitalism: A Love Story” comes to theaters. But the homeowner now may need more mortgage-related financial products, not fewer. Gerardi, Rosen and Willen suggest a new instrument that allows Americans to trade home-price risks as they plan for the future. Everyone says confidence is important for recovery, but true confidence isn’t merely feeling flush enough to head to the mall. It is the confidence to plan decades ahead. Home buyers have a hard time summoning this kind of confidence when lawmakers insist on babying them. ( Amity Shlaes , author of “The Forgotten Man: A New History of the Great Depression” is a Bloomberg News columnist. The opinions expressed are her own.) To contact the writer of this column: Amity Shlaes at amityshlaes@hotmail.com

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Merkel Has New Chance to Deliver on Old Promises: Matthew Lynn

September 29, 2009

Commentary by Matthew Lynn Sept. 29 (Bloomberg) — Not many politicians get a dress rehearsal for government. German Chancellor Angela Merkel is one of them. In retrospect, the first four years of Merkel’s time in office might well prove to be a trial run. Now with a successful campaign for re-election behind her, and at the head of a center-right government rather than the uneasy “grand coalition” with Social Democrats of her first term, she has a chance to show what she is genuinely made of. In her next term, she has the opportunity to be what she promised four years ago: a reforming, pro-business leader in the style of Margaret Thatcher of the U.K. two decades ago. Germany certainly needs it. So does Europe. The pace of change in Germany has been glacial. It needs a dynamic liberalizing of its market to unleash the kind of entrepreneurial vigor that transformed its economy in the 1950s. The euro-area economy needs one country to lead it. France under President Nicolas Sarkozy appears to have lost interest in economic progress. The U.K. looks set to spend a decade dealing with the mess created by the credit crunch. Spain is in an even worse mess. If any country is going to have the capacity to lead Europe out of this recession, it can only be Germany. Will it happen? The opportunity is certainly there. Easy Victory The German elections held over the weekend turned into an easy victory for the center-right. Instead of having to govern in coalition with the Social Democrats, the way is now clear for Merkel to form a coalition with the pro-market Free Democratic Party. The pressure on the new government will be coming from the right, not from the left. Moreover, the left now looks to be permanently fractured. The Social Democrats scored a dismal 23 percent of the vote. That wasn’t so much because Germans have drifted right, as because the left has split. The anti-capitalist Left Party won 11.9 percent while the Greens scored 10.7 percent. That matters. With the left broken into three parties, it is unlikely it can win power again for at least a generation. Merkel, together with the FDP, now have the chance to shift Germany dramatically in a pro-market direction. That doesn’t mean it will happen. The markets were disappointed by Merkel’s first term. After campaigning on a radical platform, prompting hopes among investors, she turned into a traditional German consensus politician. That might have been because she was hemmed in by a coalition with the Social Democrats. It might be because those are her core beliefs. We are probably about to find out. ‘Far-Reaching Reforms’ “A CDU/CSU-FDP coalition could bring about far-reaching reforms,” Barclays Plc Chief Economist Thorsten Polleit said in a note to investors on the elections. Indeed it could. The Free Democrats promised tax reform, with a top rate of 35 percent for income tax, and a bottom rate of 10 percent. A plan like that would almost make Germany a tax haven. It might even turn Frankfurt back into a major financial center once again: just think about the comparison with the top tax rate of 50 percent planned for London’s financiers. It is unlikely that Merkel will allow her partners in government to push through anything too radical. Even so, the stage does seem set for a tax-cutting administration, and one that is more willing to take on the entrenched power of the trade unions. After all, the Free Democrats actually increased their votes in the election. That gives them power and momentum, always the two crucial factors in politics. What Germany Needs There is little debate about the kind of reform that Germany needs. Its big-company, export-led, manufacturing-dominated economy must be reinvented for the 21st century. It needs small companies that concentrate as much on design and marketing as on precision engineering; more-flexible employment rules to create new jobs as fast as it gets rid of old ones; a financial sector that can deliver plenty of capital to entrepreneurs; a retail sector that gets Germans shopping again; and a tax system that rewards work and success, instead of punishing it. The rest of the world tends to view Germany as an intensively conservative country, wedded to its social-market model. But, of course, in the 1950s it was one of the most creatively entrepreneurial countries in the world. With the right policies it can be again. German Impact Germany has a chance to influence how the global economy develops in the next five years in two significant ways. When political leaders talk about rebalancing the global economy, they tend to be referring to China. Yet Germany is the other big economy with a huge trade surplus. A tax-cutting, growing, consuming Germany would be a big step toward that rebalanced economy. And it could take over the leadership of a European economy that looks bereft of inspiration. With the U.K. and Spain, the powerhouses of the continent’s growth in the past decade, stuck in recessions that could last for years, growth has to come from somewhere. Germany is the only realistic option. Now it is up to Merkel and her new allies to deliver. ( Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.) To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net

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Buying a New Car Gets Pricier as GM, Ford Cut Inventory to Avoid Discounts

September 29, 2009

By Keith Naughton Sept. 29 (Bloomberg) — Buyers who have been waiting for better deals on new cars may be disappointed. General Motors Co. and Ford Motor Co., bucking decades of tradition, are weaning themselves from dependence on profit- sapping discounts after factory shutdowns curbed dealers’ supply of cars and trucks. Incentives on GM, Ford and Chrysler Group LLC autos plunged 26 percent to $3,278 in August from a March peak, while discounts industrywide fell 22 percent to $2,474, according to researcher Edmunds.com. The U.S. automakers’ vehicles sold for an average of $2,000 more in the second quarter than a year earlier, said researcher J.D. Power and Associates. “As we suffered through the worst automotive recession in our lifetimes, the lesson automakers learned was to stay under control and not bloat inventory, which you have to follow with huge incentives to move the metal,” said Jeff Schuster , an analyst at J.D. Power. “From now on, we’re going to see a more cautious approach to incentives.” The paucity of bargains for consumers is a healthy sign for Detroit automakers once willing to pile on money-losing rebates to win more market share, said Schuster, who is based in Detroit. Now, the companies are finally matching output to demand, he said. Boosting the price paid by buyers, not just the number on the window sticker, is pivotal. Ford, alone among the domestic trio in avoiding bankruptcy, lost $30 billion in the past three years, while GM and Chrysler relied on $65 billion in U.S. loans to reorganize in court. ‘Pull the Trigger’ Ford buyers paid an average of $2,000 more for each vehicle in the second quarter, according to the automaker. That translated into a $900 million increase in net pricing in North America during the period, Ford Chief Financial Officer Lewis Booth said July 23. Researcher Autodata Corp. estimated that Ford pared spending on discounts 27 percent this year. The average price per vehicle commanded by GM, Ford and Chrysler in the U.S. rose 7.3 percent to $27,571 in the second quarter, from $25,567 a year earlier, according to J.D. Power. Industrywide, average vehicle prices rose to $26,921 in the second quarter from $25,954 a year earlier, Westlake Village, California-based J.D. Power said. “If your inventories are aligned with demand, there’s not as much temptation to pull the trigger and match the competition with incentives,” George Pipas , Ford’s sales analyst said in an interview. ‘No Deals’ Detroit teacher Doris McDaniel, who was shopping on Sept. 25 at Avis Ford in Southfield, Michigan, said she was frustrated at finding few bargains in searching for a fuel-efficient new car to replace her Nissan Motor Co. truck. “With the way the economy is, I was thinking cars should be much cheaper,” McDaniel, who wouldn’t give her age, said in an interview. “After the clunkers thing, I thought the incentives would still be out there. But there’s no incentives. No deals. No anything.” When a salesman showed her a $41,000 Flex wagon in the showroom, she peered at the price and said, “Too much.” Extended summer plant closings at GM and Chrysler halted the flow of new autos amid sales at the worst levels in almost 30 years, while Ford cut inventory in half since the start of the year. The U.S. cash for clunkers program shrank supplies to the lowest since at least 1985, according to researcher Ward’s AutoInfoBank of Southfield, Michigan. Toyota’s Way A lack of cash also crimped U.S. automakers’ discounting, J.D. Power’s Schuster said. Japan’s two biggest automakers, Toyota Motor Corp. and Honda Motor Co., have long championed limiting inventory to curb incentives, he said. Toyota offered discounts averaging $1,584 on each vehicle this year and Honda’s figure was $1,567, according to Woodcliff Lake, New Jersey-based Autodata. GM’s spending averaged $3,418 through August, while Dearborn, Michigan-based Ford’s was $2,811 and Chrysler’s was $4,407, Autodata estimated. Rebate fatigue also may be shaping Detroit’s retreat from incentives, said Jessica Caldwell , an auto analyst with Santa Monica, California-based Edmunds.com. Even record discounts earlier this year couldn’t shield the U.S. auto market from a 28 percent sales decline through August under the pressure of job losses and plunging home values. Detroit automakers began turning to rebates more than 30 years ago, when Chrysler used former baseball player-turned- announcer Joe Garagiola in a 1975 Super Bowl commercial with the catchphrase, “Buy a car, get a check.” GM unveiled no-interest loans on most models after the terrorist attacks of Sept. 11, 2001, and in 2005, the year after its last profit, offered employee discounts to all buyers. ‘All Been Done’ This month, the biggest U.S. automaker offered a 60-day money-back guarantee to help regain credibility with car buyers. “The big blockbuster, peanut-butter-approach programs like zero-percent financing and employee discounts for everyone have all been done before,” John McDonald , a spokesman for Detroit- based GM, said in an interview. With assembly lines cranking up again now that inventory is depleted, the incentives restraint at GM, Ford and Auburn Hills, Michigan-based Chrysler may be tested, Caldwell said. “Automakers have to pull the lever and increase production in an unknown market,” she said. “They could find there are no buyers out there and have to raise incentives again. It’s a vicious circle.” September U.S. sales probably will run at an annual rate of 9.34 million vehicles, 34 percent lower than in August when the clunkers program was in place, Edmunds said yesterday. That’s better than Edmunds’ Sept. 17 forecast for an 8.8 million pace. Not Chasing ‘Blindly’ Ford, which posted its first sales gains since 2007 in July and August, said Sept. 16 it expects to boost 2009 market share while keeping inventory and spending in check. “We’re not just chasing market share blindly,” Chief Financial Officer Lewis Booth told investors at the Frankfurt Motor Show Sept. 16. Ford rose 20 cents, or 2.7 percent, to $7.49 at 4:15 p.m. in New York Stock Exchange composite trading. The company’s shares have more than tripled this year. Toyota’s plan to spend $1 billion on fourth-quarter advertising, incentives and other marketing support is “larger than average,” Irv Miller , group vice president for Toyota’s U.S. sales unit, said in a Sept. 16 interview. Gordon Stewart, a Toyota and Chevrolet dealer, said he hopes the ad blitzes from the two automakers will stimulate sales that have fallen to “the slowest ever” since the end of the clunkers discounts. He isn’t counting on big incentives. “We’re in a transition period where people are waiting for the next deal and it’s just not coming,” said Stewart, who owns a Toyota store in Alabama and four Chevrolet outlets in Georgia, Florida and Michigan. “We’re just not going to buy business anymore.” To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net

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Romanian Central Bank Cuts Benchmark Interest Rate to Lowest in 19 Months

September 29, 2009

By Irina Savu Sept. 29 (Bloomberg) — Romania’s central bank cut its main interest rate to the lowest in 19 months as a deepening recession saps price pressures in the east European country. The Banca Nationala a Romaniei lowered the monetary policy rate to 8 percent from 8.5 percent, the Bucharest-based bank said in an e-mail today. The decision matched the expectations of all 13 economists surveyed by Bloomberg. The rate remains the highest in the European Union after Hungary cut its rate to 7.5 percent yesterday. “Given the fact that Romania has one of the highest rates in the region and that it started the easing cycle quite late, we may see the NBR preserving a dovish bias longer than other central banks in the region,” ING Bank Romania economists Nicolaie Alexandru-Chidesciuc and Vlad Muscalu in Bucharest, wrote in a note before the announcement. Twenty of the 53 central banks tracked by Bloomberg eased monetary conditions in the past three months to fight the recession, including east European countries such as Russia and the Czech Republic in August and September. Romania’s economy contracted an annual 8.7 percent in the second quarter, the most on record, as consumption dropped and the global crisis forced the government to seek an international bailout. Lucian Croitoru , a monetary policy adviser to central bank Governor Mugur Isarescu , said on Sept. 17 that the bank will keep lowering rates as inflation slows. The bank has lowered the rate four times since February as government austerity measures linked to the country’s international bailout made room for a monetary easing needed to soften the impact of a recession. Inflation Inflation slowed to a two-year low of 5 percent in August compared with 5.1 percent in July. The central bank forecasts the inflation rate will fall to 4.3 percent by the end of this year and 2.6 percent in 2010. The government predicts the economy will shrink about 8.5 percent this year, after growing 7.1 percent last year, the fastest pace in the EU. It predicts an emergence from a recession in the fourth quarter and growth of about 0.5 percent next year. Romania obtained a 20 billion-euro ($29 billion) international loan led by the International Monetary Fund and the EU this year to finance its budget and current-account gaps. As a condition for receiving the credit, the government froze state wages this year and pledged to cut spending to meet a budget target of 7.3 percent of gross domestic product in 2009. Hungary, Ukraine, Belarus, Latvia and Serbia have also sought bailouts to prevent defaults and aid banks. To contact the reporter on this story: Irina Savu in Bucharest isavu@bloomberg.net .

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Europe Confidence in Economic Outlook Rose to a 12-Month High in September

September 29, 2009

By Simone Meier Sept. 29 (Bloomberg) — European confidence in the economic outlook increased to the highest in 12 months in September as the economy showed signs of rebounding from the worst recession in more than six decades. An index of executive and consumer sentiment in the 16- nation euro region rose to 82.8, the highest since September 2008, from 80.8 in August, the European Commission in Brussels said today. That was the sixth straight monthly gain. Economists had projected an increase to 82.7, according to the median of 23 estimates in a Bloomberg News survey. European companies including Germany’s ThyssenKrupp AG and Paris-based L’Oreal SA have beaten analysts’ earnings estimates, suggesting government stimulus programs are feeding into the economy. Manufacturing and service industries expanded for a second month in September and German business confidence climbed to a 12-month high. Rising unemployment may prompt consumers to rein in spending, curbing the recovery. “There’s still a lot of steam in the pipeline,” said Christoph Weil , a senior economist at Commerzbank AG in Frankfurt. “Sentiment indicators are backing our estimates that the economy will probably expand at a stronger-than-expected pace in the second half .” The world economy is emerging from the deepest slump since the 1930s following $2 trillion of government spending, tax breaks and infrastructure projects. The European Central Bank earlier this month kept its key interest rate at a record low of 1 percent, with ECB President Jean-Claude Trichet saying the economy is past the worst and will show a “gradual recovery.” Largest Economies The euro-area economy may expand 0.2 percent in the current quarter and 0.1 percent in the three months through December, the commission said on Sept. 14. In the second quarter, the economy contracted just 0.1 percent as Germany and France, the region’s two largest economies, returned to growth. Ryanair Holdings Plc Chief Executive Officer Michael O’Leary said on Sept. 24 that he anticipates earnings will rise “significantly” this year. Dublin-based Ryanair, Europe’s largest low-cost airline, is cutting the “cost base and gearing the company up for a period of renewed growth over the coming years,” O’Leary said. “We do see light at the end of the tunnel; there are more and more signs that the economy is improving,” HeidelbergCement AG Chief Executive Officer Bernd Scheifele said in an interview on Sept. 22. Germany’s biggest cement supplier will benefit “noticeably” from the government’s stimulus programs, he said. The Dow Jones Stoxx 600 Index has risen 20 percent this year while Germany’s benchmark DAX Index has jumped 8 percent in the past two months, bringing gains to 17 percent in 2009. Biggest Steelmaker L’Oreal , the world’s largest cosmetics maker, on Aug. 28 posted a smaller-than-projected earnings decline and forecast a gradual recovery through the second half of 2009. ThyssenKrupp , Germany’s biggest steelmaker, last month posted a smaller-than- forecast third-quarter loss. “The recent jump in economic expectations exceeds our own projections,” ThyssenKrupp Chief Executive Officer Ekkehard Schulz said on Sept. 4 in Dusseldorf. “We’re seeing the first signs of bottoming out and rising orders in the steel area.” European companies are starting to ramp up output to meet reviving global demand. European industrial orders rose for a second month in July, led by durable consumer goods, and exports increased 4.1 percent from June. The euro-area services industry index showed a return to expansion in September. Rising Unemployment ECB policy makers including Trichet have warned the recovery may face obstacles such as rising unemployment . European retail sales fell for a 16th month in September, Markit Economics said today, citing a survey of more than 1,000 executives. Europe’s jobless rate probably rose to 9.6 percent in August, according to a Bloomberg survey. That would be a 10- year high. The European Union’s statistics office in Luxembourg will release the report on Oct. 1. The commission noted in today’s report that the September increase in sentiment was “the smallest since the upturn started in April.” The August index reading was revised to 80.8 from the 80.6 reported on Aug. 28. European households anticipate prices will decline more, today’s report showed. A gauge of consumers’ price expectations over the next 12 months held near a record low, rising to minus 14 in September from minus 16 in August, which was the lowest since the data were first compiled in 1990. The ECB said earlier this month that it projects euro- region consumer prices will rise about 0.4 percent this year and around 1 percent in 2010. In September, consumer prices probably dropped 0.2 percent from a year ago, a Bloomberg survey shows. The ECB aims to keep inflation just below 2 percent. Cutting Costs With companies still cutting costs and the economy struggling to gather steam, ECB officials have signaled they are ready to maintain the bank’s unconventional measures for a while. The ECB has offered banks unlimited cash over 12 months and purchased covered bonds to encourage lending. “ The ECB won’t be in any rush over the next six months, but we see a rate hike towards the end of 2010,” said Laurent Bilke , a senior economist at Nomura in London. “They probably have the tools to negotiate a gradual exit.” To contact the reporter on this story: Simone Meier in Dublin at smeier@bloombert.net

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Microsoft Says Ford, Continental, Starwood, Intel to Upgrade to Windows 7

September 29, 2009

By Dina Bass Sept. 29 (Bloomberg) — Microsoft Corp. said Ford Motor Co., Continental Airlines Inc., Starwood Hotels & Resorts Worldwide Inc. and Intel Corp. will help introduce its Windows 7 operating system, saying they will upgrade to the new program. Executives of the four companies will appear today with Microsoft Chief Executive Officer Steve Ballmer at an event in San Francisco to talk about their use of the software, according to an e-mail from Microsoft. Starwood put the program on computers in Sheraton hotel lobbies. Intel , which skipped the previous Windows upgrade, has 500 people trying it out. Microsoft needs to generate interest among corporate customers for Windows 7, which goes on sale Oct. 22, after Windows Vista was adopted by relatively few during its almost three years on the market. Twenty-four percent of companies surveyed by Goldman Sachs Group Inc. said they will upgrade to Windows 7 in the first 12 to 18 months, and 67 percent plan to switch eventually, a higher rate than Vista achieved. Vista was deployed by about 10 percent of customers in the first 12 to 18 months, Goldman said. In total, only 20 percent to 25 percent switched to Vista, according to Goldman. Ford is planning to “aggressively move” to Windows 7, Microsoft said, as the automaker tries to offer better computer technology for a younger and more mobile workforce. Starwood has put Windows 7 on Hewlett-Packard Co.’s touch- screen computers in Sheraton hotels in seven cities, including New York and Seattle, said Hoyt Harper, a Starwood senior vice president who’s overseeing a project to refresh the Sheraton brand. Hotel-Lobby Computers A key part of that project has been outfitting lobbies with computing areas that let hotel guests check e-mail, order food and drinks, and take digital photos to send electronic postcards. Some hotels will install Windows 7 on new touch- screen machines, while others will put Windows 7 on existing computers in the lobby. The software and touch-screen computers will let guests browse Microsoft’s Bing Maps program or play games. Starwood also plans to start installing Windows 7 on its corporate PCs. Microsoft rose 28 cents to $25.83 yesterday on the Nasdaq Stock Market. The shares have gained 33 percent this year. To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net .

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Brown Slumps to Third in U.K. Poll as Timetable Points to May 6 Election

September 29, 2009

By Robert Hutton and Kitty Donaldson

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Chinese 103-Year-Old Wall Street Emigrant Expecting Communism to Fade Away

September 29, 2009

By Bloomberg News Sept. 29 (Bloomberg) — Zhou Youguang was a child of 6 when a revolution toppled China’s last emperor in 1912. He was 43 when he says he left a Wall Street banker’s job to help Mao Zedong’s Communists create what he thought would be a democracy after decades of warlord rule, occupation and civil war. Now 103, he has seen China transformed from a country of 368 million being carved up by foreign powers to a nation of 1.3 billion and the world’s fastest-growing major economy , expanding at an average annual rate of 9.9 percent from 1978 to 2008. He says he still believes China will eventually become a democracy — in spite of communism, not because of it. “China will follow the mainstream of the world, sooner or later,” the pajama-clad Zhou said during an interview in the book-lined study of his third-floor walk-up apartment in central Beijing. His experiences encapsulate the complicated legacy of the Communist Party, which celebrates 60 years in power this week with a military parade past Tiananmen — the Gate of Heavenly Peace — where Mao proclaimed the founding of the People’s Republic on Oct. 1, 1949. While Zhou endured three years of forced separation from his family during the 1966-76 Cultural Revolution, he survived a purge of intellectuals that led many of his colleagues to commit suicide. He was also given the opportunity to devise a new system of spelling out Chinese characters with the Roman alphabet that helped hundreds of millions of Chinese peasants learn to read. ‘Lucky Ones’ “There were very few who returned from America who escaped the catastrophe,” Zhou said. “I was one of the very lucky ones.” Like China’s leaders, Zhou divides Communist rule into two periods: the first three decades dominated by Mao, who died in 1976, and the second characterized by the opening of China to the world by paramount leader Deng Xiaoping , who died in 1997. While Deng’s era sparked rapid growth, Zhou, an economist by training, considers it a mixed success. Deng “reformed the economy but didn’t reform politics,” Zhou said. “In the political scene, there was absolutely no change; it was an autocracy.” That wasn’t the outcome Zhou Enlai promised Zhou in the late 1930s. The two, who aren’t related, met in Chongqing when the Yangzi River city became the wartime capital following Japan’s occupation of Nanjing in 1937. Meetings of Intellectuals Zhou Enlai — who would become China’s premier in 1949 — held monthly get-togethers with intellectuals, including Zhou, who worked for Sin Hua Trust & Savings Bank, which was founded in 1914 and became part of the Bank of China Ltd . in 2001. “Zhou Enlai told me at those meetings that the Communist Party was a democratic party,” Zhou said. Zhou left China for New York at the end of 1946, where he represented Sin Hua at Irving Trust Co., the bank’s U.S. agent, at its Art Deco headquarters on 1 Wall Street . He and his wife, Zhang Yunhe, returned to Shanghai in June 1949, as the Communists neared victory. “We thought that with China liberated, there was hope; everyone wanted to come back home and do something,” Zhou wrote in a 2008 autobiography. When he arrived, Shanghai — occupied by the People’s Liberation Army the previous month — straddled the communist- capitalist divide. Zhou lived in both worlds: working at Sin Hua and at what is now the Shanghai University of Finance and Economics as a professor. There he and his colleagues, most of them scholars who returned from the U.S., watched as textbooks were jettisoned for new ones reflecting Marxist theories of class struggle. Common Language In 1955, Zhou, whose hobby was linguistics, was asked during a Beijing conference to lead a group creating a standardized system of writing Chinese phonetically with Roman letters. The project would supersede a hodgepodge of Romanization systems and was part of a drive that included simplifying the way thousands of characters were written and teaching a common language, Mandarin, in schools throughout the country. “I said no way, I’m an amateur,” Zhou said. It was too late; the premier, who remembered his avocation from their days in Chongqing, had already called Zhou’s colleagues in Shanghai and told them he wouldn’t be coming home. Zhou’s pinyin system, which turned “Peking” into “Beijing,” uses markers to identify which of Mandarin’s four tones to use. It became the national standard in 1958 and has helped reduce China’s illiteracy rate to 10 percent today from about 80 percent in the 1950s. Mao’s Purge His new career also kept him relatively safe when economics professors, especially those who had lived in the U.S., became targets of Mao’s Anti-Rightist Campaign in 1957 to purge anyone he thought opposed his revolution. “Every day there were people killing themselves,” Zhou wrote in his autobiography. Zhou didn’t completely escape persecution. He was branded a “reactionary academic authority” in 1969 during the Cultural Revolution and sent to northwestern China’s Ningxia region, where, already well into his 60s, he spent a year toiling in rice paddies. He was allowed to return to his family in 1972. Since then he’s helped make pinyin a global standard and published books on linguistics. Zhou never expressed regret in the interview for giving up his New York lifestyle. In 1949, the “common people trusted the Communist Party,” he said. Looking back over 60 years, he now believes the party, which he never joined, “cheated the Chinese people. They destroyed everything, especially the intellectuals.” That doesn’t stop Zhou from saying that China’s economic boom will someday be accompanied by the democracy he had hoped to help create. “I’m always optimistic,” he said. For Related News and Information: Stories on Chinese politics: TNI CHINA POL BN China economic snapshot: ESNP CH Top China stories: TOP CHINA Top Asia stories: TOPA

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Typhoon Ketsana Makes Landfall in Vietnam After Battering the Philippines

September 29, 2009

By Van Nguyen and Aaron Sheldrick Sept. 29 (Bloomberg) — Typhoon Ketsana, which left more than 240 people dead in the Philippines, crossed the coast of central Vietnam today as a Category 2 storm with winds of 167 kilometers (104 miles) per hour. “The typhoon made landfall just now in Quang Nam and Quang Ngai provinces,” Nguyen Xuan Dieu , head of the National Committee for Flood and Storm Control , said in a phone interview about 3 p.m. Vietnam time. “Local authorities have reported much stronger winds since noon today.” More than 170,000 people were evacuated in the region in advance of the storm, Dieu said. Residents were earlier advised to stockpile food, water and medicines. Dieu said he hadn’t received reports of casualties or damage. “Water levels are rising fast,” he said. “Our focus now is to protect people in the affected area and to mitigate damages and casualties as we expect heavy rains, floods and landslides.” Ketsana’s maximum sustained winds increased to 167 kilometers per hour from 148 kph yesterday as it approached the coast, according to the U.S. Navy Joint Typhoon Warning center, which tracks storms in Asia. Ketsana crossed Luzon in the Philippines as a tropical storm on Sept. 26, causing floods in the capital, Manila, and surrounding areas after dumping a month’s worth of rain in a six- hour period. Philippines Impact More than 1.8 million people were affected by the floods and 374,800 people are in evacuation centers, the Philippines disaster council said. Thirty-seven people are missing. The government declared a “state of calamity” for the Manila metropolitan region and other parts of Luzon island as well as Mindoro island to the south. Central Vietnam was hit by rains last week that left 23 people dead or missing, according to a statement on the government’s Web site. More than 9,600 houses were damaged. Before it hit the coast, Ketsana was a Category 2 storm, the second-weakest on the five-step Saffir Simpson scale . Such storms are capable of “widespread damage,” according to the U.S. National Hurricane Center’s Web site . Ketsana, the 17th storm of the season, is the name of a tree in Laos, according to the Hong Kong Observatory, which list names in use for Pacific storms on its Web site. To contact the reporters on this story: Van Nguyen in Hanoi at vnguyen23@bloomberg.net ; Aaron Sheldrick in Tokyo at asheldrick@bloomberg.net .

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Wien Rebuilds Reputation as Strategist Sees S&P 500 Extending Gain to 77%

September 29, 2009

By Rita Nazareth Sept. 29 (Bloomberg) — The steepest rally in the Standard & Poor’s 500 Index since the 1930s is restoring Byron Wien’s reputation as a stock picker. Wien, hired by Blackstone Group LP last month, said he’s keeping his January forecast for a 33 percent annual gain in the benchmark index for U.S. equities, implying a 13 percent advance from yesterday’s close. More than six months ago, the S&P 500 needed to rise 77 percent to reach Wien’s year-end prediction of 1,200. “In March, that didn’t look too good, and people wouldn’t make eye contact with me,” said Wien, 76, vice chairman of Blackstone Advisory Services and the former chief market strategist for hedge fund Pequot Capital Management Inc. “But now, with three months to go, that looks like it may be realized. The horse is corporate earnings and economic activity. The horse drives the cart.” Wien’s year-end forecast for the S&P 500 is higher than the average estimate of strategists surveyed by Bloomberg of 1,037. It also exceeds the most bullish forecast of 1,100 from JPMorgan Chase & Co.’s Thomas Lee . The index closed at 1,062.98 yesterday after jumping 57 percent since March. The investment strategist is calling for the steepest annual gain in the S&P 500 since 1995 and biggest fourth-quarter rally in a decade. Wien says an economic recovery and earnings that exceed analysts’ forecasts will spur the stock market during the next three months. Earnings, Economy In the second quarter, 72.3 percent of S&P 500 companies topped the average analyst profit estimate, matching the highest proportion even in Bloomberg data going back to 1993. The Economic Cycle Research Institute’s gauge of U.S. economic growth surged 24 percent in the week ended Sept. 18, the fastest increase in data stretching back to 1968. Wien is also more optimistic than Wall Street strategists tracked by Bloomberg about corporate earnings. Combined earnings for S&P 500 companies will exceed $60 a share this year and rise to $75 in 2010, he said. The average strategist forecasts are $56.33 and $69.44, respectively. “What’s going to drive the stock market is whether the earnings momentum that we’ve seen is sustained,” Wien said. “The economy will be stronger, and corporate earnings both in the third and fourth quarters will be better than expected.” Companies in the S&P 500 traded for 20.2 times reported operating earnings from the past year on Sept. 22, data compiled by Bloomberg show, the highest valuation since 2004. ‘Further To Go’ “To some extent it’s overbought, but I still think it has further to go,” he said. “You have to say that if investors were very pessimistic in March, they are much more optimistic now, but not at extreme levels. I don’t think we’ll have a 10 percent correction before the end of the year.” Blackstone , the world’s biggest private equity firm, hired Wien last month to advise the company and its clients on the economy and politics. Pequot, his previous employer, said in May that it would shut down because of a federal insider-trading investigation. Before Pequot, Wien was senior market strategist at Morgan Stanley. At the start of 2008, Wien’s predictions included a 10 percent decline for the S&P 500 and the beginning of the first U.S. recession since 2001. The main benchmark for American equities sank 38 percent, the most since 1937, as financial shares collapsed and energy and metal producers tumbled. The economic contraction began in December 2007, according to the National Bureau of Economic Research . Most Attractive Within the 10 main industry groups in the S&P 500, Wien said technology, energy, raw-material and health-care companies are the most attractive. He predicted mergers between industries companies. U.S. stocks rose the most in five weeks yesterday as takeovers in the drug and technology industries added to evidence that mergers and acquisitions are rebounding from the slowest pace in six years. Takeovers involving U.S. companies have totaled $49.1 billion in September, compared with $26.6 billion in August and $36.8 billion in July, based on Bloomberg data. Through the third week of September, M&A dropped by about half in the U.S. to $492.5 billion this year, the slowest pace since 2003, Bloomberg data show. “I do think that M&A will be strong over the next few months,” Wien said. “Investors are confident and businessmen are confident, too. They see some attractive companies out there at attractive prices. And they’re willing to buy them.” To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net .

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Russia Cuts Benchmark Rate by Half-Point to 10% to Stimulate Bank Lending

September 29, 2009

By Denis Maternovsky Sept. 29 (Bloomberg) — Russia’s central bank lowered its key interest rates by half a percentage point to help the world’s biggest energy exporter stimulate lending as it recovers from the biggest economic contraction on record. Bank Rossii cut its refinancing rate to 10 percent from 10.5 percent and lowered the repurchase rate charged on central bank loans to 9 percent from 9.5 percent, effective tomorrow, the bank said on its Web site today. The bank has cut rates seven times since April 24, including by a quarter point on Sept. 14. “Interest rates on loans to the real sector of the economy remain relatively high,” the bank said on its Web site today. “Further steps on lowering interest rates will depend on the need to create conditions for broadening lending and stimulating economic growth, taking inflationary tendencies into account.” Finance Minister Alexei Kudrin told investors at a conference in Moscow today that Russia has “come out of recession,” after the economy contracted a 10.9 percent in the second quarter. The ruble appreciated 0.1 percent to 30.0720 per dollar at 11:33 a.m. in Moscow and added 0.4 percent against the euro at 43.9130, retaining gains before the rate announcement. The Micex Index of 30 stocks advanced 0.7 percent to 1,216.33. To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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Emerging-Market Stocks Advance Most in a Week; European Shares Fluctuate

September 29, 2009

By Gavin Serkin and Zijing Wu Sept. 29 (Bloomberg) — Emerging-market shares rose the most in a week, led by computer-related companies, after Taiwan said it may allow China to invest in technology industries. The MSCI Emerging Markets Index added 1 percent at 10:08 a.m. in London, the most since Sept. 22. Taiwan Semiconductor Manufacturing Co. rallied 4.9 percent and Hon Hai Precision Industry Co. climbed 2.8 percent after Taiwan said it may let Chinese investors buy stakes in flat-panel and computer-chip companies. Europe’s Dow Jones Stoxx 600 Index and U.S. index futures fluctuated. “The general trend is upwards,” Mark Mobius , who oversees about $25 billion as the executive chairman of Templeton Asset Management Ltd., said in an interview in Singapore. “We are in a bull market. There’s no reason why we should not get beyond the previous high.” Russian stocks still look “cheap” and are poised to extend gains, Mobius said today. The benchmark Micex Index has almost doubled this year, the best performance in major emerging markets. A six-month, 64 percent rally has driven the MSCI World Index of 23 developed nations this month to the most expensive level since 2003, data compiled by Bloomberg show. U.S. economic reports may show house prices declined at the slowest pace in 17 months in July while consumer confidence improved. The Micex index erased earlier gains, dropping 0.2 percent as of 12:41 p.m. in Moscow. The central bank cut its key interest rate by half a point to 10 percent, the seventh reduction since April 24. India’s Bombay Stock Exchange Sensitive Index advanced 1.1 percent. Lithuania’s OMX Vilnius index jumped 2.8 percent, leading a recovery in Baltic shares. European Valuations The Dow Jones Stoxx 600 Index of European shares slipped 0.2 percent after earlier rising 0.3 percent. A 54 percent increase since March 9 has driven valuations on the gauge to 49.4 times reported profit, the highest level since 2003, weekly Bloomberg data show. The MSCI World traded at 27.8 times earnings this month, also the most expensive level in six years. BNP Paribas SA , France’s largest bank, climbed 2.6 percent in Paris after saying it will seek 4.3 billion euros ($6.3 billion) in a rights offer to help repay government funds. Societe Generale SA, the country’s second-largest bank by market value, added 2 percent. The MSCI World Index fell as much as 59 percent from Oct. 31, 2007, through March 9, 2009, as the global economy fell into its first recession since World War II and the collapse of subprime mortgages spurred $1.6 trillion in losses and writedowns at the largest financial companies. Stocks have rebounded as countries from France and Germany to Hong Kong and New Zealand exited recession and the Federal Reserve held interest rates near zero to unlock credit markets. Dollar Rises The dollar rose for a second day against the euro, strengthening 0.2 percent, as Russia’s rate cut revived concern that policy makers have more to do to spur an economic recovery. The Dollar Index , which IntercontinentalExchange Inc. uses to track the currency against those of the U.S. major trading partners, was little changed at 77.075. Treasuries snapped five days of gains, with the yield on the 10-year note climbing 3 basis points to 3.31 percent. The yield on the German 10-year bund, Europe’s benchmark government security, rose 1 basis point to 3.26 percent. Futures on the Standard & Poor’s 500 Index slipped 0.2 percent after earlier climbing 0.2 percent. The S&P 500 had surged the most in five weeks yesterday as takeovers in the drug and technology industries added to evidence that acquisitions are rebounding from the slowest pace in six years. House Prices U.S. economic reports today may show home values in 20 U.S. metropolitan areas declined at a slower pace and consumer confidence improved, according to economists. The S&P/Case-Shiller home-price index fell 14.2 percent in July from a year earlier, the least in 17 months, according to the median forecast of 35 economists surveyed by Bloomberg News. The Conference Board may say its gauge of consumer sentiment rose this month to the highest level in a year. Copper for delivery in three months fell 1.2 percent to $5,938.25 a metric ton on the London Metal Exchange. Crude oil rose 1 cent to $66.85 a barrel on the New York Mercantile Exchange. White sugar rose to a record $604 a ton on the Liffe exchange in London. To contact the reporter on this story: Gavin Serkin at gserkin@bloomberg.net

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BNP Will Raise $6.3 Billion to Repay Government Assistance; Shares Advance

September 29, 2009

By Fabio Benedetti-Valentini and David Whitehouse Sept. 29 (Bloomberg) — BNP Paribas SA, France’s largest bank, said it will raise 4.3 billion euros ($6.3 billion) in a rights offer to help repay government funds. BNP Paribas is offering existing investors 107.6 million shares at 40 euros each, or 29 percent below yesterday’s closing price, the Paris-based bank said today. The company will repay 5.1 billion euros it received from the French state as well as 226 million euros of interest, it said. BNP Paribas and Societe Generale SA , the country’s second- largest bank by market value, received a total 8.5 billion euros from the state to boost capital and sustain lending after Lehman Brothers Holdings Inc. ’s failure shook markets last September. After paying back the government, BNP Paribas’s tier-one capital ratio, an indicator of financial strength, will be above 9 percent, the company said. “This will put them in a stronger position and I certainly support this,” said Andy Lynch , who manages $1.8 billion at Schroders Investment Managers in London and holds BNP shares. “We are likely to see more of these moves throughout Europe.” BNP Paribas rose as much as 4.1 percent in Paris trading, and was up 2.7 percent at 58.09 euros by 9:17 a.m. in Paris, valuing the bank 62.6 billion euros. The stock has risen 92 percent so far in 2009, outpacing the 53 percent gain of the 64-member Bloomberg Europe Banks and Financial Services Index. ‘Objectives’ Achieved In return for the government funds, the banks agreed to increase the volume of outstanding loans to households and companies by at least 3 percent this year. BNP Paribas said it’s standing by commitments given to the French state. The state assistance has “fully achieved its objectives,” the bank said in a statement. “Given the changing environment and the strong performance of BNP Paribas, this support is no longer required.” BNP Paribas said results for the third quarter in each of its “three core businesses” should not differ significantly from the previous quarter, beyond the usual seasonal effects. Second-quarter profit rose 6.6 percent to 1.6 billion euros, helped by the acquisition of Fortis assets and higher investment-banking revenue, the bank said Aug. 4. Axa SA , which holds about 5.2 percent of BNP Paribas’s shares, will subscribe to new stock “by exercising all of the preferential subscription rights it will be granted,” BNP said. BNP Paribas will be offering investors one new share for every 10 they already hold. The transaction will “be 8.4 percent accretive” to earnings per share, based on analysts’ consensus estimates for 2010 net income, the bank said. The offer runs between Sept. 30 and Oct. 13. The bank will also use about 750 million euros of equity from dividends paid in shares and about 260 million euros from a capital increase reserved for employees to help reimburse “all of the non-voting shares issued in March to Societe de Prise de Participation de l’Etat,” the state-run financing company, BNP Paribas said. The offer will be managed by BNP Paribas and underwritten by a syndicate led by BNP Paribas, HSBC Holdings Plc and Calyon. To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net David Whitehouse in Paris on dwhitehouse1@bloomberg.net

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CelLynx Names Barry M. George Chief Marketing Officer

September 29, 2009

Company Implementing Major 5BARz Road Warrior Marketing Campaign

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Report: Oaktree Cap Getting $1B From CIC

September 29, 2009

Extract not available.

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Realogy debt plan moves forward

September 29, 2009

Real estate franchise and brokerage company Realogy Corp. said Monday it took out $515 million in loans in a debt restructuring that will reduce the company’s debt by $70 million

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CIC To Invest $1b In Oaktree

September 29, 2009

Oaktree to use CIC’s money to invest in distressed debt and other fixed income assets over a period of time China Investment Corporation (CIC), the $300 billion sovereign wealth fund, has agreed to invest about $1 billion in Oaktree

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Brookfield Travel Company, Sundance Vacations, Under New Leadership

September 29, 2009

BROOKFIELD, WI–(Marketwire – September 29, 2009) – Sundance Vacations named Sean Agnew as Sales Director of the Brookfield, Wisconsin sales division. Agnew was previously employed at the Downers Grove Sundance Vacations sales office and has been employed by the wholesale travel company since 2005. The Sales Director will ensure the efficiency of the Sundance Vacations Brookfield sales center and assume the responsibility of 26 staff members. Mr. Agnew intends to provide all of the necessary tools for the Brookfield staff to be successful and his ultimate goal is to make certain his staff understands the quality of the great product that Sundance Vacations provides. Agnew will further assist the sales staff in maintaining their commitment to honest sales practices. Sundance Vacations has a reputation for such practices. The company won the NEPA Torch Award for Marketplace Ethics in 2005; and in 2009 was a sponsor of the

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GLG unveils distressed fund for corporate debt

September 29, 2009

GLG Partners has unveiled a new distressed fund to invest in the debt of struggling UK and European companies, and has named Galia Velimukhametova, the former chief of the European operations of , to run the vehicle, according

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Dylan Ratigan: Why Would We Let Them Rig the Game?

September 28, 2009

Why is health insurance the only business that has an exemption from the Sherman Anti-Trust Act other than Major League Baseball? If the delivery of taxpayer trillions by our politicians to the banks to support their fraudulently paid bonuses hasn’t shown you what our current government’s values are, check this link out. Through the governmental negligence that we as voters allowed, a health care system was created in which a single health care company controls at least 30 percent of the insurance market in 95% of the country, including states like the following: Maine, where Wellpoint controls 71% of the market. North Dakota, where Blue Cross controls 90% of the market. Arkansas, where Blue Cross Blue Shield controls 75% of the market. Alabama, where Blue Cross Blue Shield controls 83% of the market. This monopoly, combined with the misaligned incentives that trap people in employer-based health care, is causing the skyrocketing health care costs that are hurtling our nation towards bankruptcy. I don’t know what’s worse: that most Republicans seem to be against ending this unfair legal protection for an entrenched industry that is ruining our country with their non-competitive practices, or that most Democrats seem to be threatening this arrangement only as a bargaining chip to push for a meaningless public option that wouldn’t be accessible to almost 85% of the population? Instead of improving our country, through creating and enforcing free and fair markets, our politicians are currently engaging in backroom deals, most of which protect the very companies who profit the most from these disastrous outdated systems — industries like health insurance and big Pharma . While we clearly have the ability as a group of 305 million to update the system that is American Health Care and move our country into the 21st century in the process, it’s becoming clear that we may not have the leaders to do it. Instead of seeking answers to the problem of paying for and providing medicine, we are doing the exact opposite. Taxpayers’ money is being played with by politicians who are desperately trying to protect the competition-stifling, false security of the monopolistic employer-based health care system and its outdated, over-charging, under-delivering ways. Given the least consideration are those affected the most — the patients and the doctors who care for them. This country’s founders built an ingenious system of checks and balances for a reason: to ensure that no special interest or group could use government power to commandeer the creative and economic wealth of our nation to their own ends. How much longer must we live in a country where the citizens are subservient to the banks, health insurance companies and any other special interest able to control our government at the expense of our the most basic principles of fairness, our future as a nation and, as a result, our freedom?

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British house prices edge up in September

September 28, 2009

British house prices edge up in September

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Xerox to acquire Affiliated Computer Services for $6.4b

September 28, 2009

Xerox to acquire Affiliated Computer Services for $6.4b

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New York Jets Benched Clowney After Twitter Complaint About Playing Time

September 28, 2009

By Nancy Kercheval Sept. 29 (Bloomberg) — David Clowney sat out the New York Jets’ 24-17 win over the Tennessee Titans two days ago for complaining about his lack of playing time on Twitter. The wide receiver was benched after noting that he was “a bit disappointed” that he only took part in five plays during the Sept. 20 win over the New England Patriots. Jets coach Rex Ryan said he punished Clowney in part to see how the player would react. “He could have come down and been upset and pouted, or he could come out and be a Jet and work his tail off and show me that he wants to do it our way,” Ryan said during a press conference yesterday. “He was phenomenal this week in preparation.” The Jets are undefeated going into the fourth week of the National Football League season and play the New Orleans Saints (3-0) on Oct. 4. To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net .

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Cowboys Rally to Defeat Panthers 21-7, Register First Win in New Stadium

September 28, 2009

By Dex McLuskey Sept. 28 (Bloomberg) — The Dallas Cowboys registered their first win in their new $1.1 billion stadium with a 21-7 defeat of the Carolina Panthers. The Cowboys (2-1) took the lead in the third quarter on a five-yard touchdown run by Tashard Choice after Dante Rosario scored on a 25-yard pass for Carolina (0-3) in the second quarter. Terence Newman returned an interception 27 yards to make it 19-7 in the fourth quarter and Dallas added a two-point conversion through Choice to complete the scoring. Nick Folk contributed two field goals for Dallas, which lost its first game at Cowboys Stadium in Arlington, Texas, to the New York Giants.

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Sex Drive, Erections Improved by New Testosterone Drug, Maker Acrux Says

September 28, 2009

By Simeon Bennett Sept. 29 (Bloomberg) — An experimental treatment for men with low testosterone improved sex drive and erections in a late-stage patient study, the product’s Australian developer Acrux Ltd. said today. Acrux’s Axiron treatment restored testosterone levels to normal levels in 84 percent of men after four months in a trial among 155 men in six countries, the Melbourne-based company said in a statement today. Axiron is a testosterone spray applied under a man’s armpits once a day, Acrux said. The company plans to apply for U.S. regulatory approval this year. Approval would give Acrux, which has never made a profit , its first registered product in a market that generated $1 billion of sales in the year ended March and grew more than 20 percent in the U.S., the company said, citing data from IMS Health Inc. “We suggest that investors who entered Acrux for the release of these results may care to take profits today,” Tanya Solomon , a health-care analyst with RBS Morgans Ltd. in Brisbane, wrote in a note to clients today. She owns the stock. Acrux fell 2.2 percent to A$1.565 as of 11:05 a.m. in Sydney, valuing the company at A$250 million ($218 million). Earlier the stock rose as much as 5.6 percent. About 94 percent of patients and 92 percent of doctors rated the product better than testosterone gels in terms of the risk of the product rubbing off on other people, the company said. To contact the reporter on this story: Simeon Bennett in Singapore at sbennett9@bloomberg.net

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Fujii Denies Support for Stronger Yen in Reversal of Rhetoric on Currency

September 28, 2009

By Keiko Ujikane Sept. 29 (Bloomberg) — Japanese Finance Minister Hirohisa Fujii said the government may act to stabilize the foreign- exchange market should currency movements become irregular. “If the currency market moves abnormally, we may take necessary steps in the national interest,” Fujii said at a news conference in Tokyo today. He denied saying he tolerates a stronger yen. Fujii is seeking to clarify his stance on the Japanese currency after it surged to an eight-month high yesterday. Since taking the post two weeks ago, Fujii has he doesn’t support a “weak yen” and he opposes governments stepping into currency markets “in principle.” The yen has gained about 16 percent in the past year, making Japanese products shipped abroad more expensive and eroding the value of repatriated profits. The Democratic Party of Japan, which won power for the first time last month, has said a stronger currency may benefit households by making imported goods cheaper. Fujii, 77, said today that recent currency moves have been too sudden and intervention remains possible, Reuters reported, citing Japan’s Jiji news service. At the same time, he said at the briefing that history shows yen-devaluation policies hurt the global economy. World leaders agreed in London this year that countries shouldn’t compete to devalue their currencies, Fujii said. “That decision is quite right.” ‘One-Sided’ Moves At a forum co-hosted by Bloomberg yesterday, he said he “never said I will leave the yen to strengthen” and he didn’t necessarily accept gains in the currency. He also said foreign- exchange moves “have been somewhat one-sided recently.” The foreign-exchange market shouldn’t react excessively, Fujii told reporters today. The yen fell to 89.98 per dollar at 11:55 a.m. in Tokyo after yesterday touching 88.24, the strongest level since Jan. 23. Eiji Hirano , a former Bank of Japan executive director, said Fujii intends to retain the option of selling the yen should it gain excessively. “I don’t think Minister Fujii meant he has ruled out intervention completely,” Hirano said in interview on Sept. 25. “If the yen advances drastically and people panic, intervention can’t be ruled out.” Japan hasn’t stepped into the foreign-exchange market since the first quarter of 2004, when the central bank at the behest of the Finance Ministry sold a record 14.8 trillion yen ($165 billion) to weaken the currency. Yen May Drop Hirano, who is now a director at Toyota Financial Services Corp., said current market moves don’t warrant action and the yen may depreciate over time because the economy is likely to weaken as the population shrinks and ages. Some investors say the DPJ’s support for households indicates it’s more willing to allow a stronger yen than the Liberal Democratic Party, which governed Japan for almost all of the past 54 years. “The DPJ’s foreign-policy bias toward Asia and away from the U.S. and economic policy focused more on households than on large corporations should translate into medium- to long-term tolerance for yen appreciation,” said Tomoya Masanao , an executive vice president at Pacific Investment Management Co. Fujii stressed in yesterday’s speech that households should underpin Japan’s economic growth rather than exporters. “The days of high growth driven by exports and big companies are over,” he said. “We want to focus on policies that will foster spending by consumers and domestic demand.” Meanwhile Toyoo Gyohten , will is scheduled to be appointed an adviser to Fujii today, expressed support for the U.S. dollar as the world’s reserve currency. “There’s no better alternative to the dollar,” Gyohten, 78, said in an interview yesterday. “Making it as stable as possible would be the best policy option at the moment.” To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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U.S. Won’t Recognize New Honduras Vote Without End to Crisis, Aide Says

September 28, 2009

By Indira A.R. Lakshmanan Sept. 28 (Bloomberg) — The U.S. won’t recognize a scheduled November election in Honduras if there is no resolution to the political crisis that began with a coup that ousted President Manuel Zelaya in June, a State Department official said today. The U.S. has told the “de facto regime that because of the environment on the ground, we will not recognize the election,” said Philip J. Crowley , spokesman for the U.S. State Department. On Sunday, the de facto government led by interim President Roberto Micheletti banned protests and suspended other civil rights for 45 days and denied entry to an Organization of American States delegation seeking to negotiate an end to the three-month standoff in the Central American nation. At an emergency meeting of the 35-member body of the OAS in Washington today, both sides were criticized for their actions. “We are very concerned by the de facto regime’s suspension of fundamental civil liberties,” Charles Luoma- Overstreet, spokesman for the State Department’s bureau of Western Hemisphere Affairs, said in a telephone interview. “We call on the de facto regime to lift the decree and take the necessary steps to initiate a meaningful negotiation with President Zelaya. At the same time, we strongly urge President Zelaya and his supporters to direct their statements in a constructive and positive manner,” he said. Luoma-Overstreet added that “both sides need to refrain from actions that incite division.” Support for Settlement The U.S. has supported a negotiated settlement proposed by Costa Rican President Oscar Arias , a Nobel Peace Prize-winner. His plane would restore Zelaya to power, create a unity government and schedule early elections. The de facto government has rejected the proposal, alleging that Zelaya violated the constitution by seeking to amend it to extend his term in office. Zelaya said he wants to hold talks with Micheletti at the Brazilian Embassy in the Honduras capital of Tegucigalpa, where he has holed up since last week, and will recognize Nov. 29 elections, a precondition set by Micheletti. Micheletti and Zelaya met separately with the nation’s four leading presidential candidates last week, meetings that were seen as a step toward direct talks. The acting government has given Brazil a 10-day deadline to declare whether Zelaya has been granted asylum, Foreign Minister Carlos Lopez Contreras said yesterday. Honduras will act to remove the embassy’s diplomatic status and protections after 10 days, Lopez Contreras added, though he said the government will refrain from attacking the embassy to forcefully remove Zelaya. Brazil doesn’t recognize the ultimatum, President Luiz Inacio Lula da Silva said in Venezuela yesterday. To contact the reporter on this story: Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net

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Home Prices in U.S. Probably Fell at Slower Pace, Consumer Confidence Rose

September 28, 2009

By Bob Willis Sept. 29 (Bloomberg) — Home values in 20 U.S. metropolitan areas probably declined at a slower pace and consumer confidence improved, signs the recession is abating as the real-estate crisis eases, economists said before reports today. The S&P/Case-Shiller home-price index fell 14.2 percent in July from a year earlier, the least in 17 months, according to the median forecast of 35 economists surveyed by Bloomberg News. The Conference Board may say its gauge of consumer sentiment rose this month to the highest level in a year. Foreclosure-driven price declines, low borrowing costs and government tax credits for first-time buyers have lifted home sales for much of this year, helping to slow the decline in prices. Stability in real-estate values and rising stock prices may help set the stage for a recovery in the consumer spending that accounts for two thirds of the economy. “The year-on-year decline in home prices is slowing considerably, showing a bottoming in home prices,” said Michelle Meyer , an economist at Barclays Capital Inc. in New York. “We look for overall confidence to improve in the near term as the general economy rebounds.” The S&P/Case-Shiller figures are due at 9 a.m. Estimates in the Bloomberg survey ranged from declines of 12.5 percent to 15 percent. Year-over-year records for the gauge, which was down 15.4 percent in June from a year earlier, began in 2001, and the measure has fallen every month since January 2007. At 10 a.m., the New York-based Conference Board may report its consumer confidence index increased to 57 this month from 54.1 in August, according to the Bloomberg survey median. Home Sales Rise Combined sales of new and existing homes have risen for four out of the last five months, signaling the worst of the housing crisis is over. Sales of new homes climbed in August to the highest level in almost a year, the Commerce Department reported last week. Sales of existing homes unexpectedly declined, while remaining at the second-highest level in 23 months, the National Association of Realtors reported last week. The S&P/Case-Shiller price index for June rose 1.4 percent from the previous month, following a 0.5 percent increase in May, the first back-to-back gains since 2006. The monthly figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes. Signs of a revival in the housing market have sent homebuilder stocks higher. The Standard & Poor’s Supercomposite Homebuilding index is up 27 percent so far this year, compared with an 18 percent increase for the S&P 500 Index. Share price gains, along with a slower pace of job losses, have also helped boost consumer confidence. The economy lost 216,000 jobs in August, the least in a year, the Labor Department reported on Sept. 4. Household Wealth The gains in share prices contributed to a $2 trillion increase in household wealth in the second quarter. Net worth for households and non-profit groups climbed to $53.1 trillion from $51.1 trillion in the first quarter, marking the first gain since the third quarter of 2007, according to a Sept. 17 report from the Federal Reserve. Fed policy makers last week said they would keep the benchmark lending rate near zero “for an extended period,” while noting that the economy and housing had strengthened. They also said they would slow the central bank’s purchases of mortgage debt and extend the program through the first quarter of 2010 in order to keep lending rates low. Lennar Corp., the third-largest U.S. homebuilder, is among companies that see demand improving, even as losses mount. The Miami-based company said last week it expects to turn a profit in fiscal 2010. Signs of Improvement “In the third quarter we started to see some real signs that the housing market is in fact starting to stabilize,” Stuart Miller , Lennar’s chief executive officer, said on a Sept. 21 conference call. “The sense that now is the time to buy is starting to gain momentum.” Mounting foreclosures present a risk of renewed price declines as more homes are thrown onto the market. Foreclosure filings in August exceeded 300,000 for the sixth straight month, according to data from RealtyTrac Inc. A total of 358,471 properties received a default or auction notice or were seized last month, 18 percent more than a year earlier. KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, on Sept. 25 reported a third-quarter loss exceeding analysts’ estimates and said a housing recovery isn’t imminent. “The precise timing of a housing recovery remains uncertain,” Chief Executive Officer Jeffrey Mezger said on a conference call with analysts. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Volcker Says Rise of China Underscores Decline in U.S. Economy, Leadership

September 28, 2009

By James Tyson and Michael McKee Sept. 29 (Bloomberg) — Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S. “I don’t know how we accommodate ourselves to it,” Volker, an economic adviser to President Barack Obama , said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.” The former Fed chairman also said unemployment at 9.7 percent will slow the pace of recovery from the U.S. recession as consumers default on mortgages and consumer loans. Moreover, commercial real estate loans are likely to cause further losses for lenders. “This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.” Group of 20 leaders, meeting in Pittsburgh last week, announced plans for more durable economic growth, including reducing U.S. dependence on overseas capital and cutting the reliance of emerging nations such as China on exports. World leaders decided that the G-20, which includes emerging economies such as China and Brazil, will replace the Group of Eight as the main forum for global economic coordination. The shift illustrates how the excesses that led to the financial crisis have compelled industrial nations to share governance of the world economy. Less Dominant The growth of emerging economies is “symbolic of the relative, less dominant position the United States has, not just in the economy but in leadership, intellectual and otherwise,” Volcker said. The G-20 accounts for about 85 percent of global gross domestic product and was created after a spate of currency devaluations plagued emerging markets from Russia to Thailand in the 1990s. The G-8, which comprises the most advance industrial economies of Europe and North America plus Japan and Russia, accounts for about half of global GDP. China has overtaken Germany to become the world’s third- largest economy and may soon become the biggest exporter. It passed Japan a year ago as the main foreign investor in U.S. government debt. China, Russia, Brazil and India together hold about 42 percent of international reserve assets, excluding gold. Herding Cats “I would like to think that given the history of the past, given the strength, actual and potential of the American economy, we can still provide a kind of indispensable element of leadership here,” Volcker, 82, said. “But it’s not going to be dictatorial, I’ll tell you that. It is very hard to herd these cats together.” Volcker repeated that under a new regulatory structure the Fed should be given primary responsibility for supervising banks rather than a council of regulators led by the U.S. Treasury . The Treasury has “no professional background and no traditions in the area of banking supervision,” Volcker said. “In the distribution of authorities among regulatory institutions, it’s really the Federal Reserve that naturally should to be surveying the whole world, so to speak,” he said. Volcker has criticized the Obama administration’s plan to give the Fed authority to supervise “systemically important” financial firms. Such a designation would imply government readiness to support the firms in a crisis, encouraging excessive risk-taking, he said in said in testimony to the House Financial Services Committee on Sept. 24. Independent Agency The central bank should instead oversee bank regulation carried out by an independent agency, Volcker has said. The chairman of that agency could also be a vice chairman of the Fed, to increase accountability and ensure the Fed is fully informed. Volcker is chairman of the Economic Recovery Advisory Board, a body created by Obama in February to recommend responses to the crisis. Since January, Volcker has advocated that regulators prohibit financial companies whose collapse would pose a risk to the economy — those considered “too big to fail” — from engaging in certain types of trading and investing. The administration wants stricter oversight for such companies and tighter capital and liquidity requirements. Volcker said the Fed and the White House “were right in providing massive support” to financial markets after the collapse of Lehman Brothers Holdings Inc. Sept. 15, 2008, and to bail out American International Group. “Faced with those emergencies, they did what they had to do at the time,” he said. Giving Succor While more might have been done ahead of time to prevent Lehman’s demise, “I think if it had been rescued somehow and kept alive, I still think you would have had an attack on the other institutions,” he said. The government’s actions give “succor to the next institution that gets in trouble and to their creditors in particular,” Volcker said. The interview will air in two parts, on Tuesday and Wednesday on PBS, and will be rebroadcast on Wednesday and Thursday on Bloomberg Television channels around the world as part of a new partnership between Rose and Bloomberg. To contact the reporter on this story: James Tyson in Washington at jtyson@bloomberg.net

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Fujii Denies Backing a Stronger Yen, Says Japan May Intervene in Markets

September 28, 2009

By Keiko Ujikane Sept. 29 (Bloomberg) — Japanese Finance Minister Hirohisa Fujii said the government may act to stabilize the foreign- exchange market should currency movements become irregular. “If the currency market moves abnormally, we may take necessary steps in the national interest,” Fujii said at a news conference in Tokyo today. He denied saying he tolerates a stronger yen. Fujii is seeking to clarify his stance on the Japanese currency after it surged to an eight-month high yesterday. Since taking the post two weeks ago, Fujii has he doesn’t support a “weak yen” and he opposes governments stepping into currency markets “in principle.” The yen has gained about 16 percent in the past year, making Japanese products shipped abroad more expensive and eroding the value of repatriated profits. The Democratic Party of Japan, which won power for the first time last month, has said a stronger currency may benefit households by making imported goods cheaper. Fujii, 77, said today that recent currency moves have been too sudden and intervention remains possible, Reuters reported, citing Japan’s Jiji news service. At the same time, he said at the briefing that history shows yen-devaluation policies hurt the global economy. World leaders agreed in London this year that countries shouldn’t compete to devalue their currencies, Fujii said. “That decision is quite right.” ‘One-Sided’ Moves At a forum co-hosted by Bloomberg yesterday, he said he “never said I will leave the yen to strengthen” and he didn’t necessarily accept gains in the currency. He also said foreign- exchange moves “have been somewhat one-sided recently.” The foreign-exchange market shouldn’t react excessively, Fujii told reporters today. The yen fell to 89.98 per dollar at 11:55 a.m. in Tokyo after yesterday touching 88.24, the strongest level since Jan. 23. Eiji Hirano , a former Bank of Japan executive director, said Fujii intends to retain the option of selling the yen should it gain excessively. “I don’t think Minister Fujii meant he has ruled out intervention completely,” Hirano said in interview on Sept. 25. “If the yen advances drastically and people panic, intervention can’t be ruled out.” Japan hasn’t stepped into the foreign-exchange market since the first quarter of 2004, when the central bank at the behest of the Finance Ministry sold a record 14.8 trillion yen ($165 billion) to weaken the currency. Yen May Drop Hirano, who is now a director at Toyota Financial Services Corp., said current market moves don’t warrant action and the yen may depreciate over time because the economy is likely to weaken as the population shrinks and ages. Some investors say the DPJ’s support for households indicates it’s more willing to allow a stronger yen than the Liberal Democratic Party, which governed Japan for almost all of the past 54 years. “The DPJ’s foreign-policy bias toward Asia and away from the U.S. and economic policy focused more on households than on large corporations should translate into medium- to long-term tolerance for yen appreciation,” said Tomoya Masanao , an executive vice president at Pacific Investment Management Co. Fujii stressed in yesterday’s speech that households should underpin Japan’s economic growth rather than exporters. “The days of high growth driven by exports and big companies are over,” he said. “We want to focus on policies that will foster spending by consumers and domestic demand.” Meanwhile Toyoo Gyohten , will is scheduled to be appointed an adviser to Fujii today, expressed support for the U.S. dollar as the world’s reserve currency. “There’s no better alternative to the dollar,” Gyohten, 78, said in an interview yesterday. “Making it as stable as possible would be the best policy option at the moment.” To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Yen Falls Versus Euro, Dollar as Fujii Says Japan Is Prepared to Intervene

September 28, 2009

By Yoshiaki Nohara Sept. 29 (Bloomberg) — The yen weakened against the dollar as Japan’s Finance Minister said the government may take action in markets after the currency’s gain to an eight-month high imperiled earnings for export-dependent companies. Japan’s currency declined against all of its 16 major counterparts as Asian shares extended a global rally, boosting demand for higher-yielding currencies. The dollar traded near a two-week high against the euro after European Central Bank President Jean-Claude Trichet and an adviser to Japan’s finance minister reaffirmed support for the greenback. “Japan’s policy makers can’t just let the yen rise, which will hurt companies’ profits and reduce jobs,” said Koji Fukaya , a senior currency strategist in Tokyo at Deutsche Bank AG. “Economic fundamentals are improving, boosting demand for risk taking.” The yen declined to 89.98 per dollar as of 1:07 p.m. in Tokyo from 89.63 in New York yesterday, when it touched 88.24, the strongest level since Jan. 23. Japan’s currency dropped to 131.64 per euro from 131.06 in New York yesterday. The dollar was at $1.4625 per euro from $1.4622. Yesterday it touched $1.4565 per euro, the highest level since Sept. 15. “If the currency market moves abnormally, we may take necessary steps in the national interest,” Japanese Finance Minister Hirohisa Fujii said at a news conference in Tokyo today. He denied saying he tolerates a stronger yen. Since taking the post two weeks ago, Fujii has he doesn’t support a “weak yen” and he opposes governments stepping into currency markets “in principle.” Central banks intervene in foreign-exchange markets by selling and buying currencies. Exporters vs. Consumers The yen has gained about 16 percent in the past year, making Japanese products shipped abroad more expensive and eroding the value of repatriated profits. Fujii’s Democratic Party of Japan, which won power for the first time last month, has said a stronger currency may benefit households by making imported goods cheaper. Japanese companies said they can remain profitable as long as the yen trades at 97.33 per dollar or weaker, according to a Cabinet survey released on April 22. Exports account for 12 percent of Japan’s economy, compared with 6 percent in the U.S. “The yen’s recent gains, fueled by market interpretation of Fujii’s comments, are losing momentum,” said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc. a unit of Nippon Telegraph & Telephone Corp. Stocks Rally Japan’s currency weakened as Asian shares followed gains by U.S. equities. Japan’s Nikkei 225 Stock Average rose 0.7 percent, rebounding from yesterday’s 2.5 percent tumble, after the U.S.’s Standard & Poor’s 500 Index added 1.8 percent. MSCI’s Asian Pacific Index increased 0.9 percent. “Risk appetite has improved because of the big bounce in U.S. equities,” said Sean Callow , a senior currency strategist at Westpac Banking Corp. in Sydney. “Speculators who have been betting on the yen’s strength should probably start reconsidering whether they should still be long on the yen.” The European Commission in Brussels will report today that economic confidence in the euro zone gained to 82.7 this month from 80.6 in August, according to the median estimate of economists in a Bloomberg News survey. That would be the highest since September 2008. Trichet told lawmakers in Brussels it was too early for the ECB to unwind emergency stimulus policies and the “solidity of the dollar is very important” for the world economy. The euro reached a one-year high of $1.4844 on Sept. 23, making European exports more expensive. No Alternative Japan’s government should support the U.S. dollar’s status as the world’s reserve currency, said Toyoo Gyohten , tapped to become an adviser to Finance Minister Fujii. “There’s no better alternative to the dollar,” Gyohten , 78, said in an interview yesterday in Tokyo. “Making it as stable as possible would be the best policy option at the moment.” Gyohten’s comments indicate the DPJ may follow policies by the former government of supporting the dollar’s hegemony and buying U.S. government debt. Demographics may also act to push down the yen, as Japan’s aging society and weak growth prospects gradually erode the currency’s buying power, said former Bank of Japan Executive Director Eiji Hirano. Population Decline “It’s favorable to have a stable and strong currency in the long term, but it’s more likely that the yen will weaken,” Hirano said in an interview in Tokyo on Sept. 25. “If Japan fails to counter the problem of a shrinking and aging population, the economy may weaken and the currency may become cheaper.” Adding to signs Japan’s recovery is stalling, consumer prices fell the most in at least 38 years in August, according to data released by the statistics bureau in Tokyo today. Prices excluding fresh food slid 2.4 percent from a year earlier, topping July’s 2.2 percent decline. The drop matched economists’ estimates. The U.S. Federal Reserve may keep its benchmark interest rate at a record low for “too long,” increasing pressure on the dollar to weaken, said Steve Hanke , a professor at Johns Hopkins University. Fed Chairman Ben S. Bernanke and other policy makers may hold off increasing rates until after the mid-term Congressional elections in November 2010, as inflation stays within the central bank’s target range, Hanke said in an interview in Kuala Lumpur late yesterday. “It’s conceivable they’ll wait too long and they’ll probably keep as loose as they can before the elections,” Hanke said. “2011 would really be way too late.” To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net .

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BNP Paribas Seeks $6.3 Billion Capital Increase to Repay French Government

September 28, 2009

By David Whitehouse Sept. 29 (Bloomberg) — BNP Paribas SA said in an e-mailed statement it will seek 4.3 billion euros in a capital increase.

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Toxic Assets: Government’s New Programs Aim To Buy Buy Banks’ Bad Assets, Help Home Buyers

September 28, 2009

The Obama administration is close to rolling out two initiatives aimed at addressing lingering problems from the financial crisis: A long-delayed effort to cleanse financial firms of their toxic assets, and a $35 billion plan to prop up state programs that help lower-income borrowers get affordable mortgages.

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Movie Gallery Closing 200 Game Crazy Stores

September 28, 2009

The country’s second largest movie rental retailer, Movie Gallery, is closing 200 of its 680 Game Crazy stores. The stores, which sell new and used video games and accessories, are located adjacent to Hollywood Video locations across the country. The…

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Philippine Flood Deaths Reach 240; Government Criticized for Its Response

September 28, 2009

By Aaron Sheldrick and Francisco Alcuaz Jr. Sept. 29 (Bloomberg) — The death toll in the Philippines from Tropical Storm Ketsana almost doubled overnight to 240 people as the government said it will seek aid for hundreds of thousands of people in emergency shelters. The National Disaster Coordinating Council agency said at least 37 people are missing in a report issued at 6 a.m. today. At least 140 were confirmed dead, Defense Secretary Gilbert Teodoro told reporters in Manila yesterday. More than 374,800 people are in evacuation centers, the council said. The government declared “states of calamity” for the Manila metropolitan region and other parts of Luzon island as well as Mindoro island to the south. The storm and floods have “really overwhelmed our system,” Anthony Golez , the officer in charge of the Office of Civil Defense, said in a phone interview yesterday. Clean water, food, cooking gas and medicines are difficult to find, said Cora Guidote , a corporate executive helping in relief operations in Marikina, northern Manila. “The situation is pretty desperate,” she said. Business is “at a standstill because of mud and muck everywhere. People are tired of cleaning with very little sleep. Kids and old people are getting sick.” Ketsana, called Ondoy in the Philippines, was over the South China Sea heading toward Vietnam today, according to the U.S. Navy Joint Typhoon Warning center. The storm, now a typhoon with winds of 167 kilometers (101 miles) per hour, was 287 kilometers east of Hue at 1 a.m. Vietnamese time today. Ketsana is the deadliest storm to hit the Philippines since Typhoon Fengshen slammed into the eastern island of Samar in June last year, leaving 730 people dead and 637 missing. Ketsana dropped more than a month’s rain on northern Manila, the weather bureau said. About 411 millimeters (16 inches) fell there, exceeding the September monthly average of 391 millimeters and the bureau’s record for one day of 331 millimeters in 1967. To contact the reporters on this story: Aaron Sheldrick in Tokyo at asheldrick@bloomberg.net ; Francisco Alcuaz Jr . in Manila at falcuaz@bloomberg.net .

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Treasuries Decline, End Five-Day Gain, Before Confidence, Factory Reports

September 28, 2009

By Theresa Barraclough Sept. 29 (Bloomberg) — Treasuries fell, ending a five-day gain, on speculation yields near the lowest level in two weeks deterred investors before reports that economists said will show consumer confidence improved and manufacturing expanded. Ten- and 30-year debt led the declines as Asian stocks followed gains in U.S. equities, damping demand for the relative safety of government debt. U.S. employers cut fewer jobs this month and household purchases jumped in August, other reports will show this week according to Bloomberg News surveys. “This yield level is too low to buy,” said Yasutoshi Nagai , chief economist in Tokyo at Daiwa Securities SMBC Co., a unit of Japan’s second-largest brokerage. “Some market participants believe in economic recovery. Confidence and manufacturing figures will be negative for Treasuries.” The yield on the 10-year note rose two basis points to 3.30 percent as of 11:16 a.m. in Tokyo, according to BGCantor Market Data. Yields earlier dropped to 3.28 percent, the lowest level since Sept. 11. The 3.625 percent security due August 2019 fell 6/32, or $1.88 per $1,000 face amount, to 102 22/32. The MSCI Asia Pacific index of shares gained 0.9 percent after the Standard & Poor’s 500 Index rose 1.8 percent yesterday. Economists surveyed by Bloomberg say the world’s largest economy grew 2.9 percent this quarter, the largest expansion in two years, as the nation recovered from its deepest recession since World War II. Confidence, Manufacturing Consumer confidence rose to 57 this month, the highest in a year, from 54.1 in August, according to a Bloomberg survey before today’s Conference Board report. The Institute for Supply Management will say Oct. 1 that its manufacturing index climbed to 54 in September, the most since April 2006, a separate survey showed. Readings greater than 50 signal expansion. The decline in Treasuries was tempered on speculation Federal Reserve officials speaking today will reiterate that interest rates are set to remain near record lows amid an absence of inflation. The difference in yield between 10-year notes and similar- maturity Treasury Inflation Protected Securities, which reflects the outlook among traders for consumer prices, was at 1.74 percentage points, down from this year’s high as 2.13 percentage points in June. “It’s definitely the time to buy,” said Hiromasa Nakamura , who helps oversee the equivalent of $38.5 billion as a senior investor in Tokyo at Mizuho Asset Management Co., part of Japan’s second-largest bank. “Low inflation will continue for a while, the Fed will keep interest rates low and yields will decline.” Yields to Fall Ten-year yields may fall as low as 2.80 percent by year- end, Nakamura said. Should his predictions prove accurate, investors who buy today would make a 5 percent return, Bloomberg calculations show. Treasuries have handed investors a loss 2.7 percent this year, as measured by Merrill Lynch & Co.’s Treasury Master Index. Treasury holders have made a 0.6 percent return this month. The spread between two- and 10-year yields was at 2.32 percentage points today, after shrinking to 2.30 percentage points, the narrowest since May, amid speculation the Fed will refrain from raising rates as the recovery loses momentum. Interest rates will stay “exceptionally low” for an “extended period,” policy makers said in their most recent policy statement on Sept. 23. Dallas Fed President Richard Fisher will speak today in Dallas on the U.S. economy, and Philadelphia Fed President Charles Plosser will talk later today at an economic summit in Easton, Pennsylvania. The central bank plans to buy notes maturing from May 2012 to November 2013 today as part of its effort to cap consumer borrowing costs. The Fed is purchasing as much as $300 billion of Treasuries in a program that started in March and is scheduled to end next month. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net .

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Pimco Says Risks to Japan’s Growth Make It Favor Intermediate-Term Bonds

September 28, 2009

By Wes Goodman Sept. 29 (Bloomberg) — Pacific Investment Management Co., which runs the world’s biggest bond fund, said it is favoring mid-term government debt in Japan and the new government there may allow the yen to appreciate. The policies of the Democratic Party of Japan will probably boost economic growth in 2010 and 2011 before weighing on the expansion from 2012 through 2014, Tomoya Masanao , an executive vice president in Tokyo, wrote in a report on Pimco’s Web site. The Bank of Japan, which cut its target for overnight lending to 0.1 percent in December, will probably keep interest rates low for a “considerable period” to foster growth, the report said. “The BOJ’s policy of low rates for an extended period of time coupled with the potential downside risks in the economy suggest the intermediate part of the Japanese government bond curve will continue to be a prudent” investment, Masanao wrote. Japanese government bonds headed for their first two-month gain this year, returning 0.9 percent since the end of July, according to an index compiled by Merrill Lynch & Co. Investors sought the relative safety of government debt as consumer prices fell at a record pace, increasing the risk that deflation will slow Japan’s recovery from its deepest postwar recession. The DPJ-led government, which came to power this month, may allow the yen to strengthen, Masanao wrote in the report. “The DPJ’s foreign policy bias toward Asia and away from the U.S. and economic policy focused more on households than on large corporations should translate into medium- to long-term tolerance for yen appreciation,” the report said. That stance “seems likely to parallel other Asian countries’ increasing tolerance for their own currency appreciation.” Asian Currencies Pimco is favoring a basket of Asian currencies excluding Japan that are “cheaper than the yen,” it said. Japanese Finance Minister Hirohisa Fujii said the government may take steps if currencies move abnormally, speaking to reporters today in Tokyo. The yen has climbed almost 16 percent against the dollar in the past year, the most among the 16 most-traded currencies, according to data compiled by Bloomberg. Japan’s currency is up 4 percent over the past month versus the greenback. The new Japanese government has an “unfriendly” policy toward large companies, and Pimco is “cautious” on the nation’s corporate bonds, according to the report. DPJ Policies Japan’s longer-maturity debt “looks vulnerable” because of the government’s policies, and investors will require a “higher fiscal risk premium” Masanao wrote. The DPJ is planning subsidies for households, farmers and child care, the report said. Prices in the Japanese economy, excluding fresh food costs, slid 2.4 percent in August from a year earlier, topping the previous month’s 2.2 percent decline, the statistics bureau said today in Tokyo. Deflation, a general drop in prices, often occurs as part of an economic slowdown. Pimco, based in Newport Beach, California, is a unit of Munich-based insurer Allianz SE. It runs the $177.5 billion Total Return Fund, managed by Bill Gross . To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net .

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Cnooc Parent Seeks Stake in 6 Billion Barrels of Nigeria Oil, FT Reports

September 28, 2009

By John Duce Sept. 29 (Bloomberg) — China National Offshore Oil Corp., the country’s biggest offshore crude producer, is in talks to acquire stakes in about 6 billion barrels of oil reserves in Nigeria, the Financial Times reported. The bid is for the equivalent of one in six barrels of the proven reserves in sub-Saharan Africa’s largest oil producer, with 16 licenses up for renewal, the newspaper said, citing a letter from the office of Nigerian President Umaru Yar’Adua . Li Shiqiang , a China National spokesman, couldn’t be reached by phone at his office. Xiao Zongwei, a spokesman for unit Cnooc Ltd., said he couldn’t comment as he’s unaware of the situation. Chinese energy companies have spent at least $13 billion on overseas assets since December as they take advantage of lower commodity prices caused by the global economic slowdown. Cnooc said last month it will step up exploration and acquisitions to boost reserves and meet China’s oil demand. “This is part of the long-term trend among Chinese oil companies to secure resources overseas,” said Michael Yuk , an analyst at Sun Hung Kai Financial in Hong Kong. “I can see increasing bids from Chinese companies for oil assets overseas.” The value of China National’s offer for the Nigerian oil assets isn’t given in the letter from the Nigerian President, Financial Times said. The offer could be as high as $50 billion, the newspaper said, citing unnamed oil industry executives. Nigeria is in talks with various other “stakeholders” in the oil industry and no decision had been made on the licenses, the newspaper quoted a presidential spokesman as saying. Building Reserves About 83 percent of Cnooc’s reserves are off China’s coast, the company’s annual report shows. The company has interests in oil and gas fields in Africa, Australia and Indonesia. Cnooc and China Petroleum & Chemical Corp., the nation’s largest oil company, said in July they agreed to acquire a 20 percent stake in an offshore block in Angola for $1.3 billion from Marathon Oil Corp., the fourth-largest U.S. oil company. China’s oil consumption doubled in the last decade, rising to 8 million barrels a day last year from 4.2 million barrels in 1998, according to BP Plc’s Statistical Review. The world’s third-largest economy imported 3.6 million barrels of oil a day in 2008, meeting about 45 percent of its needs. To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

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Fujii Says Japanese Government May Act Should Currencies Move `Abnormally’

September 28, 2009

By Keiko Ujikane Sept. 29 (Bloomberg) — Japanese Finance Minister Hirohisa Fujii said the government may act to stabilize the foreign- exchange market should currency movements become irregular. “If the currency market moves abnormally, we may take necessary steps in the national interest,” Fujii said at a news conference in Tokyo today. He denied saying he tolerates a stronger yen. Fujii is seeking to clarify his stance on the Japanese currency after it surged to an eight-month high yesterday. Since taking the post two weeks ago, Fujii has he doesn’t support a “weak yen” and he opposes governments stepping into currency markets “in principle.” The yen has gained about 16 percent in the past year, making Japanese products shipped abroad more expensive and eroding the value of repatriated profits. The Democratic Party of Japan, which won power for the first time last month, has said a stronger currency may benefit households by making imported goods cheaper. Fujii, 77, said today that recent currency moves have been too sudden and intervention remains possible, Reuters reported, citing Japan’s Jiji news service. At the same time, he said at the briefing that history shows yen-devaluation policies hurt the global economy. World leaders agreed in London this year that countries shouldn’t compete to devalue their currencies, Fujii said. “That decision is quite right.” ‘One-Sided’ Moves At a forum co-hosted by Bloomberg yesterday, he said he “never said I will leave the yen to strengthen” and he didn’t necessarily accept gains in the currency. He also said foreign- exchange moves “have been somewhat one-sided recently.” The foreign-exchange market shouldn’t react excessively, Fujii told reporters today. The yen fell to 89.98 per dollar at 11:55 a.m. in Tokyo after yesterday touching 88.24, the strongest level since Jan. 23. Eiji Hirano , a former Bank of Japan executive director, said Fujii intends to retain the option of selling the yen should it gain excessively. “I don’t think Minister Fujii meant he has ruled out intervention completely,” Hirano said in interview on Sept. 25. “If the yen advances drastically and people panic, intervention can’t be ruled out.” Japan hasn’t stepped into the foreign-exchange market since the first quarter of 2004, when the central bank at the behest of the Finance Ministry sold a record 14.8 trillion yen ($165 billion) to weaken the currency. Yen May Drop Hirano, who is now a director at Toyota Financial Services Corp., said current market moves don’t warrant action and the yen may depreciate over time because the economy is likely to weaken as the population shrinks and ages. Some investors say the DPJ’s support for households indicates it’s more willing to allow a stronger yen than the Liberal Democratic Party, which governed Japan for almost all of the past 54 years. “The DPJ’s foreign-policy bias toward Asia and away from the U.S. and economic policy focused more on households than on large corporations should translate into medium- to long-term tolerance for yen appreciation,” said Tomoya Masanao , an executive vice president at Pacific Investment Management Co. Fujii stressed in yesterday’s speech that households should underpin Japan’s economic growth rather than exporters. “The days of high growth driven by exports and big companies are over,” he said. “We want to focus on policies that will foster spending by consumers and domestic demand.” Meanwhile Toyoo Gyohten , will is scheduled to be appointed an adviser to Fujii today, expressed support for the U.S. dollar as the world’s reserve currency. “There’s no better alternative to the dollar,” Gyohten, 78, said in an interview yesterday. “Making it as stable as possible would be the best policy option at the moment.” To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Yen Falls Versus Euro on Economy Optimism, Speculation Japan to Intervene

September 28, 2009

By Yoshiaki Nohara Sept. 29 (Bloomberg) — The yen fell against the euro for the first time in six days as Asian stocks rebounded and before a report forecast to show European confidence in the economy improved, damping demand for Japan’s currency as a refuge. Japan’s currency declined against the dollar as Japanese Trade Minister Masayuki Naoshima asked for a probe into how a stronger yen will hurt exporters, stoking speculation Japan may intervene in currency markets. The dollar traded near a two-week high against the euro after European Central Bank President Jean-Claude Trichet said it’s “extremely important” to have a strong greenback. “Economic fundamentals are improving, boosting demand for risk taking,” said Koji Fukaya , a senior currency strategist in Tokyo at Deutsche Bank AG. “Japan’s policy makers can’t just let the yen rise, which will hurt companies’ profits and reduce jobs.” The yen dropped to 131.45 per euro as of 9:52 a.m. in Tokyo from 131.06 in New York yesterday. The yen declined to 90.01 per dollar from 89.63 yesterday, when it touched 88.24, the strongest level since Jan. 23. The dollar was at $1.4606 per euro from $1.4622. Yesterday it touched $1.4565 per euro, the highest level since Sept. 15. The yen declined against all of its 16 major counterparts as Asian shares followed gains by U.S. equities. Japan’s Nikkei 225 Stock Average rose 0.8 percent, rebounding from yesterday’s 2.5 percent tumble, after the U.S.’s Standard & Poor’s 500 Index added 1.8 percent. MSCI’s Asian Pacific Index increased 0.3 percent. Risk Appetite “Risk appetite has improved because of the big bounce in U.S. equities,” said Sean Callow , a senior currency strategist at Westpac Banking Corp. in Sydney. “Speculators who have been betting on the yen’s strength should probably start reconsidering whether they should still be long on the yen.” The European Commission in Brussels will report today that economic confidence in the euro zone gained to 82.7 this month from 80.6 in August, according to the median estimate of economists in a Bloomberg News survey. That would be the highest since September 2008. Naoshima asked bureaucrats to investigate the yen’s effect on Japanese exporters, Yosuke Kondo, parliamentary secretary for the Trade Ministry, told reporters in Tokyo yesterday. Fujii Comments Japanese companies said they can remain profitable as long as the yen trades at 97.33 per dollar or weaker, according to a Cabinet survey released on April 22. Exports account for 12 percent of Japan’s economy, compared with 6 percent in the U.S. The yen pared gains versus the dollar yesterday after Finance Minister Hirohisa Fujii said at a forum co-hosted by Bloomberg that he “never said I will leave the yen to strengthen” and that he didn’t necessarily accept gains in the currency. Fujii earlier said he didn’t support a “weak yen,” fueling speculation the government won’t act to stem the currency’s 16 percent appreciation against the dollar in the past year. Central banks intervene in foreign-exchange markets by selling and buying currencies. Yen Momentum “The yen’s recent gains, fueled by market interpretation of Fujii’s comments, are losing momentum,” said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc. a unit of Nippon Telegraph & Telephone Corp. A strong currency reduces the value of overseas profits for Japanese companies. Large Japanese manufacturers forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1. The dollar rose against the euro after Trichet told lawmakers in Brussels the “solidity of the dollar is very important.” The euro reached a one-year high of $1.4844 on Sept. 23, making European exports more expensive. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net .

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GE Capital Sells Boston’s Independence Wharf for $106M

September 28, 2009

GE Capital Real Estate sold the Independence Wharf building in Boston’s financial district to Credit Suisse Asset Management last Friday for $106.25 million, or approximately $316 per square foot. Built in 1927 and renovated in 2001, the 336,725-square…

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Sydney Finkelstein, Ph.D.: Jeff Immelt: "Reflections on Leadership for Social Change"

September 28, 2009

Jeff Immelt has one of the toughest jobs in America. He’s CEO of a company — General Electric — with operations around the world, in numerous industries, and with big business challenges that are still on the table. He’s been named one of the “World’s Best CEOs” three times by Barron’s, and GE continues to win accolades in surveys in Fortune and the Financial Times as one of the most respect companies in the world. So when Jeff Immelt agreed to participate in new Dartmouth President Jim Kim’s Panel on Leadership for Social Change in Hanover, NH September 21, it was a big deal. And he didn’t disappoint. This clip from the panel discussion is a classic case in point. I asked Jeff about some of the pivotal events in his life that had a major impact on the direction of his career, and he jumped to his Dartmouth years. His conversations with former President John Kemeny, who he worked for as a grader of math assignments, would have made for fascinating listening to be sure. Kemeny was one of the greatest academic leaders and innovators of the 20th century, and I would have loved to be a fly on the wall as he quizzed Jeff about what was happening at the College. The lesson Jeff drew from those experiences should resonate with most anyone who stops to think about it: The smartest people ask more questions than they answer! I like that lesson because as a teacher, I am in the business of asking questions, both to students in the classroom and to executives I interact with as an advisor. But the lesson is more powerful than that because all of us, regardless of what we do for a living, can help ourselves by being open to new ideas and different points of view. It’s all about the learning. The more we learn, the better we become, and the more we can do, for others and ourselves. So Lesson #1 ends, appropriately, with a question: How can we learn something new, today?

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The Credit Rally of 2009

September 28, 2009

I commented on a previous post about how I think index funds could be driving the high yield / credit rally that we have seen in distressed debt and on-the run vanilla high yield in the past 6 months. …

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Dubai Banks’ Exposure to Real Estate Sector Rises to 23pc [Khaleej Times, Dubai, United Arab Emirates]

September 28, 2009

PM ET 09/28/2009 6:59 PM ET Sep. 29–DUBAI — The exposure of Dubai banks to the troubled real estate sector is 23 per cent, the second highest in the GCC after Bahrain, while banks in Abu Dhabi have the least at nine per cent, a report by Kuwait

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