October 2009

Video: McClellan Says Moderates Key to Public Option’s Future: Video

October 30, 2009

Oct. 30 (Bloomberg) — Mark McClellan, former administrator of the Centers for Medicare and Medicaid and now a senior fellow at the Brookings Institution, talks with Bloomberg’s Lizzie O’Leary about the outlook for the so-called public option portion of the health-care overhaul legislation. McClellan also discusses the differences between Senate and House versions of the bill and the implications of an employer mandate for health-care coverage. (Source: Bloomberg)

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Video: Blodget Sees Little Growth Ahead for Panasonic, Sony: Video

October 30, 2009

Oct. 30 (Bloomberg) — Henry Blodget, chief executive officer of The Business Insider, talks with Bloomberg’s Erik Schatzker about Sony Corp. and Panasonic Corp. The world’s two largest makers of consumer electronics reported half-year results today and narrowed their forecasts for annual losses after cutting jobs and closing factories. Blodget also discusses the National Basketball Association’s move to offer games on mobile phones and the implications for the cable and broadcast television industries. (Source: Bloomberg)

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Video: Feldman Sees `Very Promotional’ Holiday Shopping Season: Video

October 30, 2009

Oct. 30 (Bloomberg) — Joseph Feldman, an analyst at Telsey Advisory Group, talks with Bloomberg’s Francine Lacqua about the outlook for the holiday shopping season. Feldman, speaking from New York, also discusses retailers that stand to benefit this holiday. (Source: Bloomberg)

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Video: Bernstein Discusses Jobs Created or Saved by Stimulus: Video

October 30, 2009

Oct. 30 (Bloomberg) — White House economic adviser Jared Bernstein talks with Bloomberg’s Peter Cook about the impact of the stimulus program on the jobs market. Jared says stimulus has created or saved 1 million jobs in the U.S. so far. (This is an excerpt of the full interview. Source: Bloomberg)

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Ironwood Gold Corp. Announces Strategic Project Acquisition — Company Appoints Senior Leadership

October 30, 2009

SCOTTSDALE, AZ–(Marketwire – October 30, 2009) – Ironwood Gold Corp. ( OTCBB : IROG ) (the “Company” or “Ironwood”) wishes to announce it has signed an acquisition agreement with Ironwood Mining Corp., and related parties for 100% right, title and interest in and to certain mineral claims known as the Cobalt Canyon Gold Project in Nevada. The agreement includes consideration of both share and cash payments in exchange for said title.

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Don’t Switch to a Mac, and How to Do It Anyway: Tech by Rich Jaroslovsky

October 30, 2009

Commentary by Rich Jaroslovsky Oct. 30 (Bloomberg) — So, now that Windows 7 is finally out, it’s time to ask the question: Should you switch to a Mac? The answer is, probably not. Microsoft Corp. ’s new operating system provides no compelling reason for users to move to the Mac; as I and others have written, it’s a vast improvement over its ill-fated predecessor, Windows Vista. And changing computers — let alone software platforms — is always a hassle. Still, some of you are probably contemplating the move anyway. Brian Marshall , an analyst at Broadpoint AmTech Inc., has concluded that Apple Inc. ’s Mac sales tend to increase after Microsoft introduces a new OS, going back to Windows 98. And as good as Windows 7 seems to be, the Mac continues to beat it in ease of use, security and that ineffable quality we’ll call, for lack of a better term, elegance. Apple, of course, does its best to encourage such thinking in its long- running “I’m a Mac” ad campaign . So if you are going to ignore my sound advice and make the leap anyway, here is some good news: There are a lot of tools and options available to ease the way. Look, it may still be a hassle, but it can be done. The first decision to make is whether you just need to migrate your documents, photos and other files, or will actually have to run Windows programs on your Mac. The Mac versions of popular Windows programs — notably Microsoft Office — generally open files created by their PC counterparts with a minimum of fuss. Moving E-Mail One exception to that rule is if you have a lot of e-mail messages you need to take with you. There’s no simple way to transfer messages from Microsoft Outlook to Apple’s Mail program. While it’s somewhat easier to move to Outlook’s equivalent in Office for the Mac, called Entourage, even that isn’t directly compatible. And Microsoft has already disclosed plans to replace Entourage with a Mac version of Outlook in the version of Office expected next year. If you are buying your computer from one of Apple’s retail stores, there’s an easy answer to moving your files: Bring in your Windows computer, and an employee will do it for you. If you don’t have access to Apple’s experts, the process will be a bit more involved. External Drive If you have an external hard drive, you can copy your Windows files to it, then connect it to the Mac and drag them to their new home. (This, by the way, isn’t very far removed from the method Microsoft recommends for users upgrading from Windows XP to Windows 7.) You can also move files over a network, or via a direct cable connection. A program called Move2Mac ($39.95, from Detto Technologies) can help with transferring your Web bookmarks, calendar and address books, as well as converting e- mail. You have a few options if you need to continue running Windows programs, as opposed to just moving your files. Current Macs use Intel Corp. chips, which also power many PCs, and every Mac comes with a utility called Boot Camp that allows you to install a copy of Windows on a separate part of the hard drive. When starting your Mac, you can decide whether to run Windows or the Mac operating system, the current version of which is called OS X Snow Leopard. (By the way, that’s “X” in the Roman numeral sense, though even some Mac-heads refer to it as if it were the 24th letter of the alphabet.) Back and Forth Boot Camp’s downside is that you can’t share data or move back and forth between the Mac and Windows environments. For that, you need either VMWare Fusion ($79.99, from VMWare Inc. ) or Parallels Desktop ($79.99, from Parallels Inc. ). These programs each create a virtual PC in a window on your Mac. You can either install a new copy of Windows, or use them to clone an existing Windows computer onto your Mac — copying the operating system and programs as well as files. And both offer modes that let you hide Windows and run individual programs from your Mac desktop. If you don’t actually need a full Windows computer, just the ability to run some programs, and are feeling adventurous, you could instead try CrossOver ($39.95 from CodeWeavers Inc.). Based on an open-source technology called Wine , CrossOver runs Windows programs in the Mac environment without needing Windows itself. Be warned: Not all programs have been tested to see if they’ll run under CrossOver, and the company leaves a lot up to its user community to monitor and disseminate compatibility information. That may not appeal to a normal computer user, who cares less about the technical underpinnings and is mostly concerned with simply making sure things work with a minimum of aggravation. Then again, if you were that concerned about avoiding all aggravation, you might not be switching in the first place. Just don’t say I didn’t warn you. ( Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Rich Jaroslovsky in New York at rjaroslovsky@bloomberg.net .

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AEP Tests Clean Coal’s Future at West Virginia Plant That Buries Carbon

October 30, 2009

By Tina Seeley Oct. 30 (Bloomberg) — An American Electric Power Co. plant in New Haven, West Virginia, may help determine whether the nation’s 1,500 coal-burning power generators become relics of a dirtier age or can flourish in a low-carbon world. American Electric’s 29-year-old Mountaineer facility this month became the first coal-fired power plant in the U.S. to capture a portion of its carbon dioxide emissions and inject them underground. The company will host a ribbon-cutting ceremony today to mark the milestone. “This is the ultimate step to make certain that coal stays in the equation in the U.S., because it absolutely has to,” Michael Morris , chief executive officer of American Electric, said in an Oct. 28 telephone interview. The project, using experimental technology from France’s Alstom SA , may show emissions from existing coal-fired power plants can be reduced enough to meet limits set in legislation passed by the U.S. House and being considered by the Senate. The U.S., with the world’s largest coal reserves, proposes spending billions of taxpayer dollars on research so the fuel can be used for power under the new restrictions. Coal supplies 50 percent of U.S. electricity and a third of energy-related carbon-dioxide emissions, which scientists blame for global warming. “If we’re going to keep the lights on, and therefore the economy going forward, we’re going to have to do the retrofits” to reduce carbon dioxide from coal-fired plants, Morris said. “You will not be able to retire the existing fleet and replace it with a new fleet in any kind of a timeline that would sustain the electric needs of this country.” Largest U.S. Producer Columbus, Ohio-based American Electric is the largest U.S. producer of coal-fired power, depending on the fuel for 73 percent of its generation capacity. The company rose $1.12, or 3.8 percent, to $30.78 yesterday in New York Stock Exchange composite trading and has fallen 7.5 percent this year. President Barack Obama has backed cleaner coal as part of U.S. climate-change policy. The government has set aside $3.4 billion for carbon capture and storage from its $787 billion stimulus measure. Mountaineer’s smokestacks are visible for miles before a visitor gets to the plant located along the Ohio River among fields of corn stalks and cows. The plant towers over the town of 1,559 people, which has no stoplights and a store advertising that it’s “not processing deer” at the moment. American Electric’s project uses chilled ammonia to snare CO2 before it escapes the plant’s flue, absorbing it to form ammonium bicarbonate, then stripping out the CO2 and returning the ammonia for reuse. The carbon dioxide is pumped into deep saline aquifers at the site. Higher Cost “When it comes to reducing emissions of greenhouse gases, an end-of-stack technology solution for coal-fired power plants could prove a game changer,” said Christine Tezak , senior energy analyst for Robert W. Baird & Co. Inc., a Milwaukee-based asset management fund. Tests of the technology show it raises the cost of power by about 50 percent, according to Philippe Joubert , president of Alstom Power. That premium still leaves coal cheaper than most other sources of electricity, Morris said. An existing coal plant with CO2 capture could make power for about 6 cents a kilowatt-hour compared with 18 cents for wind generation and 14 cents for power from a new nuclear plant, he said. The technology is still too expensive to be used on most of the nation’s existing coal-fired power plants, said Emily Rochon, climate and energy campaigner for Greenpeace, a Washington-based environmental group. The U.S. should “stop trying to hang on to coal at all costs” and look to renewable sources to help phase out coal power by 2050, Rochon said. Gasification Method The carbon-capture method being used at Mountaineer is still “a long way” from being workable on a commercial scale, she said. A rival method that requires turning coal into a gas is more expensive and can’t be added to existing plants, Joubert said in an Oct. 13 interview. Gasification is the technology that would be used in FutureGen, a $1.8 billion plant proposed for Illinois. The Obama administration revived the project after George W. Bush’s team questioned its cost. American Electric and Southern Co. said in June they were pulling out of FutureGen to focus on their own carbon-capture efforts. Retrofitting existing coal-fired power plants to make them suitable to run in a carbon-constrained world is a “huge problem that we’ll have to solve,” and gasification “cannot solve it,” Joubert said. Projects on Hold American Electric has put its two coal-gasification projects on hold, due to failure to obtain all state regulatory approvals and lower power-demand forecasts because of the recession. Morris said he would opt for coal gasification if he were building a new plant. The company said in August it was seeking funding from the Energy Department for half of the estimated $768 million it would cost to capture CO2 from 235 megawatts of Mountaineer’s 1,300-megawatt capacity. The demonstration project, which is costing American Electric $70 million, captures more than 90 percent of the CO2 from about 20 megawatts. Germany’s RWE AG and the Electric Power Research Institute, an industry-funded organization based in Palo Alto, California, are partners in the project. To contact the reporter on this story: Tina Seeley in New Haven, West Virginia, at tseeley@bloomberg.net .

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Caps on Flexible Savings Accounts May Force Patients to Expedite Treatment

October 30, 2009

By Ryan J. Donmoyer and Margaret Collins Oct. 30 (Bloomberg) — About 35 million Americans may have as little as a month to take full advantage of a tax subsidy for out-of-pocket medical expenses under a health-reform bill Congress is debating. The legislation unveiled in the House yesterday would set for the first time a $2,500 cap on contributions to Flexible Spending Accounts, a benefit offered by employers that allows workers to pay some medical expenses with pretax dollars. Employers currently set their own limits, generally $3,000 to $5,000. The proposal is similar to one adopted by the Senate Finance Committee. An average worker could lose about $625 in tax savings by failing to take the full amount before the limits are set. The “open enrollment” benefit-selection period now under way at 95 percent of employers may be the last opportunity to claim a higher amount. “If you’re a parent and your kid needs braces in the next year or two, you may want to expedite that,” said Joe Jackson, chief executive officer of WageWorks Inc. , a San Mateo, California, company that administers 1.5 million flexible spending accounts for some 2,800 employers. The House limits wouldn’t apply until 2013, while the Senate limits would take effect in 2011. The current open- enrollment period, which typically lasts a week or two, is generally the only time workers can decide how much to contribute to their accounts in 2010. About 35 million Americans have flexible spending accounts and they have an average salary of $55,000, said Jackson, who is also chairman of Save Flexible Spending Plans , a coalition of business groups, medical providers and plan administrators opposing the caps. Growing Popularity Employers increasingly are offering such accounts, said Beth Umland, director of research for health and benefits at Mercer, a New York-based human resources consulting firm. About 83 percent of employers with 500 or more employees had health spending accounts in their benefit plans in 2008, up from 52 percent in 1995. The plans let workers deposit money before taxes into accounts that can be used to pay health-related expenses. Typically, all the money must be spent within a year to 15 months or it’s forfeited. Under current law, depositing $5,000 to pay for a medical procedure such as laser eye surgery would save a worker in the 25 percent income-tax bracket $1,250 in taxes. An employee in the 15 percent tax bracket would save $750. Those tax savings would be cut in half under the proposal to cap the maximum annual contribution at $2,500. Sam Gibbs , senior vice president for eHealthInsurance , an online seller of insurance based in Mountain View, California, said many Americans are aware of the possible changes. Closer Look “For the first time people are taking their benefits package and really looking at them,” Gibbs said. “Now is the time to put as much money in there as possible.” The House legislation would generate an estimated $13.3 billion in tax revenue to help fund broader health reforms, according to the nonpartisan congressional Joint Committee on Taxation. The House bill also would place limits on tax-advantaged Health Savings Accounts, which share some similarities with Flexible Spending Accounts, except money in HSAs doesn’t have to be spent by a specific date. It also would prohibit purchases of over-the-counter drugs using Flexible Spending Account contributions. To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net ; Margaret Collins in New York at mcollins45@bloomberg.net .

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House Faces Fight With Industry, Abortion Foes Over U.S. Health-Care Plan

October 30, 2009

By James Rowley and Kristin Jensen Oct. 30 (Bloomberg) — House leaders are facing criticism from business groups and wading through contentious issues such as abortion and undocumented immigrants as they try to secure votes for legislation overhauling U.S. health care. Speaker Nancy Pelosi yesterday unveiled a plan that would create a government-run insurance program, require employers to cover workers and impose a new tax on the wealthiest Americans. Lawmakers may vote as early as next week on the legislation, which would cost $894 billion over 10 years and cover 36 million uninsured Americans. The bill has no Republican support, and some Democrats object to both the cost and the idea that federal dollars might help undocumented immigrants buy insurance. The head of a group of 82 Democrats complained that the government insurance plan was too weak. And about 40 other House Democrats are concerned that government money might be used to pay for abortions. “Is it settled? No. Close? Yes,” said South Carolina Representative James Clyburn , who counts votes for Democrats. The legislation represents the most sweeping health-care changes since the 1965 creation of the Medicare program for the elderly. It would put new restrictions on insurers , encourage greater use of preventive medicine and require Americans to buy coverage, with subsidies if needed. After passing a bill in the House, leaders would work with senators on a compromise before a new round of votes, a process that might take months. Reid’s Struggles First, Senate Majority Leader Harry Reid has to find consensus on issues including the government program, or public option, which would compete with insurers such as Hartford, Connecticut-based Aetna Inc. Reid, a Nevada Democrat, is pushing a government plan that would let individual states opt out. Even after House lawmakers watered down their version of the public option, they face opposition from groups who have backed overhaul efforts. The Business Roundtable , which says its member companies provide health benefits for more than 35 million people, said it can’t support the House bill. The public option will shift costs and “stifle innovation,” according to a statement from John Castellani , president of the group, whose members range from New-York based Pfizer Inc. to JPMorgan Chase & Co. Pelosi’s Compromise Lacking votes for her proposal to tie the public option’s reimbursements to doctors to the lower rates paid by Medicare , Pelosi settled on requiring the plan to negotiate rates with providers, as private insurers do. The measure still drew fire from insurers, who would also lose an antitrust exemption. “A new government-run plan would bankrupt hospitals, dismantle employer coverage” and shift more costs to consumers, said Karen Ignagni , president of the Washington trade group America’s Health Insurance Plans , in a statement. Not all lawmakers are happy either. Leaders of the 82- member Congressional Progressive Caucus have pushed for the strongest form of the public option. A group co-chairman, Arizona Representative Raul Grijalva , expressed “deep disappointment” in a statement. “I will push to allow for a vote on a robust public option amendment,” Grijalva said. The compromise did pull in more Democrats, including self- described fiscal conservatives known as the Blue Dogs . North Dakota Representative Earl Pomeroy estimated that about half the 52 Blue Dogs would now support the bill. Pomeroy won applause yesterday when he said he had decided to vote for it. Rural Lawmakers “Moving toward negotiated rates brings along many of us from rural areas where Medicare underpays,” Pomeroy said. The House measure is the product of work by three committees and White House officials. President Barack Obama has made a health-care overhaul his top domestic priority and asked Congress to finish work this year. Hospitals, doctors, drugmakers and medical device manufacturers would also be affected. The bill calls for fees on device makers, recommendations from the independent Institute of Medicine on how to fix the Medicare payment system and a new procedure for Medicare to negotiate drug prices, potentially driving down prices. The bill would extend coverage to 96 percent of Americans, according to the Congressional Budget Office. Because government money would be used to help buy insurance, critics said some might go toward abortions. House members are still discussing whether to allow undocumented aliens to use their own money to purchase private insurance sold on the so-called exchange, a regulated market to be set up in 2013. Abortion Issue Michigan Democrat Bart Stupak contends that 40 members would unite to block House consideration of the legislation unless the abortion issue is resolved or they are given a chance to introduce an amendment during floor debate. Another controversy may be waiting because of provisions that call for end-of-life counseling. During the summer, critics charged that Democrats planned to set up “death panels” that would decide who got care. The new bill says nothing in it would “presume the withdrawal of treatment.” House Democrats included a surtax on couples who make more than $1 million a year. And the bill contains about a dozen other smaller tax increases on businesses and individuals. One Blue Dog, North Carolina Representative Heath Shuler , said House leaders made “significant improvements,” though he’s still undecided. “We need to get health care done,” Shuler said. To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net ; Kristin Jensen in Washington at kjensen@bloomberg.net

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`Tribal Chiefs’ Pressure Reid to Spend More on Health-Care Overhaul Plan

October 30, 2009

By Ryan J. Donmoyer Oct. 30 (Bloomberg) — Senate Majority Leader Harry Reid faces a dilemma as he hunts for votes for a plan to overhaul the health system: how to find what economists say may be as much as $100 billion to meet the demands of other lawmakers. The Nevada Democrat is under growing pressure to exempt more workers from a proposed tax on high-end insurance plans; cut in half a proposed $40 billion fee on medical-device makers; increase subsidies to help lower-income Americans get coverage, and make it easier for the elderly to buy medication. These and other possible changes may force Reid to consider new ways to raise revenue to meet President Barack Obama’s pledge that the bill won’t add to the federal deficit, said Uwe Reinhardt , a Princeton University health economist. “The health-reform bill is no different than tribal warfare: To get this bill through, you’ve got to pay off the tribal chiefs,” Reinhardt said. “One would expect him to be somewhat short on revenue and have to do some real artistry.” Reinhardt and other economists said those revisions could add as much as $100 billion to the bill, although potential cost-cutting measures such as setting up a new government-run insurance program could help offset that, they say. Reid is melding a measure passed by the Senate health committee in July with an $829 billion proposal approved by the finance panel on Oct. 13. House leaders yesterday unveiled their own bill, which would cost $894 billion over 10 years to expand coverage to 96 percent of all Americans. Many Scenarios Democrats say Reid has sent a variety of bills to the Congressional Budget Office for cost estimates. He’s sharing few details about what his final bill will look like, other than that it will contain a government-run insurance plan. Reid spokesman Jim Manley dismissed as “speculation” questions that the majority leader’s final measure would be short of revenue. Still, Senate Budget Committee Chairman Kent Conrad of North Dakota said on Oct. 27 that Reid had “expressed an interest in replacement revenue.” When asked why Reid would be looking for new revenue, finance committee Chairman Max Baucus said, “It depends on what else is in the bill.” Reid can’t afford to ignore lawmakers’ demands because he would need all 60 votes controlled by the Democrats in the Senate to overcome Republican stalling tactics. Device Makers Among other Democrats, Minnesota Senators Amy Klobuchar and Al Franken want a $40 billion fee on makers of medical devices to be cut in half. Minnesota is home to Minneapolis-based Medtronic Inc. , the world’s largest maker of heart-rhythm devices, and St. Paul-based St. Jude Medical Inc. , also a maker of devices to treat irregular heartbeats. Florida Senator Ben Nelson wants Reid to close a $50 billion so-called doughnut hole in Medicare that forces seniors to pay out-of-pocket for some prescription drugs. Senators like Jay Rockefeller of West Virginia are pushing to exempt more households from a proposed excise tax on the most-expensive health insurance plans provided by employers. Paul Van de Water , a health economist at the Center on Budget and Policy Priorities, said that would reduce projected revenue by about $20 billion, depending on where a final threshold is set. New York Senator Charles Schumer yesterday said senators were also debating higher subsidies to help low-income Americans buy insurance and whether to mandate that employers provide coverage. ‘Serious Problems’ Douglas Holtz-Eakin , a former director of the Congressional Budget Office who was Republican presidential candidate John McCain’s top economic adviser in 2008, said a final CBO analysis will likely show a shortfall. “Reid has a serious problem in making this add up,” Holtz-Eakin said. “He’s got to be a substantial amount short.” Reinhardt and Holtz-Eakin said Reid may try budget maneuvers to make up any gap. One would be to include a long- term-care insurance proposal designed by the late Senator Edward Kennedy that would begin collecting premiums for five years before paying any claims. Reid can also tinker with the timing of when certain provisions take effect by collecting taxes and fees first and delaying subsidies, Holtz-Eakin said. Clint Stretch , a principal at the Deloitte Tax LLC consulting firm, said Reid has few good choices if he considers new tax increases. ‘Not Popular’ “Tax increases are not popular,” Stretch said. “If you’re talking $100 billion, you’ve got to find one thing or two very big things” to make up for it. Stretch said the few ideas that meet that criteria include the House’s proposal for an income surtax on couples earning more than $1 million a year and a version of an Obama budget proposal to limit itemized deductions for high-income individuals. Other proposals rejected earlier, including a tax on soda, may also be resurrected, he said. One thing Reid will likely want to avoid, he said, are new taxes on businesses, which would likely organize against the bill. “If they go after general business increases, it makes the bill more controversial.” To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

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Consumer Spending Fell in U.S. Last Month After Auto Rebate Program Ended

October 30, 2009

By Timothy R. Homan Oct. 30 (Bloomberg) — Spending by U.S. consumers fell in September for the first time in five months after the government’s auto-rebate program expired. The 0.5 percent decrease in purchases matched the median estimate of economists surveyed by Bloomberg News and followed a 1.4 percent jump in the prior month, Commerce Department figures showed today in Washington. Incomes were unchanged, while the savings rate climbed. Stagnant wages and concern over mounting unemployment are causing confidence to wane, raising the risk that consumers will retrench in coming months as government assistance programs such as the so-called cash-for-clunkers plan expire. The report also showed inflation was lower than the Federal Reserve’s long-term projection, indicating the policy makers can keep rate low. “September as a total was quite weak, but a lot of that can be traced to autos,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “Government assistance has probably taken consumers about as far as they can go.” The median forecast for spending reflected responses from 75 economists surveyed. Projections ranged from a decline of 0.9 percent to a gain of 0.5 percent. The government revised the August reading up from an originally reported increase of 1.3 percent. Wages and salaries dropped 0.2 percent after a 0.2 percent gain the prior month as job losses mounted. Fed Pledge Fed policy makers, who have said they’d keep the benchmark lending rate near zero “for an extended period,” are trying to secure an economic recovery alongside an eventual withdrawal of fiscal and monetary stimulus in time to avoid driving inflation and borrowing costs higher. Today’s report showed inflation held below the Fed’s long- term forecasts. The price gauge tied to spending patterns fell 0.5 percent from September 2008. The Fed’s preferred price measure, which excludes food and fuel, climbed 0.1 percent from the previous month and was up 1.3 percent from a year earlier, matching the 12-month gain in August that was the smallest since 2001. Adjusted for inflation, spending dropped 0.6 percent following a 1 percent increase in August. The decrease in spending pushed the savings rate up to 3.3 percent last month from 2.8 percent. Less Income Disposable income, or the money left over after taxes, was unchanged after rising 0.1 percent the previous month. Adjusted for inflation, disposable income dropped 0.1 percent. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, fell 7.2 percent last month after increasing 6.7 percent in the prior month. Autos in October probably sold at a 9.85 million pace, down from an average 11.5 million rate in the third quarter than reflected the boost from ‘cars-for-clunkers,’ according to the median estimate of analysts surveyed by Bloomberg News. Purchases averaged 13.15 million in 2008. Consumer purchases of non-durable goods increased 0.5 percent, and spending on services, which account for almost 60 percent of all outlays, rose 0.1 percent. Kellogg Co., the largest U.S. breakfast-cereal maker, yesterday reported third-quarter profit that exceeded analysts’ estimates as costs fell more than sales. “Consumers remain nervous and are more value conscious than they were a couple of years ago,” Chief Executive Officer David Mackay said in a telephone interview. “We have to be pragmatic about consumers and the issues and pressures they face, and try to help them in any way we can.” To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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New York Tobacco Bond Refinancing Might Produce $500 Million, Bankers Say

October 30, 2009

By Michael Quint Oct. 30 (Bloomberg) — Tobacco bonds that helped New York close a budget deficit in 2003 could be refinanced and provide $500 million to help eliminate this year’s $3.2 billion spending gap, according to a plan bankers presented to state officials. The proposal by Morgan Stanley and Bank of America Corp. ’s Merrill Lynch & Co. would have the state sell new bonds with the double-barreled backing of annual payments from cigarette makers, and state appropriations if needed, said Travis Proulx , a spokesman for Democratic Senate leader John Sampson of Brooklyn. The existing bonds have such a dual guarantee. “Refinancing of tobacco bonds could provide for immediate revenue to the state — upwards of $500 million,” Sampson said in a statement yesterday. “We must explore that option” to help avoid Governor David Paterson ’s proposed cuts in education and health care, he said. States and municipalities sold $37 billion in tobacco bonds to cash in on their shares of a 1998 settlement with cigarette makers. The bonds have been one of the strongest sectors of the municipal bond market this year. Investors’ total return from interest payments and price gains on tobacco bonds was 31.9 percent in the first nine months, according to a Merrill Lynch index. The new bonds would have a thinner cushion of cigarette company payments than the existing $3.59 billion of bonds, allowing additional debt to be issued with proceeds to help close the budget gap, Proulx said. Paterson called the idea “dead” at a public meeting in New York City yesterday. Jennifer Sala , a spokeswoman for Morgan Stanley, and Kerrie McHugh , a spokeswoman for Merrill Lynch, declined to comment. Paterson Critical At an Oct. 21 meeting with Sampson and other legislative leaders, Paterson said the savings might be only $25 million. The governor said that wouldn’t provide the immediate cash needed by mid-December, when the state faces payments of $5.1 billion to schools and local governments and expects to have only $2 billion in cash on hand. Questions to Paterson about the discrepancy between his description of savings and Sampson’s were referred to the Division of Budget. “We are not currently exploring the proposal as a viable option at this time given Governor Paterson’s stated position that we need to focus on recurring spending reductions,” said Matt Anderson , a spokesman for the Division of the Budget . The state’s 2003 tobacco bond sale helped lead to a reduction in its general obligation bond rating to AA-, which has since been raised to AA, Anderson said. ‘Appetite in the Market’ “Given the appetite in the market, we could go down in coverage a little bit and still attract investors at rates that would be lower than for existing bonds,” said Larry Soule, deputy secretary of the Senate Finance Committee and a former public finance banker and municipal bond analyst at Moody’s Investors Services. The state’s potential gain declines as interest rates rise, he said. Payments from tobacco companies would equal about 1.2 times the interest and principal payments on new bonds, compared with 1.5 times for those sold in 2003. The bonds would be backed by fewer of the cigarette company payments, meaning the state would face an increased risk that in future years it would have to provide money if tobacco payments aren’t enough to pay bondholders, Soule said. That risk isn’t “significant,” he said. Declining numbers of smokers, partly the result of higher cigarette taxes, have led tobacco companies to reduce their payments and to dispute the amounts they owe, according to the state’s July 29 updated annual information statement. Bankers say there is still enough projected revenue to support a new, larger bond sale, according to Soule. AA- Rated New York’s existing tobacco bonds are rated AA- by Standard & Poor’s, the fourth highest rating and one level lower than bonds backed by the state’s full faith and credit, according to the budget office. Spending cuts of $480 million for aid to schools and $287 for Medicaid are part of Paterson’s two-year, $5 billion plan . Since he became governor in 2008, Paterson has often criticized previous bond sales that are now part of the state’s $54 billion of debt, and said New York “can’t afford” to sell more bonds to pay for budget gaps. Other states and local governments have squeezed cash from old tobacco bonds to help balance their budgets. Wisconsin collected $309 million in March when it sold $1.54 billion of bonds backed by state appropriations to refinance debt issued by Badger Tobacco Asset Securitization Corp. New Jersey, Virginia, California, and Westchester County in New York are among other governments that have sold new tobacco-backed bonds to take advantage of lower interest rates and raise cash. To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net .

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Nissan Consults Lawyers, Scores `Minor Miracle’ With Unclaimed Leaf Name

October 30, 2009

By Kae Inoue, Makiko Kitamura and Yuki Hagiwara Oct. 30 (Bloomberg) — After Nissan Motor Co. tackled technical restrictions on its first electric car involving range, battery life and temperature fluctuations, it still had to come up with a name. Choosing ‘Leaf’ wasn’t easy. Before settling on names for new models the carmaker consults lawyers in as many as 200 countries or territories, including the Canary Islands, to make sure candidates aren’t trademarked or considered offensive in local languages. “It was a minor miracle that the name was cleared,” said Kozue Nakayama , Nissan’s head of brand management. “We go through a vetting process to avoid words that have negative connotations or links to sex and violence.” When carmakers come up with a possible hit name, they often trademark it regardless of whether an applicable model is in the works. Nissan has spent more than 500 billion yen ($5.5 billion) developing electric cars to compete with Toyota Motor Corp.’s Prius and Honda Motor Co. ’s Insight hybrids. The Yokohama-based automaker also had to consider the more than 1,000 team members who have been involved in the project and wanted a say, according to Nakayama. At Nissan’s annual shareholders meeting in June, Chief Executive Officer Carlos Ghosn was pressed to explain why no name had been announced yet. “When you name a child, isn’t it often the case that in addition to the parents, the grandparents also weigh in?” Ghosn said at the meeting, according to Nakayama. “Please understand that there are so many of us with strong feelings.” “Leaf” was chosen since a plant, which converts carbon dioxide into oxygen during photosynthesis, is the “ultimate energy source” and is easily understood across cultures, Nakayama said. Phaeton, Qashqai Some names can have unintended connotations. When Volkswagen AG called its first luxury car bearing the company’s brand “Phaeton” after the son of Helios, the Greek sun god, analysts pointed out that in mythology, the boy was killed for driving his father’s chariot too close to the earth. The model subsequently failed to meet sales forecasts. Nissan drew from its own “piggy bank” of names in rechristening its Qashqai sport-utility vehicle “Dualis” for the Japan market, when the model went on sale in May 2007, Nakayama said. Qashqai, which refers to a tribe of people in Iran, can be mistaken for the question “Is it cash?” in Japanese and is difficult to pronounce, she said. Nissan shares rose 4.8 percent to close at 672 yen in Tokyo. ‘Naked,’ ‘Bongo Friendee’ When Honda renamed the Fit compact for markets outside Japan in 2002, it decided on “Jazz,” which was originally trademarked in 1986 for possible use for a 50cc motorcycle, according to the company. “Japanese model names have often been amusing to non- Japanese,” said Ashvin Chotai , managing director of Intelligence Automotive Asia, citing names such as Daihatsu Motor Co. ’s “Naked” minicar, Mazda Motor Corp. ’s “Bongo Friendee” van and Isuzu Motors Ltd. ’s “Big Horn” sport- utility vehicle. Trademarks explain why many car names contain X’s, Z’s and acronyms, as most everyday words are already reserved, Nissan’s Nakayama said. The Leaf is powered by lithium-ion batteries and has a range of 100 miles on a full charge. It will go on sale in Japan, Europe and the U.S. next year, according to Nissan. The carmaker expects at least 20,000 U.S. orders for the model by the time deliveries begin by the end of 2010. Staking Its Future “Nissan is staking its future on the Leaf, and its name must match up with consumers’ needs and their subconscious,” said Tatsuya Mizuno , director of Mizuno Credit Advisory in Tokyo. In addition to Toyota and Honda’s hybrids, it will compete against General Motors Co. ’s Chevrolet Volt, which will debut by late 2010. Stricter emissions regulations are spurring introductions of electric cars. Starting with 2012 models, California state law requires 3 percent of vehicles sold over a three-year period to be so-called “zero-emission vehicles.” Sometimes, top executives get directly involved in the naming process. That was the case with Toyota’s new Lexus LFA , a $375,000 “supercar” unveiled at the Tokyo Motor Show last week. LFA stands for Lexus F-series Apex, with the F referring to the Fuji Speedway racetrack. That F was suggested by Toyota’s President Akio Toyoda , a racing fan, during his days as executive vice president, according to the company. ‘Good Omen’ Suzuki Motor Corp. ’s Chairman Osamu Suzuki played a role in naming the WagonR, the company’s first wagon-style vehicle, which was first sold in 1993 and ranked as Japan’s best-selling car last year. “R” is pronounced “AH-ru” in Japanese, which sounds like the word for “we have.” “Suzuki has sedans. We have sedans, but we now also have wagons, so I thought we could just call it WagonR,” Suzuki wrote in his 2009 autobiography. Hamamatsu, Japan-based Suzuki now plans to enter the mid- size sedan market in the U.S. with its “Kizashi” model. The name means “good omen,” which the company hopes the new challenge will be for Suzuki, spokesman Takuma Mizuyoshi said. “Names don’t make or break a car’s success,” analyst Mizuno said. “But they can certainly symbolize a company’s risk-taking attitude.” For Related News and Information: Auto news: NI AUT Top transport stories: TRNT Stories about Japanese automakers: TNI JAPAN AUT Most-read auto stories in the past week: MNI AUT 1W Automaker earnings stories: TNI ERN AUT

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Kravis Shakes Bondholders as LBO Optimism Drives up Demand for Poison Puts

October 30, 2009

By John Detrixhe and Bryan Keogh Oct. 30 (Bloomberg) — U.S. bond investors are demanding more protection from takeovers than ever amid concern that the biggest corporate bond market rally in more than a quarter century will spark a wave of credit-damaging leveraged buyouts . For the first time, more than half of the lowest-rated investment-grade industrial companies that sold bonds this year included a promise to pay investors a premium to face value in a takeover, according to data compiled by Bloomberg. A total of 55 borrowers from Woonsocket, Rhode Island-based drugstore chain CVS Caremark Corp. to Dow Chemical Co. sold $44.2 billion of debt last quarter with so-called poison puts, a record 30 percent of all investment-grade issuers. The steepest gain in the Standard & Poor’s 500 index since the 1930s, the lowest yields on corporate bonds since 2005 and a doubling in bank lending is raising concern among bondholders that the two-year drought in debt-laden mergers and acquisitions is coming to an end. KKR & Co. ’s Henry Kravis and Stephen Schwarzman of Blackstone Group Inc. both said this month they’re poised to start buying again. Investors are shifting out of “survival mode” and demanding better defenses against LBOs, said Tom Murphy , a money manager at RiverSource Investments LLC in Minneapolis, which oversees $145 billion in assets. “There are some credits I wouldn’t invest in without it.” Stocks and Bonds Poison puts allow investors to sell a bond back to the issuer at 101 cents on the dollar in the event of a corporate takeover, merger or restructuring that would result in control shifting hands. The provisions protect bondholders from deals that crush credit ratings and the prices of their securities, while allowing companies to pay lower yields on their debt. “The beginning signs of a measured economic recovery are noticeable and real,” Kravis said Oct. 20 at a conference in Quebec City, according to prepared remarks. Private-equity firms have been able to win financing commitments for transactions, especially those involving buying assets from large corporations, he said. “The future now looks substantially brighter for us in the private equity business,” Schwarzman, chief executive officer of Blackstone, told attendees at the Super Return Middle East conference in Dubai on Oct. 14. Peter McKillop, a spokesman for KKR, and Christine Anderson, a spokeswoman for Blackstone, both of New York, declined to comment. Damaging Buyouts The use of poison puts in investment-grade bonds accelerated at the end of 2006, during a two-year, $1.4 trillion takeover binge. About 8 percent of issuers included a form of the provision in the fourth quarter of that year, up from 4.5 percent in the prior three months and less than 2 percent in all of 2005, Bloomberg data show. About 50 percent of non-financial bonds sold this year with the three lowest levels of investment grade contained a poison put, up from 45 percent in all of 2008, Bloomberg data show. About 85 percent of bonds that included the provision were rated in that BBB category, as ranked by Standard & Poor’s, and 97 percent were from non-financial issuers. The percentage of corporate borrowers offering bonds with poison puts began to decline early last year after the U.S. economy entered the worst recession since the 1930s. It dropped to 10 percent in the fourth quarter as investors sought only the highest-rated debt. The covenants returned this year as companies agreed to pay higher yields to build their cash hoards and debt markets opened up to lower-rated issuers. Cost to Bondholders A lack of protection can cost bondholders. Buyers of $3.5 billion of TXU Corp. bonds sold in November 2004 have lost about $1 billion in value in the past two years, since the Dallas- based power producer was bought by KKR and TPG Inc. for $32 billion. The bonds, sold with the lowest S&P investment-grade rating of BBB-, were slashed to CCC, or eight steps lower, at the time of the October 2007 buyout . They’re now rated CC. TXU was renamed Energy Future Holdings Corp. Poison puts have “become the de facto standard for all but the highest-rated companies,” said Brad Fox , chairman of the National Association of Corporate Treasurers and treasurer of Pleasanton, California-based Safeway Inc. , the third-largest U.S. supermarket chain. Underwriters “basically say, if you want to get the deal done, it has to have the put,” he said. Investors may be willing to take as much as 50 basis points less in interest in exchange for LBO protection, RiverSource’s Murphy said in a telephone interview. That would save a company $5 million a year in interest on $1 billion of debt. Corning Corning Inc. , the world’s biggest maker of glass for flat- panel televisions, sold $350 million of 10- and 15-year bonds with a change-of-control covenant on May 15 in its first offering with the provision, Bloomberg data show. Underwriters told the Corning, New York-based company that adding the put might save about 25 basis points, or 0.25 percentage point, treasurer Mark Rogus said in a telephone interview. That’s about $880,000 a year in interest. “We wanted quality execution, done quickly, with tight spreads,” Rogus said. The poison put “allowed us to achieve a better offering,” he said. Corning is using a poison put as merger activity picks up in the technology industry. More than $17 billion in acquisitions were announced in the past six weeks, Bloomberg data show. Norwalk, Connecticut-based Xerox Corp. agreed to buy Affiliated Computer Services Inc. of Dallas for about $6 billion. Round Rock, Texas-based Dell Inc. snapped up Perot Systems Corp. of Plano, Texas, for $3.9 billion. Leveraged Buyout A leveraged buyout is a takeover in which the buyer borrows money by usually selling high-yield, high-risk loans and bonds, which are ranked below Baa3 by Moody’s Investors Service and BBB- by S&P. The debt, along with the target’s existing liabilities, is paid back out of the purchased company’s revenue. Poison puts increase the costs to the buyer by requiring them to put up more cash. An acquirer of Corning would have to pay $353.5 million for the company’s new bonds that include the poison put. LBOs and mergers tumbled to $58 billion this year from $212 billion in all of 2008 and $675 billion the year before, Bloomberg data show. During the LBO boom, firms were able to finance about two-thirds of the purchase price of their deals in debt. Blackstone put up $5.5 billion in equity and raised $21 billion in loans to finance its 2007 buyout of Hilton Hotels Corp. Anheuser-Busch InBev Anheuser-Busch InBev NV , brewer of Budweiser and Stella Artois beers, raised $8.5 billion from bond offerings in May and October that included poison puts, after selling $5 billion of debt without the protection in January. Leuven, Belgium-based AB InBev’s $2.25 billion of 5.375 percent bonds due in 2020, part of the October sale, pay a yield 178 basis points more than benchmark rates. That’s 27 basis points less than similar debt it sold in January without the protection, Bloomberg data show. AB InBev was created from the former InBev NV’s $52 billion purchase of Anheuser-Busch Cos. in November 2008. “Issuers did the right thing in thinking, ‘Let’s get investors to focus on the credit and get the bonds placed,’ rather than spending a lot of time arguing over change of control,” said Anne Daley , a managing director in U.S. fixed income syndicate at Barclays Capital in New York. The value of the covenants is “somewhat neutralized at this point because almost all issuers include it,” she said. Barclays helped manage the May and January sales for AB InBev. ‘Table is Set’ Increased use of change-of-control provisions doesn’t necessarily portend a wave of buyouts, according to Corning’s Rogus. The trend coincides with a debt- market rally that helped the lowest-rated investment-grade companies, which account for almost all the deals with a poison put, to sell more bonds. It’s going to take some time before bank lending picks up more, Rogus said. Even as the “table is set” for private equity deals to increase amid lower interest rates, “it’s not clear anyone has been invited yet,” he said. Concern that buyouts may return comes as stocks have surged on optimism the economy is recovering from the first global recession since World War II. The U.S. economy grew in the third quarter for the first time in more than a year, the Commerce Department said yesterday. Yields Fall Company bond yields dropped to a four-year low of 5.895 percent this week from 10.46 percent in March, making it cheaper for companies and private equity firms to borrow, according to Merrill Lynch & Co.’s broadest U.S. corporate bond index. Borrowers have sold $1.11 trillion in debt in the U.S. in 2009, the fastest pace on record, data compiled by Bloomberg show. Banks provided $5.8 billion of high-yield loans to finance leveraged buyouts and acquisitions in the U.S. last quarter, almost double the $3 billion sold in the first half of the year, according to S&P Leveraged Commentary and Data. CVS, the largest U.S. drugstore chain, has been including poison puts in its bonds since at least May 2007, Bloomberg data show. In September, the company sold $1.5 billion of 6.125 percent bonds due in 2039 with the protection. Carolyn Castel, a spokeswoman for CVS, said executives weren’t available for comment. Dow Chemical Dow Chemical began selling bonds with poison puts in May 2008, 13 months after Britain’s Sunday Express reported on April 9, 2007, that buyout firms were preparing to bid for the company. The cost to protect Dow’s bonds from default soared almost 50 percent. The largest U.S. chemical maker fired two executives three days after the report for holding unauthorized discussions to sell the company. Dow raised $2.75 billion in a protected bond offering in August, including $1.25 billion of 4.85 percent notes due in 2012 that currently pay a spread about 40 basis points lower than similar debt sold seven years earlier without the provision, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Dow officials weren’t available for comment. Even Blackstone, the world’s biggest buyout firm, included change-of-control protection in its debut offering of corporate bonds in August, when it raised $600 million in a sale of 6.625 percent 10-year notes, Bloomberg data show. The securities are rated A by S&P. Blackstone agreed Oct. 7 to buy brewer AB InBev’s amusement park unit that includes SeaWorld and Busch Gardens for as much as $2.7 billion in the largest private-equity deal this year. KKR, founded in 1976 by Kravis and George Roberts , bought Oriental Brewery Co. earlier this year from AB InBev for $1.8 billion. Kravis said similar opportunities may arise as companies pursue plans to shed units they don’t consider central. To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net ; Bryan Keogh in New York at bkeogh4@bloomberg.net

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Blair’s Fading EU Presidency Chances Spur Race for Top Post in New Treaty

October 30, 2009

By James G. Neuger Oct. 30 (Bloomberg) — Tony Blair’s fading chances to be picked as the first European Union president opened the gates to new candidates as the EU cleared the final obstacles to creating the high-level post. EU leaders voiced growing doubts about the former U.K. prime minister, shifting the speculation to figures with a lower global profile such as Dutch Prime Minister Jan Peter Balkenende or former Finnish Prime Minister Paavo Lipponen . “I’d like there to be more candidates,” Spanish Prime Minister Jose Luis Rodriguez Zapatero , a socialist allied with Blair’s Labour party, said yesterday at an EU summit in Brussels. EU leaders surmounted the key remaining hurdle to creating the job by bowing to the Czech Republic’s demands for an exemption to treaty provisions that Czech leaders feared would grant property rights to ethnic Germans expelled after World War II. The concession was Czech President Vaclav Klaus’s price for abandoning his campaign to sabotage the Lisbon Treaty, which overhauls the EU’s half-century-old decision-making apparatus. Climate change and the economy are on the agenda for the summit’s final sessions, which end around 1 p.m. With EU leaders setting a Jan. 1 target for starting the new governing arrangements, the next step is a ruling due next week by the Czech supreme court, which has already backed the treaty once. “Let me assure you that, provided that the constitutional court rules on Nov. 3 that the Lisbon Treaty is in line with the constitution, there will be nothing standing in the way of completing the ratification,” Czech Prime Minister Jan Fischer said last night. Klaus “does not have a problem” with the deal, he added. Emerging Campaign The breakthrough forces into the open what had been the behind-the-scenes jockeying for the posts of EU president and foreign-policy chief. The powers of the president, with a 2 ½ year-term renewable once, remain to be fleshed out and debate has centered on whether the EU leaders who will make the choice want a globally recognized name like Blair or a lesser-known consensus-seeker. Lipponen, 68, put himself in the latter camp. Writing in the Financial Times yesterday, Lipponen, now a consultant to the Nord Stream AG gas pipeline, said the president’s principal job is “to listen to the member governments and deal with possible problems as a troubleshooter.” Balkenende, 53, would also fit into the EU tradition of picking representatives of smaller states for top posts. The first president of the European Central Bank in 1998 was a fellow Dutchman, Wim Duisenberg . Iraq Links Blair, the biggest-name candidate, hit fresh headwinds at the summit when he failed to win the backing of his EU socialist allies, partly due to his support for George W. Bush’s invasion of Iraq in 2003. “There will remain a link for the coming generation between Iraq, Bush and Tony Blair,” Luxembourg Foreign Minister Jean Asselborn said yesterday. “In politics you have to show you can bring things together and not divide them. There are better candidates than Tony Blair on these points.” U.K. Prime Minister Gordon Brown sought to defuse the controversy, pitching his predecessor as an “excellent candidate” who would advance the EU’s interests on the economy, trade and climate change. “What are the issues we in Europe are going to be discussing these next few years?” Brown said. “It’s not Iraq.” Zapatero’s Call Zapatero, who pulled Spain’s forces from Iraq in one of his first acts after his 2004 election, appealed for “a pro- European president, a president with a great European commitment.” The leaders of the two biggest EU nations aren’t giving Blair much comfort. French President Nicolas Sarkozy has voiced concerns over appointing a Briton to the union’s top position, saying the U.K.’s failure to adopt the euro is a “problem.” Frenchmen currently lead the European Central Bank, World Trade Organization and International Monetary Fund. While German Chancellor Angela Merkel has said she’ll wait until the Lisbon Treaty is ratified before making known her preference for the post of president, she is “unenthusiastic” about a Blair candidacy, the Munich-based Sueddeutsche Zeitung reported today, citing anonymous government sources. EU leaders have no “shortlist” for president, though they will have to make the appointment quickly once the treaty is ratified, Austrian Chancellor Werner Faymann said. “The shortlist hasn’t been put together yet,” Faymann told reporters at the EU summit. Once the treaty is passed “we’ll have to act quickly and show we’re capable of acting.” Lithuanian President Dalia Grybauskaite recalled “very tough times” negotiating the EU budget with Blair in 2005, though she has “impressive memories” of him. She also called former Latvian President Vaira Vike-Freiberga , 71, a viable candidate. Also stepping forward was former Irish Prime Minister John Bruton , the EU’s ambassador to the U.S. Bruton, 62, announced his bid in a letter to European governments, the Irish Times reported, citing the letter. To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

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Cuts to Health Savings Accounts May Force Patients to Expedite Treatments

October 30, 2009

By Ryan J. Donmoyer and Margaret Collins Oct. 30 (Bloomberg) — About 35 million Americans may have as little as a month to take full advantage of a tax subsidy for out-of-pocket medical expenses under a health-reform bill Congress is debating. The legislation unveiled in the House yesterday would set for the first time a $2,500 cap on contributions to Flexible Spending Accounts, a benefit offered by employers that allows workers to pay some medical expenses with pretax dollars. Employers currently set their own limits, generally $3,000 to $5,000. The proposal is similar to one adopted by the Senate Finance Committee. An average worker could lose about $625 in tax savings by failing to take the full amount before the limits are set. The “open enrollment” benefit-selection period now under way at 95 percent of employers may be the last opportunity to claim a higher amount. “If you’re a parent and your kid needs braces in the next year or two, you may want to expedite that,” said Joe Jackson, chief executive officer of WageWorks Inc. , a San Mateo, California, company that administers 1.5 million flexible spending accounts for some 2,800 employers. The House limits wouldn’t apply until 2013, while the Senate limits would take effect in 2011. The current open- enrollment period, which typically lasts a week or two, is generally the only time workers can decide how much to contribute to their accounts in 2010. About 35 million Americans have flexible spending accounts and they have an average salary of $55,000, said Jackson, who is also chairman of Save Flexible Spending Plans , a coalition of business groups, medical providers and plan administrators opposing the caps. Growing Popularity Employers increasingly are offering such accounts, said Beth Umland, director of research for health and benefits at Mercer, a New York-based human resources consulting firm. About 83 percent of employers with 500 or more employees had health spending accounts in their benefit plans in 2008, up from 52 percent in 1995. The plans let workers deposit money before taxes into accounts that can be used to pay health-related expenses. Typically, all the money must be spent within a year to 15 months or it’s forfeited. Under current law, depositing $5,000 to pay for a medical procedure such as laser eye surgery would save a worker in the 25 percent income-tax bracket $1,250 in taxes. An employee in the 15 percent tax bracket would save $750. Those tax savings would be cut in half under the proposal to cap the maximum annual contribution at $2,500. Sam Gibbs , senior vice president for eHealthInsurance , an online seller of insurance based in Mountain View, California, said many Americans are aware of the possible changes. Closer Look “For the first time people are taking their benefits package and really looking at them,” Gibbs said. “Now is the time to put as much money in there as possible.” The House legislation would generate an estimated $13.3 billion in tax revenue to help fund broader health reforms, according to the nonpartisan congressional Joint Committee on Taxation. The House bill also would place limits on tax-advantaged Health Savings Accounts, which share some similarities with Flexible Spending Accounts, except money in HSAs doesn’t have to be spent by a specific date. It also would prohibit purchases of over-the-counter drugs using Flexible Spending Account contributions. To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net ; Margaret Collins in New York at mcollins45@bloomberg.net .

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Calderon Bonds Sink Most in Nine Months as Mexico Rating Downgrade Looms

October 30, 2009

By Lester Pimentel and Catarina Saraiva Oct. 30 (Bloomberg) — Mexico’s dollar bonds are posting their biggest monthly declines since January on speculation President Felipe Calderon will fail to cut the budget gap enough to avoid a credit-rating downgrade. The debt lost 2 percent this month, compared with a drop of 0.5 percent for JPMorgan Chase & Co.’s benchmark emerging-market index. Credit-default swaps, contracts investors use to protect against non-payment, show Mexico trading as high-yield, or junk — placing it three levels below the nation’s BBB+ grade from Standard & Poor’s and Fitch Ratings. Investors are unloading Mexican bonds as the opposition- controlled congress challenges Calderon’s plan to increase taxes and narrow a budget gap that RBS Securities Inc. says will grow to the widest in two decades on tumbling oil revenue. The legislative fight compounds concerns after the economy was the hardest hit in Latin America by the global recession that started in the U.S., the buyer of 80 percent of Mexican exports. “Mexico is more vulnerable than the rest,” said Jonathan Binder, who manages $350 million of emerging-market debt at Consilium Investment Management in Fort Lauderdale, Florida and sold his Mexican holdings in the past three months on concern the ratings will be cut. “I expect more underperformance.” Nafta Mexico, which in 2000 became the second country in Latin America after Chile to earn an investment-grade rating as the North American Free Trade Agreement increased exports to the U.S., now has a negative outlook from both S&P and Fitch. The rating companies say they may downgrade Mexico should the government fail to contain the deficit. Moody’s Investors Service rates Mexican debt Baa1, also three levels above junk. Mexico’s $1.09 trillion economy shrank 10.3 percent in the second quarter and will contract as much as 7.5 percent this year, the most since the 1930s, according to the central bank. The government’s dollar bonds have returned 7.1 percent in 2009, lagging behind the 24 percent return in JPMorgan’s EMBI+ index. This month’s drop is the worst since a 4.4 percent tumble in January, according to JPMorgan indexes. The extra yield investors demand to own Mexican bonds instead of U.S. Treasuries has narrowed 1.63 percentage points to 2.13 points this year — less than the 3.71-point drop in the spread on bonds in the EMBI+ index. Calderon, 47, said Oct. 29 that the country’s “vulnerability is very high,” blaming business leaders for lobbying against higher taxes. ‘Unprecedented Blow’ “It’s not that the president says it,” Calderon said in Mexico City. “You can look at the exchange rate, country risk on Mexican bonds, comments from the rating agencies, which clearly know that we’ve had a severe and unprecedented blow to our public finances.” The government projects this year’s budget shortfall will total 2.1 percent of gross domestic product and grow to 2.5 percent next year as the drop in oil production and recession erode tax revenue, according to Calderon’s proposal. The 2009 budget gap will be the widest since 1989, said Benito Berber, an economist with RBS Securities in Stamford, Connecticut. Oil, which funds 38 percent of Mexico’s budget, has fallen 45 percent since reaching a high of $147.27 a barrel in New York on July 11, 2008. Output at state- owned Petroleos Mexicanos fell last year at the fastest rate since 1942, costing Mexico 300 billion pesos in lost revenue, according to Finance Minister Agustin Carstens. Consumption Tax The 2010 budget proposal calls for spending cuts of 218 billion pesos. The lower house voted down a 2 percent consumption tax, which accounted for about two-fifths of the government’s new revenue proposals, and scaled back others. The Senate, which has until tomorrow to approve the revenue portion of the budget, plans further changes to the new tax measures. “There’s a lot of cooks in this kitchen and unfortunately for Mexico it’s all playing out very publicly,” said Blaise Antin , managing director of emerging-market research at TCW Group Inc. in Los Angeles. “That’s obviously not supportive of asset prices.” Congress has until Nov. 15 to vote on the spending portion of the budget. “The soap opera in Mexico is going to last another month,” said Sergio Trigo Paz , who manages $2.8 billion of emerging-market fixed-income assets, including Mexican debt, as chief investment officer at Fortis Investments in London. “Market participants are tired.” IMF Line The cost of protecting Mexican debt against default for five years is 1.65 percentage points, according to data compiled by CMA Datavision. By comparison, it costs 1.63 points to protect securities issued by Colombia and 1.54 points to protect bonds sold by Panama, countries that S&P rates three levels below Mexico at BB+. A basis point equals $1,000 on a swap protecting $10 million of debt against default. Credit-default swaps, conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. Mexico’s peso is up 4.7 percent to 13.0638 per dollar this year, the second-worst performer after Argentina’s peso among the major Latin American currencies. It plunged 20 percent in 2008 and sank to a record 15.5892 amid the global credit crisis in March, prompting Calderon to turn to the International Monetary Fund for a $47 billion credit line. The economic slump and downgrade concerns also are eroding demand for corporate debt. Mexican companies sold $5.9 billion of bonds in international markets this year, compared with $19.1 billion by Brazilian companies, data compiled by Bloomberg show. That’s the biggest disparity in corporate debt offerings from the region’s two largest countries since at least 1999. ‘Comfortable’ “If you’re not positive on Mexican growth, why would you take credit risk there?” Fortis’s Paz said. “We’re avoiding corporate credit risk in Mexico.” Paz said a credit-rating downgrade “is priced in” for Mexican government debt and the worst of the declines are over. As recently as Oct. 6, Carstens said he expected Mexico to maintain its current credit rating. “I feel comfortable that we will be able to keep our rating,” Carstens said in an interview in Istanbul. He said the officials he met from ratings companies reacted favorably to the government’s budget plan and that, even if it slows the economic recovery, will help attract investment that fell 12.7 percent in June from a year ago. Paulo Leme , the chief Latin America economist at Goldman Sachs Group Inc., said Mexican growth will rebound next year as the U.S. economy recovers. Pre-Crisis Growth “The country will get back to pre-crisis growth next year,” Leme said in a telephone interview from Miami. “Mexico has highly skilled labor, good entrepreneurs, and a good location.” Morgan Stanley, UBS AG, Bank of America Corp., RBC Capital Markets and Banco Santander SA all said this month that Mexico is likely to be downgraded. Lisa Schineller , an S&P analyst, called the lower house’s rejection of the 2 percent consumption tax a “lost opportunity” in an Oct. 21 interview. Both Schineller and Shelly Shetty , an analyst at Fitch Ratings in New York, said in interviews this week that the companies are waiting to see the final budget before deciding whether to cut the rating. “The real question is whether the tax package will go far enough,” Shetty said in an Oct. 28 telephone interview. To contact the reporter on this story: Lester Pimentel at lpimentel1@bloomberg.net ; Catarina Saraiva in New York at asaraiva5@bloomberg.net

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Cisco Systems Is Said to Consider Dropping $3.1 Billion Tandberg Purchase

October 30, 2009

By Edward Evans and Diana ben-Aaron Oct. 30 (Bloomberg) — Cisco Systems Inc. may drop its 17.2 billion-krone ($3.04 billion) offer for Tandberg ASA as shareholders owning 24 percent of the Norwegian company press for a higher offer, said a person familiar with the transaction. If Cisco is unable to get investors with 90 percent of Tandberg to approve its 153.50 kroner-a-share offer, it would strongly consider walking away, said the person who declined to be identified. Trading in Tandberg, the world’s second-largest maker of videoconferencing equipment by sales, was halted by the Oslo stock exchange. “I think it’s quite unlikely that they’ll drop their offer, everything points to them buying Tandberg,” said Martin Hoff , an Arctic Securities ASA analyst with a “buy” rating on the stock. “It’s probably smart of them to send some signals to scare the shareholders into accepting the offer.” Cisco, the world’s largest maker of networking equipment, made its bid for Tandberg on Oct. 1 to expand into videoconferencing. The offer needs support from 90 percent of Tandberg’s shareholders to force a complete takeover. SEB AB’s SEB Enskilda unit in Norway canvassed shareholders and found that 21 owners who wouldn’t sell “at the current offer terms,” according to a Oct. 15 statement issued by the bank. Folketrygdfondet, Norway’s domestic pension fund, holds 10.09 percent of shares in Tandberg, according to filings, making it the largest shareholder. “We don’t comment during the process,” Folketrygdfondet’s Managing Director Olaug Svarva said by phone today. Shares Fall Tandberg fell 4.2 kroner, or 2.7 percent, to 152.3 kroner at 12:07 p.m. in Oslo, before its shares were suspended. “If Cisco withdraws the bid then probably Tandberg shares will drop from the 150-plus bid that Cisco put out,” said Michiel Plakman , who helps oversee the equivalent of $150 billion at Rotterdam-based Robeco NV, including Cisco shares. “I would be surprised if they actually did so. I think it’s tactics with regards to the investors that actually want a slightly higher bid for Tandberg. ” Tandberg’s board backed the offer and Cisco said it would make Tandberg Chief Executive Officer Fredrik Halvorsen the head of an expanded videoconferencing division. Tandberg’s Geir Olsen declined to comment today. Cisco had $35 billion in cash at the end of July. Cisco’s offer was 11 percent more than Tandberg’s closing price on Sept. 30. The bid is also a 38 percent premium to the closing price on July 15, prior to news reports of a possible transaction, the San Jose, California-based company said in a statement. The Oslo stock exchange halted trading in Tandberg shares, saying in a statement it is “investigating whether some participants have access to different information in relation to evaluating the value of the company’s shares.” To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net ; Edward Evans at eevans3@bloomberg.net

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U.S. Third-Quarter Labor Costs Rise 0.4%; Wage Gains Smallest Since 1982

October 30, 2009

By Courtney Schlisserman Oct. 30 (Bloomberg) — Employment expenses in the U.S. rose 0.4 percent in the third quarter and wages had the smallest 12- month gain since 1982, as the sluggish labor market restrains compensation. The increase in the employment cost index was the same as the gain in the second quarter, according to Labor Department data released today. A 0.3 percent increase in the first quarter was the smallest since records began in 1996. Companies probably will keep curtailing labor costs , which account for about two-thirds of corporate expenses, even as the economy emerges from the recession. With the unemployment rate forecast to rise, employees have little room to negotiate pay and benefit increases. “Workers in general don’t have a lot of bargaining power and businesses, in a high unemployment environment, are using less overtime and in some cases part time,” to contain costs, Stuart Hoffman, chief economist at PNC Financial Services Group, said before the report. “For those who are getting wage increases, companies are skimming them down.” Economists forecast the index would increase 0.4 percent, according to the median of 57 projections in a Bloomberg News survey. Estimates ranged from gains of 0.2 percent to 0.7 percent. The employment cost gauge measures the cost to companies of wages, benefits and employer-paid taxes such as Social Security and Medicare. Wages and salaries, which account for about 70 percent of total employment costs, increased 0.4 percent, compared with a 0.4 percent rise in the second quarter. From a year earlier, these costs rose 1.5 percent, the smallest gain since 1982. Benefits Benefit costs, which include some bonuses, severance pay, health insurance and paid vacations, gained 0.4 percent after a 0.3 percent increase from April through June. In the past 12 months, benefit costs were up 1.6 percent. Among private companies, total compensation costs increased 0.5 percent, compared with a 0.2 percent advance in the second quarter. Compensation for state and local government employees was unchanged in the third quarter. Even as other parts of the economy show signs of stabilizing, rising unemployment may keep overall wages and benefits subdued and weigh on consumer spending. The U.S. has lost 7.2 million jobs since the recession began in December 2007, and the government is scheduled to release the October payrolls report on Nov. 6. Growth Resumes The economy expanded at a 3.5 percent pace from July through September, exceeding the median estimate of economists surveyed by Bloomberg News, after shrinking the previous four quarters, figures from the Commerce Department showed yesterday. Household purchases climbed 3.4 percent, the most in more than two years. Personal income in the third quarter fell at a 0.5 percent pace, following a 0.6 percent increase the prior three months, according to data from the Commerce Department released yesterday. The Federal Reserve’s most-recent Beige Book regional survey, released Oct. 21, suggested that the economy is gaining momentum and has not yet overcome weaknesses in banking and employment. The U.S. central bank’s Federal Open Market Committee next meets in Washington Nov. 3-4. US Airways Group Inc., the smallest full-fare U.S. airline, said Oct. 28 it will cut 1,000 jobs as it cuts flights and bases. The job losses account for about 3 percent of the workforce and will come in the first half of 2010. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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Barclays, BNP Paribas May Have $300 Million Losses From K1, Warrant Shows

October 30, 2009

By Karin Matussek and Jann Betinga Oct. 30 (Bloomberg) — Helmut Kiener , the K1 Group hedge- fund firm founder arrested earlier this week, may have duped Barclays Plc out of as much as $240 million and BNP Paribas SA out of $60 million, according to the warrant for his arrest. Kiener may have used $220 million from Barclays contrary to agreements with funds in the group, according to the arrest warrant issued by a court in Wurzburg, Germany. The money is “for the most part” gone, according to the document obtained by Bloomberg News. A separate deal with Barclays generated about $20 million of management fees for Kiener, according to the document. K1 Group is at the center of an international criminal investigation after saddling banks, which also include JPMorgan Chase & Co. and Societe Generale SA, with about $400 million of losses, people with knowledge of the probe said. European and U.S. authorities are investigating whether K1, which manages funds of hedge funds, deceived the banks to inflate investments, according to the people, who declined to be identified because the investigation isn’t public. Kiener was arrested on Oct. 28, and the court in Wurzburg yesterday ruled he must remain in custody. A spokeswoman for Munich-based law firm Lutz Libbertz, which represents Kiener, said his lawyers will file a request for release. She said the firm will comment in detail on the allegations later. BNP suffered losses from a $60 million investment starting in April 2007, according to the warrant. Kiener may have also deceived BNP when receiving management fees, the warrant said, without specifying an amount. BNP Paribas’s spokeswoman Carine Lauru declined to comment on the amount. BNP Paribas has said it’s cooperating with authorities. Barclays Capital spokesman Daniel Hunter declined to comment. Calls to the court and to prosecutors in Wurzburg seeking comment weren’t answered. To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net .

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U.S. Stock Futures Drop on Consumer Spending Data; Dollar, Treasuries Gain

October 30, 2009

By Sarah Jones Oct. 30 (Bloomberg) — U.S. stock-index futures fell, with the Standard & Poor’s 500 Index poised for its second straight weekly retreat, before a report that may show consumer spending dropped for the first time in five months. Chevron Corp., the second-largest U.S. energy company, and Sun Microsystems Inc. retreated in German trading before the companies report earnings. MetLife Inc. may be active after the biggest U.S. life insurer posted its third straight loss. Futures on the S&P 500 index expiring in December declined 0.5 percent to 1,056.6 at 11:38 a.m. in London . Dow Jones Industrial Average futures fell 0.4 percent to 9,861.0, while the Nasdaq-100 Index futures slid 0.3 percent to 1,703.0. U.S. stocks jumped the most since July yesterday after the economy returned to growth following the worst contraction in seven decades. The advance ended four sessions of losses spurred by investor concern that a rally since March had overtaken the outlook for economic growth. Since March 9, the S&P 500 has surged 58 percent. “The beta rally will abate,” said Gunnar Miller , Frankfurt-based global head of equity research at RCM, which oversees $80 billion in assets. “The bounce off the bottom has been almost unprecedented. We’ve already had a pretty good year so we’re expecting things to grind sideways for a while.” Spending by U.S. consumers probably fell in September as auto dealer showrooms emptied in the wake of the government’s auto-rebate program, economists said before the report. Chevron Falls Purchases declined 0.5 percent after a 1.3 percent jump in August, the biggest in almost eight years, according to the median forecast of 75 economists in a Bloomberg survey. Other reports may show consumer sentiment fell this month and business activity shrank at a slower pace. Chevron slipped 0.3 percent to $77.74 in German trading before reporting third-quarter earnings today. Rival Exxon Mobil Corp. earlier this week reported a fourth straight drop in profit after demand slumped for fuels to run cars, factories and airplanes. Sun Microsystems, which is being acquired by Oracle Corp., lost 0.8 percent to $8.20 before it reports first quarter earnings. Shares of Oracle slipped 0.4 percent to $21.36. MetLife may move after posting a third-quarter net loss of $620 million, or 79 cents a share, as revenue declined. Operating earnings, which exclude some investment and derivative results, were 87 cents a share, beating by a penny the average estimate analysts surveyed by Bloomberg. The shares did not trade in Europe. McAfee Inc. declined 3.8 percent to $42.07 in Germany after the second-biggest maker of security software reported third- quarter sales that fell short of some analysts’ estimates. NYSE Gains Las Vegas Sands Corp. rallied 6.6 percent to $15.74. The casino company run by billionaire Sheldon Adelson said Las Vegas convention business is recovering, after collapsing during the recession. NYSE Euronext, the world’s largest owner of stock exchanges reported a 28 percent drop in third-quarter profit to $125 million, or 48 cents a share, as revenue from equity trading dropped and European competitors took market share. Excluding some costs, profit was 53 cents a share, beating the 46 cent average of 17 analysts surveyed by Bloomberg. The shares rose 0.3 percent to $27.66 in France. So far, earnings-per-share have topped estimates at 84 percent of the companies in the S&P 500 that posted third- quarter results, which would be a record proportion for a full quarter, according to Bloomberg data going back to 1993. To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net .

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Consumer Spending in U.S. Declined in September After Auto Incentive Ended

October 30, 2009

By Timothy R. Homan Oct. 30 (Bloomberg) — Spending by U.S. consumers fell in September for the first time in five months after the government’s auto-rebate program expired. The 0.5 percent decrease in purchases matched the median estimate of economists surveyed by Bloomberg News and followed a 1.4 percent jump in the prior month, Commerce Department figures showed today in Washington. Incomes were unchanged, while the savings rate climbed. Stagnant wages and concern over mounting unemployment are causing confidence to wane, raising the risk that consumers will retrench in coming months as government assistance programs such as the so-called cash-for-clunkers plan expire. The report also showed inflation was lower than the Federal Reserve’s long-term projection, indicating the policy makers can keep rate low. “September as a total was quite weak, but a lot of that can be traced to autos,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “Government assistance has probably taken consumers about as far as they can go.” The median forecast for spending reflected responses from 75 economists surveyed. Projections ranged from a decline of 0.9 percent to a gain of 0.5 percent. The government revised the August reading up from an originally reported increase of 1.3 percent. Wages and salaries dropped 0.2 percent after a 0.2 percent gain the prior month as job losses mounted. Fed Pledge Fed policy makers, who have said they’d keep the benchmark lending rate near zero “for an extended period,” are trying to secure an economic recovery alongside an eventual withdrawal of fiscal and monetary stimulus in time to avoid driving inflation and borrowing costs higher. Today’s report showed inflation held below the Fed’s long- term forecasts. The price gauge tied to spending patterns fell 0.5 percent from September 2008. The Fed’s preferred price measure, which excludes food and fuel, climbed 0.1 percent from the previous month and was up 1.3 percent from a year earlier, matching the 12-month gain in August that was the smallest since 2001. Adjusted for inflation, spending dropped 0.6 percent following a 1 percent increase in August. The decrease in spending pushed the savings rate up to 3.3 percent last month from 2.8 percent. Less Income Disposable income, or the money left over after taxes, was unchanged after rising 0.1 percent the previous month. Adjusted for inflation, disposable income dropped 0.1 percent. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, fell 7.2 percent last month after increasing 6.7 percent in the prior month. Autos in October probably sold at a 9.85 million pace, down from an average 11.5 million rate in the third quarter than reflected the boost from ‘cars-for-clunkers,’ according to the median estimate of analysts surveyed by Bloomberg News. Purchases averaged 13.15 million in 2008. Consumer purchases of non-durable goods increased 0.5 percent, and spending on services, which account for almost 60 percent of all outlays, rose 0.1 percent. Kellogg Co., the largest U.S. breakfast-cereal maker, yesterday reported third-quarter profit that exceeded analysts’ estimates as costs fell more than sales. “Consumers remain nervous and are more value conscious than they were a couple of years ago,” Chief Executive Officer David Mackay said in a telephone interview. “We have to be pragmatic about consumers and the issues and pressures they face, and try to help them in any way we can.” To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Video: Omers’s Michael Nobrega Seeks U.S. Pension-Fund Alliance: Video

October 30, 2009

Oct. 30 (Bloomberg) — Michael Nobrega, chief executive officer of Ontario Municipal Employees Retirement System, talks with Bloomberg’s Erik Schatzker and Deirdre Bolton about efforts to form an alliance of the largest U.S. pension funds to avoid reliance on investment consultants. (Source: Bloomberg)

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Video: Briggs Says Gold May Reach $1,110 in Six to 12 Months: Video

October 30, 2009

Oct. 30 (Bloomberg) — Graham Briggs, chief executive officer of Harmony Gold Mining Ltd., talks with Bloomberg’s Scarlet Fu about the outlook for gold prices. Briggs also discusses the company’s production output and costs. Africa’s third-largest producer of gold raised production 5.6 percent to 373,431 ounces in the fiscal first quarter, beating its own output forecast. The Johannesburg-based company posted a net loss of 29 million rand ($3.7 million). (Source: Bloomberg)

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Video: Dennis Gartman Says He’s `Bullish’ on Gold, Grains: Video

October 30, 2009

Oct. 30 (Bloomberg) — Dennis Gartman, economist and editor of the Gartman Letter, talks with Bloomberg’s Deirdre Bolton about gold prices. Gartman, speaking from Suffolk, Virginia, also discusses his investment strategy for crude oil and his “bullish” position on the grain market. (Source: Bloomberg)

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Video: FT’s Lex Columnist McLannahan on Macquarie Group: Video

October 30, 2009

Oct. 30 (Bloomberg) — Ben McLannahan of the Financial Times’ Lex commentary team talks with Bloomberg’s Erik Schatzker about Macquarie Group Ltd.’s first-half profits, which fell 21 percent. (Source: Bloomberg)

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Video: Briggs Says Gold May Reach $1,100 in Six to 12 Months: Video

October 30, 2009

Oct. 30 (Bloomberg) — Graham Briggs, chief executive officer of Harmony Gold Mining Ltd., talks with Bloomberg’s Scarlet Fu about the outlook for gold prices. Briggs also discusses the company’s production output and costs. Africa’s third-largest producer of gold raised production 5.6 percent to 373,431 ounces in the fiscal first quarter, beating its own output forecast. The Johannesburg-based company posted a net loss of 29 million rand ($3.7 million). (Source: Bloomberg)

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Video: Consumer Confidence Report Due Today; Hertz to Offer More Midsize Sedans

October 30, 2009

OCt. 30 — Bloomberg’s Jane King summarizes the day’s top stories on the Bloomberg Business Report.

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Linc Energy Limited (ASX:LNC) Quarterly Report For The Period Ending 30 September 2009

October 30, 2009

Linc Energy Limited (ASX:LNC) Quarterly Report For The Period Ending 30 September 2009

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Texon Petroleum Limited (ASX:TXN) Quarterly Report For The Period Ending 30 September 2009

October 30, 2009

Texon Petroleum Limited (ASX:TXN) Quarterly Report For The Period Ending 30 September 2009

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Republic Gold Limited (ASX:RAU) Far North Queensland’s Gold Resources At Tregoora Upgraded By 48%

October 30, 2009

Republic Gold Limited (ASX:RAU) Far North Queensland’s Gold Resources At Tregoora Upgraded By 48%

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Jameson Resources Limited (ASX:JAL) Quarterly Report For The Period Ending 30 September 2009

October 30, 2009

Jameson Resources Limited (ASX:JAL) Quarterly Report For The Period Ending 30 September 2009

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US economy marks 3.5% growth in Q3

October 30, 2009

US economy marks 3.5% growth in Q3

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Japan’s unemployment drops to 5.3% in Sept

October 30, 2009

Japan’s unemployment drops to 5.3% in Sept

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US economy grows in 3Q, signals end of recession

October 30, 2009

US economy grows in 3Q, signals end of recession

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China wants urgency in Australia free-trade talks

October 30, 2009

China wants urgency in Australia free-trade talks

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Japan jobless rate falls for 2nd straight month

October 30, 2009

Japan jobless rate falls for 2nd straight month

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Oil steadies below $80 after jumping on US GDP data

October 30, 2009

Oil steadies below $80 after jumping on US GDP data

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Oil rises nearly $2 after U.S. GDP growth

October 30, 2009

Oil rises nearly $2 after U.S. GDP growth

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Samsung Q3 profit hits $3.14b

October 30, 2009

Samsung Q3 profit hits $3.14b

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Video: Obama Advisers Say Stimulus Responsible for 650,000 Jobs: Video

October 30, 2009

Oct. 30 (Bloomberg) — President Barack Obama’s advisers expect a report later today that will show the $787 billion stimulus passed in February is responsible for saving or creating about 650,000 jobs so far, according to an administration official. Bloomberg’s Peter Cook reports. (Source: Bloomberg)

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Homeowners Choice Selected as Replacement Insurer for Policyholders of Failed American Keystone Insurance Company

October 30, 2009

CLEARWATER, Fla., Oct. 30, 2009 (GLOBE NEWSWIRE) — Homeowners Choice, Inc. (Nasdaq:HCII), a Florida-based insurance holding company, today announced that its wholly-owned insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. has been selected by the Florida Department of Financial Services as the replacement insurer for policyholders of American Keystone Insurance Company, which was placed into receivership by the Circuit Court in Leon County, Florida. The Florida Department of Financial Services is the court-appointed receiver. On Oct. 9, 2009 the Department announced plans to liquidate the company. All of American Keystone’s approximately 5,500 homeowners’ policies are scheduled for cancellation at 11:59 p.m. on Nov. 8, 2009. The Department has authorized Homeowners Choice to offer replacement coverage to those policyholders. Homeowners Choice will pay commissions to the Department for replacement policies that remain active for one year. The policyholders and their agents are free to seek out other insurance companies.

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Video: Galleon’s Rajaratnam Asks Judge to Reduce Bail: Video

October 30, 2009

Oct. 30 (Bloomberg) — Raj Rajaratnam, the Galleon Group hedge fund founder accused of directing an elaborate insider-trading ring, told a judge he’s being treated worse than Bernard Madoff and asked that his bail be cut to $25 million. Rajaratnam, 52, requested in a letter yesterday that his $100 million bond be reduced. Bloomberg’s Monica Bertran reports. (Source: Bloomberg)

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Video: Hertz Expands Vehicle Fleet; Kohls Boosts Online Ads: Video

October 30, 2009

Oct. 30 (Bloomberg) — Bloomberg’s Erik Schatzker reports on the latest breaking business news and top stories in today’s Business Briefs. (Source: Bloomberg)

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Video: Bankers Expect Rising Bonus Pay to Break Records in Poll: Video

October 30, 2009

Oct. 30 (Bloomberg) — In the financial world, most executives expect their bonuses to match or exceed last year’s, with 1 in 10 predicting their best-ever payout. Having shaken off the biggest economic decline since the 1930s, almost three in five traders, analysts and fund managers believe their 2009 bonuses will either increase or won’t change, according to a quarterly poll of Bloomberg customers. Bloomberg’s Lizzie O’Leary reports. (Source: Bloomberg)

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Video: ‘Paranormal Activity’ Profits From Web-Based Marketing: Video

October 30, 2009

Oct. 30 (Bloomberg) — Bloomberg’s Michele Steele reports on “Paranormal Activity,” a low-budget horror film that’s being propelled by a Web-based marketing campaign. Industry experts say the film about a demonic presence may generate as much as $200 million in worldwide ticket sales. (Source: Bloomberg)

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CalPERS Seeks Operating Investment Chief

October 30, 2009

CalPERS is looking for a chief operating investment officer Originally posted here: CalPERS Seeks Operating Investment Chief

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Options to Protect Against Dollar’s Rise Are Most Expensive Since December

October 30, 2009

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Avon Calling Emerging Market Investors at 13% Discount to Brazil’s Natura

October 30, 2009

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Avon Calling Emerging Market Investors at 13% Discount to Brazil’s Natura

October 30, 2009

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