February 2010

Blockbuster Shuttering Up to 545 Stores During 2010

by on February 28, 2010

Keeping with the ongoing contraction of the traditional movie rental retail business, Blockbuster Inc. (NYSE: BBI, BBI.B) said it would close 500 to 545 of its company-owned U.S. retail stores during 2010. To date, the retailer has already closed 253…

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China’s Manufacturing PMI Falls More Than Economist Estimates in January

by on February 28, 2010

By Bloomberg News March 1 (Bloomberg) — China’s manufacturing expanded by the least in a year in February as output and orders grew at a slower pace. The Purchasing Managers’ Index fell to a seasonally adjusted 52, according to Li & Fung Ltd., a Hong Kong-based company that releases data for the Federation of Logistics and Purchasing. That was less than 55.8 in January and the median 55.2 estimate in a Bloomberg survey of 15 economists. The world is counting on China to drive growth as Europe’s recovery falters and the U.S. grapples with high unemployment. The Shanghai Composite Index has fallen about 7 percent this year on concern that the Chinese economy may lose momentum as the government reins in stimulus to counter overheating risks. “We are still in strong expansionary territory, but we believe some of the momentum of the recovery we experienced in 2009 is fading,” Stephen Green , an economist at Standard Chartered Plc in Shanghai, said before today’s data. Last month’s Lunar New Year holiday may have damped orders, he said. In today’s data, a reading over 50 indicates an expansion. An index of export orders fell to 50.3 from 53.2 in January. The output index fell to 54.3 from 60.5. Cooling Credit China’s economic growth accelerated to 10.7 percent, the fastest pace since 2007, in the fourth quarter on stimulus spending, subsidies for consumer purchases and record lending. Increased demand was a factor in Baoshan Iron & Steel Co. , China’s biggest publicly traded steelmaker, raising prices for March delivery. Policy makers are cooling credit growth to restrain inflation and limit the risk of soured loans and asset- price bubbles as property prices surge in cities such as Shenzhen and Sanya. The central bank has twice raised lenders’ reserve requirements this year. Analysts will watch for any policy shifts when Premier Wen Jiabao makes an annual address to the nation on March 5 at the National People’s Congress in Beijing. In a Feb. 27 webcast, he reaffirmed a “moderately loose” monetary policy and said 2010 would be a complicated mix of sustaining the economic expansion, adjusting the nation’s growth model and managing inflation expectations. Manufacturers have been getting a boost from exports, with overseas shipments climbing for a second straight month in January after plummeting because of the financial crisis. Subsidies within China for car and home-appliance purchases and tax rebates for exporters will continue this year, the government said. Yuan’s Peg The central bank is also yet to loosen the yuan’s effective peg to the dollar, which has kept the currency at about 6.83 since July 2008, shielding exporters from the slump in global demand. “Foreign demand is improving, and consumption growth remains solid,” Dariusz Kowalczyk , chief investment strategist at SJS Markets Ltd., said in Hong Kong before today’s data. China’s growth in the first half will be “so strong that it can be characterized as overheating,” Kowalczyk said, forecasting “further policy tightening.” After last year overtaking the U.S. as the biggest auto market and Germany as the biggest exporter, China is poised to overtake Japan this year as the second-largest economy. The nation will contribute more than a third of global growth in 2010, according to Nomura Holdings Inc. Today’s PMI figure was up from a record-low 38.8 in November 2008, when recessions in the U.S., Europe and Japan sent export orders plunging. The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, is based on replies to questionnaires sent to purchasing executives at more than 730 companies in 20 industries. It started in January 2005. — Li Yanping and Sophie Leung . Editors: Paul Panckhurst , Lily Nonomiya . To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net Sophie Leung in Hong Kong at +852-2977-6126 or sleung59@bloomberg.net

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Canada Brings Home Hockey Gold, Obama Beer in Overtime Match

February 28, 2010

By Gadi Dechter Feb. 28 (Bloomberg) — With an overtime goal by Sidney Crosby , the Canadian men’s hockey team brought home the gold medal — and a case of Molson’s Canadian lager for Canada’s Prime Minister, Stephen Harper , paid for by Barack Obama . The U.S. president and Harper made a “friendly wager” on the gold medal game today that pitted the North American neighbors in the final event of the Vancouver Olympic Games. If the U.S. had defeated the hometown favorites, Harper would have suffered the added ignominy of having to buy Obama a case of Yuengling beer, with headquarters in Pottsville, Pennsylvania, said White House spokesman Nick Shapiro . Canada beat the U.S. 3-2, earning its eighth hockey gold medal. The game was extended after U.S. player Zach Parise scored in the last 24 seconds of regulation play. The last U.S. Olympic title came in 1980, when a group of college players upset the Soviet Union in a semifinal game that became known as the “Miracle on Ice.” The U.S. beat Finland for the gold. Molson Canadian lager is made by Molson Coors Brewing Co ., jointly headquartered in Denver and Montreal. Last year, the company sold its 19.9 percent stake in the Montreal Canadiens professional hockey team to an investment group led by Quebec’s Molson family. D.G. Yuengling & Son, Inc ., which bills itself as “America’s Oldest Brewery,” traces its roots to 1829’s Eagle Brewery in Pottsville, a central Pennsylvania town two hour’s drive from Philadelphia. Shapiro originally said the loser would get the beer. “Sorry, we had it backwards,” Shapiro said in a second e- mailed statement today during the game. “Blame Canada.” To contact the reporters on this story: Gadi Dechter in Washington, D.C. at gdechter@bloomberg.net .

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Blasts at Bangkok Bank Come as Thailand Seizes $1.4 Billion From Thaksin

February 28, 2010

By Daniel Ten Kate and Suttinee Yuvejwattana March 1 (Bloomberg) — Thai security forces were on alert following bomb attacks on Bangkok Bank Pcl that came after a court seized about $1.4 billion from fugitive former Prime Minister Thaksin Shinawatra . Four branches of Thailand’s biggest bank were targeted late on Feb. 27 with grenades, two of which exploded. Nobody was hurt in the attacks, which shattered glass and damaged buildings. “There is only a small group of people who want to create unrest in the country,” Prime Minister Abhisit Vejjajiva said yesterday in his weekly television address. “We shouldn’t fall victim to them.” Competition for political power between Thaksin’s generally rural and poorer supporters and largely urban and more middle class opponents has prompted unrest in Thailand since the coup that ousted him in September 2006. Protests by the two sides have included airport blockades, rioting and bombings. “The government will do everything it can to control the situation,” Abhisit said. “We will increase checkpoints and patrols. The police may not have enough officers, so we will ask for more people from the military.” Nine Supreme Court judges decided on Feb. 26 to seize 46.4 billion baht ($1.4 billion) of the 76.6 billion baht that Thaksin’s family earned from the 2006 sale of holding company Shin Corp. to Singapore’s Temasek Holdings Pte. The court returned 30.2 billion baht to the former premier. Thaksin Supporters Thaksin’s supporters rallied in front of Bangkok Bank’s headquarters last month to protest its links with Prem Tinsulanonda , the president of King Bhumibol Adulyadej’s Privy Council, who has also served as an adviser to the bank. Thaksin has accused Prem of masterminding the coup, a charge he has denied. King Bhumibol, the world’s longest reigning monarch, has been hospitalized since Sept. 19 with symptoms of pneumonia. The 82-year-old head of state visited a Bangkok palace for about four hours on Feb. 27 before returning to the hospital, the Associated Press reported yesterday, citing an unidentified palace official. The pro-Thaksin United Front for Democracy Against Dictatorship aims to gather 1 million people in Bangkok later this month to push for a fresh election. The group urged its supporters to accept the verdict against Thaksin “with cold, angry silence.” Thaksin said the ruling was “100 percent politically motivated” and urged his supporters to continue fighting the government. The former prime minister lives overseas after fleeing a two-year prison sentence in 2008. Continue Fighting The verdict may boost Thai stocks, which trade at 10.9 times 2010 earnings, the third-cheapest in Asia. Thailand’s SET Index has lagged behind benchmarks in Indonesia, Malaysia, the Philippines and Vietnam this year. Markets are closed today in Bangkok for a holiday. “The market will rise as political tension has eased,” Prapas Tonpibulsak , chief investment officer at Ayudhya Fund Management, said immediately after the verdict. “Upside will probably be limited as conflicts remain.” Foreign investors, net sellers of $98 million of Thai stocks this year, bought a net $58 million on Feb. 25, the most since Oct. 9, according to stock exchange data. The baht on Feb. 26 gained on optimism an economic recovery is gathering pace after industrial production rose for a fifth straight month in January. After Thaksin founded Shin Corp. in 1983, its units were awarded one of two mobile-phone concessions and an exclusive satellite franchise. The company controls Advanced Info Service Pcl , Thailand’s top mobile-phone operator, and satellite services monopoly Thaicom Pcl . Court Findings The court said Thaksin benefited Shin-controlled companies by lowering Advanced Info’s royalty payments to the state-owned telecoms operator and approving a government loan to Myanmar, part of which was used to buy equipment from Thaicom. Shin shares gained 121 percent from when Thaksin took office on Feb. 9, 2001, to when his family sold the company on Jan. 23, 2006, compared with a 128 percent gain in the benchmark SET index, according to data compiled by Bloomberg. Siam Cement Pcl , Thailand’s fourth-biggest company, which is controlled by the monarchy’s investment arm, gained 717 percent in that time. Thaksin’s supporters say the constitution drafted after the coup gives too much power to appointed figures such as soldiers, judges and royal advisors at the expense of elected politicians. Thaksin and his allies have won the past four elections on heavy support from the northeast, Thailand’s poorest region and home to a third of its 66 million people. Balance of Power Since the 2006 coup, courts have disbanded parties linked to Thaksin that won the past two elections. The rulings have eroded confidence in the judicial system among Thaksin’s supporters, who say different standards are applied to their opponents, who seized the prime minister’s offices and the airports two years ago. Prosecutors have yet to bring those cases to trial. Thaksin’s supporters want the constitution changed to eliminate a half-appointed Senate and provisions that make it easy to disband political parties. Abhisit, who took power in December 2008 after a court dissolved the pro-Thaksin party that won an election the previous year, has opposed efforts to amend the constitution. He must call an election by the end of 2011. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net ; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net .

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Obama Trip May Alter U.S. Misperception of Asean, Economic Ministers Say

February 28, 2010

By Daniel Ten Kate March 1 (Bloomberg) — President Barack Obama needs to grasp Southeast Asia’s economic potential and help boost U.S. investment when he travels to Indonesia three weeks from now, economic ministers from the region said. “There’s still a lack of awareness in the U.S., a misperception that we have to address,” Indonesian Trade Minister Mari Pangestu said in an interview in Putrajaya, Malaysia, where envoys from the Association of Southeast Asian Nations met at the weekend. “We have to keep up the momentum” to expand cooperation, she said. Asean ministers plan to travel to the U.S. in May to meet with business executives. The association plans to showcase its position as an economic hub in competing for funds with China and India, the world’s fastest-growing economies. Obama, who became the first U.S. leader to meet with the 10-member bloc in November, is aiming to increase trade with Asia to help meet a January pledge to double exports in five years. Southeast Asia was the third-biggest market for U.S. goods in 2008 behind Canada and Mexico. The region is rich in coal, oil and precious metals as well as containing sea lanes vital to world trade. Asean aims to form an economic community modeled on the European Union, though without a common currency, by 2015. It has already signed free- trade accords with China, Japan, South Korea, Australia and New Zealand. Economic Recovery “It’s important that Mr. Obama look more to the East,” Thai Deputy Commerce Minister Alongkorn Ponlaboot said in an interview. “There has been a power shift toward this region after the financial crisis, and I hope Obama will have a clear message for Asean when he visits.” Asia’s export-dependent economies are emerging from recession as global demand increases for the region’s computer chips, cars and commodities. In January, Detroit-based General Motors Co. received local funding to open a diesel-engine plant in Thailand, and Santa Clara, California-based Intel Corp. plans to start operations of a chip assembly and testing plant in Vietnam later this year. Asean leaders will aim to make the U.S. “understand why we have been able to succeed and why we will continue to undertake the policies that would ensure that this economic recovery is not just a coincidence,” Pangestu said. “We’ve actually moved further than you think and the opportunity is there.” Investment Programs Foreign direct investment from the U.S. into Asean from 2006 to 2008 amounted to $12.8 billion, or 6.9 percent of the bloc’s total, down from 17 percent from 1995 to 2001. The EU invested $42.1 billion into Asean from 2006 to 2008 while Japan put down $28.7 billion, statistics show . Economic disparity among Asean members has hindered the region’s ability to leverage its market of 584 million people. The region’s four largest economies — Singapore, Thailand, Malaysia and Indonesia — account for almost 80 percent of all foreign investment into Asean. The Philippines, Brunei, Cambodia, Laos, Myanmar and Vietnam are the other members of the 10-nation group. “There is a lot of unutilized potential” for joint investments between Southeast Asian countries, Mustapa Mohamed , Malaysia’s minister of international trade and industry, said in an interview. “We are underperforming in intra-Asean trade, so that’s a priority this year.” Trade Initiative Southeast Asian countries are split on Obama’s top trade initiative, the Trans-Pacific Partnership, which he aims to turn into a platform for economic integration in the Asia-Pacific region. Vietnam, Singapore and Brunei will join New Zealand, Chile, Peru, Australia and the U.S. for talks on the TPP later this year. “The success of the TPP depends very much on the attitude and the viewpoint of the U.S.,” Vu Huy Hoang , Vietnam’s minister of industry and trade, told reporters. Malaysia and Indonesia are both reviewing the TPP and haven’t decided whether to join talks. Thailand prefers a free- trade deal between the U.S. and Asean as a bloc, Alongkorn said. “We have noted that investments from the U.S. have dropped,” Surin Pitsuwan , Asean’s secretary-general, told reporters yesterday after the meeting, which ran from Feb. 27 until today. “There is very keen interest in strengthening cooperation, but because of the differences and diversity among us we have not yet made a definite decision whether or not this is going to be a free-trade agreement.” China Trade Indonesia notified its partners in Asean earlier this year that it wants to revise the group’s free-trade agreement with China, which took force on Jan. 1 and scraps tariffs on about 90 percent of goods. Textiles, food and electronics companies have said they will suffer from the inflow of cheaper Chinese goods. China’s trade with Asean has jumped sixfold since 2000 to $193 billion in 2008. The country’s share of Southeast Asia’s total commerce increased to 11.3 percent from 4 percent in that time, whereas the U.S. portion fell to 10.6 percent from 15 percent, Asean statistics show. “We don’t worry so much about having to compete with the U.S. in the way some sectors worry about having to compete with China,” Indonesia’s Pangestu said. “From the Asean-U.S. perspective of increasing trade and investment, it’s more like, ‘Hey guys, the U.S. is back.’” To contact the reporter on this story: Daniel Ten Kate in Putrajaya, Malaysia, at dtenkate@bloomberg.net

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Malaysia to Encourage State-Linked Companies, Tycoons to Invest at Home

February 28, 2010

By Barry Porter March 1 (Bloomberg) — Malaysia’s government-linked companies and businessmen are being pressed to boost spending at home amid concern that more money is being invested abroad than flowing into the country. Fresh ideas to stimulate investment may be included in the government’s so-called New Economic Model, International Trade and Industry Minister Mustapa Mohamed said in an interview on Feb. 27. Prime Minister Najib Razak will unveil the strategy in about a month’s time, Mustapa said. “In the past couple of years there’s been more outflows than inflows,” Mustapa said. “We are going to be more aggressive in promoting our people to invest in Malaysia. We have spoken to our GLCs, for example. They have got some plans, some of which have been presented to the government.” Malaysia reported a net outflow of 17.8 billion ringgit ($5.3 billion) in direct investment in the six months through September 2009, according to statistics department data. State- linked companies, including oil and gas producer Petroliam Nasional Bhd., mobile-phone operator Axiata Group Bhd . and palm- oil producer Sime Darby Bhd. , have invested abroad in recent years to expand their operations. The cumulative net outflow in investment overseas during the past three years was 40 billion ringgit, the Edge weekly newspaper reported on Feb. 27, citing central bank data. Investments abroad were mainly in oil and gas, financial services, communications and business services, the Edge said. “There was a phase in Malaysia’s history when we encouraged our companies to move abroad and there was a time when we received a lot of foreign direct investment inflows into the country,” Mustapa said. Spend at Home While the government won’t stop companies investing overseas, it will encourage them more “aggressively” to spend at home, Mustapa said. The minister didn’t specify what measures to stimulate domestic investment may be included in the New Economic Model, saying details are being ironed out and discussions are still under way. Property is one industry where government-linked companies can invest more locally, Mustapa said. “Some of the GLCs have huge land banks,” he said. “So this is time for them to think about putting more money into our system. We have been talking to our GLCs. We have been talking to our own people, our rich entrepreneurs who have done very well.” Malaysia eased rules governing foreign investors, initial public offerings and property purchases last year, peeling back decades of benefits to the ethnic-Malay majority as the nation slid into its first recession in a decade. Exports Improve Overseas companies investing in the Southeast Asian nation and locally listed businesses no longer need to set aside 30 percent of their equity for so-called Bumiputera investors, identified as Malays and some indigenous people. Overseas ownership thresholds in the fund management industry and at local stockbrokers were also raised. Malaysia emerged from its recession last quarter with gross domestic product rising 4.5 percent from a year earlier. Investment as measured by gross fixed capital formation jumped 8.2 percent, and the construction industry grew 9.2 percent, Malaysia’s central bank said on Feb. 24. Export data for January, due on March 5, could exceed expectations, Mustapa said, adding that the country has no need for further stimulus. Malaysia unveiled 67 billion ringgit of measures under two packages in 2008 and 2009 to help resuscitate growth. “What has happened in respect to Malaysia is a global phenomenon,” said Mustapa. “There has been a global contraction of foreign direct investments throughout the world.” Approved factory investment dropped by about half to 32.6 billion ringgit last year as companies delayed projects during the global economic slump, Mustapa said last month. The government aims to attract domestic investments to account for 60 percent of total investments by 2020 from about 32 percent in 2009, he said Feb. 23. To contact the reporter on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net

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Bernanke Makes 2-Year Treasuries Sweetest Spot as Fed Readies Asset Sales

February 28, 2010

By Liz Capo McCormick

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Greece Now, U.K. Next as Scots Investors Ready for 20-30% Plunge in Pound

February 28, 2010

By Rodney Jefferson March 1 (Bloomberg) — While the eyes of the world focus on Greece’s debt crisis, investors in Edinburgh are busy preparing for the U.K. to be next. Turcan Connell , which caters to rich families, expects the pound to lose between 20 percent and 30 percent against the dollar once investors turn their sights on Britain as the government sells a record amount of debt. Concern that Greece won’t be able to cut its budget deficit helped send the euro 5 percent lower against the dollar this year. “Alarm bells were ringing in Greece for a long time and when it happened, it happened very quickly,” Haig Bathgate , head of strategy at Turcan Connell, said at the company’s offices in the Scottish capital. “The U.K. is in a similar predicament. It could be hit very hard.” Money managers in Edinburgh, where investment decisions have been made on behalf of insurers, pensioners and the wealthy for two centuries, are maneuvering to protect assets from the U.K. economy as it limps out of its worst recession on record. Bruce Stout , whose Murray International Trust Plc in Edinburgh has doubled over the past five years, said the chance of a plummeting pound are “better than even” and his biggest holdings are in Asia and Latin America. He called sterling a “very vulnerable currency.” U.K. fund managers at Aegon Asset Management and Scottish Widows Investment Partnership, together responsible for more than 30 billion pounds ($45 billion), said in January they are buying companies that do the bulk of their business abroad. ‘Very Dire’ “When there’s a fiscal crisis, the markets tend to punish that country very quickly,” said Bathgate, who is responsible for 560 million pounds. “I don’t think Britain is in nearly as bad a position as Greece. We’ve got a good taxation system, however the position of the economy is very dire.” The U.K.’s budget deficit is roughly the same as Greece’s, both exceeding 12 percent of economic output. Moody’s Investors Service and Standard & Poor’s said last week they may cut Greece’s credit rating as the five-month-old government struggles to curb spending and control its debt. British Prime Minister Gordon Brown’s government in December increased its planned gilt sales for the financial year ending this month to a record 225.1 billion pounds from the 220 billion pounds announced in April. Moody’s Investors Service said in December the U.K. may “test the Aaa boundaries.” Brown must call an election by June and some polls signal that no party will emerge with a clear majority. Hung Parliament A so-called hung parliament or signs retail sales and economic growth aren’t recovering as expected might be the catalysts for the pound to accelerate declines, Bathgate said. The Office for National Statistics last week revised up the rate of economic growth for the fourth quarter to 0.3 percent from a previous estimate of 0.1 percent. “There could be a number of triggers,” he said. “If there’s indecision about how you deal with a problem, that’s when things start to fall apart. We could be in the position where the spotlight turns to the U.K.” The pound may fall below parity with the euro and drop to the lowest level against the dollar since the mid-1980s should the U.K. cut spending too quickly, Mansoor Mohi-Uddin , chief currency strategist at UBS AG, said in a Feb. 24 report. Sterling slid to a nine-month nadir against the dollar last week, trading at $1.52. Zurich-based UBS, the world’s second- biggest currency trader, predicted it could fall “quickly back” to $1.05 or below. ‘Devalue the Currency’ The pound may come under further pressure with the Bank of England resuming its quantitative-easing program, a process of injecting new money into the economy, within the next three to four months, Bathgate said. Policy maker Adam Posen said Feb. 24 the central bank may expand the 200 billion-pound asset-purchase plan should the economic recovery prove weaker than expected. “If it comes back then we’re likely to be the only people doing that in the world at that time,” said Bathgate. “My strong view is the government is trying to create inflation and devalue the currency.” Bathgate said he sold conventional U.K. government-bond investments at the end of 2008 and only holds index-linked securities because of concern inflation may accelerate. The firm also has reduced holdings in corporate bonds because of the potential “knock-on impact” from a decline in government securities. The yield on the benchmark 10-year gilt dropped 24 basis points to 4.03 percent last week. The yield on Greek 10-year bonds fell 6 points to 6.39 percent. German bunds, the region’s benchmark debt, declined 18 points to 3.10 percent. Turcan Connell, whose clients typically have at least 5 million pounds to invest, was founded in 1998 and oversees about 1 billion pounds in total. Bathgate is responsible for allocating money to different funds, and half is currently in stocks portfolios with 30 percent in hedge funds and other so- called alternative investments. To contact the reporter on this story: Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net

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China’s Manufacturing Expands Less Than Economists’ Estimates for February

February 28, 2010

By Bloomberg News March 1 (Bloomberg) — China’s manufacturing expanded by the least in a year in February as output and orders grew at a slower pace. The Purchasing Managers’ Index fell to a seasonally adjusted 52, according to Li & Fung Ltd., a Hong Kong-based company that releases data for the Federation of Logistics and Purchasing. That was less than 55.8 in January and the median 55.2 estimate in a Bloomberg survey of 15 economists. The world is counting on China to drive growth as Europe’s recovery falters and the U.S. grapples with high unemployment. The Shanghai Composite Index has fallen about 7 percent this year on concern that the Chinese economy may lose momentum as the government reins in stimulus to counter overheating risks. “We are still in strong expansionary territory, but we believe some of the momentum of the recovery we experienced in 2009 is fading,” Stephen Green , an economist at Standard Chartered Plc in Shanghai, said before today’s data. Last month’s Lunar New Year holiday may have damped orders, he said. In today’s data, a reading over 50 indicates an expansion. An index of export orders fell to 50.3 from 53.2 in January. The output index fell to 54.3 from 60.5. Cooling Credit China’s economic growth accelerated to 10.7 percent, the fastest pace since 2007, in the fourth quarter on stimulus spending, subsidies for consumer purchases and record lending. Increased demand was a factor in Baoshan Iron & Steel Co. , China’s biggest publicly traded steelmaker, raising prices for March delivery. Policy makers are cooling credit growth to restrain inflation and limit the risk of soured loans and asset- price bubbles as property prices surge in cities such as Shenzhen and Sanya. The central bank has twice raised lenders’ reserve requirements this year. Analysts will watch for any policy shifts when Premier Wen Jiabao makes an annual address to the nation on March 5 at the National People’s Congress in Beijing. In a Feb. 27 webcast, he reaffirmed a “moderately loose” monetary policy and said 2010 would be a complicated mix of sustaining the economic expansion, adjusting the nation’s growth model and managing inflation expectations. Manufacturers have been getting a boost from exports, with overseas shipments climbing for a second straight month in January after plummeting because of the financial crisis. Subsidies within China for car and home-appliance purchases and tax rebates for exporters will continue this year, the government said. Yuan’s Peg The central bank is also yet to loosen the yuan’s effective peg to the dollar, which has kept the currency at about 6.83 since July 2008, shielding exporters from the slump in global demand. “Foreign demand is improving, and consumption growth remains solid,” Dariusz Kowalczyk , chief investment strategist at SJS Markets Ltd., said in Hong Kong before today’s data. China’s growth in the first half will be “so strong that it can be characterized as overheating,” Kowalczyk said, forecasting “further policy tightening.” After last year overtaking the U.S. as the biggest auto market and Germany as the biggest exporter, China is poised to overtake Japan this year as the second-largest economy. The nation will contribute more than a third of global growth in 2010, according to Nomura Holdings Inc. Today’s PMI figure was up from a record-low 38.8 in November 2008, when recessions in the U.S., Europe and Japan sent export orders plunging. The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, is based on replies to questionnaires sent to purchasing executives at more than 730 companies in 20 industries. It started in January 2005. — Li Yanping and Sophie Leung . Editors: Paul Panckhurst , Lily Nonomiya . To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net Sophie Leung in Hong Kong at +852-2977-6126 or sleung59@bloomberg.net

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Merck KGaA to Buy Millipore for $6 Billion in Cash, Beating Thermo Fisher

February 28, 2010

By Zachary R. Mider and Angela Cullen March 1 (Bloomberg) — Merck KGaA agreed to buy Millipore Corp. , a supplier of drug development equipment for biotechnology companies, for about $6 billion in cash, beating a rival offer from Thermo Fisher Scientific Inc. Merck will pay $107 a share, the Darmstadt, Germany-based company said in a statement today. The offer is 13 percent more than Millipore’s closing price on Feb. 26, and 50 percent higher than the closing price on Feb. 19, the last day of trading before Bloomberg reported Millipore got a takeover bid . Merck , the world’s largest maker of liquid crystals used to make flat-panel televisions, will get about 35 percent of its revenue from chemicals after the Millipore acquisition, up from about 25 percent currently, Merck spokeswoman Phyllis Carter said today in an interview. Merck will also gain Millipore’s expertise in testing and manufacturing biotechnology drugs, said Deutsche Bank analyst Ross Muken . “The angle for Merck is access to high-growth biologics,” Muken said in a telephone interview today. Millipore allows Merck, seller of the cancer drug Erbitux outside the U.S., an opportunity to expand into biotechnology “without the pipeline risk,” said Muken, who has a “hold” rating on Millipore and doesn’t own shares in the company. Millipore, based in Billerica, Massachusetts, put itself up for sale after getting an unsolicited takeover bid worth less than $95 a share from Thermo Fisher, said people with knowledge of the matter. General Electric Co. is among other companies that weighed a bid during the auction, which was run by Goldman Sachs Group Inc., these people said. Long-Term Debt Millipore had long-term debt of $890 million, according to a Feb. 2 regulatory filing. Merck valued its acquisition at about $7.2 billion, including debt. Merck will use a bridge loan provided by Bank of America Corp., BNP Paribas and Commerzbank AG to help finance the acquisition, Merck’s Carter said. “This is a combination with an excellent strategic fit, which will allow us to cover the entire value chain for our pharma and biopharma customers, offering integrated solutions beyond chemicals,” said Dr. Karl-Ludwig Kley , chairman of the executive board of Merck, in a joint statement with Millipore today. Millipore is well-positioned in the market for researching and producing biotechnology drugs, the companies said in their statement. Merck will also gain Millipore’s comprehensive range of products , technologies and services used by drug companies and universities to improve lab productivity and manufacturing, the companies said. ‘Full Work Flow’ “Millipore can offer a full work flow for a biotech customer,” Deutsche Bank’s Muken said. “They probably have the widest array of products for that biomanufacturing market of any other players out there.” Last year, Millipore generated sales of US$ 1.7 billion, with around 6,000 employees in more than 30 countries, the companies said in their statement. Merck said last year it was seeking acquisitions to bolster its chemicals business as margins from liquid crystals slipped to less than 50 percent. Merck is being advised on Millipore by Guggenheim Securities and Perella Weinberg Partners. Millipore will contribute immediately to core earnings per share and generate cost synergies of about $100 million a year three years after the closing of the deal, Merck’s Carter said. “Today’s announcement, which is the outcome of a thorough strategic review process, is a validation of the tremendous value of the Millipore brand and a testament to the value this transformation has created for all of our stakeholders,” Martin Madaus , Chairman, President and CEO of Millipore said in the joint statement today. “We are excited to join a high-quality company like Merck as we will gain greater scale and scope in the life science industry.” To contact the reporters on this story: Zachary Mider in New York at zmider1@bloomberg.net Angela Cullen in Frankfurt at acullen8@bloomberg.net ;

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Copper Jumps to Five-Week High in London as Chile Quake Disrupts Supplies

February 28, 2010

By Bloomberg News March 1 (Bloomberg) — Copper jumped to the highest level in more than five weeks in London and by the limit in Shanghai after a magnitude-8.8 earthquake disrupted supplies from Chile, the world’s largest producer. Copper for three-month delivery on the London Metal Exchange surged as much as 5.6 percent to $7,600 a metric ton, the highest price since Jan. 20. The contract traded at $7,430 a ton at 9:46 a.m. in Shanghai. The June-delivery contract on the Shanghai Futures Exchange climbed 5 percent from the previous settlement price to 61,150 yuan ($8,958) a ton, and last traded at 60,410 yuan. The quake which hit central Chile on the morning of Feb. 27 forced Codelco and Anglo American Plc to halt mine operations. Codelco said it will meet supply contracts with shipments from undamaged plants in Chile’s north. Copper represented half of Chile’s $53 billion of exports last year. “The initial reaction to the quake is for copper to shoot up,” Xu Liping, an analyst at HNA Topwin Futures Co., said from Shanghai today. “The extent of the rally will depend on what additional information emerges and interpretation of the actual supply damage,” he said. Codelco’s El Teniente and Andina mines halted operations because of the power outage on the day the quake struck, and the company said two mines will reopen “shortly” after inspectors failed to find major damage. Anglo American Plc said its Los Bronces and El Soldado mines in Chile stopped operating for the same reason, without giving more details on whether the company was planning a restart. The South American country’s production of the metal used in pipes and wiring climbed 0.7 percent to 5.4 million metric tons in 2009. Aluminum in London was 0.3 percent up at $2,140 a ton, zinc added 1.4 percent to $2,226, lead increased 1.6 percent to $2,200 a ton, nickel rose 0.6 percent to $21,300, and tin climbed 1 percent to $17,300. — Li Xiaowei . With reporting by Sebastian Boyd, James Attwood and Eduard Thomson in Santiago. Editors: Richard Dobson, Matthew Oakley. To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net

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AIG Said to Discuss $35 Billion Sale of Hong Kong Unit to Prudential Plc

February 28, 2010

By Kevin Crowley and Howard Mustoe Feb. 28 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in negotiations to buy American International Group Inc. ’s Hong Kong-based life unit for more than $30 billion, according to a person familiar with the situation. Prudential would not be forced to sell any of its existing businesses to fund a purchase of American International Assurance Co., said the person, who declined to be identified because the talks are private. Chief Executive Tidjane Thiam has spoken with AIG’s board in recent days, the person said. Thiam wants to raise the proportion of sales the company gets from Asia to 80 percent by 2015 from 50 percent now, he said in a Feb. 17 interview. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K. market. A sale of AIA would be a change of course for AIG, which has been planning an initial public offering for the unit to help repay its $182.3 billion bailout by the U.S. government. “Strategically it’s probably the right move, it puts them into a different league,” said Justin Urquhart Stewart , who oversees about $3.3 billion as director of 7 Investment Management in London, including Prudential shares. “Until we see what the figures are like, then you’d have to question their ability to afford and fund it.” London-based Prudential has a market value of 15.3 billion pounds ($23.3 billion). The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. The company has an A+ credit rating with a negative outlook at Standard & Poor’s and an A2 rating with a negative outlook at Moody’s Investors Service Share Sale “Prudential has a very strong capital position , but an acquisition of this size would probably need equity financing to support it,” said Antonello Aquino , a senior credit analyst at Moody’s Investors Service, who follows European insurers. A 15 billion-pound share sale to fund the purchase would be fully underwritten by a group of banks led by Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co., Sky News reporter Mark Kleinman wrote on his blog today. Sky News first reported on the negotiations yesterday. Lloyds Banking Group Plc completed the U.K.’s biggest rights issue in December, raising 13.5 billion pounds. Credit Suisse, HSBC, JPMorgan and Lazard Ltd. are advising Prudential on the acquisition, Sky said. Prudential would pay mainly in cash with a small amount of stock, though the terms of the deal are still being worked out, the Wall Street Journal said today, citing one person familiar with the transaction. More Bidders? Prudential spokesman Ed Brewster declined to comment as did AIG spokesman Mark Herr . Credit Suisse, Lazard and JP Morgan also declined to comment. A spokesman for HSBC didn’t respond to an e-mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t respond to a voicemail left on her mobile phone outside regular office hours. Prudential’s offer may tempt other insurers to bid for the AIG unit, especially if AIG were prepared to lower its asking price, said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “In the various territories in the Far East and Asia, AIG and the Pru have been number one and two,” he said. “They can justify a higher price through synergy gains.” AIA, which has operated in Asia for more than 90 years, has 20,000 employees and 250,000 agents in markets spanning China to Australia, AIG said in a May statement. It sells life, accident and health insurance policies and private retirement planning and wealth management services. The unit has more than 20 million customers and more than $60 billion of assets. AIA IPO Earlier this month, AIG, which is selling assets to repay the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. This is the second time Prudential has pursued AIA. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. If AIG proceeds with an IPO of AIA, it hopes to value the unit at $30 billion to $40 billion and get proceeds of about $15 billion, the WSJ reported today. Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc. and operates in the U.S. through its Jackson National Life Insurance Co. unit. To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net Howard Mustoe in London at hmustoe@bloomberg.net

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Video: Toyota’s President to Meet Press in China Amid Recalls: Video

February 28, 2010

March 1 (Bloomberg) — Bloomberg’s Stephen Engle reports on Toyota Motor Corp. President Akio Toyoda’s plan to hold a press conference today in China, the world’s biggest car market. Toyota is struggling to salvage its reputation amid global recalls of more than 8 million vehicles. (Source: Bloomberg)

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Video: Barratt Says Copper Prices May See `Sustained’ Gains: Video

February 28, 2010

March 1 (Bloomberg) — Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, talks with Bloomberg’s Haslinda Amin about the outlook for commodities. Copper rose the most in 11 months after a magnitude 8.8 earthquake halted mines in Chile, cutting supplies from the world’s largest producer. (Source: Bloomberg)

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Video: Montesano Says Thai Government Needs to Face Election: Video

February 28, 2010

March 1 (Bloomberg) — Michael Montesano, a visiting research fellow at the Institute of Southeast Asian Studies in Singapore, talks with Bloomberg’s Bernard Lo about Thailand’s political stability. Thai security forces were on alert following bomb attacks on Bangkok Bank Pcl that came after a court seized about $1.4 billion from fugitive former Prime Minister Thaksin Shinawatra. (Source: Bloomberg)

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Video: Dennelind Says Digi.Com to Sell iPhone in Malaysia: Video

February 28, 2010

March 1 (Bloomberg) — Digi.Com Bhd. Chief Executive Officer Johan Dennelind speaks with Bloomberg’s Bernard Lo about an agreement to sell Apple Inc.’s iPhone in Malaysia. Dennelind, speaking from Kuala Lumpur, also discusses the company’s business strategy and growth outlook. (Source: Bloomberg)

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Dennis Whittle: Entrepreneurs are made, not born

February 28, 2010

Here is a nice piece by Vivek Wadhwa in TechCrunch.

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Merkel Seeks to Damp Greek `Emotions’ as Crisis Weighs on Euro Confidence

February 28, 2010

By Tony Czuczka March 1 (Bloomberg) — German Chancellor Angela Merkel said she aims to calm the turmoil over Greece’s budget crisis in talks with Prime Minister George Papandreou , signaling her concern that “emotions” may be spinning out of control. Greece’s budget deficit, the European Union’s biggest, has triggered the euro’s longest losing streak against the dollar since November 2008 and forced EU leaders to plan for possible emergency aid. The crisis has spilled over to German-Greek relations, after Greek Deputy Prime Minister Theodoros Pangalos suggested Germany isn’t entitled to criticize Greece because of the Nazi-era occupation of his country during World War II. Merkel, who is scheduled to host Papandreou for talks on March 5, wants “to stay in close contact with him so the emotions don’t run so high,” she said in off-the-cuff studio remarks in Berlin yesterday overheard by reporters. On camera, Merkel said in an interview on ARD television that “the euro is certainly facing the most difficult phase since its inception.” The comments are further evidence of Merkel’s concern about the risk Greece poses to the single currency, to Germany and the EU as a whole. Merkel, who leads Europe’s biggest economy, warned as early as Jan. 13 that Greece “can put us under great, great pressures.” German lawmakers say euro-area officials are crafting a plan to grant Greece about 25 billion euros ($34 billion) in aid should the need arise, possibly by using state-owned lenders such as Germany’s KfW Group to buy its debt. Merkel said in the interview that decisions on aid “absolutely haven’t been taken” and the European Commission, the EU’s executive arm, is in charge of the bloc’s response. “We can best help Greece right now by making it clear that Greece has to do its homework,” Merkel said on ARD. “The Commission is dealing with that.” Greece “must do what’s important for the country but also what’s important for all us,” she said. To contact the reporters on this story: Tony Czuczka at aczuczka@bloomberg.net

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Chile Steps Up Search for Survivors as Earthquake Death Toll Surpasses 700

February 28, 2010

By James Attwood Feb. 28 (Bloomberg) — Chile stepped up efforts to find survivors of an earthquake registering 8.8 magnitude that struck before dawn yesterday, killing more than 700 people, severing the country’s main highway and damaging 1.5 million homes. The Chilean Air Force began ferrying rescue workers, police and other security forces in hourly flights to the city of Concepcion, close to the epicenter of the quake. Special forces troops and police with sniffer dogs are among the rescue workers entering worst affected areas of southern Chile. Authorities are setting up field hospitals and deploying additional rescue workers to the most affected areas, President Michelle Bachelet told reporters today. The army is sending 10,000 troops, Defense Minister Francisco Vidal said. More than 50 aftershocks followed yesterday’s quake, which was stronger than the one in Haiti last month that may have killed 300,000. A temblor measuring 6.2 hit the Libertador O’Higgins region, 90 miles south of Santiago, at 6:25 a.m. New York time, the U.S. Geological Survey said on its Web site. “It’s much worse than I thought it would be,” Public Works Minister Sergio Bitar told reporters yesterday. “It’s not something we can solve quickly. This will take several months.” Bachelet held meetings with armed forces personnel, ministers and emergency agency officials in Santiago. President- elect Sebastian Pinera visited the city of Talca by helicopter, calling on private companies to assist the emergency efforts and reconstruction. Yesterday’s quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region and close to Concepcion, a metropolitan region of over 500,000 people. Highways and airports were shut by damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc. ‘State of Catastrophe’ Bachelet declared a “state of catastrophe.” She said in a televised address yesterday about 2 million people have been affected by the earthquake, which the USGS said is the world’s fifth strongest since 1900. The 90-second temblor severed the Pan-American highway, the country’s main thoroughfare, at several points south of Santiago. Bridges collapsed and embankments have subsided, rendering long sections of asphalt impassable. Bypasses have been set up to reconnect roadways, Abumohor said today. An estimated 1.5 million homes may have been damaged, a third of them severely, Housing Minister Patricia Poblete said. “We are talking almost about a cataclysm,” Poblete said in remarks broadcast on TVN. Santiago Palace Damaged In Santiago, people slept in cars, their yards and outside apartment buildings, concerned that aftershocks would further damage their homes. The facade of the fine arts museum collapsed and Bitar said there was damage to part of the La Moneda presidential palace. The worst problems are near the epicenter of the earthquake close to Parral, more than 300 kilometers from Santiago. The tower of the pink church at Pelequen, a place of pilgrimage 130 kilometers south of Santiago, was gone and the roofs of several colonial-style houses had collapsed. Pinera, who is to be sworn into office on March 11, vowed to reassign spending to finance reconstruction. Television images showed collapsed buildings across Concepcion. Rescue workers with specially trained dogs worked through the night to rescue 100 people believed to be trapped inside a 14-story apartment building that toppled onto one side, following the cries of those trapped inside, TVN reported. Water System Destroyed Tanker trucks distributed drinking water to the city, whose water system was destroyed by the quake, Mayor Jacqueline Von Rysselberghe told TVN, as rescue workers drilled into the toppled building behind her. Food is running out in the city because it’s impossible for supplies to reach the city, she said. Riot police patrolled the streets in Concepcion, firing teargas on people looting a supermarket, TVN images showed. “People are running out of food at home and that encourages looting,” the mayor said. “If we don’t solve that problem tonight will be very hard, the social tension will be very high.” In towns closer to the epicenter, including Curico and Talca, more than 80 percent of buildings were flattened, CHV Television reported. Offshore Epicenter The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the USGS Web site . It carried a force 500 times stronger than the magnitude 7.0 earthquake that last month devastated Haiti, in terms of the energy released, according to the USGS. “We literally bounced around the room,” Patricia Bustamante, 61, said from the emergency room at the Salvador hospital in Santiago where her daughter was being treated for multiple concussions. “I’ve been through the earthquakes of 1960, 1971 and 1985 and this one felt different. It was like a galloping horse.” Stringent building codes and the most highly-engineered building inventory in Latin America helped mitigate damage, Boston-based Air Worldwide, a catastrophe modeling firm that estimates damages for insurers, said in a press release. Power and phone connections were disrupted. Chilectra , the electric utility for the Chilean capital of Santiago, said electricity has been restored to 80 percent of the city’s homes and businesses. At least four copper mines responsible for 16 percent of the country’s output halted operations after the quake struck. Chile is the world’s largest copper producer. Mines to Reopen Codelco’s El Teniente and Andina mine in central Chile will reopen “shortly” after inspectors failed to find major damage, Mining Minister Santiago Gonzalez said without providing a timetable for them to restart. Most of Chile’s copper deposits and port facilities are located in the northern half of the country and had no reports of damage. These include Escondida, the world’s largest copper mine, operated by BHP Billiton Ltd. and in which Rio Tinto Group is a shareholder. Secretary of State Hillary Clinton still plans to visit Chile during her previously planned five-country tour of Latin America this week, department spokeswoman Megan Mattson said in a telephone interview today. “The secretary is still planning on stopping in Chile to show solidarity with the Chilean people,” Mattson said. “At this time, we have not received a formal request for aid.” Finance Minister Andres Velasco said it was too early to estimate the economic cost of the quake. He said Chile’s policy of funneling windfall copper profits into a $14.7 billion rainy- day fiscal savings fund would help shoulder the cost of rebuilding. “Chile has saved for a very long time in order to have the savings to be able to face situations like this,” he told reporters. To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net ; Michael Smith in Santiago at mssmith@bloomberg.net ; James Attwood in Santiago at jattwood3@bloomberg.net .

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Scorsese’s `Shutter Island’ Tops U.S. Box Office Sales for Second Weekend

February 28, 2010

By James Callan Feb. 28 (Bloomberg) — “Shutter Island,” the Martin Scorsese thriller about an insane asylum, was the top-grossing movie at U.S. and Canadian theaters for the second consecutive weekend with ticket sales of $22.2 million. “Cop Out,” an action-comedy starring Bruce Willis and Tracy Morgan , opened in second place with $18.6 million for Time Warner Inc.’s Warner Bros., Hollywood.com Box-Office said today in an e-mailed statement. “Shutter Island,” the first release this year from Viacom Inc.’s Paramount Pictures, stars Leonardo DiCaprio as a detective investigating a missing patient at the asylum. It has made $75.1 million in the past two weeks and had the biggest opening weekend ever for both Scorsese and DiCaprio. A lack of horror films lately has made the thriller more appealing, said Chad Hartigan , a box-office analyst at Exhibitor Relations. “There’s always the teen and the young-adult audience that gets into these films, and you couple that with the marquee value of Leonardo DiCaprio and the cache of Martin Scorsese,” Hartigan said in an interview. “It’s paying dividends.” “Cop Out,” from director Kevin Smith , tells the story of a pair of mismatched New York detectives who take on a Mexican drug dealer while searching for a valuable baseball card that’s been stolen. Appetite for Horror “The Crazies” made its debut in third place with $16.5 million for Overture Films. In the R-rated horror film, inhabitants of a small town mysteriously turn into homicidal zombies when exposed to a deadly virus. It stars Timothy Olyphant and Radha Mitchell. “Horror films are usually way more prominent in the early months of the year,” Los Angeles-based Hartigan said. “If ‘Shutter Island’ wasn’t out, ‘The Crazies’ would have done even better.” “Avatar,” James Cameron’s 3-D adventure, dropped to fourth place from third with $14 million in ticket sales. The sci-fi movie has made $706.9 million domestically for Twentieth Century Fox since its Dec. 18 release. It is the top-grossing film of all time. Fox’s “Percy Jackson & The Olympians: The Lightning Thief,” fell to fifth place from fourth with $9.8 million. Romance “Valentine’s Day,” featuring Julia Roberts , Ashton Kutcher and Jessica Alba , slipped to sixth place from second with sales of $9.51 million. The romantic comedy was released on Feb. 12, in time for the movie’s namesake holiday, and has taken in a total of $100.4 million. “Dear John” fell to seventh place from sixth with $5 million for Sony Corp. The movie, based on a Nicholas Sparks novel, is about a soldier on leave who falls in love with a college student. Sales for the top 12 films rose 24 percent to $108.1 million from $87.2 million a year earlier, Hollywood.com said. Year-to-date receipts total $1.81 billion, up 1.5 percent from a year earlier. Attendance is down less than 1 percent this year. The following table has figures provided by studios to Hollywood.com. The amounts are based on actual ticket sales from Feb. 26 and yesterday and estimates for today. Rev. Avg./ Pct. Total Movie (mln) Theaters Theater Chg. (mln) Wks ================================================================ 1 SHUTTER ISLAND $22.0 3,003 $7,393 -46 $75.1 2 2 COP OUT 18.6 3,150 5,894 — 18.6 1 3 THE CRAZIES 16.5 2,477 6,670 — 16.5 1 4 AVATAR 14.0 2,456 5,700 -14 706.9 11 5 PERCY JACKSON 9.8 3,302 2,698 -36 71.2 3 6 VALENTINE’S DAY 9.5 3,578 2,657 -43 100.3 3 7 DEAR JOHN 5.0 3,006 1,663 -30 72.6 4 8 THE WOLFMAN 4.1 3,043 1,355 -58 57.2 3 9 TOOTH FAIRY 3.5 2,249 1,534 -21 53.9 6 10 CRAZY HEART 2.5 1,148 2,213 -14 25.1 11 11 THE BLIND SIDE 1.3 945 1,370 -11 248.8 15 12 THE BOOK OF ELI 1.1 975 1,159 -40 92.5 7 Top 12 Films Grosses This Week Year Ago Pct. (mln) (mln) Chg. =================================== $108.1 $87.2 23.9 Year-to-date Revenue YTD YTD Pct. (bln) (bln) Chg. =================================== $1,805 $1,778 1.5 Year-to-date Attendance: 0.5% To contact the reporter on this story: James Callan in New York at jcallan2@bloomberg.net .

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Europe Demands Greece Cut Budget Deficit as Bloc Crafts $34 Billion Rescue

February 28, 2010

By Simon Kennedy and Maria Petrakis March 1 (Bloomberg) — European Union Monetary Affairs Commissioner Olli Rehn will likely push Greece to do more to cut its budget deficit today as governments craft a possible rescue package for the cash-strapped nation. Rehn will meet with Prime Minister George Papandreou as German lawmakers say euro-area officials are devising a plan to grant Greece about 25 billion euros ($34 billion) in aid should it need help financing its debt, possibly by using state-owned lenders such as the KfW Group to buy its bonds. German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker signaled yesterday that Rehn will warn Greece it must do more to narrow the EU’s largest budget gap and can’t rely on taxpayers elsewhere to help until it acts. Adding to the political pressure, the fiscal strategy of Papandreou’s government may soon be tested by investors as it readies a sale of as much as 5 billion euros of 10-year notes. “If the Greek government cannot raise the necessary funds in the commercial market, which continues to look unlikely, then bilateral loans will be forthcoming,” said Erik Nielsen , chief European economist at Goldman Sachs Group Inc. in London. Rehn arrives after European officials pored over the government’s books to verify it’s doing enough to knock 4 percentage points off its budget deficit from last year’s 12.7 percent of gross domestic product. The country has until March 16 to satisfy fellow EU governments that its deficit reduction plan is on track and faces being pressed to increase consumer taxes and lower capital spending if it can’t show sufficient progress. ‘Additional Actions’ Juncker, who speaks for euro-area finance ministers, yesterday indicated more will be demanded. Greece needs to “take additional actions” to pare its shortfall and “must understand that the taxpayer in Germany, Belgium or Luxembourg isn’t prepared to correct the mistakes of Greek fiscal policy,” he told Eleftherotypia newspaper. In an interview with ARD Television, Merkel denied money has been set aside to bail out Greece and said the country has to “do its homework.” Speaking after the euro recorded its third straight monthly loss against the dollar, its longest losing streak since November 2008, Merkel said the single currency is “certainly facing the most difficult phase.” Billionaire investor George Soros said on CNN yesterday that the euro “may not survive” the Greek turmoil. Bonds Investors last week continued to question Greece’s chances of cutting its budget deficit. Greek two-year yields rose by as much as 75 basis points on Feb. 25, the most since Jan. 20. The spread between 10-year German bunds and Greek securities of a similar maturity widened 12 basis points in the week to 330 basis points. Still, the cost of insuring against default on Greek government debt fell for the first day in more than a week on Feb. 26 on speculation the nation will pledge tougher steps. Credit-default swaps on Greece dropped 35.6 basis points to 364.02, according to CMA Datavision. The contracts are down from Feb. 4’s record 428.25 basis points. Papandreou told the Greek parliament on Feb. 26 that the nation will “meet the challenge with whatever cost and pain we will need to go through.” Government spokesman George Petalotis said in an interview the same day that more measures will be concerned if the EU deems it necessary. Greece needs to raise 53 billion euros this year and redeem more than 20 billion euros of bonds by the end of May, according to data compiled by Bloomberg. It vows to reduce its budget gap below the EU limit of 3 percent of GDP in 2012. The European Commission forecasts a debt equivalent to 124.9 percent of GDP this year. KfW KfW’s purchase of Greek bonds, backed by German government guarantees, would be an emergency measure as it would risk inviting investors to speculate against other euro region countries, the German lawmakers said on condition of anonymity because the information is confidential. France’s state-owned Caisse des Depots may also be involved, Greece’s Ta Nea newspaper reported Feb. 27. The Wall Street Journal said the plan may total 30 billion euros. “Greece won’t be allowed to sink on the condition it respects its commitments to stabilize its budget,” French Finance Minister Christine Lagarde told Europe 1 radio yesterday. “We have a certain number of proposals in the euro zone, involving either private partners or public partners or both.” Strikes EU leaders ordered Greece on Feb. 11 to slash its budget deficit, while promising “determined” yet unspecified action to help if needed. Papandreou will on March 5 meet with Merkel, who yesterday suggested she is worried “emotions” may be spinning out of control. Complicating the country’s efforts last week were another round of strikes and warnings from Standard & Poor’s and Moody’s Investors Service that they may soon cut Greece’s debt rating if the government flounders in reducing its deficit. The government intends to sell 10-year notes by early March, according to a Jan. 26 statement from the Public Debt Management Agency. Fund managers who may take part in the issue say Greece must offer the biggest premium over benchmark German debt since 1998, paying a coupon of about 7 percent. To contact the reporters on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net ; Maria Petrakis in Athens at mpetrakis@bloomberg.net .

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Merck KGaA Agrees to Buy Millipore in Transaction Valued at $7.2 Billion

February 28, 2010

By Angela Cullen Feb. 28 (Bloomberg) — Merck KGaA said it has entered a definitive agreement to buy Millipore Corp. in a cash deal valued at about $7.2 billion. Merck’s offer of $107 a share in cash is 13 percent higher than Millipore’s closing price on Feb. 26. The acquisition will contribute “immediately” to the German company’s core earnings per share and will generate about $100 million in annual cost savings three years after closing, Merck KGaA spokeswoman Phyllis Carter said in a telephone interview today. Merck will use a bridge loan provided by Bank of America Merrill Lynch, BNP Paribas and Commerzbank AG to help finance the acquisition, said Carter. Merck, based in Darmstadt, Germany, was advised by Guggenheim Securities and Perella Weinberg Partners. Thermo Fisher Scientific Inc., the world’s largest lab instruments maker, had previously offered $6 billion including debt for Millipore, a supplier of drug-development equipment, according to a person familiar with the bid. Thermo Fisher offered less than $95-a-share, said the person, who declined to be identified because the bid wasn’t public. Millipore, based in Billerica, Massachusetts, last week hired Goldman Sachs Group Inc. to solicit bidders for a possible merger or sale, and said in a statement Feb. 23 that it had no “definitive timetable” for the auction. Joshua Young , a Millipore spokesman, declined to comment, saying the company would make an announcement shortly. To contact the reporter on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net ;

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Prudential Plc Said to Be in Talks for $30 Billion AIG Asian Unit Purchase

February 28, 2010

By Kevin Crowley and Howard Mustoe Feb. 28 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in negotiations to buy American International Group Inc. ’s Hong Kong-based life unit for more than $30 billion, according to a person familiar with the situation. Prudential would not be forced to sell any of its existing businesses to fund a purchase of American International Assurance Co., said the person, who declined to be identified because the talks are private. Chief Executive Tidjane Thiam has spoken with AIG’s board in recent days, the person said. Thiam wants to raise the proportion of sales the company gets from Asia to 80 percent by 2015 from 50 percent now, he said in a Feb. 17 interview. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K. market. A sale of AIA would be a change of course for AIG, which has been planning an initial public offering for the unit to help repay its $182.3 billion bailout by the U.S. government. “Strategically it’s probably the right move, it puts them into a different league,” said Justin Urquhart Stewart , who oversees about $3.3 billion as director of 7 Investment Management in London, including Prudential shares. “Until we see what the figures are like, then you’d have to question their ability to afford and fund it.” London-based Prudential has a market value of 15.3 billion pounds ($23.3 billion). The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. The company has an A+ credit rating with a negative outlook at Standard & Poor’s and an A2 rating with a negative outlook at Moody’s Investors Service Share Sale “Prudential has a very strong capital position , but an acquisition of this size would probably need equity financing to support it,” said Antonello Aquino , a senior credit analyst at Moody’s Investors Service, who follows European insurers. A 15 billion-pound share sale to fund the purchase would be fully underwritten by a group of banks led by Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co., Sky News reporter Mark Kleinman wrote on his blog today. Sky News first reported on the negotiations yesterday. Lloyds Banking Group Plc completed the U.K.’s biggest rights issue in December, raising 13.5 billion pounds. Credit Suisse, HSBC, JPMorgan and Lazard Ltd. are advising Prudential on the acquisition, Sky said. Prudential would pay mainly in cash with a small amount of stock, though the terms of the deal are still being worked out, the Wall Street Journal said today, citing one person familiar with the transaction. More Bidders? Prudential spokesman Ed Brewster declined to comment as did AIG spokesman Mark Herr . Credit Suisse, Lazard and JP Morgan also declined to comment. A spokesman for HSBC didn’t respond to an e-mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t respond to a voicemail left on her mobile phone outside regular office hours. Prudential’s offer may tempt other insurers to bid for the AIG unit, especially if AIG were prepared to lower its asking price, said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “In the various territories in the Far East and Asia, AIG and the Pru have been number one and two,” he said. “They can justify a higher price through synergy gains.” AIA, which has operated in Asia for more than 90 years, has 20,000 employees and 250,000 agents in markets spanning China to Australia, AIG said in a May statement. It sells life, accident and health insurance policies and private retirement planning and wealth management services. The unit has more than 20 million customers and more than $60 billion of assets. AIA IPO Earlier this month, AIG, which is selling assets to repay the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. This is the second time Prudential has pursued AIA. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. If AIG proceeds with an IPO of AIA, it hopes to value the unit at $30 billion to $40 billion and get proceeds of about $15 billion, the WSJ reported today. Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc. and operates in the U.S. through its Jackson National Life Insurance Co. unit. To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net Howard Mustoe in London at hmustoe@bloomberg.net

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Starbucks Gun Policy: Refusal To Ban Firearms Pleases Open Carry Advocates, Troubles Gun Control Advocates

February 28, 2010

Dale Welch recently walked into a Starbucks in Virginia, handgun strapped to his waist, and ordered a banana Frappuccino with a cinnamon bun. He says the firearm drew a double-take from at least one customer, but not a peep from the baristas. Welch’s foray into the coffeehouse was part of an effort by some gun owners to exercise and advertise their rights in states that allow people to openly carry firearms. Even in some “open carry” states, businesses are allowed to ban guns in their stores. And some have, creating political confrontations with gun owners. But Starbucks, the largest chain targeted, has refused to take the bait, saying in a statement this month that it follows state and local laws and has its own safety measures in its stores. “Starbucks is a special target because it’s from the hippie West Coast, and a lot of dedicated consumers who pay $4 for coffee have expectations that Starbucks would ban guns. And here they aren’t,” said John Bruce, a political science professor at the University of Mississippi who is an expert in gun policy. Welch, a 71-year-old retired property manager who lives in Richmond, Va., doesn’t see any reason why he shouldn’t bear arms while he gets caffeinated. “I don’t know of anybody who would provide me with defense other than myself, so I routinely as a way of life carry a weapon – and that extends to my coffee shops,” he said. The fight for retailers heated up in early January when gun enthusiasts in northern California began walking into Starbucks and other businesses to test state laws that allow gun owners to carry weapons openly in public places. As it spread to other states, gun control groups quickly complained about the parade of firearms in local stores. Some were spontaneous, with just one or two gun owners walking into a store. Others were organized parades of dozens of gun owners walking into restaurants with their firearms proudly at their sides. In one case, about 100 activists bearing arms had planned to go to a California Pizza Kitchen in Walnut Creek, Calif., but after it became clear they weren’t welcome they went to another restaurant. That chain and Peet’s Coffee & Tea are among the businesses that have banned customers with guns. Just as shops can deny service to barefoot customers, restaurants and stores in some states can declare their premises gun-free zones. The advocacy group OpenCarry.org, a leading group encouraging the demonstrations, applauded Starbucks in a statement for “deciding not to discriminate against lawful gun carriers.” “Starbucks is seen as a responsible corporation and they’re seen as a very progressive corporation, and this policy is very much in keeping with that,” said John Pierce, co-founder of OpenCarry.org. “If you’re going to support individual rights, you have to support them all. I applaud them, and I’ve gone out of my way personally to let every manager of every Starbucks I pass know that.” The Brady Campaign to Prevent Gun Violence has responded by circulating a petition that soon attracted 26,000 signatures demanding that Starbucks “offer espresso shots, not gunshots” and declare its coffeehouses “gun-free zones.” Gun control advocates hope the coffeehouse firearms displays end up aggravating more people than they inspire. “If you want to dress up and go out and make a little political theater by frightening children in the local Starbucks, if that’s what you want to spend your energy on, go right ahead,” said Peter Hamm, a spokesman for the Brady campaign. “But going out and wearing a gun on your belt to show the world you’re allowed to is a little juvenile.” The coffeehouse debate has been particularly poignant for gun-control advocates in Washington state, where four uniformed police officers were shot and killed while working on their laptops at a suburban coffeehouse. The shooter later died in a gun battle with police. Ralph Fascitelli of Washington Ceasefire, an advocacy group that seeks to reduce gun violence, said allowing guns in coffeehouses robs residents of “societal sanctuaries.” “People go to Starbucks for an escape, just so they can get peace,” Fascitelli said. “But people walk in with open-carry guns and it destroys the tranquility.” Gun control advocates have been on the defensive. Their opponents have trumpeted fears that gun rights would erode under a Democrat-led White House and Congress, but President Barack Obama and his top allies have largely been silent on issues such as reviving an assault weapons ban or strengthening background checks at gun shows. Gun rights groups are looking to build on a 2008 U.S. Supreme Court ruling that struck down Washington, D.C.’s handgun ban, and cheered legislation that took effect Monday allowing licensed gun owners to bring firearms into national parks. Obama signed that legislation as part of a broader bill. Legislators in Montana and Tennessee, meanwhile, have passed measures seeking to exempt guns made and kept in-state from national gun control laws. And state lawmakers elsewhere are considering legislation that would give residents more leeway to carry concealed weapons without permits. Observers say the gun rights movement is using the Starbucks campaign to add momentum and energize its supporters. “They’re trying to change the culture with this broader notion of gun rights,” said Clyde Wilcox, a Georgetown University government professor who has written a book on the politics of gun control. “I think they are pressing the notion that they’ve got a rout going, so why not just get what they can while they’re ahead?” ___ On the Net: http://www.bradycampaign.org/ http://www.opencarry.org/

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David Harris: America Over a Barrel

February 28, 2010

There are some things I just don’t get. One of them is America’s chronic inability to address our energy dependence on countries hostile to our core values. Though grave damage is being done to our national security and economy, as a nation, we just can’t summon the will to solve a problem which does have a solution. Thirty-seven years ago, a shot was fired across our bow. OPEC, the oil cartel, decided to mix politics and economics by declaring a boycott of the U.S. Then came the quadrupling of oil prices, sending our economy into a tailspin. Our political leaders all promised dramatic action to wean us from our addiction. Initially, some progress was made in raising fuel economy standards and improving overall energy efficiency. But, in the end, their promises fell short. The price of oil stabilized as output kept pace with demand, and we were quickly lulled right back into collective national complacency. We felt that it was no one’s business to tell us what to drive, how to drive, or what to do in our oil-heated homes. This was America, after all, not some nanny state. So when President Jimmy Carter turned down the thermostat in the White House one winter, donned a sweater, and asked us to do the same, we scoffed at our leader. Didn’t he know that, as Americans, we were entitled to be the world’s biggest energy consumers? How dare he ask us to sacrifice? Then Congress made matters worse. Even as fuel economy standards were being raised for cars, Capitol Hill exempted light trucks and vans from the rules. Lo and behold, as Americans bought more and more of these gas-guzzlers — eventually more than half of all vehicles sold in any given year — our oil needs only grew. In more recent years, we again became aware of the danger of our oil dependence. The 9/11 attacks were a sobering reminder. We learned that Saudi Arabia, with the world’s largest oil reserves, was spending tens of billions of dollars in oil revenue to support the extremist Wahhabi version of Islam around the world. Mosques and madrassas were purveying a message of intolerance and conflict, even as Saudi Arabia was taking out slick ads in the American media promoting our two countries’ “shared values.” We watched as Venezuela, the fifth largest exporter of oil to the U.S. and owner of CITGO, used its petrodollars to undermine American interests in Latin America and to forge ties with Iran. And more broadly, we witnessed energy security issues penetrate just about every nook and cranny in international relations. America tried to bring the horrors of Darfur to an end, but China’s interest in Sudan’s oil made it difficult to get concerted international action — and China isn’t alone. We’ve tried to forge consensus against Iran’s nuclear program, but China’s interest in Iran’s oil complicates that, too — and, again, China isn’t alone. Meanwhile, European countries, most of which are heavily dependent on imported oil, are forced to tiptoe politically around the likes of Libya, a nation with the eighth largest proven reserves in the world. And do we Americans need reminders about the costly consequences for our own foreign policy of our reliance on Middle Eastern oil? What can be done about this? For starters: First, focus on the prize — a world where the value of oil has dropped dramatically. Imagine what that could mean for the distribution of global power. And think about the impact on our economy if we could keep hundreds of billions of dollars per year right here rather than sending them overseas to Venezuela to buy weapons from Moscow or to Saudi Arabia to fund madrassas in Pakistan. Second, it’s time we demand — yes, demand — concerted action by all our elected officials. Words won’t suffice. We’ve had too many of them. Excuses for inaction won’t wash. The very future of our nation is at stake, and it’s high time to put this issue at the top of our agenda and keep it there. Third, let’s drop the partisanship. This is about America, not about political parties. Both parties should have an identical interest in moving the country toward real energy security. However naive it may sound, what a sight it would be to see Democrats and Republicans standing shoulder-to-shoulder and pledging united action to deal with our energy dependence head-on until we reach the goal. Fourth, think bold. Brazil did in the 1970s. It was even more dependent than we on imported oil. No longer. The country today is energy independent, through a combination of national planning, technological innovation, and exploration. And now China is on the way. Beijing has already announced that it seeks to be the global leader in post-oil technologies. Are we going to be content one day to replace our dependence on Middle Eastern oil with dependence on Chinese alternative energy technologies? Fifth, look in the mirror. How many of us have been part of the problem — by our buying and driving patterns, by our lifestyles, by a sense of entitlement, and by a belief that some are exempted from the rules that should govern others? With modest changes in our own behavior, we can have a dramatic impact. And sixth, look to Europe. Not a single one of the most fuel-efficient cars in the U.S. would make the comparable list in Europe, where the base line for the top ten models is 64 miles per gallon. Are Europeans any less interested in safety, emissions controls, or comfort than we are? Europe has also gone much further than the U.S. in developing public transportation. So, too, has Japan. Now China is leaping ahead. This is especially striking in the realm of high-speed trains. We waited decades for the Acela, but compared to what’s available elsewhere, including the Maglev in Shanghai and the TGV in France, forgive me, it’s practically ancient. This is true in metropolitan areas as well. Outside a handful of American cities, public transportation options are few and far between, compelling residents to rely on private vehicles for everything from work to shopping. And even in New York, with its extensive network, a project like the Second Avenue Subway has been in the works, according to author Robert Caro, since “shortly after World War I,” yet we’re still not there. Saddest of all is the knowledge that it’s well within our grasp to break the stranglehold. We can dramatically reduce our dependence on imported oil from hostile countries, while boosting our national security and enhancing our domestic economy — not to mention the benefits that measures reducing greenhouse-gas emissions will provide in terms of climate change and the environment. We have the scientific and entrepreneurial know-how to develop new technologies, and, save oil, abundant natural resources. There’s no one silver bullet for our problem, but there are several promising possibilities. All should be pursued, consistent, of course, with strict environmental safeguards. President Obama, speaking last year of “our journey toward energy independence,” said that “America’s dependence on oil is one of the most serious threats that our nation faces. It bankrolls dictators, pays for nuclear proliferation, and funds both sides of our struggle against terrorism.” By contrast, the former director of Saudi intelligence, Prince Turki al-Faisal, replied that “Like it or not, the fates of the United States and Saudi Arabia are connected and will remain so for decades to come” because of the oil link. Which will it be? President Obama’s vision or Prince Turki al-Faisal’s? The answer should be obvious. The ways to reach it are clear. The bottom-line question is whether there’s the national will.

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Tony Schwartz: Move More, Rest More

February 28, 2010

We don’t rest enough. We don’t move enough. Those are the seemingly contradictory conclusions from a series of studies that got a lot of media attention this week. In the New York Times , Olivia Judson cited a series of recent findings that we’re more vulnerable to obesity and to early death from a wide range of diseases if we spend too much time sitting, even if we work out dutifully every day for an hour at a gym. Part of the explanation is that sitting is one of the most passive activities we can do and burns very few calories. The other explanation is that when you’re sedentary for too long, the body does a worse job at metabolizing sugar and fat, and causes more of it to accumulate in the abdomen. A second study, from the University of California Berkeley, demonstrated that a 90 minute nap in the middle of the day dramatically increased the subsequent capacity of the nappers to learn new information compared to non-nappers. The researchers’ explanation is that the hippocampus, where memories are stored in the short-term, can reach capacity. Napping apparently allows the hippocampus to clear space for the storage of further learning. So what’s the common denominator here? It’s that the relentless, inflexible ways we live and work makes us less healthy, less capable and less productive Human beings are not designed to run continuously — or to be sedentary for long periods. We’re rhythmic beings, and we operate best when we pulse between spending energy and renewing energy. Nearly every system in the body operates best when it pulses. We’re hard wired to oscillate, but we live increasingly linear lives. By putting in long continuous hours, we expend too much mental and emotional energy without sufficient renewal. That’s why a midday nap can be so powerful — even one of 20 to 30 minutes. Conversely, by living mostly desk-bound, sedentary lives, we expend too little physical energy. Movement not only burns calories and builds our physical capacity, but also serves as a source of mental and emotional renewal. Inactivity, by contrast, not only makes us progressively weaker (“Use it or lose it”), it also makes us fatter, less productive and ultimately more vulnerable to disease. The antidote is to make waves, both by moving frequently and by intermittently resting throughout the day. At night we sleep in 90 minute cycles, moving between light and deeper sleep and then back out again. A full cycle gives us the most complete rest, which is why a 90 minute nap is especially effective. During the day, we operate best when we align with these same 90 minute cycles, taking a break at the end of each one as our energy begins to flag, rather than overriding it, as so many of us do. Test the assumption for yourself. This week, try building the following into your day. Take one true renewal break for at least 15 minutes at a designated time in the morning, and go for a walk outside. Take a second break in the afternoon, but this time use it to solely to relax, as deeply as you can. If you have the option to actually take a 20-30 minute nap during that time, that’s ideal. Institute these two breaks for a week. I can almost guarantee you’ll not only feel more energized, you’ll also be more productive.

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Obama Likely to Remain in `Excellent Health,’ Doctor Says After Checkup

February 28, 2010

By Nicholas Johnston and Julianna Goldman Feb. 28 (Bloomberg) — President Barack Obama is in “excellent health,” his doctor said today after an annual checkup of the U.S. chief executive. Obama, who spent about 90 minutes with doctors at the National Naval Medical Center in Bethesda, Maryland, flashed a thumbs up sign and said “really good” when asked by reporters how the examination went as he arrived back at the White House. Navy Captain Jeff Kuhlman, the head of the White House Medical Unit who conducted the exam, said in a summary that Obama “is in excellent health” and that “all clinical data indicate he will remain so for the duration of his presidency.” Kuhlman recommended that Obama, 48, get his next physical when he turns 50, in August 2011. According to the summary, Obama is 6’1” tall and weighs 179.9 pounds when wearing shoes and workout attire. The president’s body mass index is 23.7, which is considered “normal,” and his resting heart rate is 56 beats per minute and his blood pressure is 106/62. The president last received a physical in July 2008, according to the summary. A 2007 examination released during the presidential campaign reported Obama in “excellent health” with a resting heart rate of 60 and a blood pressure of 90/60. Obama adheres to a healthy diet and a strict exercise regimen. He works out nearly every day with his Chicago trainer and plays basketball and golf regularly. Kuhlman recommended that Obama change his exercise routine because of some weakness in his left knee and change his diet to get his LDL cholesterol, which is currently 138, below 130. Smoking Issue The president’s doctor also recommended that Obama continue his “smoking cessation efforts.” He noted the president uses “nicotine replacement therapy.” The president and White House officials have indicated that Obama hasn’t been able to totally kick his smoking habit. While first lady Michelle Obama has pushed Obama to quit smoking, the struggle followed him to the White House. When asked last year whether he has smoked since moving into 1600 Pennsylvania Ave., Obama was coy. “I haven’t had one on these grounds,” he told CNN. “Sometimes it’s hard, but, you know, I’m sticking to — sticking to it.” In June, when he signed a law strengthening regulation of tobacco products, Obama invoked his own troubles with the No. 1 preventable cause of death in the U.S. “I know how difficult it can be to break this habit when it’s been with you for a long time,” he said. After his checkup, Obama met with wounded military servicemen and women being treated at the Bethesda facility before returning to the White House. To contact the reporters on this story: Nicholas Johnston in Bethesda, Maryland, at njohnston3@bloomberg.net ; Julianna Goldman in Washington at jgoldman6@bloomberg.net

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Chile Earthquake Deaths at 708, Will Go Higher, President Bachelet Says

February 28, 2010

By Sebastian Boyd, Michael Smith and James Attwood Feb. 28 (Bloomberg) — Chileans awoke to aftershocks from an earthquake registering 8.8 magnitude that struck before dawn yesterday, killing more than 300 people, severing the country’s main highway and damaging 1.5 million homes. A temblor measuring 6.2 hit the Libertador O’Higgins region, 90 miles south of the capital Santiago, at 6:25 a.m. New York time, the U.S. Geological Survey said on its Web site. More than 50 aftershocks followed yesterday’s quake, which was stronger than the one in Haiti last month that may have killed 300,000. Chile’s death toll is more than 300 people, Jose Abumohor, a spokesman for the National Emergency Agency, said today during a televised news conference. “It’s much worse than I thought it would be,” Public Works Minister Sergio Bitar told reporters yesterday. “It’s not something we can solve quickly. This will take several months.” Yesterday’s quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region and close to Concepcion, a metropolitan region of over 500,000 people. Highways and airports were shut by damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc. ‘State of Catastrophe’ Chilean President Michelle Bachelet declared a “state of catastrophe.” She said in a televised address yesterday about 2 million people have been affected by the earthquake, which the USGS said is the world’s fifth strongest since 1900. A Pacific- wide tsunami warning has been cancelled “for all countries,” the Pacific Tsunami Warning Center said in an advisory on its Web site. The 90-second temblor severed the Panamerican highway, the country’s main thoroughfare, at several points south of Santiago. Bridges collapsed and embankments have subsided, rendering long sections of asphalt impassable. Bypasses have been set up to reconnect roadways, Abumohor said today. An estimated 1.5 million homes may have been damaged, a third of them severely, Housing Minister Patricia Poblete said. “We are talking almost about a cataclysm,” Poblete said in remarks broadcast on TVN. Cars headed north toward the capital were near stationary in long columns threading their way through the vineyards and fruit orchards of Chile’s central valley as Bitar and Defense Minister Francisco Vidal flew overhead in an army helicopter to inspect the damage. The army may send two field hospitals to the south of Chile, Vidal said. Santiago Palace Damaged In Santiago, people slept in cars, their yards and outside apartment buildings, concerned that aftershocks would further damage their homes. The facade of the fine arts museum collapsed and Bitar said there was damage to part of the La Moneda presidential palace. The worst problems are near the epicenter of the earthquake close to Parral, more than 300 kilometers from Santiago. The tower of the pink church at Pelequen, a place of pilgrimage 130 kilometers south of Santiago, was gone and the roofs of several colonial-style houses had collapsed. Bachelet spent yesterday morning answering phones and huddling with the ministers in the control center of the National Emergency Office in Santiago before boarding a helicopter to Talca. Collapsed Buildings President-elect Sebastian Pinera , who is to be sworn into office on March 11, said he inspected the damaged area and vowed to reassign spending to finance reconstruction. Television images showed collapsed buildings across Concepcion. Rescue workers with specially trained dogs worked through the night to rescue 100 people believed to be trapped inside a 14-story apartment building that toppled onto one side, following the cries of those trapped inside, TVN reported. Tanker trucks distributed drinking water to the city, whose water system was destroyed by the quake, Mayor Jacqueline Von Rysselberghe told TVN, as rescue workers drilled into the toppled building behind her. Food is running out in the city because it’s impossible for supplies to reach the city, she said. Riot police patrolled the streets in Concepcion, firing teargas on people looting a supermarket, TVN images showed. “People are running out of food at home and that encourages looting,” the mayor said. “If we don’t solve that problem tonight will be very hard, the social tension will be very high.” In towns closer to the epicenter, including Curico and Talca, more than 80 percent of buildings were flattened, CHV Television reported. Offshore Epicenter The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the USGS Web site . It carried a force 500 times stronger than the magnitude 7.0 earthquake that last month devastated Haiti, in terms of the energy released, according to the USGS. “We literally bounced around the room,” Patricia Bustamante, 61, said from the emergency room at the Salvador hospital in Santiago where her daughter was being treated for multiple concussions. “I’ve been through the earthquakes of 1960, 1971 and 1985 and this one felt different. It was like a galloping horse.” Stringent building codes and the most highly-engineered building inventory in Latin America helped mitigate damage, Boston-based Air Worldwide, a catastrophe modeling firm that estimates damages for insurers, said in a press release. Power, Copper Mines Power and phone connections were disrupted and Santiago residents waited in the street amid fears of aftershocks. Chilectra , the electric utility for the Chilean capital of Santiago, said electricity has been restored to 80 percent of the city’s homes and businesses. At least four copper mines responsible for 16 percent of the country’s output halted operations after the quake struck. Chile is the world’s largest copper producer. Codelco’s El Teniente and Andina mine in central Chile will reopen “shortly” after inspectors failed to find major damage, Mining Minister Santiago Gonzalez said without providing a timetable for them to restart. Most of Chile’s copper deposits and port facilities are located in the northern half of the country and had no reports of damage. These include Escondida, the world’s largest copper mine, operated by BHP Billiton Ltd. and in which Rio Tinto Group is a shareholder. Airport Closed Lan Airlines SA , Latin America’s biggest carrier by market value and which is partly owned by the billionaire Pinera, diverted 17 flights after the Santiago airport closed because of damage. It is expected to remain closed for at least 24 hours, according to airport chief Eduardo del Canto. “The terminal is completely inoperable,” he said. “The aftershocks are scary,” said Susan Irvine, one of a group of tourists from Canada stranded in Santiago after the earthquake closed the airport. “We’ve gone from talking about hours to days.” U.S. Secretary of State Hillary Clinton is scheduled to arrive March 1 in Santiago on a regional tour. President Barack Obama , in a phone call with Bachelet, said the U.S. stands ready to assist Chilean rescue and recovery efforts. While Chile “has considerable assets of its own,” the U.S. has put together a disaster response team and has placed two urban search and rescue teams on alert, State Department spokesman Philip Crowley said in a statement. Economic Cost Finance Minister Andres Velasco said it was too early to estimate the economic cost of the quake. He said Chile’s policy of funneling windfall copper profits into a $14.7 billion rainy- day fiscal savings fund would help shoulder the cost of rebuilding. “Chile has saved for a very long time in order to have the savings to be able to face situations like this,” he told reporters. United Nations Secretary-General Ban Ki-Moon said his organization is monitoring the situation. The UN is on standby to provide emergency relief, the organization said yesterday in an e-mailed statement. Five people died and 11 are missing after a tsunami struck the Juan Fernandez archipelago, 420 miles west of the city of Valparaiso on Chile’s coast, according to images broadcast by TVN, while a sea surge reached the central plaza of port city Talcahuano, near Concepcion, leaving boats stranded in streets. Chile was struck by the most powerful earthquake on record in 1960, when a magnitude 9.5 temblor killed about 1,655 people, according to the USGS Web site. A further 211 people died when associated tsunamis struck Hawaii, Japan and the Philippines. To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net ; Michael Smith in Santiago at mssmith@bloomberg.net ; James Attwood in Santiago at jattwood3@bloomberg.net .

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BHP May Face Sanctions on Falklands Oil Exploration, Argentine Envoy Says

February 28, 2010

By Jacob Greber Feb. 28 (Bloomberg) — BHP Billiton Ltd. will face business sanctions if it pushes ahead with oil exploration in waters off the Falklands Islands, Argentina ’s ambassador to Australia said, according to the Australian Broadcasting Corp. The mining company won’t be allowed to carry out some activities in Argentina if it proceeds with a license to explore off the islands, Pedro Villagra was cited as saying in a report on the broadcaster’s Web site . BHP doesn’t have any operations in Argentina, the report said. Argentina asked the United Nations last week to mediate a dispute with the U.K. over British plans to explore potential oil fields off the coast of the Falkland, where the two countries fought a war in 1982. The disputed islands are known in Spanish as the Malvinas. On Feb. 22, London-based Desire Petroleum Plc started the first exploratory drilling in Falkland waters since 1998. Melbourne-based BHP and Falkland Oil & Gas Ltd., based in London, also plan to drill. British forces drove out Argentine troops who invaded the island in 1982. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Codelco Copper Mines Shut for Second Day After Chile Earthquake Cuts Power

February 28, 2010

By James Attwood Feb. 28 (Bloomberg) — Chilean copper mines accounting for about 16 percent of the nation’s output were halted for a second day after a magnitude-8.8 earthquake cut electricity to the plants and damaged installations. Codelco , the world’s biggest copper producer, said its Andina mine suffered power losses and installations were damaged by a five-ton boulder. The mine could reopen “in the coming” hours, said a spokesman for the state-owned producer, who declined to be quoted, citing company policy. El Teniente, the world’s biggest underground copper mine, also remains closed. More than 50 aftershocks followed yesterday’s pre-dawn quake, which was stronger than last month’s temblor in Haiti that killed 300,000. Disruptions to copper mines in Chile, the world’s largest producer, may cause prices to rise when markets open, according to Macquarie Group Ltd. analyst Jim Lennon . “We see copper as the tightest of the base metal markets,” Lennon said late yesterday in a telephone interview from London. “Even if it’s just 1 percent of global supply that is affected, it would be significant.” The central Chilean ports of San Antonio and Valparaiso remain closed after an earthquake hit the country yesterday, TVN reported today, without saying where it got the information. Copper exports made up about half of Chile’s $53 billion of exports last year. Production rose 0.7 percent to 5.4 million metric tons in 2009. Prices more than doubled in the past year as the world economy recovered and demand increased. State-owned Codelco produces about 600,000 tons combined from the El Teniente and Andina operations. Anglo American Anglo American Plc said yesterday its Los Bronces and El Soldado mines in Chile stopped operating for the same reason. The two mines produce about 280,000 tons annually. Empresa Nacional de Petroleo shut its Bio Bio and Aconcagua refineries. Anglo Spokesman James Wyatt-Tilby didn’t immediately return calls or e-mails from Bloomberg News today seeking comment. Codelco’s mines in northern Chile, including Chuquicamata, are operating normally, said the spokesman. There are no reports of injuries to workers or damage, he said. ENAP, as Chile’s state oil company, plans to import diesel fuel to ensure domestic supply after shutting the two refineries, according to an e-mailed statement. Copper mines in northern Chile operated by BHP Billiton Ltd. weren’t affected by the earthquake that shook the country today, company spokesman Mauro Valdes said yesterday. Rio Tinto Rio Tinto Group , a shareholder in the world’s largest copper mine, Escondida, located in northern Chile and owned by BHP Billiton Ltd., also had no reports of damage, London-based spokeswoman Christina Mills said by telephone. Empresa Nacional de Petroleo’s halted Aconcagua oil refinery may be fixed within six days, while the state oil company’s Bio Bio unit will take longer to resume operations, Mining Minister Santiago Gonzales said yesterday. He didn’t say how long it would take to restart the mines. ENAP, as Chile’s state oil company is known, plans to import diesel fuel to ensure domestic supply after shutting the two refineries, according to an e-mailed statement. For Related News and Information: Top Latin America news: TOPL Emerging Markets Market View: EMMV News on Codelco: 1006Z CI CN Metals Prices: METL London Metal Exchange: LME Top commodity stories: CTOP

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Prudential Plc Said in Talks to Buy AIG Asian Life Unit for $30 Billion

February 28, 2010

By Kevin Crowley and Howard Mustoe Feb. 28 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in negotiations to buy American International Group Inc. ’s Hong Kong-based life unit for more than $30 billion, according to a person familiar with the situation. Prudential would not be forced to sell any of its existing businesses to fund a purchase of American International Assurance Co., said the person, who declined to be identified because the talks are private. Chief Executive Tidjane Thiam has spoken with AIG’s board in recent days, the person said. Thiam wants to raise the proportion of sales the company gets from Asia to 80 percent by 2015 from 50 percent now, he said in a Feb. 17 interview. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K. market. A sale of AIA would be a change of course for AIG, which has been planning an initial public offering for the unit to help repay its $182.3 billion bailout by the U.S. government “If they buy AIA, Prudential will become an absolute dominant force in those big, big markets,” said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “The strategic sense is terrific.” London-based Prudential has a market value of 15.3 billion pounds ($23.3 billion). The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. Fully Underwritten A 15 billion-pound share sale to fund the purchase would be fully underwritten by a group of banks led by Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co., Sky News reporter Mark Kleinman wrote on his blog today. Sky News first reported on the negotiations yesterday. Credit Suisse, HSBC, JPMorgan and Lazard Ltd. are advising Prudential on the acquisition, Sky said. Prudential would pay mainly in cash with a small amount of stock, though the terms of the deal are still being worked out, the Wall Street Journal said today, citing one person familiar with the transaction. Prudential spokesman Ed Brewster declined to comment as did AIG spokesman Mark Herr . Credit Suisse, Lazard and JP Morgan also declined to comment. A spokesman for HSBC didn’t respond to an e-mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t respond to a voicemail left on her mobile phone outside regular office hours. Prudential’s offer may tempt other insurers to bid for the AIG unit, Flanagan said, especially if AIG were prepared to lower its asking price. Prudential may be best placed to make a higher offer because of cost savings it could make, he said. AIA IPO “In the various territories in the Far East and Asia, AIG and the Pru have been number one and two,” he said. “They can justify a higher price through synergy gains.” Earlier this month, AIG, which is selling assets to repay the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. If AIG proceeds with an IPO of AIA, it hopes to value the unit at $30 billion to $40 billion and get proceeds of about $15 billion, the WSJ reported today. To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net Howard Mustoe in London at hmustoe@bloomberg.net

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Consumer Groups Rip Chris Dodd Over Financial Protection Agency Compromise

February 28, 2010

Consumer advocates are reacting harshly to a compromise Consumer Financial Protection Agency being proposed by Banking Committee Chairman Chris Dodd (D-Conn.). HuffPost and other media outlets have obtained a copy of a memo outlining the proposal that Dodd sent to committee members this weekend. Read the memo here . Under Dodd’s plan, “[t]he agency proposal would be dropped.” Consumer groups and labor unions had been pushing for independence as key to the agency’s success. Bank regulators, they argued, should not have authority to veto consumer protection rules, because they have the interests of the banking sector as their central priority, rather than concern for abusive practices. Consumer groups also wanted a presidentially-appointed head of the agency and an independent funding stream. Dodd’s proposal includes both of those. But without independence, the agency loses its ability to write or enforce strong rules. “We appreciate Chairman Dodd’s extensive efforts to secure bipartisan support for this critical part of the financial reform bill, but effective reform is once again being blocked by opposition from the big banks that caused the current financial crisis. The revised proposal does not provide what is needed to protect American families or the financial system as a whole: a strong, independent Consumer Financial Protection Agency with the power to set and enforce fair rules for all types of credit,” said Heather Booth, Executive Director of Americans for Financial Reform, in a statement. If AFR, a powerful pro-reform lobby, abandons Dodd’s proposal, it’ll lose major momentum in the Senate. Dodd’s proposal puts a variety of obstacles in front of the proposed agency, which would be called the Bureau of Financial Protection and housed in the Treasury Department. Each time the agency wanted to write a rule, it would have to consult with bank regulators. The agency would then have to respond to each and every bank regulator objection in the Federal Register. If the bank regulator was still unsatisfied, it could appeal to the “systemic regulator,” whose mission is to protect the safety and soundness of the banking industry. Anytime a new rule is proposed, bank lobbyists argue that it will be burdensome and make the system less safe and sound. If the systemic regulator agreed with the banks — as they often do — then the consumer protection rule would be voided. Notably, the consumer protection agency has no veto power over any rules issued by bank regulators, which demonstrates which regulator will be superior. The first concern is the banks. Dodd’s proposal is much weaker than that called for by the House and by President Obama. “Abusive lending made possible by inadequate consumer protections was a major cause of the financial crisis, and we cannot allow the status quo to continue,” said Nancy Zirkin, Executive Vice President of the Leadership Conference on Civil and Human Rights, in a statement. “Big banks and abusive lenders fought responsible regulation before the crisis, and we are all paying the price. It is unacceptable for Congress to allow them to succeed again.” The new BFP would not be allowed to enforce rules on banks with less than $10 billion in holdings, according to the memo, unless the bank regulator’s Inspector General determines the regulator is failing at its duty — an extremely unlikely scenario. The proposal also makes it nearly impossible for the agency to enforce rules against non-bank financial operations, such as payday lenders. Sen. Tim Johnson (D-S.D.), next in line to become chairman of the Banking Committee when Dodd resigns, and Sen. Richard Shelby (R-Ala.), the top-ranking Republican, are both very close to the payday lending industry. A vote on comprehensive financial regulatory reform is expected this week in the committee. AFR released the following analysis Sunday in the wake of news of Dodd’s proposal: Consumer protection responsibility for financial products has been scattered across seven different agencies, and is a low priority for them. To remedy this problem the Administration proposed creating a new independent consumer regulator that would consolidate and streamline this authority, and focus on establishing and enforcing fair rules for banks and other lenders when they deal with American families. The agency they proposed would be independent, with authority and enforcement over all lenders. The proposal was weakened in the House, due to industry opposition, but the final House bill still created a new, consolidated and independent protector for consumers and is a major improvement over what we have today. This recent revised proposal would establish a much weaker consumer regulator that would not have the autonomy or the authority it needs to effectively protect consumers from abusive financial practices. We are particularly troubled by the following proposed changes: -Loss of Independence. Under the proposal, the agency would be reduced from an independent free-standing agency to a bureau within the Treasury Department. Moreover, the same regulators who failed to stop abuses for years would have veto power over the bureau’s protections. The regulators whose decisions need to be overseen are the banking regulators who have been protecting banks while consumers suffer and American taxpayers pick up the bill. -Loss of Enforcement. As we saw in this crisis, protections only work if they are enforced. The few protections that were on the books before this crisis were routinely ignored by the existing regulators who refused to enforce them. The revised proposal substantially cuts back the already reduced enforcement authority in the House bill over most banks as well as cutting back enforcement authority over other creditors such as payday lenders … . This creates loopholes for predatory lenders and also disadvantages responsible lenders who play by the rules. We urge the Senate to stand up to the special interests and pass a financial reform bill that has a strong, independent Consumer Financial Protection Agency with the authority to make and enforce protections for American Families.

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Huff TV: Arianna Discusses The Move Your Money Campaign On CBS Sunday Morning (VIDEO)

February 28, 2010

The ” Move Your Money ” campaign was featured on CBS Sunday Morning this week. Arianna appeared on the show to talk about why moving money out of big banks and into smaller banks is important: “JP Morgan, Citi, Bank of America, Wells Fargo — these banks, that have received taxpayer money, that have been bailed out by the taxpayer, have not done their job at helping small businesses, at lending, so that the economy can start again, and start producing jobs.” WATCH: Watch CBS News Videos Online

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Obama Meets With Doctors in Maryland for His Annual Physical Examination

February 28, 2010
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Gordon Brown on Course to Lead Minority U.K. Government, YouGov Poll Shows

February 28, 2010

By Robert Hutton Feb. 28 (Bloomberg) — Gordon Brown is on course to lead a minority U.K. administration after this year’s election, according to a survey giving the opposition Conservative Party its smallest lead over Labour in more than two years. A YouGov Plc poll gave the Conservatives the support of 37 percent of voters, down two percentage points, and Labour the backing of 35 percent, up two. The uneven distribution of votes across districts means this would leave the incumbent Labour Party with the most seats, about nine short of a Parliamentary majority, according to the Sunday Times , which published the poll. Addressing a party conference today in Brighton, on England’s south coast, Conservative leader David Cameron will speak without notes in an echo of his 2007 conference speech, two days before Brown backed away from plans for an early election. Last week, the prime minister, who has trailed in the polls ever since that decision, urged voters to “take a second look at us, and take a long, hard look at them.” “They’ve doubled the national debt, hit people with more than one hundred tax rises, sent our troops to war without the right equipment,” Cameron wrote in an article in today’s News of the World newspaper. “We’ve had our second look, prime minister — and you don’t deserve a second chance.” Brown can choose when to call the election, which must be held by June 3. The poll is the latest in a series over the past month showing the Conservative lead over Brown’s Labour narrowing from about 10 percentage points, where it had stayed for most of the last year. Cutting Taxes George Osborne , the Conservative Treasury spokesman, yesterday said he’d cut company taxes in an emergency budget within 50 days of taking office. Earlier, Brown used a speech in Wales to suggest the opposition couldn’t be trusted on the economy. “They called for big cuts before they called for small cuts before they called for modest cuts before they called for big cuts yet again,” Brown said. “So their biggest claim to be the party of change is that they are the party that keeps changing their minds.” YouGov interviewed 1,436 adults online on Feb. 25 and 26. No error margin was given. To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net ;

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Australia May Raise Interest Rates, Economists Say as Traders Hedge Bets

February 28, 2010

By Jacob Greber and Dan Petrie March 1 (Bloomberg) — Australia may resume leading the world in raising borrowing costs, increasing the benchmark interest rate for the fourth time in five meetings, economists say. Traders aren’t so sure. Governor Glenn Stevens will boost the Reserve Bank of Australia’s overnight cash rate target to 4 percent from 3.75 percent, according to 14 of 19 economists surveyed by Bloomberg. Futures traders estimate a 48 percent chance of an increase when the decision is announced at 2:30 p.m. tomorrow in Sydney. Australia’s economy probably grew the most in 1 1/2 years in the fourth quarter, a separate analyst’s survey ahead of a report on March 3 shows, boosted by A$22 billion ($20 billion) in spending by Prime Minister Kevin Rudd on roads and schools. Concerns about sovereign debt in Europe and financial markets turmoil may prompt Stevens to wait another month, some economists say. “Tomorrow’s decision is close to a coin toss,” said Stephen Walters , chief economist at JPMorgan Chase & Co. in Sydney and the only analyst surveyed by Bloomberg who correctly predicted Stevens’ first rate increase in October. “Rates need to go up, but if they don’t it’s because there’s uncertainty about how the consumer will hold up, sovereign debt, and weak data out of the U.S.” Boosting the benchmark rate tomorrow would make Stevens the first central banker from a Group of 20 economy to raise borrowing costs this year. He was also the first in the world to increase rates three times last quarter, when he raised the key rate in three quarter-point steps to 3.75 percent from a half- century low of 3 percent. Mining Boom By contrast, the U.S. Federal Reserve Chairman Ben S. Bernanke said last week the world’s largest economy is in a “nascent” recovery that still requires low interest rates. The Fed has kept its benchmark rate close to zero since late 2008. The European Central Bank’s rate is at a record low of 1 percent. A rebound in Australian consumer confidence, higher business optimism, surging house prices, a drop in unemployment, and signs of an investment boom in resources projects such as Chevron Corp. ’s Gorgon natural gas field off Western Australia are forecast by the central bank to fuel an acceleration in Australia’s economy, one of few to skirt last year’s recession. Gross domestic product probably rose 0.9 percent in the fourth quarter from the previous three months, when it gained 0.2 percent, according to the median estimate of 18 economists surveyed by Bloomberg News. The economy probably expanded 2.4 percent from a year earlier, they said. The figures will be released at 11:30 a.m. on March 3. ‘Gentle Retreat’ “With the shrinking unemployment rate and the likely rebound in December-quarter GDP, we are convinced that another gentle retreat from the accelerator is required,” said Annette Beacher , an economist at TD Securities Ltd. in Singapore. A report published last week showed business investment jumped in the fourth quarter at almost three times the pace predicted by analysts as companies raised their forecasts for investment plans to the highest level in five years. BHP Billiton Ltd. , the world’s largest mining company, said last month it will increase capital spending on iron-ore mines and oil fields by 63 percent next year to $20.8 billion from $12.8 billion this year. Rising Chinese demand for Australian iron ore and coal is stoking a record boom in mining investment that may last more than a decade, central bank Deputy Governor Battellino said on Feb. 23. Investment in new mines, ports and infrastructure may reach 6 percent of GDP, more than double the amount spent during the last resources boom in the late 1970s, he said. Natural Gas Chevron, Exxon Mobile Corp. and Royal Dutch Shell Plc have this year begun construction on the A$43 billion Gorgon natural- gas venture, the nation’s single-biggest investment project that is forecast to generate as many as 10,000 jobs. The economy has less scope than previously expected for “robust” growth that doesn’t stoke inflation, Governor Stevens told a parliamentary committee in Canberra on Feb. 19. “Monetary policy must therefore be careful not to overstay a very expansionary setting.” While inflation in Australia cooled in 2009 amidst the global recession, the central bank has pointed to accelerating house prices as a key reason for boosting borrowing costs last quarter. House prices jumped 11.8 percent in the year through January, according to a Feb. 26 report by real-estate monitoring company RP Data-Rismark, whose figures are used by the central bank in its quarterly monetary policy statement. Normalization Retail sales rose 0.5 percent in January after falling in December for the first time in five months and building approvals gained for a third straight month, according to Bloomberg surveys of analysts ahead of reports to be released tomorrow. “Australia’s economy is in much better shape than was anticipated when rates were cut to a generation low a year ago,” said Rory Robertson , an economist at Macquarie Group Ltd. in Sydney. “I’ll be very surprised if the Reserve Bank doesn’t decide to continue its ‘normalization’ process” tomorrow. “After all, it has already paused for nearly 90 days having hiked three times in just 60 days,” he said. Still, not all investors are convinced that Stevens and his board will boost borrowing costs in tomorrow’s announcement. Traders are betting there is a 48 percent chance of a quarter-percentage-point rate increase, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 5:23 p.m. on Feb. 26. Greek Tragedy Reports published late last week have stoked speculation that the global recovery will be hampered by weak growth among the world’s biggest economies. Confidence among households and companies in the 16-nation euro economy fell and bank loans to the private sector declined for a fifth month, plus Standard & Poor’s said Feb. 25 that it may soon downgrade Greece again as the country grapples with the region’s largest budget shortfall. The number of Americans filing first-time claims for unemployment insurance unexpectedly rose last week, the Labor Department said in Washington. That contrasts with Australia where reports published last month showed business confidence rebounded and employers added 194,600 jobs in the five months through January, the biggest increase in more than three years that has cut the unemployment rate to an 11-month low of 5.3 percent. “If anyone is going to boom, surely it’s Australia,” Gerry Harvey , chairman of Australia’s largest electronics retailer Harvey Norman Holdings Ltd., said in a Feb. 26 interview. “We never really went into a recession at all. Our unemployment rate was projected to reach 7, 8, 9, or 10 percent, but it never even got to 6 percent.” To contact the reporters for this story: Jacob Greber in Sydney at jgreber@bloomberg.net ; Daniel Petrie in Sydney at dpetrie5@bloomberg.net

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Dubai Stocks Climb as U.S. Growth Spurs Oil Price; Emaar, Arabtec Advance

February 28, 2010

By Zahra Hankir Feb. 28 (Bloomberg) — Dubai shares climbed to the highest level in almost a week as oil gained on prospects for increased fuel demand in the U.S. after the economy of the world’s biggest energy-consuming country grew the most in six years. Emaar Properties PJSC , the developer of the world’s tallest skyscraper in Dubai, advanced the most in a month. Arabtec Holding PJSC, the biggest construction company in the United Arab Emirates, rose to the highest in almost two weeks after it agreed with Aabar Investments PJSC to extend the due diligence process. Dubai’s DFM General Index advanced 0.7 percent to 1,592.91, rising for a second day. The measure gained 0.2 percent in February, the first monthly gain since October. Markets are being helped by “resilient oil,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. Locally, “market volumes are not that convincing and, from what we could see, there was limited participation from international clients.” About 143 million shares traded in Dubai today, 57 percent below the index’s six-month daily average of 331 million shares, according to Bloomberg data . Crude oil rose 1.9 percent to $79.66 a barrel on Feb. 26 after a report showed the U.S. economy grew at an annual rate of 5.9 percent in the fourth quarter. Oil, which accounts for 75 percent of the revenue of the six monarchies in the Gulf Cooperation Council, advanced 9.3 percent in the month, the biggest gain since May. Prices have more than doubled from their February 2009 low of $34 a barrel. Due Diligence Emaar advanced 3.5 percent to 2.98 dirhams, the most since Jan. 28. Arabtec added 1.4 percent to 2.17 dirhams, the highest since Feb. 17. The company said it approved extending a due diligence process with Abu Dhabi government-owned Aabar to April 16. Aabar said in January it plans to make an offer to buy 70 percent of Arabtec by buying mandatory convertible bonds. Saudi Arabia’s Tadawul All Share Index fell 0.6 percent to 6,437.50. Oman’s MSM30 measure dropped 0.2 percent. Abu Dhabi’s gauge added 0.1 percent and Qatar’s Doha Securities Market 20 Index increased 0.4 percent. Markets in Kuwait and Bahrain were closed for a holiday. To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

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Greek $34 Billion Rescue Plan From EU Emerging as Deficit Pressure Mounts

February 28, 2010

By Simon Kennedy and Maria Petrakis Feb. 28 (Bloomberg) — European Union governments are piecing together a possible rescue package for Greece as they demand it first intensifies efforts to slash the bloc’s biggest budget deficit. With EU Monetary Affairs Commissioner Olli Rehn flying to Athens tonight for talks, German lawmakers say euro-area officials are crafting a plan to grant Greece about 25 billion euros ($34 billion) in aid should the need arise, possibly by using state-owned lenders such as Germany’s KfW Group to buy its debt. Luxembourg Prime Minister Jean-Claude Juncker signaled today that Rehn will use his visit to warn Greece it must do more to regain control of its budget and can’t rely on taxpayers elsewhere to help until it does. Adding to the political pressure, the fiscal strategy of Greek Prime Minister George Papandreou’s government may soon be tested by investors as it readies a sale of as much as 5 billion euros of 10-year notes. “Greece won’t be allowed to sink on the condition it respects its commitments to stabilize its budget,” French Finance Minister Christine Lagarde told Europe 1 radio today. “We have a certain number of proposals in the euro zone, involving either private partners or public partners or both.” March 16 Deadline Rehn arrives in the Greek capital after a week in which European officials pored over the government’s books to verify it’s doing enough to knock 4 percentage points off its budget deficit from last year’s 12.7 percent of gross domestic product. The country has until March 16 to satisfy other governments that its plan is on track and risks being pushed to increase consumer taxes and cut capital spending if it can’t show sufficient progress. “Markets still don’t believe that the Greek people are willing to accept such bitter medicine or that the government has the will to see this through,” said Razeen Sally, co-director of the Brussels-based European Centre for International Political Economy . Juncker, who speaks for euro-area finance ministers, today indicated more will be demanded. Greece needs to “take additional actions” to reduce its shortfall and “must understand that the taxpayer in Germany, Belgium or Luxembourg isn’t prepared to correct the mistakes of Greek fiscal policy,” he told Eleftherotypia newspaper. ‘Meet the Challenge’ Papandreou told the Greek parliament on Feb. 26 that the nation will “meet the challenge with whatever cost and pain we will need to go through.” Government spokesman George Petalotis said in an interview the same day that the country will consider taking more measures if the EU evaluations deem it necessary. Greece needs to raise 53 billion euros this year and faces more than 20 billion euros of bond redemptions by the end of May, according to data compiled by Bloomberg. It vows to reduce its budget gap below the EU limit of 3 percent of GDP in 2012. KfW’s purchase of Greek bonds, backed by German government guarantees, would be an emergency measure as it would risk inviting investors to speculate against other euro region countries, the German lawmakers said on condition of anonymity because the information is confidential. France’s state-owned Caisse des Depots may also be involved, Greece’s Ta Nea newspaper reported yesterday, while the Wall Street Journal said today the plan may run as large as 30 billion euros. Deutsche Bank CEO EU leaders ordered the country on Feb. 11 to cut its budget deficit, while promising “determined” yet unspecified action to help if needed. Papandreou is scheduled to meet German Chancellor Angela Merkel in Berlin on March 5 and President Barack Obama in Washington on March 9. He met Deutsche Bank AG Chief Executive Officer Josef Ackermann on Feb. 26. Complicating the country’s efforts this week were another round of strikes and warnings from Standard & Poor’s and Moody’s Investors Service that they may soon cut Greece’s debt rating if the government flounders in reducing its deficit. Investors continued to question its strategy this week. Greek two-year yields rose by as much as 75 basis points on Feb. 25, the most since Jan. 20. The spread between 10-year German bunds and Greek securities of a similar maturity widened 12 basis points in the week to 330 basis points. CDS Down Still, the cost of insuring against default on Greek government debt fell for the first day in a week on Feb. 26 on speculation the nation will pledge tougher measures. Credit-default swaps on Greece dropped 35.6 basis points to 364.02, according to CMA Datavision. The contracts are down from Feb. 4’s record 428.25 basis points. The government intends to sell 10-year notes by early March, according to a Jan. 26 statement from the Public Debt Management Agency. Fund managers who may take part in the issue say Greece must offer the biggest premium over benchmark German debt since 1998, paying a coupon of about 7 percent. To contact the reporters on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net ; Maria Petrakis in Athens at mpetrakis@bloomberg.net .

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Janet Tavakoli: Washington Abandons Greece: Beware of Geeks Bearing Grifts

February 28, 2010

The European Union (EU) is shocked–shocked I tell you!–that Greece used financial engineering to qualify for admission. Exactly how did they think that weaker countries managed to meet the requirements? Now the EU is concerned that geeks used their knowledge of Greece’s hidden debt (and bailout negotiations) to manipulate financial markets for their own profit. A few years ago, Greece engaged in derivatives transactions which essentially gave it a disguised loan, a gift from geeks. Greece may or may not have had plans to invest the money to create national wealth instead of say, blowing it all on national bling. Either way, Greece used its national credit card in a futile attempt to keep up with the EU Joneses. The National Bank of Greece seems embarrassed. Last week, it removed the prospectus for Titlos PLC , the financial engineering vehicle arranged for it by Goldman Sachs International, from its web site. Now Federal Reserve Chairman Ben Bernanke is concerned with the way credit derivatives and other financial instruments are being used during Greece’s current debt crisis. In his semi-annual economic report to Congress, Benanke said the Fed and the Securities and Exchange Commission (SEC) would look into the involvement of the banks they oversee: “Obviously, using these instruments in a way that intentionally destabilizes a company or a country is–is counterproductive.” He should question all related Greek and Euro transactions (not just derivatives). Banks claim their trades aren’t risky because they are doing customer business. One should remember that Goldman Sachs claimed its destabilizing transactions with AIG were “customer business.” How did that work out? EU Needs its Own Investigation To paraphrase Winston Churchill, U.S. financial regulators occasionally stumble over the truth, but they pick themselves up and hurry off as if nothing ever happened. In February 2007, I wrote the SEC about U.S. corporate credit derivatives indexes–similar to the sovereign indexes that reference Greece’s debt. Banks persuaded U.S. state pension funds to use them as “hedges” to protect their large fixed income portfolios.* Next banks served other customers by creating phoney “AAA” rated products. These fake investments used lots of leverage (borrowing), and they pushed hard in the opposite direction of the pension funds’ trades. As a result, the pension funds’ “hedges” collapsed, and they lost money. The customers that bought the new “investments” lost money, too. Within a year, the phoney AAA investments were downgraded to junk, and customers lost around 90% of their money. (These financial instruments were unrelated to phoney mortgage securitizations.) Banks made hefty fees, but the pension funds and customers they suckered into taking these “gifts” were harmed. I gave the SEC a map and a flashlight, yet it went nowhere. ( My letter still sits on the SEC’s web site.) I’m called the ” Cassandra of credit derivatives ,” but it’s a misnomer. I’m not prescient, I have no psychic ability, and the geeks at U.S. banks–that claim they are great risk managers–are capable of the same analysis. Moreover, only pension funds and banks’ customers were the victims of an unholy rape. Today, rumors are that crony capitalists are using derivatives to profit from Greece’s misery. There are allegations that investment banks and hedge funds used their knowledge of Greece’s hidden debt to drive up its borrowing cost and drive down the Euro. Then these speculators reversed their positions, when they had advance information of a potential bailout for Greece. Other rumors suggest customized trades on the sovereign credit derivatives index also exploited Greece’s problems. Still other rumors point to a campaign to manipulate Greek debt prices and knock down the Euro. The European Union and Greece should launch their own investigations. When U.S. regulators say they’ll “investigate,” it seems to mean “get lost.” The U.S. Should Investigate Transactions that Destabilized America If the U.S.’s “photo-op regulators” are investigating transactions that destabilize countries, they should start at home. Is it ” God’s work ” to enrich crony capitalists–Washington and Wall Street’s new chosen people–while siphoning money from hard-working taxpayers? Geeks used financial technology in a way that destabilized the U.S. economy while the U.S. is at war. I believe there is a much stronger word for it than “counterproductive.” *Pension funds shorted corporate credit default swap indexes (bought credit protection) and took a long position in swap spreads to hedge their bond portfolio credit risk.

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Largest U.S. privately held bank still hasn’t paid back TARP loan

February 28, 2010

Every major financial institution in New York has settled its debt with the Treasury – except Emigrant Savings Bank By Aaron Elstein February 28, 2010, 6:01 AM EST A year after taxpayers bailed out the nation’s financial system, every

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Asian Markets Overview of March 1

February 28, 2010

Asian Markets Overview of March 1

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Mt Isa Metals Limited (ASX:MET) Maiden Resource Estimate Of 740,000 Tonnes For Barbara North Lode Copper Deposit

February 28, 2010

Mt Isa Metals Limited (ASX:MET) Maiden Resource Estimate Of 740,000 Tonnes For Barbara North Lode Copper Deposit

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ABN Newswire Stocks to Watch: March 1, 2010

February 28, 2010

ABN Newswire Stocks to Watch: March 1, 2010

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Australian Power And Gas (ASX:APK) Reports 1H Revenue Of A$60 Million And Maiden Profit; Confirms Full-Year Forecast

February 28, 2010

Australian Power And Gas (ASX:APK) Reports 1H Revenue Of A$60 Million And Maiden Profit; Confirms Full-Year Forecast

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Iran plans $2b bond issuance on March 6th

February 28, 2010

Iran plans $2b bond issuance on March 6th

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Pakistan’s textile exports hit $930m in January

February 28, 2010

Pakistan’s textile exports hit $930m in January

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Kogas to invest $1.3 billion in Canada

February 28, 2010

Kogas to invest $1.3 billion in Canada

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InfraVest to end Taiwan operations

February 28, 2010

InfraVest to end Taiwan operations

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US banks veto socialist pay’ in secret talks

February 28, 2010

US banks veto socialist pay’ in secret talks

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LA Times: At least 56 people have died in Toyota accidents

February 28, 2010

LA Times: At least 56 people have died in Toyota accidents

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