a-year-ago

Obama’s Mortgage-Modification Trial Program Loses 24% of Its Participants

by on March 12, 2010

By Dawn Kopecki March 12 (Bloomberg) — The Obama administration’s foreclosure prevention program shed 24 percent of the almost 1.1 million borrowers who arranged trial loan modifications through February, the Treasury Department reported. Lenders in the Home Affordable Modification Program led by Bank of America Corp. and JPMorgan Chase & Co. successfully converted 168,708 trial plans into permanent loan revisions, up from 116,297 through the end of January, the Treasury said today in a report. More than 666,000 borrowers were in trial repayment plans, Treasury said. The program is short of the 3 million to 4 million at-risk homeowners Obama targeted when it was announced a year ago. The plan had 835,194 active trial modifications out of 1.1 million started. About 2.82 million U.S. homeowners lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said last month. Bank of America, which accounts for almost a third of the 3.4 million borrowers eligible for the program, led mortgage servicers in permanent modifications with 22,303 borrowers in such plans. JPMorgan, which had 437,323 eligible loans, revamped 20,450. Total borrowers in trial plans fell 6.7 percent to 666,486 from 714,141 as lenders pushed to make the plans permanent or dropped the customers from the program. San Francisco-based Wells Fargo & Co. said it canceled agreements with 19,000 borrowers in trial modification plans as it stepped “up its efforts to make final decisions on trials where customers have made all required payments.” The bank has permanently modified 7,533 loans through February. To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net

See more here:
Obama’s Mortgage-Modification Trial Program Loses 24% of Its Participants

Tagged as: , , , , , , , , ,

{ 0 comments }

Roundtable Survey: Sentiments of CRE Execs Are Better, But By No Means Good

by on February 9, 2010

The outlook of commercial real estate executives interviewed by the Real Estate Roundtable for its first-quarter Sentiment Index can pretty much be summed up by two responses: “We’re at least a heck of a lot better off now than we were a year ago,” and…

The rest is here:
Roundtable Survey: Sentiments of CRE Execs Are Better, But By No Means Good

Tagged as: , , , , , , , , ,

{ 0 comments }

UBS Says Withdrawals by Clients Increased Even as Bank Returned to Profit

February 9, 2010

By Elena Logutenkova Feb. 9 (Bloomberg) — UBS AG , the European bank with the biggest losses from the credit crisis, reported its first profit in more than a year, helped by a recovery at the investment bank and a lower charge tied to the company’s debt. Fourth-quarter net income was 1.21 billion Swiss francs ($1.13 billion), compared with a loss of 9.56 billion francs a year earlier, the Zurich-based bank said in a statement today. Earnings beat the 416 million-franc estimate of 14 analysts surveyed by Bloomberg, helped by a 480 million-franc tax credit. UBS may report its first annual profit since 2006 this year after spinning off $38.7 billion in toxic assets into a central bank fund, cutting 18,500 jobs and appointing 11 new managers to the executive board. Chief Executive Officer Oswald Gruebel , who has led UBS for almost a year, is relying on a recovery at the investment bank to help increase pretax earnings to 15 billion francs in three to five years. “By now Gruebel has got things under control,” Joerg De Vries-Hippen , chief investment officer for European equities at Allianz Global Investors in Frankfurt, said before the earnings release. “There is light at the end of the tunnel.” A return to profitability may help UBS stop withdrawals by wealthy clients, who removed a net 228.1 billion francs over the 21 months through December, Gruebel has said. Redemptions increased to 45.2 billion francs in the fourth quarter from 26.6 billion francs in the previous three months. Analysts had forecast 17.5 billion francs in outflows. The bank predicted that withdrawals will continue in the “immediate future.” Restoring Reputation “We expect that our return to profitability will increase clients’ confidence in UBS and restore our reputation,” Gruebel said in the statement. The wealth management and Swiss bank unit’s pretax profit more than doubled to 1.11 billion francs in the quarter as a charge to settle the U.S. cross-border case wasn’t repeated. Wealth management Americas had a profit of 178 million francs, compared with a loss of 444 million francs a year ago. The investment bank posted pretax profit of 297 million francs, its first since the second quarter of 2007, as charges on UBS’s own debt fell to 24 million francs from 1.62 billion francs a year ago. Analysts had forecast charges of about 750 million francs. Earnings in asset management rose 20 percent to 284 million francs. A quarterly profit “is an important staging post in rebuilding client confidence, and management delivering on its restructuring plan,” Matt Spick , a London-based analyst at Deutsche Bank AG, said in a note before the earnings release. “If UBS succeeds in rebuilding its investment bank, there could be considerable upside.” U.S. Tax Case UBS shares have fallen 12 percent so far this year in Zurich trading, matching the decline of the 52-company Bloomberg Europe Banks and Financial Services Index . Domestic rival Credit Suisse Group AG fell 15 percent. The Swiss administrative court last month blocked the government from passing data to U.S. authorities on certain accounts, endangering an accord reached last year to settle a lawsuit against UBS related to alleged tax evasion by American clients. Swiss Justice Minister Eveline Widmer-Schlumpf said on Jan. 27 that the government will work with the U.S. to save the deal. Also at risk is the deferred prosecution agreement that UBS signed in February 2009 to avoid criminal charges, she said. A criminal prosecution in the U.S. could lead to the bank’s insolvency and endanger the Swiss economy, the government said. Investment Bank “We are confident that the Swiss and US governments will undertake cooperative discussions, as required by the settlement, to find alternative mechanisms for fulfilling the parties’ obligations, and we are fully supportive of these efforts,” Gruebel, 66, and UBS Chairman Kaspar Villiger , 69, said in a letter to shareholders. UBS aims to attract about 5 percent of total invested assets as net new funds annually at the main wealth management unit in the medium term, and reach a pretax profit of 4.6 billion francs, the bank said in November. The investment bank targets pretax earnings of 6 billion francs annually, as the debt trading unit, which was responsible for the majority of more than $57 billion in writedowns and losses from the credit crisis, recovers. UBS last month appointed Rajeev Misra and Dimitri Psyllidis , who previously worked for Deutsche Bank AG and Merrill Lynch & Co., respectively, to co-run the debt-trading unit. The fixed-income division had its first positive revenue in the third quarter of 2009 after eight quarters of losses. UBS, which unlike Credit Suisse missed out on a credit rally in the first half of the year, brought in 200 new hires to revamp the business. To contact the reporter on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

Read the full article →

Ex-Millennium Management’s Sullivan Is in Talks to Join Hedge Fund, Bank

January 31, 2010

By Netty Ismail Feb. 1 (Bloomberg) — James Sullivan , a former managing director of Millennium Management LLC’s Asian business, said he has been in talks to join another hedge fund or bank since leaving the firm in December. Sullivan and Harvey Liu , who worked with him managing investments in Asian telecommunications, media, Internet and gaming stocks at Millennium in Singapore, are also considering starting a hedge fund in the city-state, Sullivan said. “Ultimately, the best case scenario is leveraging the resources and capabilities of a larger organization that may or may not be that familiar with operating that business in Asia, and helping them to build out a broader platform and business,” Sullivan, 36, said in an interview. Assets under management at New York-based Millennium, run by Israel Englander, have shrunk to $7.5 billion, according to the firm’s Web site , compared with about $13.5 billion more than a year ago. Singapore-based senior managers who left Millennium recently include Daniel Chuman and Albert Ee , who plans to set up a hedge fund in the city-state. Hedge-fund managers are seeking to set up or to return to Asia as the region leads the world’s emergence from the deepest recession since the 1930s. Bank of America Merrill Lynch is helping more than a dozen multibillion dollar international hedge funds set up or reestablish a presence in Hong Kong and Singapore, Dan McNicholas, head of Asia financing sales at Merrill Lynch said in January. Long-Short Strategy Sullivan and Liu, 36, are in discussions with “several parties,” Sullivan said, without naming the firms. “Our goal is to build a sustainable business focused on risk-adjusted returns,” Sullivan said. “We are looking for a firm that understands fundamental long-short equity investments in Asia and is capable and willing to give people the resources they need to build the business on a medium-term time frame.” Long-short managers buy stocks they expect to rise and hedge those bets with sales of borrowed shares they hope to buy back at a cheaper price. Prior to joining Millennium in January last year, Sullivan worked at Citadel Investment Group LLC in Hong Kong from November 2005 to December 2008, and Oaktree Capital Management LLC in Singapore from June 2003 to October 2005. “The strategies that I’ve run across the last couple of firms that I’ve worked for have all been negatively correlated to most of the major market indices and yet made money,” Sullivan said. “It provides significant diversification on a non-correlated basis.” Should they decide to start their own hedge fund, it would target returns “in the high teens,” he said. To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net

Read the full article →

Huff TV: Arianna Huffington At Davos: Obama Still Not Doing Enough For Jobs (VIDEO)

January 29, 2010

In an interviews with CNBC and Bloomberg TV at the World Economic Forum’s annual gathering in Davos, Switzerland, Arianna said the Obama administration is still not doing enough to help on the jobs front, despite new proposals announced in the President’s State of The Union speech on Wednesday. Davos attendees in the financial sector have called for global uniformity on banking reforms, but Arianna noted that the economy is in dire need of effective job creation efforts. “We still don’t see how growth is going to be filled,” Arianna told CNBC. “Where is consumption going to come from? And where jobs are going to come from? I think that’s the fear.” Arianna added that the Obama administration is still not adequately communicating the severity of the financial crisis for most Americans: “The administration, at least the majorities in Congress need to make it very clear to the public that we are not out of the woods, that we don’t see a clear path to job growth…So what they need to bring to the table is the same kind of urgency that they brought to the table a year ago, when some how they put everybody in a room and made things happen. That urgency is missing now.” Responding to the President’s recent proposal for a child care tax credit, Arianna said “the problem isn’t that you can’t find a babysitter, the problem is that there are six applicants for every job.” “The middle class is suffering and there is a kind of downward mobility,” she added. WATCH the full interview: WATCH Arianna’ interview with Bloomberg TV:

Read the full article →

Huff TV: Arianna Huffington At Davos: Obama Still Not Doing Enough For Jobs (VIDEO)

January 29, 2010

In an interviews with CNBC and Bloomberg TV at the World Economic Forum’s annual gathering in Davos, Switzerland, Arianna said the Obama administration is still not doing enough to help on the jobs front, despite new proposals announced in the President’s State of The Union speech on Wednesday. Davos attendees in the financial sector have called for global uniformity on banking reforms, but Arianna noted that the economy is in dire need of effective job creation efforts. “We still don’t see how growth is going to be filled,” Arianna told CNBC. “Where is consumption going to come from? And where jobs are going to come from? I think that’s the fear.” Arianna added that the Obama administration is still not adequately communicating the severity of the financial crisis for most Americans: “The administration, at least the majorities in Congress need to make it very clear to the public that we are not out of the woods, that we don’t see a clear path to job growth…So what they need to bring to the table is the same kind of urgency that they brought to the table a year ago, when some how they put everybody in a room and made things happen. That urgency is missing now.” Responding to the President’s recent proposal for a child care tax credit, Arianna said “the problem isn’t that you can’t find a babysitter, the problem is that there are six applicants for every job.” “The middle class is suffering and there is a kind of downward mobility,” she added. WATCH the full interview: WATCH Arianna’ interview with Bloomberg TV:

Read the full article →

Video: Gogel Not Sure Obama Bank Rules to Affect Private Equity: Video

January 29, 2010

Jan. 29 (Bloomberg) — Donald Gogel, chief executive officer of Clayton, Dubilier & Rice Inc., talks with Bloomberg’s Margaret Brennan and Francine Lacqua about the potential impact of U.S. President Barack Obama’s plan to impose new rules on bank size and risk on private-equity funds. Gogel, speaking from the World Economic Forum in Davos, Switzerland, also discusses the role of private-equity funds in the global economic recovery, the risk appetite of investors now compared to a year ago and the impact of sovereign wealth funds on the industry. (Source: Bloomberg)

Read the full article →

Altria’s Fourth-Quarter Profit Advances 6.8%, Helped by Acquisition of UST

January 28, 2010

By Chris Burritt Jan. 28 (Bloomberg) — Altria Group Inc. , the largest U.S. tobacco company, said fourth-quarter profit rose 6.8 percent, bolstered by the acquisition of snuff maker UST Inc. Net income increased to $725 million, or 35 cents a share, from $679 million, or 33 cents, a year earlier, the Richmond, Virginia-based maker of top-selling Marlboro cigarettes said today in a statement. Excluding some items, earnings were 39 cents, compared with analysts’ projection of 40 cents, the average of 10 estimates in a Bloomberg survey. Cigarette shipments fell 11 percent and Marlboro’s share of U.S. smokers dropped after Altria increased prices three times last year. The company started selling a wintergreen flavor of UST’s Copenhagen snuff in November, spurring demand for smokeless tobacco. “We’ll see how sustainable the Copenhagen wintergreen launch proves to be,” Thomas Russo , who manages more than $3 billion in assets including Altria shares at Gardner Russo & Gardner, said today in a telephone interview. “They’re facing competitive price promotions in their most important category, which is cigarettes.” Gardner Russo, based in Lancaster, Pennsylvania, held 6.4 million Altria shares as of Sept. 30, according to Bloomberg data. Annual profit will be $1.85 to $1.89 a share, the company said, compared with analysts’ estimate of $1.87. Market Share Marlboro’s U.S. market share slipped 0.4 percentage point to 41.7 percent in the fourth quarter, hurt by promotions by rivals including Reynolds American Inc., the maker of Camel and Pall Mall. Altria’s total cigarette market share fell 1.5 points to 49.4 percent. Chairman and Chief Executive Officer Michael Szymanczyk engineered Altria’s acquisition of UST a year ago to counter falling cigarette demand. It bought cigarette maker John Middleton Inc. in 2007. Altria was little changed in early U.S. trading. The stock advanced 3 cents to $19.99 yesterday in New York Stock Exchange composite trading. The shares climbed 30 percent last year, outpacing a 23 percent gain by the Standard & Poor’s 500 Index. To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net .

Read the full article →

Penthouse Publisher FriendFinder Said to Delay Initial Offer to Next Week

January 27, 2010

By Michael Tsang and Nikolaj Gammeltoft Jan. 27 (Bloomberg) — FriendFinder Networks Inc., the publisher of Penthouse magazine, has pushed back its initial public offering scheduled for today until next week, according to a person familiar with the situation. FriendFinder, the Boca Raton, Florida-based operator of Web sites from AdultFriendFinder.com to Cams.com, had planned to raise as much as $240 million selling 20 million shares at $10 to $12 each today, according to a Jan. 8 filing with the Securities and Exchange Commission and Bloomberg data. Calls and e-mails to FriendFinder’s office were not immediately returned. The delay comes after Terreno Realty Corp. became the first U.S. company to postpone a 2010 IPO this week, Cellu Tissue Holdings Inc. cut its price by 24 percent and Chesapeake Lodging Trust raised 40 percent less than originally sought, Bloomberg data show. FriendFinder has lost money for five straight years and was in default on its debt covenants until October. “FriendFinder looks like an IPO out of necessity rather than opportunity,” Steven M. Rogé , manager at R.W. Rogé & Co. in Bohemia, New York, which has $200 million in assets, said before the delay. “A lot of companies have an IPO to get cash to grow. Whatever cash FriendFinder can raise is going straight to their creditors.” While U.S. IPOs are forecast to triple according to London based Barclays Plc, 2010’s first offers show buyers are wary of new deals after almost 40 percent of deals in the second half of 2009 left investors with losses. S&P 500 FriendFinder was offering shares after the Standard & Poor’s 500 Index fell the most since October last week. The publisher, which also runs so-called general audience social networking venues from SeniorFriendFinder.com to BigChurch.com, got about 70 percent of its revenue from its adult-themed Web sites in the first nine months of 2009, according to the SEC regulatory filing. The company was selling a 49 percent stake and planned to use the proceeds to pay down debt. After the offering, it would have $5.24 million in cash compared with $286 million in debt. FriendFinder’s sales would have declined 1.5 percent in 2009 from a year ago, based on $244 million in revenue generated in the first nine months of the year. Sales from both its adult- themed and general audience sites fell during the nine-month period from a year ago, while interest expenses exceeded operating profit by 66 percent. ‘Biggest Concern’ “The biggest concern is just the fact that it’s got a lot of debt and really hasn’t grown,” said Nick Einhorn , an analyst at Greenwich, Connecticut-based Renaissance Capital LLC, which has followed IPOs since 1991. The firm isn’t affiliated with FriendFinder’s lead underwriter of the same name. “Companies that have lots of debt and slowed growth have really not been attractive for investors,” he said before the delay. Playboy Enterprises Inc. , the owner of the namesake men’s magazine, had operating income equal to 1.02 times interest expenses of $4.46 million in 2008 as the Chicago-based company posted its biggest annual loss since at least 1987. FriendFinder has also lost about as many fee-paying subscribers from its adult-themed Web sites as it has gained in each of the past four years. It had breached loan agreements in such areas as failing to deliver certified annual financial statements, missing certain sales targets for the films that it produced and distributed and not keeping senior debt below certain levels. Renaissance Capital of Moscow and Ledgemont Capital Group LLC in New York are the lead underwriters for FriendFinder. Neither firm was credited with arranging any U.S. company IPOs last year, according to Bloomberg league tables. To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net ; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net .

Read the full article →

Global real estate: Ready for a rebound?

January 25, 2010

The global real estate community is breathing easier than it was a year ago, judging by the sentiments of participants at a recent Knowledge@Wharton global real estate forum titled, ‘The Road to Recovery

Read the full article →

Global real estate: Ready for a rebound?

January 25, 2010

The global real estate community is breathing easier than it was a year ago, judging by the sentiments of participants at a recent Knowledge@Wharton global real estate forum titled, ‘The Road to Recovery

Read the full article →

American Express, Capital One Shares Tumble As New Credit Card Rules Near

January 22, 2010

NEW YORK — Shares of American Express and Capital One Financial Corp. tumbled Friday after an analyst noted coming credit card regulations could strain profits for the companies in the year ahead. American Express shares dropped $3.57, or 8.5 percent, to close at $38.59. Capital One shares sank $5.17, or 12.1 percent, to close at $37.53. In a note to investors, FBR Capital Markets analyst Scott Valentin wrote that the card industry will shrink as issuers cope with elevated chargeoff levels, higher marketing costs and new regulations. He noted that Capital One could experience the biggest contraction, given its portfolio of subprime borrowers. American Express, which traditionally caters to more affluent customers, should be less affected, Valentin wrote. Valentin cut his 2010 earnings estimate for American Express to $3.24 per share, from $3.35 per share and for Capital One to $2.25 per share from $2.50 per share. Both companies were affirmed at “market perform.” The Credit CARD Act, which goes into effect Feb. 22, will dramatically limit card issuers’ ability to raise interest rates and impose penalty fees. For example, banks will not be able to raise rates on existing balances unless payments are more than 60 days late. During a conference call Thursday, American Express Chief Financial Officer Dan Henry noted that the regulations could lower AmEx’s yields on credit cards, which were at 9.7 percent in the latest quarter. Margins at Capital One are also expected to decline to about 15.5 percent, down from 16 percent, Valentin noted. The drop-off in AmEx and Capital One shares Friday came despite improved fourth-quarter results from both companies. However, the gains came largely as a result of steep drops in provisions for loan losses. At American Express, provisions for loan losses fell 47 percent to $748 million, from $1.4 billion a year ago. At Capital One, the figure sank to $843.7 million from $2.1 billion. Quarterly revenue at American Express, meanwhile, edged lower to $6.49 billion from $6.51 billion last year. While card members’ average balances rose, the gains were offset by higher costs elsewhere. Marketing costs rose 36 percent to $713 million in the quarter. AmEx Chairman Kenneth Chenault said in a statement that while the economic outlook is improving, the company still faces the challenges of high unemployment rates and weaker household finances. Fitch Ratings, meanwhile, issued a report Friday that said chargeoffs, or loans considered unrecoverable, could become more widespread in coming months as consumers continue to struggle with debt and unemployment. The ratings agency doesn’t expect the deterioration to be severe, however. Fitch predicts U.S. unemployment will peak at 10.4 percent in the second-quarter of 2010 and will remain above the 10 percent throughout the year.

Read the full article →

Global Real Estate: Ready for a Rebound? (Knowledge at Wharton)

January 20, 2010

The global real estate community is breathing easier than it was a year ago, judging by the sentiments of participants at a recent Knowledge@Wharton global real estate forum titled, “The Road to Recovery: Investing in the Global Real Estate Rebound.” Held at the New York Stock Exchange on December 11, in conjunction with Interconnect Events, the forum focused on the developed world’s challenges …

Read the full article →

London Stock Exchange Said to Name Xtrakter’s Milne to Run Post-Trade Unit

January 18, 2010

By Nandini Sukumar Jan. 18 (Bloomberg) — London Stock Exchange Group Plc , which has surrendered 40 percent of trading in FTSE 100 stocks to new rivals, may name Kevin Milne to lead its post-trade services business as it seeks boost alternative streams of revenue, according to people familiar with the situation. Milne, 47, is the former chief executive officer of Euroclear SA ’s Xtrakter business. He will lead a unit that includes Cassa di Compensazione & Garanzia and Monte Titoli SpA, which LSE acquired with its 2007 purchase of Borsa Italiana SpA , said two people who declined to be identified before a formal announcement. LSE spokesman John Wallace declined to comment. LSE Chief Executive Officer Xavier Rolet took over from Clara Furse in May last year and has cut costs and staff, is changing trading tariffs, introducing hidden orders and making acquisitions including rival trading platform Turquoise. Rolet has said he wants to expand LSE’s post-trade services including clearing. The exchange on Nov. 25 reported first-half revenues from post-trade activities rose to 59.3 million pounds ($96 million) from 51.1 million pounds in the comparable period a year ago as revenue from trading, where the LSE makes most of its money, fell 28 percent to 95.2 million pounds. On Dec. 17, Xtrakter, which provides market data, operational risk management, trade matching and regulatory reporting services for the fixed income markets said Milne is leaving “to pursue interests outside the Euroclear group.” Milne could not be reached for comment. To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net .

Read the full article →

Technology Spending to Rise This Year, Luczo Says

January 8, 2010

By Joseph Galante and Connie Guglielmo Jan. 8 (Bloomberg) — Technology spending will rise this year because of pent-up demand from businesses for new equipment and consumer appetite for notebook computers, Seagate Technology Chief Executive Officer Steve Luczo said. “2010 is going to be a growing year for tech globally,” Luczo, head of the world’s largest maker of hard-disk drives, said in an interview yesterday at the Consumer Electronics Show in Las Vegas. “We think 2010 is going to be a good year all the way through.” Luczo, 52, who retook the CEO job at Seagate a year ago amid a global recession, said that while customers’ confidence level is not yet at the level of “everything OK,” it’s higher than it was at the start of 2009. Beginning in November, customers found they had a clear enough picture of the market to predict demand several months ahead, something they weren’t able to do in the first half of the year. “People had no visibility — I mean no visibility,” Luczo said. “The big change has been that we’re almost back to the type of visibility that we would normally have, which in our business is somewhere between three and six months.” The market for hard drives in 2009 was better than expected in part because storage remains a “fundamental” technology no matter the economic conditions, Luczo said. Seagate anticipated that total industry demand would be about 450 million units in 2009. Instead, it turned out to be about 570 million units, he said. Demand already has picked up in China, Brazil, Europe and Asia, with some business spending returning in the U.S., Luczo said. Corporate customers, who held off buying equipment during the recession, will likely update their desktop, storage and server computers, he said. Consumers continue to seek out notebooks and low-cost models called netbooks, he said. Seagate, based in the Cayman Islands and run from Scotts Valley, California, fell 24 cents to $17.80 at 9:34 a.m. New York time on the Nasdaq Stock Market. The shares more than quadrupled last year. The company will report fiscal second-quarter earnings on Jan. 20. To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net ; Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net .

Read the full article →

Jill Schlesinger: December Jobs Report: Santa Brings More Pain

January 8, 2010

The Bureau of Labor Statistics has spoken on jobs and the word is: not so fast. We wanted so badly to see a plus sign on the job creation front in December, but alas, it was not to be. Santa slashed 85,000 positions , but hark–there was a bit of good news. The previous two month’s were revised. October saw more job losses (-111,000 to -127,000), but November moved from -11,000 to +4,000. So in fact, there was POSITIVE job growth for the first time in nearly two years, but it actually already occurred. Try not to linger on the fact that when you look at October and November together, total job losses increased by 1,000 or that for all of 2009, the US economy lost 4.2 million jobs–I’m trying to be positive and here’s why: the job situation is vastly improved from a year ago. In the fourth quarter of 2009, employment losses averaged 69,000 per month, compared to job losses of 691,000 a month in the first quarter of last year. Remember last January, when the economy lost 741,000 jobs? Now that was scary. Still, there’s no getting around the fact that the employment situation stinks and that it’s really hard to find a job. My favorite employment number to follow is the “U-6″, which is defined as everyone who is unemployed, plus part-time workers plus those who are “marginally attached” (aka disgruntled workers). The rate of unemployment for that group ticked up to 17.3% from 17.2% in November. This brings me to the recent Conference Board report , which said that only 45% of Americans were satisfied with their jobs. As means of comparison, in 1987, 61% said they were satisfied. Take heart, though. The survey’s authors say that it’s not the fault of The Great Recession. “Unlike the economy, this increasing worker unhappiness is not cyclical…job satisfaction numbers have shown a consistent downward trend.” Um, not making me feel better here. Let’s regroup–here is what you need to know about the job market: new job loss is tapering off, it’s still hard to find a job and this scenario is likely to persist at least for the first half of the year. Happy New Year! Image by Flickr User Per Ola Wiberg , CC 2.0

Read the full article →

Flipping houses (The Times and Democrat)

January 3, 2010

Orangeburg resident Brett Andrae never consciously chose to “flip” real estate. He just fell into it about a year ago when he purchased some property he was subleasing.

Read the full article →

Madoff Beatten Up? ABC Says Schemer’s Injuries Are Consistent With Assault

December 24, 2009

Serious injuries sustained by convicted Ponzi schemer Bernie Maddoff are consistent with those suffered during an assault, according to ABC : Sources told WTVD, the ABC affiliate in Raleigh Durham, North Carolina, that the convicted Ponzi schemer had facial fractures, broken ribs and a collapsed lung and was discharged from Duke two days ago. Officials at the Butner federal prison, where Madoff is serving a 150-year sentence, would not confirm the report. Madoff was admitted to Duke University Hospital last Friday. He has since been been moved to the Federal Medical Center, part of the Butner Federal Correctional Complex in Butner, N.C., where he is an inmate Federal Bureau of Prisons spokeswoman Traci Billingsley said Wednesday that Madoff was moved Friday. She says the bureau won’t publicly discuss the reasons for an inmate’s transfer. Madoff has been imprisoned since March. That’s when he pleaded guilty to fraud charges and admitted cheating thousands of investors out of billions of dollars. The 71-year-old was arrested a year ago after he confessed his private-investment business was a fraud.

Read the full article →

2010 REI Outlook: Real estate investors planning on buying …

December 21, 2009

Survey plan to boost their investment in commercial real estate over the next 12 months. That figure is up from 56 percent in the third quarter and 51 percent a year ago. The exclusive survey is produced jointly by National Real Estate …. Although the flow of distressed assets to the sale market has been limited to date, the build-up of distressed properties among lenders is clearly on the rise. The total delinquency rate among bank commercial mortgages that are 90-plus …

Read the full article →

U.S. Commercial Real Estate Prices Fall to 2002 Levels, Moody’s Data Show

December 21, 2009

By Brian Louis Dec. 21 (Bloomberg) — Commercial property values in the U.S. declined in October to the lowest level since 2002 as unemployment reduced demand for apartments, offices and retail space. The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September, according to data compiled by Bloomberg. Prices fell 36 percent from a year ago and are 44 percent below the peak in October 2007. Values are dropping as U.S. unemployment climbs and consumers cut spending. Office vacancies may approach 20 percent next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc . and Grubb & Ellis Co . said last month. “The number-one issue facing commercial real estate right now is the value declines that we’ve seen since prices peaked,” Matthew Anderson, a partner at Foresight Analytics LLC in Oakland, California, said before the data were issued. “I tend to think that the size of the declines moving forward is going to be smaller.” To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net .

Read the full article →

Hale "Bonddad" Stewart: 2009 Economic Year in Review: How Did We Get Here?

December 19, 2009

Because we are approaching the end of the year, it is appropriate to take a look back at the economy for the last year to see how we’re doing. This will be a two part series. The first is, “How Did We Get Here?” It will be a retrospective of the economic numbers for the collapse. The second part will be a “Where We Are Now” piece which will show, well, where the economy is now relative to where we were about a year ago. So, let’s get started. The fall of 2008 was marked by panic. After the fall of Lehman Brothers, there was widespread talk of a “deflationary spiral,” which is: … a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.[7] Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause. The Great Depression was regarded by some as a deflationary spiral. Whether deflationary spirals can actually occur is controversial. Here is a chart of the year over year percentage change in US inflation for the last five years: Note the “cliff diving” that occurs in mid-2008: prices literally fell off a cliff. This situation is one of the most serious that can occur in an economy; it says that people have literally stopped buying things en masse. Here is a chart of real personal consumption expenditures (PCEs) for the last five years that shows the drop: This was the first drop in over 10 years indicating that something fundamental had changed in the US economy. Because PCEs comprise 70% of the US economy, this drop was extremely concerning. However, PCEs weren’t the only thing dropping. Real exports were dropping: As was total domestic investment: At this point, it’s important to remember the GDP equation: personal consumption expenditures plus investment plus net exports (or exports – imports) plus government spending = GDP. In other words by the end of 2008 every major element of GDP was dropping hard and fast. In other words, by the end of 2008 — early 2009, it was obvious the economy was at the beginning of an economic death spiral. This is exactly the same situation the country faced in 1929-1933 — which was originally mishandled horribly. So, that’s how we started the year. In the next article we’ll take a look at the economic numbers for the year to see how the economy is faring.

Read the full article →

World’s Most Expensive Office Markets Get Cheaper as Job Cuts Pare Demand

December 1, 2009

By David M. Levitt and Simon Packard Dec. 1 (Bloomberg) — The world’s most expensive office markets got a little cheaper this year. More than 130 cities worldwide saw rent expenses decline an average of 7.7 percent in the year ended Sept. 30, CB Richard Ellis Group Inc. said in a report today. Almost 50 cities reported declines of more than 10 percent. Rental costs fell about 30 percent in Midtown Manhattan , 53 percent in Singapore and 41 percent in central Hong Kong. “The places that went up the fastest and highest also came down the fastest and at greater depth,” said Raymond Torto , chief economist for CB Richard Ellis, the largest publicly traded broker. “You party Saturday night and you pay for it on Sunday morning. That’s true across the globe.” The global recession and credit crisis are pushing down office rents as companies pare jobs. About 1.93 million job cuts have been announced worldwide this year, Bloomberg data show. In the U.S., the unemployment rate jumped to 10.2 percent in October, the highest level since 1983. London’s West End district retained its position as the world’s most expensive office location, Los Angeles-based CB Richard Ellis said. Offices there cost $184.85 a square foot. That’s down 26 percent from a year ago in U.S. dollars or 18 percent in pounds. With the exception of CB Richard Ellis’s May survey, when London was passed by inner central Tokyo, the broker estimates that the West End has held the title of the world’s most expensive office site since 2001. West End Rents West End rents have been pushed higher by the Mayfair and St. James’s neighborhoods, home to Europe’s largest concentration of hedge funds. The cost of leasing space in the two locations may rise as the municipality lifts business property taxes by at least 70 percent over the next five years, CB Richard Ellis researcher Gary Martin said. “None of the other main global office markets will have such an uplift,” said the London-based analyst. Inner central Tokyo came in second in the CB Richard Ellis survey, while outer central Tokyo came in third. Central Hong Kong was fourth and Moscow was fifth. A year ago the order was the West End, Moscow, central Hong Kong, inner central Tokyo and Mumbai. London and many Asian markets are showing signs of economic stability, Torto said. Most of the rent declines in those markets have probably already happened, he said. “I would think that a year from now those markets will have sobered up,” he said. New York Falls New York City’s Midtown Manhattan came in 24th in the CB Richard Ellis survey, down from 15th last year. It remains the most expensive U.S. office market. In the Americas, Sao Paulo and Rio de Janeiro displaced Midtown as the most expensive markets for offices. Rio rose to 12th in the semi-annual survey from 37th a year ago, while Sao Paulo rose to 16th from 26th. The rise in the two Brazilian cities is “part of the changing world,” with the country’s oil and sugar cane ethanol industries helping to push demand, Torto said. New York’s decline paralleled a drop in financial services employment, he said. Offices in New York averaged $68.93 a square foot at the end of September, compared with $87.47 in Rio and $81.81 in Sao Paulo, South America’s biggest city. Rio office costs increased 12.1 percent, the second biggest increase in the survey. Sao Paulo has about 115 million square feet of offices, about the size of Chicago’s office market, according to Torto. ‘Violent Increase’ “With the emerging economies, their office markets are much more volatile, and they have a much more limited supply of grade-A office space,” said Dan Fasulo , managing director of Real Capital Analytics Inc., a New York-based firm that tracks commercial property sales. “So when there’s an economic boom, there’s always a violent increase in occupancy costs due to constrained supply.” Brazil may grow 5 percent in 2010 after an expected 0.2 percent growth this year, according to the median forecast in a Nov. 27 central bank survey of about 100 economists. Rio was among 41 cities in the survey where costs rose. The biggest increase was in Aberdeen, Scotland, where office costs rose 12.3 percent. Sao Paulo office costs were little changed. CB Richard Ellis defines occupancy costs as a rental charges including taxes and service fees. To contact the reporters on this story: David M. Levitt in New York at dlevitt@bloomberg.net ; Simon Packard in London at packard@bloomberg.net .

Read the full article →

Holiday Sales Will Drop 1% in U.S. as Forecasters See `Disciplined’ Buying

November 30, 2009

By Lauren Coleman-Lochner Nov. 30 (Bloomberg) — More consumers went shopping over the Thanksgiving holiday weekend, yet spent less than last year as they hunted for bargains on toys and electronics, according to the National Retail Federation. Spending at stores and on Web sites from Nov. 26 to Nov. 29 rose 0.5 percent to an estimated $41.2 billion from $41 billion a year earlier, the Washington-based trade group said yesterday, citing a survey conducted by polling firm BIGresearch. The higher turnout and lower average spending were in line with expectations, the NRF said. The group is sticking to a forecast for a 1 percent drop in spending this holiday season. Price cuts on small appliances, toys and winter clothes helped bring shoppers into chains including Macy’s Inc. , J.C. Penney Co. and Wal-Mart Stores Inc. On so-called Cyber Monday today, 96.5 million people plan to shop on the Internet to take advantage of limited-time offers and free shipping, according to the NRF. That would be a 14 percent increase from 2008. “People are going to be very disciplined,” said Gerrick Johnson, an analyst at BMO Capital Markets in New York. “They know their budget and they have a budget.” Thirteen percent more shoppers visited at least one department store this year, the NRF said. Internet spending on Black Friday, the day after Thanksgiving, rose 11 percent from a year ago, to $595 million, ComScore Inc. , a Reston, Virginia- based research firm, said yesterday in a statement. Cyber Offers Target Corp. , the second-biggest U.S. discount chain after Bentonville, Arkansas-based Walmart, for the first time this year advertised an online-only sale on Thanksgiving. J.C. Penney , the third-largest U.S. department-store company, started Cyber Monday specials a day earlier this year. Amazon.com Inc., based in Seattle, is the largest online retailer and plans a series of “lightning deals” for limited time periods today. The average shopper spent $343.31 in stores and online over the holiday weekend, less than $372.57 a year ago, the NRF said. The number of shoppers rose to 195 million from 172 million a year earlier, according to the NRF. The group is the world’s largest trade association, according to its Web site. “ Shoppers proved this weekend that they were willing to open their wallets for a bargain,” said Tracy Mullin , NRF’s president and chief executive officer, in a statement. “While retailers are encouraged by the number of Americans who shopped over Black Friday weekend, they know they have their work cut out for them to keep people coming back through Christmas.” More Discounts Average spending declined as prices for flat-screen televisions dropped and retailers offered a greater number of items at unprofitable prices to lure shoppers, Scott Krugman , a spokesman for the NRF, said on a conference call yesterday. Vee Weaver, a certified nurse’s aide from Atlanta, bought a set of knives, a red shirt and a purse at Macy’s and J.C. Penney after she was persuaded by a friend to shop on Black Friday. “I have a job and I’ve saved all year,” Weaver, 65, said at The Shops at Wiregrass, an outdoor shopping mall near Tampa, Florida. The black leather purse she got was $14.97 marked down from $59.98. “I had to jump up and down and blink,” she said. On Black Friday, Richfield, Minnesota-based Best Buy Co. , the biggest electronics chain, had bigger early-morning crowds and more online visitors than last year, said CEO Brian Dunn . “Those are both directionally important indicators for us,” he said in a Nov. 27 Bloomberg Television interview. $300 Laptops Holiday sales make up a third or more of retailers’ annual profit. The International Council of Shopping Centers, another industry trade group, predicted sales at stores open at least a year will advance 1 percent in November and December after a year-earlier 5.8 percent decline, the worst in 40 years. Walmart, the world’s largest retailer, attracted consumers with $298 Hewlett-Packard laptop computers and other specials that went on sale at 5 a.m. the day after Thanksgiving. The stock declined 33 cents to $54.63 in New York Stock Exchange composite trading on Nov. 27. Renee McDonald, 40, started waiting at 5 a.m. outside a Walmart in Houston, hoping to purchase a television. When the store ran out, she bought a digital camera instead. Black Friday shopping at J.C. Penney stores was strong throughout the U.S., the Plano, Texas-based retailer said in an e-mailed statement on Nov. 28. J.C. Penney and other retailers plan to report November sales on Dec. 3. The retailer fell $1.07 to $29.57 on Nov. 27 on the New York Stock Exchange. At the Macy’s in New York’s Herald Square, shopper traffic appeared greater than a year ago, and continued to flow in after the initial rush, Chairman and CEO Terry Lundgren said. Jewelry and housewares were selling “briskly,” he said. Macy’s , based in Cincinnati, dropped 59 cents to $16.97 in Nov. 27 trading. “Last year we were just getting rid of the inventory we bought six months before,” Lundgren said. “This year we’ve had a year to think through what is the sales trend.” To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net .

Read the full article →

U.A.E. Central Bank Makes Additional Liquidity Facility Available to Banks

November 29, 2009

By Arif Sharif Nov. 29 (Bloomberg) — The United Arab Emirates’ central bank said it “stands behind” the country’s local and foreign banks, which face losses from Dubai World’s possible default, and offered them access to more money under a new facility. The central bank will make available to banks “a special additional liquidity facility linked to the current accounts” at the central bank that can be drawn upon at a cost of 50 basis points above the three-month Emirates inter-bank offered rate, the Abu Dhabi-based regulator said in an e-mailed statement today. Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a “standstill” agreement with creditors. The news led to a slump in financial markets around the world and raised prospects of rising loan write-offs for U.A.E. and foreign banks. “This is a very re-assuring move by the central bank in order to limit the risk of any run on Dubai-based banks,” said John Sfakianakis , chief economist at Banque Saudi Fransi in Riyadh. It will alleviate any “liquidity concerns by foreign banks about the banking system, mostly those based in Dubai,” he said. The U.A.E.’s banking system is “more sound and liquid than a year ago” and local banks’ sale of medium-term notes and commercial paper in foreign markets has declined by 25 percent over the period, the central bank said. Foreign interbank deposits make up only 5 percent of overall interbank deposits, the central bank said in the statement. To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

Read the full article →

U.A.E. Central Bank Says It `Stands Behind’ Lenders, Offers Loan Facility

November 29, 2009

By Arif Sharif Nov. 29 (Bloomberg) — The United Arab Emirates’ central bank said it “stands behind” the country’s local and foreign banks, which face losses from Dubai World’s possible default, and offered them access to more money under a new facility. The central bank will make available to banks “a special additional liquidity facility linked to the current accounts” at the central bank that can be drawn upon at a cost of 50 basis points above the three-month Emirates inter-bank offered rate, the Abu Dhabi-based regulator said in an e-mailed statement today. Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a “standstill” agreement with creditors. The news led to a slump in financial markets around the world and raised prospects of rising loan write-offs for U.A.E. and foreign banks. “This is a very re-assuring move by the central bank in order to limit the risk of any run on Dubai-based banks,” said John Sfakianakis , chief economist at Banque Saudi Fransi in Riyadh. It will alleviate any “liquidity concerns by foreign banks about the banking system, mostly those based in Dubai,” he said. The U.A.E.’s banking system is “more sound and liquid than a year ago” and local banks’ sale of medium-term notes and commercial paper in foreign markets has declined by 25 percent over the period, the central bank said. Foreign interbank deposits make up only 5 percent of overall interbank deposits, the central bank said in the statement. To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

Read the full article →

Black Friday Crowds Snap Up Discounted TVs, Laptops at Walmart, Best Buy

November 28, 2009

By Cotten Timberlake and Chris Burritt Nov. 28 (Bloomberg) — Retailers reported “strong” shopper traffic on Black Friday as discounts on televisions, toys and computers drew budget-conscious crowds across the U.S., the National Retail Federation said. High-definition TVs, laptops, Zhu Zhu Pets robotic hamsters and winter coats were among the most popular items, according to the federation, a Washington-based trade group. Sales probably met or exceeded retailers’ projections, David Schick , a Baltimore-based analyst with Stifel Nicolaus & Co., wrote in a note to investors after store visits and conversations with employees. Wal-Mart Stores Inc. , the world’s largest retailer, drew crowds with $298 Hewlett-Packard laptop computers and other specials that went on sale at 5 a.m. Best Buy Inc. , the biggest electronics chain, used $547.99 42-inch Samsung flat-panel TVs to lure shoppers grappling with the highest unemployment in 26 years. The retailer had bigger early-morning crowds than last year, Chief Executive Officer Brian Dunn said. “The surprise news is that they are actually buying for themselves as well, due to pent-up demand and frugal fatigue,” Marshal Cohen , chief industry analyst with NPD Group Inc. said in a Bloomberg Television interview yesterday. “They are saying ‘Let’s loosen up the purse strings a little bit,’ but it is still cautious spending.” NPD, based in Port Washington, New York, is a market research firm. The day after U.S. Thanksgiving is known as Black Friday, the traditional beginning of holiday buying. Explanations of the phrase’s origins differ, one holding that it’s the weekend when retailers go to being in the black, profitable for the year. Stores open early on Black Friday and offer early-bird discounts to attract business. Black Friday Prediction Retailers’ chief marketing officers predicted Black Friday sales would climb an average 1.8 percent from a year ago at their own stores, according to a survey conducted by BDO Seidman LLP in October. Ninety-six of 100 executives said they would increase promotions this year, offering the biggest discounts on consumer electronics. “Retailers in all sectors have reported strong crowds,” according to an NRF statement yesterday. Walmart fell 33 cents to $54.63 yesterday in New York Stock Exchange composite trading . Richfield, Minnesota-based Best Buy lost 43 cents to $42.83. Snapping Up TVs There seemed to be more discounts on TVs this year, and shoppers were snapping them up, said Charles O’Shea , a New York- based retail analyst with Moody’s Investors Service. In the four hours he spent checking retailers in northern New Jersey, he saw several shoppers standing at bus stops holding flat-panel sets. “It looks like everybody has caught the promotional bug,” O’Shea said in a telephone interview yesterday. The lines in front of Best Buy stores were longer and the company’s Web site attracted more visitors than in 2008, Best Buy’s Dunn said. “Those are both directionally important indicators for us,” he said in a Bloomberg Television interview. Samir Patel arrived at noon on Thanksgiving Day with his brother and cousin to claim the No. 1 spot in line at Best Buy in Jersey City, New Jersey. The 26-year-old, who has been unemployed since he graduated with a master’s degree in May, was waiting to buy a Sony Vaio laptop for $399.99 when the store opened at 5:30 a.m. the next day. ‘Best Deal’ “It’s the best deal for a laptop this year,” he said. “There’s a minimum of 10 in the store.” Holiday sales make up a third or more of retailers’ annual profit. The International Council of Shopping Centers, a trade group, predicted sales at stores open at least a year will advance 1 percent in November and December after a year-earlier 5.8 percent decline, the worst in 40 years. “There’s a little more traffic than last year across the board, maybe 10 percent,” Bill Taubman , chief operating officer of Taubman Centers Inc., a U.S. real estate investment trust with 24 malls, said in a telephone interview yesterday. Walmart, based in Bentonville, Arkansas, kept stores open all night so shoppers could grab items when they went on sale at 5 a.m. The world’s largest retailer cut some toy prices to $5. Toys “R” Us, based in Wayne, New Jersey, had an average of 1,000 people outside its stores before they opened at midnight, five hours earlier than last year, said Chairman and CEO Jerry Storch . The chains sold a “significant number” of Apple Inc. iPods and tens of thousands of Zhu Zhu Pets robot hamsters, he said. For the Kids “The last thing parents will cut back on is toys for their kids,” Storch said in a telephone interview yesterday. At the Macy’s Inc. store in New York’s Herald Square, shopper traffic appeared greater than a year ago, and continued to flow in after the initial rush, Macy’s Chairman and CEO Terry Lundgren said. Housewares and jewelry were selling “briskly,” he said. “Last year we were just getting rid of the inventory we bought six months before,” Lundgren said. “This year we’ve had a year to think through what is the sales trend.” Macy’s, based in Cincinnati, dropped 59 cents to $16.97 yesterday on the New York Stock Exchange. Promotions are shaping up to be less haphazard than last year when conditions were “downright dysfunctional” after the financial crisis forced retailers to clear out goods, Richard Hastings , a Charlotte, North Carolina-based consumer strategist for Global Hunter Securities LLC, said yesterday in an e-mail. After this weekend, sales may slip into a lull until mid- December when retailers push out more discounts, Hastings said. “The season has a long way to go,” Hastings said. To contact the reporters on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net Chris Burritt in Greensboro, North Carolina, at 1348 or cburritt@bloomberg.net ;

Read the full article →

30-year-loan rates match record low (Washington Post)

November 27, 2009

Average rates for 30-year, fixed-rate mortgages fell this week, matching a record low set last spring. Rates are more than a full percentage point below what they were a year ago, Freddie Mac said Wednesday.

Read the full article →

U.K. Retailers Avoid Christmas `Armageddon’ Repeat With Fewer Discounts

November 26, 2009

By Sarah Shannon Nov. 26 (Bloomberg) — A year after swaths of panic price cuts led to a Christmas “Armageddon” for U.K. retailers, Britons may find it harder to get a bargain before the holiday. Marks & Spencer Group Plc, New Look Group Ltd. and House of Fraser Ltd. are among stores that say they don’t plan full-scale discounting before Dec. 25. With consumer optimism holding at an 18-month high, shoppers may still spend more in December than a year ago, according to researcher Mintel International. “I can’t see last year’s level of disorder on the high street,” New Look Finance Director Alistair Miller said in an interview with Bloomberg News. Going on sale before the holiday “is an absolutely suicidal move for retailers.” According to analysis conducted by PricewaterhouseCoopers LLP, only 43 percent of town-center retailers offered discounts or ran promotions this week, compared with 62 percent a year ago. Ninety of Britain’s 100 biggest store owners started discounting before Christmas last year as the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. caused consumers to slash their holiday budgets. “There’s much less blanket discounts this year,” said Richard Dickinson, chief executive officer of the New West End Company , the organization which represents retailers in central London’s main shopping district. “Stores have been much more astute about ordering. What people are doing is much more event driven and promotion driven.” No ‘Armageddon’ Only 40 percent of central London retailers are planning pre-holiday discount days this year, according to Dickinson. Numis Securities analyst Andy Wade expects Christmas to be “a lot stronger” for profitability as discounting subsides. Marks & Spencer’s gross margin narrowed by 1.7 percentage points in its last fiscal year after the retailer held two “Christmas Spectaculars,” one-day events in which the price of almost all products was cut by 20 percent. Those won’t be repeated this year, according to Executive Chairman Stuart Rose , who said this month that the “Armageddon” scenario of 2008 has now passed. M&S, the U.K.’s largest clothing retailer, will “trade full price through Christmas,” Rose said. Instead of price cuts, the London-based company will rely on 1,000 new products such as a 45-pound ($75.2) Christmas dinner for four people, and a 10 million-pound advertisement campaign featuring stars from the Absolutely Fabulous television series. Smaller Discounts House of Fraser Plc, the U.K.’s third-largest department- store chain, will only run “targeted promotions” such as 25 pounds off party-wear in the run up to Christmas, spokeswoman Clotilde Gros said. Last year, the retailer offered price cuts of as much as 50 percent before the holiday. New Look, the owner of 610 budget fashion outlets, will run promotions on party dresses later in the holiday season and start discounting by as much as 70 percent from Dec. 26, Miller said. “Compared to the build up to 2008’s doom and gloom laden Christmas period, 2009 is looking much more positive,” said Jon Wright , retailing manager at market researcher Euromonitor. “Retailers have cut their cloth accordingly in terms of inventory, staffing, merchandising activities and promotion.” According to PWC, stores were offering smaller discounts of about 25 percent this week, down from 40 percent a year ago. Mintel forecasts that December retail sales will rise by 2 percent after declining 1.7 percent in the same month last year. The lowest interest rates on record and improving house prices have buoyed Britons willingness to spend, according to Richard Hyman , strategic retail adviser to Deloitte & Touche LLP. Debenhams, John Lewis “I certainly feel more confident about the economy,” said Joanne Burrows, 61, as she shopped for gifts on London’s Oxford Street. “My husband and I are feeling a bit more certain about our savings and house prices seem to have recovered a little. I’d say I’m spending more than last year.” To date, few town center retailers have followed the lead of department-store chain Debenhams Plc, which started a 250 million-pound price cutting campaign on Nov. 18, surpassing its 200 million pounds of discounts before Christmas last year. John Lewis Partnership Plc, the biggest U.K. department store owner, will start its clearance on Dec. 26 at its Trafford outlet in northwest England, spokeswoman Laura Chilvers said. All other shops will go on sale from Dec. 27. Sales at John Lewis rose 15 percent in the week ended Nov. 21 and were up more than 20 percent in the following four days, the company said today. “Christmas 2009 will be more profitable than last year thanks to a more benign competitive environment,” said Kate Calvert , an analyst at Shore Capital. Price cutting in December last year was exacerbated by closing down sales at 815 Woolworths Group Plc stores across the U.K. ‘In Denial’ Not everyone agrees that the holiday will see growth in U.K. retail sales. Verdict Research forecasts a 0.7 percent drop. Deloitte’s Hyman expects Christmas sales to be a “whisper” up on last year, only to fall by 1.5 percent in 2010 because of a planned increase in value-added tax in January and potential rises in interest rates and unemployment. “It’s extraordinary that retail has held up as well as it has given the recession, and it really is a testament to how wedded to spending the U.K. consumer is,” Hyman said. “You could say they are in denial.” On Oxford Street, 37-year-old Caroline Chambers said she can afford to spend more on gifts than she did last year. “My husband feels more secure in his job and that’s made a big difference to how we feel about spending,” Chambers said. “I’m not that worried about next year. Things are improving.” To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net .

Read the full article →

Dan Solin: Does "Dr. Doom" Believe His Own Press?

November 24, 2009

I give great credit to NYU economics professor Nouriel Roubini. Unless you reside on another planet, you know that he correctly predicted the mortgage-related crash. Recently, “Dr. Doom” warned about a coming market correction. He believes “markets have gone up too much, too soon, too fast.” Should investors rely on Professor Roubini’s crystal ball? In its December 11, 2008 issue, Fortune Magazine featured a story entitled: “8 really, really scary predictions.” Titles that inspire fear and panic sell magazines. This fact is not lost on Fortune and others in the financial media. Here is Professor Roubini’s prediction for 2009: For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It’s better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It’ll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I’ll be right this year too. Year to date, the S&P 500 is up 23.99%; the Dow is up 17.73% and the Nasdaq is up a whopping 36.76%. The S&P GSCI index, which benchmarks investment performance in the commodity markets, is up 11.65%. Industrial metals are up 68.87%. In stark contrast, 12 month U.S. Treasuries are yielding 0.26%. Longer term (10 year) Treasuries are yielding 3.37%. Clearly, Professor Roubini was right about 2008, but he was dead wrong about 2009. As I indicated in last week’s blog , his equally well credentialed colleague, Wharton professor and author, Jeremy Siegel, was shockingly wide of the mark with his 2008 stock market predictions. Of course, professors, economists and others have a right to make predictions. The financial media has every right to print them. The problem is that so many investors rely on them, when they are nothing more than voodoo science. That’s really, really scary! Dan Solin is the author of The Smartest Retirement Book You’ll Ever Read. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

Read the full article →

Median Home Prices Fall In 3Q

November 10, 2009

A real estate group says home prices fell in eight out of every 10 U.S. cities in the third quarter of this year as heavily discounted distressed sales made up 30 percent of all deals. But home sales continued their climb, with quarterly sales outpacing the second quarter and the previous year’s figures, the National Association of Realtors said Tuesday. The median sales prices of existing homes declined in 123 out of 153 metropolitan areas compared with the same period a year ago. Prices rose in the other 30 cities. The national median price clocked in at $177,900, or 11 percent below the third quarter last year. “The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas,” said Lawrence Yun, the group’s chief economist, in a statement. “But we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market.” Prices in Fort Myers, Fla., plunged 40 percent to $98,000 from a year ago, the worst in the nation. Las Vegas saw its median price tumble almost 35 percent to $138,500 year-over-year. The largest price gain, by contrast, was in Cumberland, Md., where prices jumped 19 percent to $122,100. Davenport, Iowa, followed with an increase of 14 percent to $115,600. The federal tax credit of up to $8,000 for first-time homebuyers helped boost sales in the third quarter. U.S. home sales grew in 45 states from the second quarter, with 28 states posting double-digit gains. Total quarterly sales hit a seasonally adjusted annual rate of 5.3 million, up more than 11 percent from 4.76 million in the second quarter. President Barack Obama signed a bill last week extending and expanding the federal tax credit. Now, buyers who have owned in their current homes for at least five years are eligible for tax credits of up to $6,500. First-time homebuyers – or anyone who hasn’t owned a home in the last three years – would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.

Read the full article →

Home Prices Are Stablizing, But Foreclosures Still Account For 20 Percent Of Sales: Zillow

November 9, 2009

CNBC : On the way down and on the way up, home prices always lag sales, but they may be beginning to catch up. A new report from Zillow.com finds home values stabilized in the third quarter of this year, as sales of new and existing homes grew. “While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines,” according to the report. That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. The question remains if this is a real trend or a temporary surge brought on by non-organic factors. The first-time home buyer tax credit added an additional 350,000 buyers to the housing market, according to the National Association of Realtors, and the Federal Reserve’s investment in Fannie Mae and Freddie Mac mortgages and mortgage backed securities have kept mortgage rates artificially low. And then there’s the foreclosure quandary. Zillow estimates more than one fifth of all sales in September were foreclosure re-sales, up from 15 percent a year ago. Realtors have put that at a higher number. — Diana Olick Read the rest of the story here . For a slideshow of the most expensive housing markets, check out CNBC’s story here .

Read the full article →

Phillies’ Game 5 World Series Win Over Yanks Sees Rating Drop From Game 4

November 3, 2009

By Michael Buteau Nov. 3 (Bloomberg) — Television ratings for the Philadelphia Phillies’ win over the New York Yankees last night were 5 percent lower than for Game 4 the previous evening. The fifth game in the best-of-seven World Series was seen in an average of 12.8 percent of U.S. households in the top 50 television markets, News Corp.’s Fox Sports said in a news release, citing Nielsen Media Research. Game 4 of the Series, which the Yankees won, was seen in an average of 13.5 percent of U.S. television homes, making it the highest-rated World Series game since 2004, when the Boston Red Sox clinched their first title in 86 years. Last night’s game still pulled in ratings 15 percent higher than for Game 5 a year ago, when the Phillies clinched the Major League Baseball title in a contest spread over two days because of rain. The decline in ratings this year from Game 4 may have reflected competition from the “Monday Night Football” game between the Atlanta Falcons and New Orleans Saints on Walt Disney Co.’s ESPN network. The Phillies beat the Yankees 8-6 at Citizens Bank Park in Philadelphia, narrowing New York’s Series lead to 3-2. Game 6 is scheduled for tomorrow at Yankee Stadium, where New York will attempt to clinch its record-extending 27th title. To contact the reporter on this story: Michael Buteau in Atlanta at mbuteau@bloomberg.net .

Read the full article →

Video: Pilson Says World Series May Be `Perfect Storm’ for Fox: Video

October 29, 2009

Oct. 29 (Bloomberg) — Neal Pilson, owner of Pilson Communications, talks with Bloomberg’s Carol Massar and Matt Miller about television ratings for Major League Baseball’s World Series between the New York Yankees and the Philadelphia Phillies. Ratings on New Corp.’s Fox unit rose 29 percent from the opener a year ago, the network said today. The game, won by the Phillies 6-1, drew 19.5 million viewers and was seen in 12 percent of U.S. television households.(Source: Bloomberg)

Read the full article →

Banco Santander Third-Quarter Profit Advances 0.7% on Brazil, U.K. Growth

October 28, 2009

By Charles Penty Oct. 28 (Bloomberg) — Banco Santander SA, Europe’s second- biggest lender by market value, said third-quarter profit rose 0.7 percent as higher earnings from the U.K and Brazil countered loan losses. Net income increased to 2.22 billion euros ($3.29 billion) from 2.21 billion euros a year earlier, the Santander, Spain- based lender said in a filing to regulators today. That beat the 2.20 billion-euro median estimate in a survey of nine analysts. Spain’s biggest bank has captured market share in the U.K. by expanding its business beyond mortgages and savings products as rival lenders focus on rebuilding damaged balance sheets. Chairman Emilio Botin is boosting capital as Santander battles recessions in Spain and Mexico and seeks growth in Brazil, where its Sao Paulo-based bank raised 14.1 billion reais ($8.2 billion) in an initial public offering this month. “It’s a diversified international bank with a strong capital base that’s able to pay a good yield while many others cannot,” said Andrea Williams , who helps manage 1.2 billion pounds ($2 billion) at Royal London Asset Management in London. “The U.K. is looking good for them as is the Latin American franchise with the Brazilian economy so robust.” Shares of the 152-year-old lender have risen 68 percent this year, compared with a 44 percent gain in the 63-member Bloomberg Europe Banks and Financial Services Index. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, which reported a drop of less than 1 percent in third-quarter profit yesterday, has gained 44 percent. Santander repeated guidance that it would match last year’s profit of 8.88 billion euros in 2009 and would maintain the amount paid out the shareholders at 4.81 billion euros. Spanish Slump Costs for provisioning bad loans, amid the worst Spanish recession in 60 years, rose to 2.57 billion euros from 1.79 billion euros, the bank said. Bad loans as a proportion of total credit climbed to 3.03 percent from 2.82 percent in June and 1.71 percent a year ago. Loans classed as “dubious” on its books almost doubled to 22.7 billion euros. Third-quarter profit from the U.K. jumped to 430 million euros from 317 million euros a year earlier, Santander said. Profit from Brazil rose to 628 million euros from 477 million euros. Santander may earn 4 billion euros from Brazil in 2011, making it the biggest contributor to profit at the bank, dwarfing an estimated 3.2 billion euros from its Spanish business, Evolution Securities said in an Oct. 5 report. The bank used 2.25 billion euros from its Brazilian share sale and a debt exchange to bolster its reserves and fund early retirements and other costs. To contact the reporters on this story: Charles Penty in Madrid at cpenty@bloomberg.net

Read the full article →

Video: Jay Leno Show Ratings Dive Takes Toll on NBC Affiliates: Video

October 26, 2009

Oct. 26 (Bloomberg) — Bloomberg’s Su Keenan reports on the impact of the decline in ratings for the “Jay Leno Show” on NBC affiliates. Ratings for late newscasts at affiliates in 44 of the top 56 metered markets are down this year, falling an average of 13 percent in the first four weeks of the season compared with a year ago, the New York Post says. (Source: Bloomberg)

Read the full article →

Canada vs. U.S. — The New Realty (MalaysiaNews.net)

October 25, 2009

The Canadian Real Estate Association said the average sale price of a home last month was $331,602 last month, a 13.6% from a year ago. After bottoming out in January, sales activity in Canada is up ….

Read the full article →

JPMorgan Chase Takes Hits on Subprime/Prime/Home Equity

October 14, 2009

Even though JPMorgan Chase posted strong third quarter earnings, the mega bank set aside $4 billion in mortgage-related credit charges, including $1.1 billion tied to Washington Mutual, which it bought a year ago.

Read the full article →

Schwarzman Says Worst Is Behind Private-Equity Industry as Sales Stabilize

October 14, 2009

By Jason Kelly Oct. 14 (Bloomberg) — Blackstone Group LP Chief Executive Officer Stephen Schwarzman said the worst is behind the private equity industry, as sales at companies it owns stabilize and the firm weighs selling shares through public offerings. “After virtually no realizations over the last year, we’re seeing the beginnings of realizations through sales and equity offerings,” Schwarzman told a private equity conference in Dubai today. “Revenues of most portfolio companies are no longer declining.” Blackstone, the world’s largest private-equity firm, is seeking to lead a resurgence in leveraged buyouts after a two- year drought triggered by the global credit crisis. Blackstone last week announced the biggest private-equity deal of the year, the $2.7 billion acquisition of Anheuser-Busch InBev NV’s amusement park business. “The future now looks substantially brighter for us in the private equity business,” he told attendees at the Super Return Middle East conference. Blackstone is planning to list as many as eight companies and sell five more to take advantage of rising stock markets and return money to investors, Schwarzman said. The sale of the five companies will return an estimated $2.8 billion to investors, Schwarzman said. “We’re in a radically different place than a year ago,” he said after the speech, adding that the recovery wasn’t complete. “It’ll take several more years before we have what most people regard as a normal situation.” ‘Eye of the Storm’ Guy Hands, founder of London-based private equity firm Terra Firma Capital Partners Ltd., said in separate remarks that any optimism around a recovery may be misplaced. “My guess is that in the West we are currently in the eye of the storm, and the calm we feel will eventually give way to more panic,” Hands said in a speech at the conference. “We are, I believe, at the beginning of a fundamental global political and economic shift in power not seen since the 1800s.” Schwarzman, 62, created Blackstone in 1985 with Peter G. Peterson. The firm, which also invests in real estate and credit and manages funds of hedge funds, has $93.5 billion in assets under management. Blackstone is weighing opening an office in the Middle East, Schwarzman told reporters after the speech. He declined to be more specific about timing or location. His firm would join competitors including Carlyle Group and KKR & Co. who have set up bases in the region. To contact the reporter on this story: Jason Kelly in New York at jkelly14@bloomberg.net

Read the full article →

Dollar Losses Are S&P 500′s Gain as Correlation Nears Record: Chart of Day

October 13, 2009

By Jeff Kearns and Oliver Biggadike Oct. 13 (Bloomberg) — U.S. stocks and the dollar are moving in the opposite direction more than ever before as a weaker currency boosts the value of sales outside America. The CHART OF THE DAY shows that the so-called correlation coefficient using 120 days of data between the Dollar Index and the Standard & Poor’s 500 Index is minus 0.43, near the level of minus 0.45 reached on July 7. The reading three months ago was the lowest in the currency gauge’s 42-year history. “When the dollar drops, that’s good for companies that are making products in the U.S. and selling them abroad,” said Frederic Dickson , who manages $20 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. “Investors are expecting U.S. multinational companies to have positive earnings surprises as a result of the dropping dollar.” Companies in the S&P 500 generated 47.9 percent of their revenue outside the U.S. in 2008, an increase from 43.6 percent in 2006, according to data compiled by S&P. The stock measure has surged 59 percent from a 12-year low on March 9. The Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 14 percent during the same period, including the steepest two- quarter drop since 1991. The correlation between stocks and the dollar turned positive in March 2008 and peaked at 0.46 a year ago as investors sold American stocks and the greenback on concern the credit crisis would sap returns on U.S. assets. That relationship deteriorated in September 2008 as investors parked assets in the dollar and Treasuries to weather the global recession. A correlation coefficient of minus 1 means two assets are moving exactly the same percent in opposite directions. The falling dollar also “helps stocks because you have gold, oil, copper and steel companies moving up as money flows and the commodity prices move up,” Dickson said. To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Oliver Biggadike in New York at obiggadike@bloomberg.net .

Read the full article →

Recession Creating A Lost Generation; Young People Can’t Find Jobs

October 11, 2009

Bright, eager — and unwanted. While unemployment is ravaging just about every part of the global workforce, the most enduring harm is being done to young people who can’t grab onto the first rung of the career ladder. Affected are a range of young people, from high school dropouts to college grads to newly minted lawyers and MBAs across the developed world from Britain to Japan. One indication: In the U.S., the unemployment rate for 16- to 24-year-olds has climbed to more than 18 percent, from 13 percent a year ago.

Read the full article →

Surge in Stocks Reaching 52-Week Highs Sends Bullish Signal: Chart of Day

October 9, 2009

By Lynn Thomasson Oct. 9 (Bloomberg) — More U.S. stocks are trading at 52- week highs than at any time since June 2007, a sign to some investors that the steepest rally in 70 years may be sustained. The CHART OF THE DAY shows the number of companies at a 52- week high on American exchanges topped 1,069 yesterday, according to data compiled by Bloomberg. About a year ago, 14 stocks were at that level. “When I see new highs leading the market, it bodes well,” said John Wilson , chief technical strategist at Morgan Keegan & Co., which manages about $120 billion in Memphis, Tennessee. “It wouldn’t surprise me to see a sharp rally in the next quarter. The market is acting like it’s going to take out the recent highs.” The Standard & Poor’s 500 Index, up 57 percent since March and within 1 percents of its 2009 peak of 1,071.66, has climbed for the past four days in the longest streak of gains in a month. Equities advanced as the government said first-time jobless claims slid to the lowest level since January, Alcoa Inc. unexpectedly reported a profit and Goldman Sachs Group Inc. told investors to buy shares of large banks. There have only been 27 days when more U.S. stocks closed at a 52-week high than yesterday, based on data since 2002 tracked by Bloomberg. To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net .

Read the full article →

Mortgage Delinquencies: SEE Which Counties Have Been Hit the Hardest (MAP)

October 9, 2009

Where is the mortgage crisis wracking the most damage? These handy maps, courtesy of the New York Fed , track changes in mortgage delinquency rates by county. You may not be surprised to see that mortgage delinquencies are getting worse over vast swaths of the country. But the year-over-year delinquency numbers — the first chart below — point to heavy concentration of late in the West, followed by a streak of improvements in the Midwest that trickle away as you head East. In almost all parts of California, Washington and Oregon, delinquencies are far worse than they were a year ago. Disturbingly, there are only a handful of counties across the nation where mortgage delinquencies are actually improving over last year. (Kudos to Beaverhead, Montana and Red River, Texas!) The New York Fed’s website, which also tracks other measures of consumer credit, including auto loans, student loans, and bank loans, is intended to help “government agencies, community groups, commercial institutions and other practitioners better understand, monitor and respond to local conditions associated with foreclosures and credit and mortgage delinquencies.” To see how your area is faring, check out the map below. (NOTE: The New York Fed’s map has full data on each county. Check it out here .) In the below map, red indicates counties where delinquencies have worsened, green indicates areas where conditions have improved, and the gray shading indicates areas where there has been no change. The second-quarter numbers in the chart below are even more devastating news for California. In fact, the map shows that almost all of the most severe delinquency rates are concentrated in California and Florida. (Check out the more detailed version of this map here ) Get HuffPost Business On Facebook and Twitter !

Read the full article →

Goldman Sachs PAC Has Only $25,482 (VIDEO)

October 5, 2009

Reuters reports that Goldman Sachs has virtually stopped raising money for political candidates through its political action committee even as it remains extremely well-connected to Washington lawmakers. While rivals Morgan Stanley and JPMorgan Chase have shelled out hundreds of thousands of dollars in employee political contributions, campaign finance records show that Goldman’s political action committee hasn’t taken any money from employees in more than a year — its balance is a meager $25,482. According to Reuters: Critics believe Goldman might be operating under the belief that it has all the political influence it needs. “They don’t seem to need a PAC since Goldman has had its way with Washington consistently since Wall Street imploded a year ago,” said Harvey Rosenfield, president of the non-profit Consumer Education Foundation. “You could argue they have done pretty well without any PAC contributions.” Not that Goldman employees aren’t making contributions on their own – in the 2010 election cycle, they’ve contributed at least $174,303 to federal candidates, according to opensecrets.org . Goldman, which was the biggest U.S. securities firm before last year’s financial crisis, was the top corporate giver during the 2008 election cycle, according to the Center for Responsive Politics . The company strongly supported Democratic candidates. Bloomberg reported last week that Virginia Sen. Mark Warner criticized the firm for continuing to hand out large bonuses while the banking industry is still under distress. “I do hope that Goldman Sachs will be a little more sensitive to the optics of their actions,” Warner, a member of the Senate Banking Committee, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” being broadcast this weekend. The company set aside $11.8 billion for pay in the first six months of 2009 alone, according to Bloomberg. The Sunlight Foundation’s Jake Brewer weighed in today on MSNBC’s Morning Meeting on how groups like Goldman Sachs are doubling their lobbying efforts by contributing to lawmakers through lobbyist bundlers. Visit msnbc.com for Breaking News , World News , and News about the Economy

Read the full article →

Treasury to Say Blackstone, Two Others Raised $1.94 Billion for Toxic Debt

October 5, 2009

By Robert Schmidt Oct. 5 (Bloomberg) — The U.S. Treasury Department will announce today that AllianceBernstein Holding LP, BlackRock Inc. and Wellington Management Co. have raised a combined $1.94 billion for their funds participating in the U.S. effort to buy toxic assets from banks. By getting that money from private investors, the three firms will qualify for federal funds under the Public Private Investment Program. The U.S. will match the funds each money manager raised, and provide debt financing that will give them a combined purchasing power of $7.74 billion. The program, known as PPIP, is a scaled-down effort to spur the purchase of devalued real estate loans and mortgage-backed securities that weighed on banks’ balance sheets and helped cause the financial crisis. The Treasury once envisioned the partnerships buying as much as $1 trillion of the assets. “The PPIP continues to grow,” Herb Allison , assistant Treasury secretary for financial stability, said in a statement. “Private capital is being drawn into the market for legacy securities, and taxpayers are being given a chance to share in the profits.” Last week, Invesco Ltd. and TCW Group Inc. became the first two companies in the PPIP to announce initial closings of their funds. Using the federal financing, the five partnerships will have about $12.3 billion in capital. The department has said it expects the rest of the partnerships to announce closings throughout October. After the initial closings, the funds will be able to have two more rounds of investment over the next six months that will be eligible for the Treasury’s matching equity and debt. Treasury Secretary Timothy Geithner has committed as much as $30 billion in funding for PPIP from the $700 billion Troubled Asset Relief Program enacted a year ago. To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net

Read the full article →

ECB Lends Banks Less Than Forecast at Auction as Demand for Funding Eases

September 30, 2009

By Gabi Thesing Sept. 30 (Bloomberg) — The European Central Bank said it will lend banks 75.2 billion euros ($110 billion) for 12 months at the current benchmark interest rate of 1 percent to boost credit flows and aid the recovery in the euro area economy. The figure compares with the 442 billion euros the Frankfurt-based ECB loaned in June and is almost half of the 137.5 billion-euro forecast of economists, according to the median of 16 estimates in a Bloomberg News survey. The ECB filled all bids in its second auction of 12-month loans to banks at the current benchmark interest rate of 1 percent. It said the 589 banks that participated will receive the funds tomorrow. The euro extended its advance against the dollar after the announcement and was up 0.5 percent to 1.4659 as of 10:26 a.m. in London. The ECB, which will offer banks 12-month loans for a third time on Dec. 15, is flooding the system with money in the hope it will be lent on to companies and households. Money-market rates have dropped as the economy shows signs of emerging from recession and banks become less wary of lending to each other. The Eonia overnight rate , the rate European banks charge each other for overnight loans, has declined to 0.35 percent from 2.2 percent at the start of the year. The euro interbank offered rate, or Euribor, for three-month loans this week fell to a record low of 0.74 percent from 5.24 percent a year ago. To contact the reporter on this story: Gabi Thesing in Frankfurt gthesing@bloomberg.net

Read the full article →

Sigurdardottir Says Iceland Wanted More European Union Support in Crisis

September 29, 2009

By Omar R. Valdimarsson Sept. 29 (Bloomberg) — Iceland’s economic woes can “in part” be blamed on the European Union’s lack of support as the island struggled to stay afloat following the collapse of its banks a year ago, Prime Minister Johanna Sigurdardottir said. The government “would have wanted to see more cooperation and assistance from our friends,” Sigurdardottir said in an interview in the township of Gardabaer in Iceland on Sept. 26. “Our difficulties can in part be traced back to the common European framework, which in some aspects wasn’t strong enough to deal with the economic crisis.” The island’s economy buckled under the weight of its bank industry debt a year ago, forcing the government to seek a loan from a group led by the International Monetary Fund and the Nordic states, though without a contribution from the EU. Iceland’s lawmakers in July agreed to start EU accession talks, and Sigurdardottir has said membership, with euro adoption an ultimate goal, is necessary to achieve a stable economy. “Joining the EU is one of the most important steps Iceland can take on its path to resurrection,” Sigurdardottir said, adding that she “hopes” accession talks can begin next year. “Joining the EU plays into so many aspects. One is that Iceland’s currency is very vulnerable against outside influence, which makes it very important to seek the shelter and stability that can be found in the euro.” Opposition Grows More than half of Iceland’s voters disagree with Sigurdardottir’s aspiration. Opposition to joining rose to 50.3 percent in September from 48.5 in August, a Gallup poll showed. EU foreign ministers on July 27 called on the European Commission to prepare an assessment of the island’s readiness to join. Negotiations will take at least 18 months, depending on how hard Iceland fights to keep fishing quotas and a whale- hunting tradition that run afoul of EU rules. Once accession talks end, all 27 EU governments would have to endorse Iceland’s membership and the country plans to hold a referendum, a process that can take a year or more. “I’m certain that Iceland will get an outcome from those talks that are fair and good for the country,” she said. “When and if that happens, I’m sure the Icelandic people will approve of joining the EU in a national referendum and that Iceland will become an EU member and will adopt the euro within a few years.” Iceland is the western nation hardest hit by the global credit crisis that left its banks in tatters and sent the krona down 80 percent last year in the offshore market. The island, which relies on a $5.1 billion International Monetary Fund-led loan, is waiting for the fund to resume disbursement of the money. The IMF has made payments contingent on Iceland’s settling U.K. and Dutch depositor claims, with the two countries demanding Iceland’s taxpayers cover the cost. To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net .

Read the full article →

Sigurdardottir Says Iceland Wanted More European Union Support in Crisis

September 29, 2009

By Omar R. Valdimarsson Sept. 29 (Bloomberg) — Iceland’s economic woes can “in part” be blamed on the European Union’s lack of support as the island struggled to stay afloat following the collapse of its banks a year ago, Prime Minister Johanna Sigurdardottir said. The government “would have wanted to see more cooperation and assistance from our friends,” Sigurdardottir said in an interview in the township of Gardabaer in Iceland on Sept. 26. “Our difficulties can in part be traced back to the common European framework, which in some aspects wasn’t strong enough to deal with the economic crisis.” The island’s economy buckled under the weight of its bank industry debt a year ago, forcing the government to seek a loan from a group led by the International Monetary Fund and the Nordic states, though without a contribution from the EU. Iceland’s lawmakers in July agreed to start EU accession talks, and Sigurdardottir has said membership, with euro adoption an ultimate goal, is necessary to achieve a stable economy. “Joining the EU is one of the most important steps Iceland can take on its path to resurrection,” Sigurdardottir said, adding that she “hopes” accession talks can begin next year. “Joining the EU plays into so many aspects. One is that Iceland’s currency is very vulnerable against outside influence, which makes it very important to seek the shelter and stability that can be found in the euro.” Opposition Grows More than half of Iceland’s voters disagree with Sigurdardottir’s aspiration. Opposition to joining rose to 50.3 percent in September from 48.5 in August, a Gallup poll showed. EU foreign ministers on July 27 called on the European Commission to prepare an assessment of the island’s readiness to join. Negotiations will take at least 18 months, depending on how hard Iceland fights to keep fishing quotas and a whale- hunting tradition that run afoul of EU rules. Once accession talks end, all 27 EU governments would have to endorse Iceland’s membership and the country plans to hold a referendum, a process that can take a year or more. “I’m certain that Iceland will get an outcome from those talks that are fair and good for the country,” she said. “When and if that happens, I’m sure the Icelandic people will approve of joining the EU in a national referendum and that Iceland will become an EU member and will adopt the euro within a few years.” Iceland is the western nation hardest hit by the global credit crisis that left its banks in tatters and sent the krona down 80 percent last year in the offshore market. The island, which relies on a $5.1 billion International Monetary Fund-led loan, is waiting for the fund to resume disbursement of the money. The IMF has made payments contingent on Iceland’s settling U.K. and Dutch depositor claims, with the two countries demanding Iceland’s taxpayers cover the cost. To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net .

Read the full article →

Tasweek sets sights on scooping up local property

September 29, 2009

property marketing and development firm launched less than a year ago, plans to raise $250 million to acquire distressed real estate assets in Abu Dhabi and Dubai.Todays announcement comes on the heels of news that other firms in the region, eager to

Read the full article →

Neil Barofsky, TARP Inspector: Economy May Now Be In A "Far More Dangerous Place" (VIDEO)

September 25, 2009

Neil Barofsky is the man who tracks the historic bailout known as the Troubled Asset Relief Program, or TARP. The 39-year-old special inspector general, named to the post in December 2008, monitors a dozen separate bailout-related programs that now account for nearly $3 trillion in financial commitments. A former federal prosecutor, Barofsky has subpoena power and has launched about three dozen investigations since being named to the post in December 2008. In an audit released in July, Barofsky made clear that he was intent on demanding transparency from all quarters – including the U.S. Treasury. His next audit is due in October. In an interview with the Investigative Fund, Barofsky lays out the breadth of his work and is blunt in his assessment about whether the financial system, now with fewer and bigger banks, is safe. “I think we may be in a far more dangerous place today than we were a year ago,” he said.

Read the full article →

Asia’s Wealthy Shun `Exotic’ Investments for Stocks, Bonds, DBS Group Says

September 9, 2009

By Joyce Koh Sept. 10 (Bloomberg) — Rich individuals in Asia are shunning “exotic” investments such as derivatives and hedge funds in favor of stocks and bonds, challenging efforts to boost private-banking revenue, according to DBS Group Holdings Ltd. “This scares me,” Kwong Kin Mun, the Singapore head of private banking at Southeast Asia’s biggest lender, said in a Sept. 7 interview. “Their investment activities are very basic ones like what we used to see in the late ‘80s and ‘90s, but the only difference is they carry much thinner profit margins today.” Derivatives were tarnished after they helped hasten the collapse of Lehman Brothers Holdings Inc. a year ago, and as private-banking clients in Singapore and Hong Kong sued Citigroup Inc. and Goldman Sachs Group Inc. over investment losses. The shift among wealthy Asians toward stocks and bonds has crimped industry profit margins, analysts said. “Everyone in the industry has felt the impact of clients looking for simple, transparent products,” said Beat Lenherr , who helps oversee about $16 billion as the Singapore-based chief global strategist at LGT Capital Management. “For an individual private banker, you might have to have a bigger book to get the same profitability.” Net fee income at DBS’s wealth management division, which includes private banking, fell 53 percent in the second quarter from a year earlier to S$21 million ($14.7 million), even as the bank grew assets by S$3 billion in the first six months of 2009. Assets Growing DBS fared better than some competitors, Kwong said. The bank has taken clients from overseas rivals who were bailed out by their governments or encumbered by credit-market losses, he said, without naming any companies. The bank has more than 100 relationship managers serving almost 15,000 private banking clients in Asia. DBS ranked sixth by assets managed from Singapore and Hong Kong with a 5 percent market share, according to the Calamander Group Report 2008. Before the collapse of Lehman Brothers a year ago sent asset prices tumbling, “a lot” of private-banking industry revenue came from selling clients so-called alternative investments including hedge funds, private equity and structured products, Kwong said, without specifying. The MSCI Asia ex-Japan Index has gained 52 percent this year, led by technology and consumer companies. The extra yield investors demand to hold Asian corporate bonds denominated in U.S. dollars rather than government securities more than halved since Jan. 1, according to JPMorgan Chase & Co.’s Asia Corporate Bond Index. No ‘Cutting Edge’ “In the past six months, clients were making money buying stocks, bonds, plain-vanilla investments,” said Kwong. “Clients are saying, ‘I don’t need the exotic complex stuff since the basic products achieved the same objective.’ For them, cutting-edge means it cuts.” Derivatives are contracts whose value is derived from stocks, bonds, loans, currencies, commodities or linked to specific events such as changes in interest rates. Oei Hong Leong , one of Singapore’s richest men, in May sued Citigroup’s private banking arm over S$1 billion in losses on foreign exchange and bond options. A former Goldman Sachs client adviser was banned by Hong Kong’s securities regulator in July from re-entering the industry for two years for making unauthorized trades for a client who later sued the firm. Both banks are contesting the suits. Private-banking assets worldwide dropped 16 percent last year to $14.5 trillion, according to Scorpio Partnership, a London-based consultancy. It doesn’t break out figures for Asia. Margins Contract About 60 percent of private banks based in Asia saw their assets under management drop by more than a fifth in the 12 months ending between December and March, according to a survey published Sept. 8 by PricewaterhouseCoopers LLC . Industry profit margins are now “negligible,” compared with about 30 percent to 40 percent during the years that preceded the financial crisis, said Justin Ong , PwC’s head of Asia-Pacific private-banking practice. “Most of the structured products have either blown up or gone out of money,” Ong said in an interview. “The banks have to re-look their old service offerings.” Even so, structured products may be regaining favor among some investors again, Ong said. “If you asked me six months ago, I would say that’s the end of it. But since one month ago, banks are telling me that clients are again talking about it, which I think is frightening,” said Ong. “That’s the investor mindset for you.” To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

Read the full article →

← Previous Entries