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Asian Stocks, Oil Fall on China Rates Concern, Obama Bank Plan; Yen Rises

January 21, 2010

By James Regan Jan. 22 (Bloomberg) — Stocks in Asia fell for a fifth day and commodities slumped on concern China will raise interest rates and banking curbs proposed by President Barack Obama will dent the U.S. recovery. The yen rose to a nine-month high against the euro and the risk of corporate defaults climbed. The MSCI Asia Pacific Index sank 1.7 percent to 121.69 at 2:05 p.m. in Tokyo, set to complete its longest losing streak in six months. Stock benchmarks in Japan, China, Hong Kong and South Korea fell more than 2 percent, while U.S. futures were little changed after declines in New York. Copper dropped for a third day and crude oil slipped below $76 a barrel. The yen rose against all 16 of the most-traded currencies. Indexes tracking Asian credit-default swaps rose the most in almost two months. Investors are retreating from higher-yielding assets after China’s 10.7 percent growth in the fourth quarter ignited concerns that the nations responsible for leading the world out of a recession will raise borrowing costs to keep their economies from overheating. Obama’s plan to restrict proprietary trading by lenders triggered declines of more than 6 percent in JPMorgan Chase & Co. and Bank of America Corp. yesterday. “There are some worries about the extent of tightening in China,” said Shane Oliver , head of investment strategy in Sydney at AMP Capital Investors, which oversees $90 billion. “I don’t think they’re seeking to crunch their economy, but obviously the market worries that that will be the case.” Stocks Slide Sixteen stocks declined on the MSCI Asia Pacific Index for each one that rose. Japan’s Nikkei 225 Stock Average slumped 2.5 percent, almost erasing this year’s advance. South Korea’s Kospi dropped 2.4 percent, the most since November. Mitsubishi Corp. , which gets 39 percent of its sales from commodities, lost 4.8 percent. Samsung Electronics Corp. , which relies on China for more than 20 percent of its sales, slid 2.7 percent. The Shanghai Composite Index fell 2.5 percent, extending the year’s decline to 5.7 percent. China’s central bank will raise interest rates by the end of June and increase banks’ reserve requirements, according to the median forecasts of 17 economists surveyed by Bloomberg after government reports yesterday on gross domestic product and consumer prices. “We’re looking toward a small correction going forward,” Seth Freeman , chief executive officer at New York-based EM Capital Management, said in a Bloomberg Television interview in Hong Kong. “The change in economic policy should have some impact on the market.” China Sales Investors pulled $348 million from China equity funds in the week ended Jan. 20, the biggest drop in four months, according to EPFR Global, in Cambridge, Massachusetts. Shares of Jiangxi Copper Co. slumped 3.7 percent in Shanghai and Aluminum Corp. of China Ltd. dropped 2.8 percent after they were cut to “sell” from “neutral” at Goldman Sachs Group Inc., which said accelerating inflation has increased risks for the industry. China’s inflation accelerated to 1.9 percent in December, from 0.6 percent the previous month. Copper for May delivery in Shanghai fell for a third day, dropping as much as 3.1 percent to 59,110 yuan ($8,658) per metric ton in Shanghai. Zinc tumbled 4.8 percent. Gold for immediate delivery traded at $1,092.15 an ounce, near the low of $1,088.65 yesterday, a level not seen since Dec. 30. The metal is poised for its biggest weekly decline in seven as the dollar’s rebound curbed investor demand. The Dollar Index , a gauge of the greenback’s strength against the currencies of six major U.S. trading partners, has gained 1.1 percent this week and yesterday reached a four-month high. U.S. Fuel Demand Crude oil dropped for a third day to $75.86 a barrel in New York, after the U.S. Energy Department said refineries ran at 78.4 percent of capacity last week, the lowest rate outside the Atlantic hurricane season since at least 1989. Gasoline stockpiles were the highest since March 2008. Fuel consumption in the past four weeks was 1.8 percent less than a year earlier. The yen advanced to 126.98 per euro in Tokyo from 127.37 in New York yesterday. It earlier reached 126.56, the strongest level since April. Japan’s currency gained to 89.93 per dollar from 90.43 yesterday after reaching 89.79, the highest level since Dec. 18. Korea’s won was the worst performer among the most-traded currencies, falling 1.8 percent against the yen and 1.3 percent versus the dollar. “Weakness across global equity markets is suppressing risk appetite,” said Mike Jones , a currency strategist at Bank of New Zealand Ltd. in Wellington. “Against this backdrop, investors will continue to sell growth-sensitive currencies in favor of safe-haven currencies like the dollar and the yen.” ‘Double-Dip’ Risk Japan’s 10-year bonds rose the most in six weeks, pushing the yield on the 1.3 percent note due December 2019 down three basis points to 1.310 percent. Similar-maturity U.S. Treasuries yielded 3.58 percent, about a quarter percentage point less than at the start of the year. A basis point is 0.01 percentage point. “There’s a possibility of a double-dip recession,” said Hiromasa Nakamura , a Tokyo-based senior investor at Mizuho Asset Management Co., which oversees $21.1 billion. “There is limited room for stocks to rise. Those factors are positive for U.S. Treasuries.” The Asia-Pacific region’s three benchmark indexes for credit-default swaps were on track for their biggest daily increases since Nov. 27, prices from CMA DataVision show. The indicators rise when the credit outlook deteriorates. The Markit iTraxx Japan index jumped 9.5 basis points to 142.5 basis points, according to Morgan Stanley prices. The Markit iTraxx Australia index climbed 9 basis points to 93 basis points, according to Citigroup Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan increased 6 basis points to 108.5 basis points, Royal Bank of Scotland Group Plc prices show. To contact the reporter on this story: James Regan at jregan19@bloomberg.net ;

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Real Money (Jan. 21): Capital Raisings, Property Financings

January 20, 2010

PGGM Private Real Estate Fund (PGGM), an investment vehicle for Dutch pension funds, agreed to increase its investment in Behringer Harvard’s growing portfolio of multifamily communities to $300 million. This most recent commitment represents the third…

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Building Permits in U.S. Unexpectedly Jump in Sign of Construction Rebound

January 20, 2010

By Bob Willis Jan. 20 (Bloomberg) — Housing starts in the U.S. fell more than anticipated in December, while building permits unexpectedly jumped, signaling inclement weather may have kept builders away from worksites. Work began on 557,000 houses at an annual rate, down 4 percent from November, figures from the Commerce Department showed today in Washington. Permits , a sign of future construction, climbed to the highest level in a year. The government’s extension and expansion of a tax credit for first-time buyers may help underpin demand in the first half of 2010, giving builders reason to ramp up new projects. The gain in permits, which are less influenced by weather, indicates an unseasonably cold and wet December probably prevented some work from getting started last month, according to economists like Patrick Newport. “When it’s cold and rainy you can’t pour concrete and lay foundations, but you can get a permit,” said Newport, an economist at IHS Global Insight in Lexington, Massachusetts, who forecast a drop in starts and increase in permits. “Overall, this is a really good report,” he said, adding the housing recovery “has legs.” A report from the Labor Department showed wholesale prices increased 0.2 percent after jumping 1.8 percent the prior month, showing the economy is recovering without the immediate threat of inflation. Excluding food and fuel, so-called core prices were unchanged. Stocks Down Stock-index futures held earlier losses following the reports, depressed by declines in banking shares after Bank of America Corp. reported its third loss in the past five quarters. The contract on the Standard & Poor’s 500 Index was down 0.6 percent to 1,138.4 at 8:51 a.m. in New York. Treasury securities rose. Starts were projected to fall to a 572,000 pace last month according to the median estimate of 72 economists surveyed by Bloomberg News. Projections ranged from 495,000 to 630,000. The government revised November’s reading up to a 580,000 from the 574,000 previously estimated. For all of 2009, builders broke ground on 553,800 houses, the fewest since records began in 1959. The annual rate was down 39 percent down from 2008’s 905,500, which was the second-lowest ever. The report showed building permits increased 11 percent to a 653,000 pace, the most since October 2008. Permits were forecast to fall to 580,000. Construction of single-family houses decreased 6.9 percent to a 456,000 rate. Multifamily Rises Work on multifamily homes, such as townhouses and apartment buildings, climbed 12 percent to an annual rate of 101,000. Three of four regions showed a decline in starts in December, led by a 19 percent drop in the Northeast. The South showed a 3.3 percent gain. There are still headwinds to a housing recovery. Rising foreclosures are adding to inventory and may discourage builders. A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast on Jan 14. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of the month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April. Still, the measure may have pulled sales forward, depressing demand in the second half of the year. Sales Decrease Sales of new houses dropped 11 percent in November, the month the government’s tax credit was due to expire. A jump in purchases of existing homes pushed total sales up to a 6.895 million annual pace, the most since March 2007. Weather may have also played a role in depressing December housing starts, economists said. Last month was the 14th coldest December and 11th wettest in 115 years of record keeping, according to the National Climatic Data Center, in Asheville, North Carolina. Confidence among U.S. homebuilders unexpectedly dropped in January to the lowest level since June, the National Association of Home Builders/Wells Fargo said yesterday. Any sustained recovery will require gains in employment, economists said. The U.S. has lost 7.2 million jobs since the recession began, and economists surveyed by Bloomberg early this month forecast joblessness will average 10 percent this year. Builder Loss KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, is among homebuilders struggling. The company last week reported a pretax loss of $91 million on declining revenue for the fiscal fourth quarter that ended Nov. 30. KB Home’s orders rose 12 percent to 1,446 from 1,296 in the year-earlier quarter, while completed sales dropped 22 percent to 3,042, according to the report. The average price declined 12 percent to $203,400. KB Home is “not going to make money in the first quarter” and plans to “restore profitability” in the second half of 2010, Chief Executive Officer Jeffrey Mezger said Jan. 12 in a conference call with analysts and investors. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

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Housing Starts in U.S. Fall More Than Forecast; Building Permits Increase

January 20, 2010

By Bob Willis Jan. 20 (Bloomberg) — Housing starts in the U.S. fell more than anticipated in December, while building permits unexpectedly jumped, signaling inclement weather may have kept builders away from worksites. Work began on 557,000 houses at an annual rate, down 4 percent from November, figures from the Commerce Department showed today in Washington. Permits , a sign of future construction, climbed to the highest level in a year. The government’s extension and expansion of a tax credit for first-time buyers may help underpin demand in the first half of 2010, giving builders reason to ramp up new projects. The gain in permits, which are less influenced by weather, indicates an unseasonably cold and wet December probably prevented some work from getting started last month, according to economists like Patrick Newport. “When it’s cold and rainy you can’t pour concrete and lay foundations, but you can get a permit,” said Newport, an economist at IHS Global Insight in Lexington, Massachusetts, who forecast a drop in starts and increase in permits. “Overall, this is a really good report,” he said, adding the housing recovery “has legs.” A report from the Labor Department showed wholesale prices increased 0.2 percent after jumping 1.8 percent the prior month, showing the economy is recovering without the immediate threat of inflation. Excluding food and fuel, so-called core prices were unchanged. Stocks Down Stock-index futures held earlier losses following the reports, depressed by declines in banking shares after Bank of America Corp. reported its third loss in the past five quarters. The contract on the Standard & Poor’s 500 Index was down 0.6 percent to 1,138.4 at 8:51 a.m. in New York. Treasury securities rose. Starts were projected to fall to a 572,000 pace last month according to the median estimate of 72 economists surveyed by Bloomberg News. Projections ranged from 495,000 to 630,000. The government revised November’s reading up to a 580,000 from the 574,000 previously estimated. For all of 2009, builders broke ground on 553,800 houses, the fewest since records began in 1959. The annual rate was down 39 percent down from 2008’s 905,500, which was the second-lowest ever. The report showed building permits increased 11 percent to a 653,000 pace, the most since October 2008. Permits were forecast to fall to 580,000. Construction of single-family houses decreased 6.9 percent to a 456,000 rate. Multifamily Rises Work on multifamily homes, such as townhouses and apartment buildings, climbed 12 percent to an annual rate of 101,000. Three of four regions showed a decline in starts in December, led by a 19 percent drop in the Northeast. The South showed a 3.3 percent gain. There are still headwinds to a housing recovery. Rising foreclosures are adding to inventory and may discourage builders. A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast on Jan 14. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of the month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April. Still, the measure may have pulled sales forward, depressing demand in the second half of the year. Sales Decrease Sales of new houses dropped 11 percent in November, the month the government’s tax credit was due to expire. A jump in purchases of existing homes pushed total sales up to a 6.895 million annual pace, the most since March 2007. Weather may have also played a role in depressing December housing starts, economists said. Last month was the 14th coldest December and 11th wettest in 115 years of record keeping, according to the National Climatic Data Center, in Asheville, North Carolina. Confidence among U.S. homebuilders unexpectedly dropped in January to the lowest level since June, the National Association of Home Builders/Wells Fargo said yesterday. Any sustained recovery will require gains in employment, economists said. The U.S. has lost 7.2 million jobs since the recession began, and economists surveyed by Bloomberg early this month forecast joblessness will average 10 percent this year. Builder Loss KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, is among homebuilders struggling. The company last week reported a pretax loss of $91 million on declining revenue for the fiscal fourth quarter that ended Nov. 30. KB Home’s orders rose 12 percent to 1,446 from 1,296 in the year-earlier quarter, while completed sales dropped 22 percent to 3,042, according to the report. The average price declined 12 percent to $203,400. KB Home is “not going to make money in the first quarter” and plans to “restore profitability” in the second half of 2010, Chief Executive Officer Jeffrey Mezger said Jan. 12 in a conference call with analysts and investors. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

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Pimco Boosts Holdings of Developed Bonds Outside U.S. to Most Since 2004

January 19, 2010

By Wes Goodman Jan. 20 (Bloomberg) — Bill Gross , who runs the world’s biggest bond fund at Pacific Investment Management Co. , increased holdings of non-dollar developed-market debt last month to the most October 2004. Gross boosted the $201.7 billion Total Return Fund ’s investment in the securities to 16 percent of assets in December from 5 percent in November, according to Pimco’s Web site . The fund cut government-related bonds to 32 percent, the least since July, from 51 percent. Bill Gross, 65, co-chief investment officer at Pimco in Newport Beach, California, began 2010 with a bullish view on German bonds. They are his “favorite” because a constitutional amendment there requires a balanced budget by 2016, Gross said Jan. 6 on Bloomberg Radio. Pimco on Jan. 4 said it is cutting holdings of U.S. and U.K. debt as the two nations increase borrowing to record levels. Under what Pimco has termed the “new normal,” investors will face lower-than-average returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy. Gross increased cash holdings to 8 percent of the fund’s assets in December, the most since Lehman Brothers Holdings Inc. collapsed in September 2008, from 7 percent. The Total Return Fund gained 13.7 percent in the past year, beating half of its peers, according to data compiled by Bloomberg. The one-month return is 1.1 percent, also outpacing about half of its competitors. Pimco is a unit of Munich-based insurer Allianz SE. To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net .

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Treasury 10-Year Notes Gain Most in Week Since November After Price Report

January 16, 2010

By Susanne Walker Jan. 16 (Bloomberg) — Treasury 10-year notes posted the biggest gain since November as retail sales unexpectedly declined and consumer prices rose less than forecast, spurring demand at the week’s $84 billion in note and bond sales. Two-year note yields, most sensitive to monetary policy, fell the most in the past two weeks since November 2008 as a report showed on Jan. 8 that the U.S. economy unexpectedly lost jobs in December and investors questioned the strength of the economic recovery. Housing starts rose in December, economists forecast before a report on Jan 20. “We had a few points of weak data this week which didn’t help the outlook on the economy,” said Dan Mulholland , a Treasury trader in New York at Royal Bank of Canada, one of 18 primary dealers required to bid at Treasury auctions. “People feared that supply would take the market to higher yields, but it didn’t. There was a need for Treasuries.” The 10-year note yield fell 15 basis points on the week, or 0.15 percentage point, to 3.68 percent in New York, according to BGCantor Market Data. The 3.375 percent security due November 2019 rose 1 6/32, or $11.88 per $1,000 face amount to 97 1/2. The yield dropped the most since it dropped 17 basis points over the five days ended Nov. 27. Present Weakness Two-year note yields fell 11 basis points on the week, touching 0.86 percent yesterday, the lowest level since Dec. 22. The yield’s 27 basis point decline since Jan. 4 is the most since the 34 basis points it lost over the 10 trade days ended Nov. 14, 2008, when the Federal Reserve cut its target rate below 1 percent as the economic outlook worsened after the collapse of Lehman Brothers Holdings Inc. “It speaks to the economic troubles that still lurk with the sovereigns who are in real trouble and the weakness that is still present in the U.S.,” said Michael Cheah , who manages $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey. Sales at U.S. retailers fell 0.3 percent in December, compared with the median forecast in a Bloomberg survey for an increase of 0.5 percent. Consumer prices rose 0.1 percent last month, less than the 0.2 percent median estimate in a separate survey. Companies may have little success raising prices with unemployment projected to average 10 percent this year, the highest annual rate in seven decades. “The Fed has reiterated that they don’t think inflation is going to be a threat and this confirms inflation is still not a big worry right now,” said Sergey Bondarchuk , an interest-rate strategist in New York at primary dealer BNP Paribas. “All in all, the week’s news was positive for Treasuries.” ‘Need to See’ New York Fed President William Dudley said short-term rates may remain “low” for at least six months and possibly for as long as two years. Before supporting an interest rate-increase, “I certainly need to see an economy that’s vigorous enough to bring the unemployment rate down, No. 1,” said Dudley on Jan. 13, according to the transcript of an interview on PBS Television’s Nightly Business Report. Futures on the CME Group exchange show a 27 percent chance the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, down from almost 55 percent odds a month ago. Treasuries rose Jan. 12 as China’s central bank moved to curb bank lending by increasing the proportion of deposits that banks must set aside as reserves. The action raised speculation that slowing global growth will boost demand for U.S. debt. ‘Severe Irregularities’ Treasuries also gained amid speculation European sovereign issuers’ credit quality will erode, which has pushed yields higher in Greece, Spain and Ireland. The European Commission said Jan. 12 that “severe irregularities” in Greece’s statistical data leave the accuracy of the European Union’s largest deficit in doubt. The U.S. sold $13 billion of 30-year bonds on Jan. 14, $21 billion in 10-year debt on Jan. 13, and a record-tying $40 billion in three-year notes on Jan. 12. The government also sold $10 billion in 10-year Treasury Inflation Protected Securities on Jan. 11. Investors bid for 2.68 times the amount of securities offered at the 30-year bond sale, the most since September. The bid-to-cover ratio at the $21 billion 10-year offering was 3.00, the most since October. Direct bidders, non-primary dealers that bid on their own accounts, bought 17.3 percent of the 10-year notes, the most since May 2005, and 23.4 percent of the three-year notes, the most since at least 2003. ‘Cloaking Their Intentions’ “The big question during the auctions was the uptick in direct bidding,” said Dan Greenhaus , chief economic strategist at Miller Tabak & Co. LLC in New York. “One possible explanation is that there was one potentially large bidder cloaking their intentions. A more likely explanation is some large bidders who were classified as indirect have taken steps to become direct bidders as the first steps in becoming a primary dealer.” Builders broke ground on 575,000 homes in December, according to the median estimate in a Bloomberg survey before the Jan. 20 report. A separate report is forecast to show producer prices were unchanged last month. To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net .

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Futures Funds Fall Most Since 1987 as AHL, John Henry Miss Market Shifts

January 14, 2010

By Tom Cahill and Alexis Xydias Jan. 14 (Bloomberg) — Hedge-fund managers that use computers to predict trends in futures prices, including Man Group Plc and John W. Henry & Co. , posted the biggest losses in more than two decades in 2009 because they missed shifts in equity, commodity and bond markets. Managed-futures funds fell an average of 4.7 percent last year, according to an index of 50 top funds compiled by BarclayHedge Ltd. The decline, which compared with a gain of 13.5 percent in 2008, was the first in 15 years and the largest since BarclayHedge began tracking returns in 1987. The firms, which oversee about $213 billion of the $1.4 trillion in hedge funds, often stumble amid abrupt market changes, according to Alex Allen , chief investment officer of Eddington Capital Management Ltd. in London. They were slow to jump aboard last year’s global stock-market rally , the biggest since the 1930s, and many were caught off guard by declines in government bonds and precious metals, and the dollar’s rise. “December was horrible, they all got clobbered,” said Allen, whose firm oversees $140 million in hedge-fund investments for clients. John W. Henry , owner of Major League Baseball’s Boston Red Sox, lost 11 percent in his $107 million JWH GlobalAnalytics fund in December, the worst month in a year and a half, according to its Web site. Kenneth Webster , president and chief executive officer of the Boca Raton, Florida-based firm, didn’t return phone calls seeking comment. Managed-futures funds, also known as commodity trading advisers, lost 3.2 percent last month, the most since August 2007, according to an index from Paris-based Newedge Group. In November, investors added $4.3 billion to CTAs, the sixth straight month of net inflows, according to Fairfield, Iowa- based BarclayHedge. Extreme Expectations Eddington’s Allen plans to put more money into managed- futures funds despite last year’s losses. “We’re in for another year of extremes — either we have another melt-up or another meltdown,” he said. “Liquid strategies that can capture these extreme moves are attractive.” Man AHL Diversified Plc , the computer program that drives $22 billion, or half, of Man Group’s funds, dropped 16.9 percent last year, its only annual loss, according to data compiled by Bloomberg. Morgan Stanley cut its stock rating on London-based Man Group to “equal-weight” from “overweight” because AHL is a “critical determinant” of dividends and its rough patch will reduce 2011 net sales by half, according to a Jan. 8 note to investors by London-based analyst Bruce Hamilton . Paucity of Trends AHL was hurt by “sudden market reversals and a paucity of clear sustained trends,” Tim Wong , AHL’s chief executive officer, wrote in a Jan. 12 letter to investors, a copy of which was obtained by Bloomberg News. Winton Futures Fund Ltd. , managed by David Harding , declined 4.6 percent in 2009, its first negative year since inception in 1997, Bloomberg data show. London-based Winton Capital Management Ltd. managed $12.7 billion at the end of 2009, up from $12.5 billion a year earlier. Greenwich, Connecticut-based Millburn Ridgefield Corp. , which has managed CTA funds since 1977, lost 7.4 percent in its $1.1 billion Millburn International Diversified fund, the most since 1986, according to data from the firm. Its $643 million Multi-Markets Program fell 1.9 percent. Henry’s JWH Global dropped 24 percent in 2009, its worst year, after a gain of 91 percent in 2008, its best. Tudor Tensor Fund Ltd., run by Greenwich, Connecticut-based Tudor Investment Corp., fell 2.7 percent, according to Newedge. London-based Aspect Capital Ltd.’s Aspect Diversified Fund declined 11 percent. Bucking the Trend Among funds outperforming peers was London-based BlueCrest Capital Management Ltd.’s $9 billion BlueTrend , run by 43-year- old Leda Braga , which rose 5.4 percent, according to Newedge. The $2 billion Renaissance Institutional Futures fund, managed by James Simons’s Renaissance Technologies Corp. in East Setauket, New York, rose 3.8 percent. Officials for Winton, Tudor, Aspect, BlueTrend and Renaissance declined to comment. “You have to put the year in context,” said Barry Goodman, head of trading at Millburn. “We stepped back from the abyss when everyone thought it was the end of the financial world as we know it.” CTAs tend to lose money when markets suddenly change direction. Gold futures reversed three months of gains in December for the biggest drop in 14 months, according to data compiled by Bloomberg. Silver futures fell the most in six months. The dollar, after five months of losses against currencies such as the euro, posted its biggest increase in 11 months. Rate Concerns “Moves were too sharp,” said Alexander Mehser at Volksbanken AG in Vienna, manager of the $30 million Alpha Strategien Futures fund, which fell 14 percent in 2009 after rising 64 percent the previous year. “Most trend followers wouldn’t have a chance to capture such a sharp break in trends.” The dollar rose and yields on Treasuries jumped after a Dec. 4 Labor Department report showed the jobless rate in the U.S. unexpectedly declined in November, encouraging traders to boost bets on Federal Reserve interest rate increases. Many funds suffered in December when 10-year U.S. Treasury note futures maturing in March 2010 fell after the report, ending five months of gains. ‘Seemed Like a Blip’ While some short-term CTAs, those that hold positions for 10 days or less, profited from the equity-market rally that began in March, most missed it. “Equity-market downward trends were so severe in 2008 that at the beginning of the year the equity rally seemed like a blip compared to the falls we had seen,” said Paul Netherwood , a partner at Beach Horizon LLP, a London-based CTA with about $270 million. Beach Horizon fell 4.37 percent last year. CTA investors and managers said losses last year should be viewed against the gains in 2008. That year hedge funds lost a record 19 percent on average in the wake of Lehman Brothers Holdings Inc.’s bankruptcy, according to Chicago-based Hedge Fund Research Inc. The Standard & Poor’s 500 index tumbled 38 percent in 2008, its worst showing since 1937, and the MSCI World Index of 23 developed markets dropped 42 percent, the steepest decline since the measure’s data starts in 1970. “They’ve protected us a lot,” said Morten Spenner, chief executive officer of International Asset Management Ltd., which manages $3 billion in hedge funds. Still, his firm trimmed its allocations to CTAs a year ago to 10 percent from 20 percent. “Typically, some of these guys have difficulties when volatility is declining,” he said. Optimists Remain Equity-market volatility plunged last year and now is at its lowest since May 2008, according to the VIX index , the Chicago Board of Options Exchange Volatility benchmark for U.S. stock options and a measure of expected price swings. That may create headwinds for CTAs. “In a market with low volatility I wouldn’t expect to see the returns of periods when we saw large directional moves,” said Michael Crook , an investment strategist with Barclays Wealth in New York. Some CTA investors cautioned against avoiding the funds because they will prosper as markets return to traditional patterns. So far this year, some of the programs are making money. Man AHL Diversified gained 3.5 percent through Jan. 11, according to filings. “What 2010 holds we don’t know, but markets generally revert back to trending conditions,” Emanuel Balarie , managing director of Chicago-based Balarie Capital Management, which advises investors on allocations to managed-futures programs. “For those who came in late to the game they absolutely cannot walk away from it now,” he said. “It’s an insurance policy that can balance out other investments.” To contact the reporters on this story: Tom Cahill in London at tcahill@bloomberg.net ; Alexis Xydias in London at axydias@bloomberg.net

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Industry Takes Stock of Shifting Landscape in Wake of Colliers, Cassidy Rebrandings

January 12, 2010

Details continued to emerge this week about two of the most significant changes to the commercial real estate brokerage landscape since 2008, the rebranding and uniting of Colliers International and FirstService Real Estate Advisors (REA) and the impending…

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Treasuries Gain as Asian Stock Losses Increase Demand for Safety of Debt

January 11, 2010

By Wes Goodman Jan. 12 (Bloomberg) — Treasuries rose as Asian stocks fell and Australia said home-loan approvals declined in November by the most in 18 months, increasing demand for the relative safety of government debt. Benchmark 10-year notes climbed the most in a week as stock losses raised speculation the global economy will take time to recover from last year’s recession. Traders added to bets the Federal Reserve will keep borrowing costs at a record low to foster the recovery. The U.S. is scheduled to sell a record- tying $40 billion of three-year notes today in the second of four debt auctions this week totaling $84 billion. “The economy doesn’t have enough power to lead the Fed to raise rates in 2010,” said Kei Katayama , who oversees $1.6 billion of non-yen debt in Tokyo as leader of the foreign fixed- income group at Daiwa SB Investments Ltd., a unit of Japan’s second-biggest investment bank. “I may buy as the yield rises.” The yield on the 10-year note declined three basis points to 3.79 percent as of 11:08 a.m. in Tokyo, according to BGCantor Market data. The 3.375 percent security due in November 2019 rose 6/32, or $1.88 per $1,000 face amount, to 96 19/32. The MSCI Asia Pacific Index of shares declined 0.4 percent, snapping two days of gains. The number of loans granted to build or buy houses and apartments in Australia slumped 5.6 percent from October, when they fell by a revised 1.9 percent, the statistics bureau said in Sydney today. Rate Futures Futures contracts traded on the Chicago Board of Trade showed a 32 percent chance the U.S. central bank will raise its target lending rate by at least a quarter-percentage point by June, down from 51 percent odds a week earlier. Two-year yields fell to the lowest level in more than two weeks yesterday as Fed Bank of Atlanta President Dennis Lockhart said the U.S. recovery from recession will be slow. The Fed’s pledge to keep rates low for an “extended period” means borrowing costs should be low until “recovery has shown momentum that is based on private business and consumer demand, job growth is established or at least imminent, and the downside risks appear to be safely navigable,” Lockhart said in prepared remarks to the Rotary Club of Atlanta. The two-year rate declined last week by the most since August after a government report showed the economy unexpectedly lost jobs in December. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net .

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Olivia Edwards and Mary Murphy of The Platinum Group with McGuire Real Estate, Burlingame, CA,

January 11, 2010

Reaching the pinnacle of their profession nationally, Olivia Edwards and Mary Murphy of The Platinum Group with McGuire Real Estate, were accepted as Members of the Top 5 in Real Estate Network®, the most prestigious of all industry achievements. More

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Olivia Edwards and Mary Murphy of The Platinum Group with McGuire Real Estate, Burlingame, CA, Named Members of Top 5 in Real Estate Network(R)

January 11, 2010

Reaching the pinnacle of their profession nationally, Olivia Edwards and Mary Murphy of The Platinum Group with McGuire Real Estate, were accepted as Members of the Top 5 in Real Estate Network®, the most prestigious of all industry achievements. More

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Dubai Stocks Fall on Arabtec’s Below-Market Takeover Price; Emaar Declines

January 10, 2010

By Zahra Hankir Jan. 10 (Bloomberg) — Dubai shares dropped for the first time in four days after Abu Dhabi-based Aabar Investments PJSC agreed to buy a stake in Arabtec Holding PJSC for 20 percent less than the company’s previous closing price. Arabtec, United Arab Emirates’ biggest construction company, retreated the most in a month. Emaar Properties PJSC, the U.A.E.’s biggest developer, declined to the lowest level this year. The DFM General Index lost 1.2 percent, the biggest fluctuation among the seven Gulf markets, to 1,814.33. Most other Gulf benchmarks advanced. “The Arabtec news is negative in the short-term because of shareholder dilution,” said Yazan Abdeen, a fund manager at ING Investment Management (Dubai) Ltd. In the longer-term, Arabtec will benefit on two levels, “first, cash, which will make the working capital of the company more efficient, and second, the amount of backlog that Aabar will bring to the table.” Aabar, the Abu Dhabi government-owned investor, said Jan. 7 it plans an offer to buy 70 percent of Arabtec through the purchase of mandatory convertible bonds that will convert into shares at a price of 2.3 dirhams each, it said. That’s a 20 percent discount to Arabtec’s closing share price on Jan. 7. Alaqaria Arabtec tumbled 6.9 percent, the biggest one-day drop since Dec. 9, to 2.69 dirhams. The shares have increased 21 percent in the past two weeks. Aabar added 4.6 percent, bringing the gain this year to 11 percent, and pushing Abu Dhabi’s benchmark index up 0.2 percent. Emaar shares dropped 2.5 percent to 3.95 dirhams, the lowest since Dec. 31. Oman’s MSM30 Index advanced 0.5 percent, the Kuwait Stock Exchange Index rose 0.7 percent and Bahrain’s measure increased 0.1 percent. Saudi Arabia’s Tadawul All Share Index and Qatar’s DSM 20 Index each lost less than 0.1 percent. Qatar Real Estate Investment Co., also known as Alaqaria, jumped the most in four years after Barwa Real Estate Co. agreed to purchase the developer of industrial and residential projects. Alaqaria soared 9.7 percent, the most since March 2006, to 30.5 riyals. Barwa added 2.7 percent to 33.9 riyals, the highest close in almost three weeks. To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net .

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Dubai Stocks Fall on Arabtec’s Below-Market Takeover Price; Emaar Declines

January 10, 2010

By Zahra Hankir Jan. 10 (Bloomberg) — Dubai shares dropped for the first time in four days after Abu Dhabi-based Aabar Investments PJSC agreed to buy a stake in Arabtec Holding PJSC for 20 percent less than the company’s previous closing price. Arabtec, United Arab Emirates’ biggest construction company, retreated the most in a month. Emaar Properties PJSC, the U.A.E.’s biggest developer, declined to the lowest level this year. The DFM General Index lost 1.2 percent, the biggest fluctuation among the seven Gulf markets, to 1,814.33. Most other Gulf benchmarks advanced. “The Arabtec news is negative in the short-term because of shareholder dilution,” said Yazan Abdeen, a fund manager at ING Investment Management (Dubai) Ltd. In the longer-term, Arabtec will benefit on two levels, “first, cash, which will make the working capital of the company more efficient, and second, the amount of backlog that Aabar will bring to the table.” Aabar, the Abu Dhabi government-owned investor, said Jan. 7 it plans an offer to buy 70 percent of Arabtec through the purchase of mandatory convertible bonds that will convert into shares at a price of 2.3 dirhams each, it said. That’s a 20 percent discount to Arabtec’s closing share price on Jan. 7. Alaqaria Arabtec tumbled 6.9 percent, the biggest one-day drop since Dec. 9, to 2.69 dirhams. The shares have increased 21 percent in the past two weeks. Aabar added 4.6 percent, bringing the gain this year to 11 percent, and pushing Abu Dhabi’s benchmark index up 0.2 percent. Emaar shares dropped 2.5 percent to 3.95 dirhams, the lowest since Dec. 31. Oman’s MSM30 Index advanced 0.5 percent, the Kuwait Stock Exchange Index rose 0.7 percent and Bahrain’s measure increased 0.1 percent. Saudi Arabia’s Tadawul All Share Index and Qatar’s DSM 20 Index each lost less than 0.1 percent. Qatar Real Estate Investment Co., also known as Alaqaria, jumped the most in four years after Barwa Real Estate Co. agreed to purchase the developer of industrial and residential projects. Alaqaria soared 9.7 percent, the most since March 2006, to 30.5 riyals. Barwa added 2.7 percent to 33.9 riyals, the highest close in almost three weeks. To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net .

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Real-estate brokers find a simple knock helps get foot in door (Denver Post)

January 10, 2010

Many brokers and real estate investors use social media tools like Face book to find clients. But with online forums getting more crowded, some professionals have reverted to the most social medium of all: door-to-door prospecting

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Leon Charney

January 9, 2010

Citizenship: U.S. Net Worth: $1.4 billion Age: 68 Source of wealth: real estate What is the most alarming trend facing the economy today? Unemployment. When will the Fed step in to strengthen the U.S. dollar? When the unemployment rate dips below

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Shrinking U.S. Labor Force Keeps Unemployment Rate From Climbing Above 10%

January 8, 2010

By Bob Willis and Courtney Schlisserman Jan. 8 (Bloomberg) — An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said. Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, say economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York. “The actual unemployment rate is higher than shown by the official numbers,” Bandholz said. About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, figures from the Labor Department showed today in Washington. The share of the population in the labor force last month fell to the lowest level in 24 years. December’s 10 percent unemployment rate was unchanged from the previous month, matching the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier. The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — rose to 17.3 percent in December from 17.2 percent, today’s report showed. The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994. Length of Unemployment The backdrop to the disillusionment is that it’s taking longer and longer to find work, economists said. Workers were unemployed for 29.1 weeks on average last month, the most since records began in 1948. “Longer-term unemployment is one of the biggest problems,” said Bandholz. “Payroll declines will come to a halt in the next couple of months, but the people who are unemployed are having problems getting a job and it’s getting tougher by the month.” The U.S. unexpectedly lost another 85,000 jobs in December after revised figures showed payrolls climbed by 4,000 the month before, today’s report from the Labor Department showed. The November gain was the first since the economic slump began in December 2007. “Workers seem to be particularly discouraged by this recession,” said Chris Rupkey , chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Participation Rate The participation rate , or the share of the population in the labor force, fell to 64.6 percent in December, the lowest level since 1985, from 64.9 percent. The labor force will probably grow this year as the economy continues to expand and Americans believe jobs will be easier to get. That will mean the unemployment rate will head higher because there won’t be enough jobs available to satisfy the demand for work. “The exodus from the labor force can’t contain the unemployment rate indefinitely,” said Ryan Sweet , a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “We expect unemployment to resume rising over the next few months, peaking near 10.5 percent in the third quarter.” Federal Reserve policy makers, while noting stabilization in the labor market, have expressed concern about unemployment and poor job prospects. That’s one reason policy makers will keep the benchmark interest rate near zero longer than most anticipate, said John Ryding . Fed ‘On Hold’ “We continue to believe that the Fed will leave monetary policy on hold throughout 2010 in light of the high level of un- and under-utilized labor resources,” Ryding, chief economist at RDQ Economics in New York, said in a note to clients. The median forecast of economists surveyed by Bloomberg News last month projected the first rate increase would come in the third quarter of this year. Treasury two-year notes today gained the most in three weeks following the worse-than-expected payroll numbers. The notes’ yields dropped below 1 percent. President Barack Obama on Dec. 8 proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. “We’re going to have to work harder to create jobs.” U.S. Labor Secretary Hilda Solis said in an interview today on Bloomberg Television. “This is a very stubborn recession.” To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net ; Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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Robert Reich: The Bad Job Numbers and the Secret Second Stimulus

January 8, 2010

The Labor Department reports that 85,000 jobs were lost in December. The official rate of unemployment (which measures how many people are looking for jobs) held steady at 10 percent nonetheless. That’s because so many more people have stopped looking. Reportedly, 661,000 Americans dropped out of the labor force last month, deciding there was no hope of finding a job. Had they continued to look, the official unemployment rate would have been 10.4 percent. These statistics mask an even more troubling reality. Since the start of the recession in December 2007, around 8 million jobs have been lost. But this doesn’t include all the people who, in a growing national population, would have entered the labor market had there been jobs for them. These “never entereds” amount to an estimated 2.5 million. So, in truth, the national economy is down by 10.6 million jobs overall. There’s no way to make this up for years. The most painful political truth for Democrats is the nation won’t possibly be out of this jobs hole by the presidential election of 2012, even if the recovery is vigorous. Do the math. In order to get out of the hole, we’d need an average monthly increase of 400,000 jobs between now and then. But even at the peak of the 1990s jobs boom, the highest we ever got was 280,000 jobs a month. At the peak of the last recovery, in 2005, we got no higher than 212,000 jobs a month. Bottom line: Obama will be going into an election year with a higher total level of unemployment than before the Great Recession. He will have to argue that, were it not for his policies, things would be even worse. Counter-factuals like this do not sit well on bumper stickers. Almost 40 percent of the jobless have been without work for over six months. That’s a record. People who have been out of the labor force for more than six months have a particularly hard time getting back in. Many never do. What worries me most about all this is the trend line. If we were coming out of a recession with any potential strength in the job market, we’d at least see growth in the length of the average workweek. But there’s no sign of any growth. The average workweek held steady in December at 33.2 hours. Employers aren’t even giving their own workers more hours. Big American companies are more profitable, to be sure. But there’s a massive disconnect between profitability and employment. Companies are increasing profits by cutting their costs (including payrolls), outsourcing more jobs abroad, and selling more abroad. But American workers — and, therefore, American consumers — are still stuck in a deep recession. Only two things are keeping unemployment from rising more: The stimulus package, which is approaching its peak spending; and the Fed, which continues to keep a loose rein on the money supply and buy up mortgage-backed securities. After December’s discouraging job’s report, don’t expect the Fed to tighten any time soon — probably not until after the middle of 2010, at the earliest. What about fiscal policy? A second stimulus? Yes, to this extent: Democrats are looking into the cross-hairs of a mid-term election that won’t be pretty, to say the least. Pelosi has to hold on to 40 seats. In the Senate, Dodd’s and Dorgan’s departures pose a huge problem. Without 60 reliable votes, the Senate Democrats won’t be able to do much of anything. Rarely in history have the Republicans in both chambers been so relentlessly united. The dismal jobs picture makes Republicans salivate over 2010 and 2012. Democrats know they have to do something to show voters they’re focused on jobs. A victory on health care won’t cut it. So expect the Democrats to move toward more spending — more unemployment benefits, more cash for clunkers, more help for small businesses, maybe a new jobs tax credit. A larger defense budget will also be part of the stimulus. But don’t expect any of this to be dressed up as a “second stimulus package.” That would give Republicans too much ammunition to attack Dems as big spenders and try to focus the public’s attention on the widening deficit and growing federal debt. The truth, of course, is that the most important fiscal indicator is the ratio of the debt to the GDP. And the most important issue there is how quickly America can get jobs back and the GDP growing again. More spending in the short term is the only way to accelerate a jobs recovery, and reduce the debt-GDP ratio over the longer term. In other words, more deficit spending is a good thing to do now, a but a bad thing three or four or five years from now when the economy is back to normal. (I should admit at this point that I don’t think we’ll ever get back to “normal” because I believe “normal” got us into the pickle we’re now in, but I’ll save this for another time.) Yet Republicans will demagogue the deficit and debt like mad in coming months. I hope the President doesn’t take the bait and begin talking about deficits and debts, when he should be talking only about creating more jobs. How issues are framed for the public makes all the difference. Cross-posted from RobertReich.org

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Japan’s Recovery Persists as Exports Expand to Asia, Economic Index Shows

January 7, 2010

By Aki Ito and Toru Fujioka Jan. 8 (Bloomberg) — Japan’s broadest indicator of economic health rose for an eighth month as growing demand from abroad boosted manufacturing. The coincident index , a composite of 11 indicators including factory production and retail sales, climbed to 95.9 in November from a revised 94.3 a month earlier, the Cabinet Office said today in Tokyo. The median estimate of 13 economists surveyed by Bloomberg was for an advance to 95.8. The report adds to evidence that Japan’s recovery persists as companies from Toyota Motor Corp. to Komatsu Ltd. benefit from more than $2 trillion in global stimulus spending. Analysts say accelerating growth in Asia will prompt manufacturers to continue increasing output, which climbed the most in six months in November. “From steel to metal parts, increasing exports to Asia is lifting activity at the country’s factories,” Kyohei Morita , chief economist at Barclays Capital in Tokyo, said before the report. “Production won’t keep rising at this pace forever. But exports will continue to recover, and that means Japan will be able to avert a double-dip recession.” The leading index , an indication of economic health in three to six months, rose to 91.2, a ninth monthly gain. Japanese shipments to Asia rose in November for the first time in 14 months. Industrial production climbed 2.6 percent, the most since May, and factories increased their workers’ overtime hours for an eighth month. Demand From China Toyota, the country’s largest carmaker, said this week its China sales rose 21 percent to 790,000 units in 2009. The automaker narrowed its full-year net loss forecast for a second time in November after government incentives boosted car demand in China and the U.S. Komatsu and Hitachi Construction Machinery Co., Asia’s two largest excavator makers, said this week that December sales in China more than doubled. Takahide Kiuchi , chief economist at Nomura Securities Co. in Tokyo, says exporters face a better outlook than sectors dependent on consumers at home, forming a “two-faced” recovery this year. Benefits from an export revival have been slow to spread to households because corporate profits are still too low for employers to afford higher personnel costs, according to Barclays’ Morita. That means workers won’t see paycheck increases anytime soon. Wages have dropped for 18 straight months, leaving less money for consumers to spend. Japan’s largest businesses slashed winter bonuses by 15 percent to 755,628 yen ($8,100), the steepest drop since the survey began in 1959, the Japan Business Federation said last month. Firms typically pay the bonus in December. To contact the reporters on this story: Aki Ito in Tokyo at aito16@bloomberg.net ; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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Jeff Bocan: Fossilizing Fossil Fuels: You Gotta Believe…

January 7, 2010

The romantic vision of weaning the Midwest, and ideally the U.S., off the fossil fuel-powered electricity grid is appealing to many. Yet, perhaps equally as many believe it to be an elusive or perhaps unobtainable goal. I am not one of those skeptics – I am a believer. A radically reduced carbon-dependent, cleaner energy vision becomes better understood, particularly as it pertains to the potential contribution from wind power, when one strips the situation down to the most crude, fundamental, yet most powerful drivers for large scale action – supply and demand. On the demand side of the wind power market, the rest of the country needs to catch up to where the Midwest is in encouraging both utility scale wind and small community wind. At a minimum, states need Renewables Portfolio Standards (RPS) in place from their state governments to create the aggregate consumer market “demand” for clean energy. RPS is a regulation that generally places an obligation on electricity supply companies to purchase or generate a specified percentage of electricity from “renewable” sources such as wind, solar, biomass, geothermal, hydroelectric, etc. Only 27 states have such standards; however, all but Indiana in the classically defined “Midwest states” have some form of RPS in place. There are other important drivers in building demand (renewable technologies getting down the cost curve and competing with coal on cost is foremost), but RPS seems to have had the most direct impact thus far. On the supply side, we obviously need more turbines, solar panels and clean energy developments in place. There are many drivers to boost supply, but wind energy is rather responsive to innovative tax credits and incentive programs for investors, developers and financial institutions. ” The Minnesota Flip ” is an example of a policy that has realized success in boosting wind energy supply, as demonstrated by Minnesota’s national leadership position in community wind megawatt capacity. However, government-driven regulatory policy alone is not a sustainable clean energy panacea… For the clean energy industry, in particular the wind industry, to really take off in the Midwest, it will require a regional wind supply chain ecosystem to both continually improve wind energy generation, through local companies driving technological innovation, and to develop local operational expertise that can bring down operational and especially maintenance costs of wind energy. Most wind turbines are physically enormous, expensive to purchase and very costly to install and maintain – just imagine the expense of getting a massive crane to a remote area to replace a broken turbine blade, coupled with the expense of moving around large replacement parts. I am pleased to report that the development of this Midwest regional ecosystem is under way and is picking up steam. Yes, the Midwest will continue to pick up its share of contract manufacturing opportunities for major wind turbine OEMs, but the stories I find most encouraging and critical to accelerate and sustain the Midwest region’s leadership in wind energy are those coming from the regionally-based wind-related technology innovators. I’m not just blowing wind up your backside. Within the past month there have been announcements from Michigan-based wind sector technology companies from diverse sub-sectors of the wind power supply chain. (Disclosure: my venture capital firm neither invested in nor is actively considering an investment in any of the following three companies): Danotek Motion Technologies Inc. received13.2 million of venture funding. The company will use the capital to add employees, expand research and development and launch production of its permanent-magnet generators next year. Astraeus Wind Energy Inc. was awarded7 million in federal funds allocated to Michigan companies for clean energy manufacturing projects. The Company is negotiating with Dow Chemical to use a new carbon-fiber resin in their turbines blades that would offer lighter weight, yet stronger blades than the current market standard technology, at potentially a much lower cost. Accio Energy, http://www.accioenergy.com/ an earlier-stage Ann Arbor-based company working on energy systems that directly convert wind energy to electricity without any moving parts, recently won a250,000 federal contract to continue developing its potentially revolutionary wind energy device. I have seen a prototype of their technology in action and it is very impressive – could be an interesting solution to some of wind energy’s challenges – particularly for off-shore or near-shore wind. We are witnesses to this industry evolving right here in our Midwest backyard. It won’t take place overnight, but innovative companies like Danotek, Astraeus and Accio, and many others are moving us closer to realizing the broader vision of substantially-reduced fossil fuel dependence, giving me reason to stand up to clean energy skeptics and confidently state, “I believe…”

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Brazil Factory Output Unexpectedly Fell in December for First Time in Year

January 6, 2010

By Camila Fontana and Adriana Brasileiro Jan. 6 (Bloomberg) — Brazil’s industrial output fell in November for the first time in almost a year, surprising analysts who had forecast a rise and reducing speculation the central bank will raise rates early this year to stem inflation. Yields on interest rate futures fell after the national statistics agency said today that industrial production fell 0.2 percent from October, signaling traders are reducing bets the central bank may increase the benchmark interest rate in the first quarter. The median forecast in a Bloomberg survey of 22 analysts was for a 1 percent rise, with only two economists expecting output to decline. The yield on the contracts due in January 2011, the most traded in Sao Paulo stock exchange, fell 6 basis points, or 0.06 percentage point, the most since Dec. 17, to 10.37 percent at 7:09 a.m. New York time. The real fell 0.24 percent to 1.7347 per dollar from 1.7306 yesterday. Stock-index futures fell. “After a very intense recovery helped by government stimulus, the industry will keep growing but at a more modest pace,” Flavio Serrano, senior economist at Banco Espirito Santo de Investimento said in a phone interview. “Expectations that the central bank could start raising rates in March will lose strength. They now may be able to wait until April or June.” After emerging from recession in the second quarter of 2008, recovery in Latin America’s biggest economy had been gaining momentum thanks to tax cuts and record low borrowing costs that are stoking consumption . Coupled with a rebound in investment, gross domestic product will expand 5.8 percent this year, the central bank said Dec. 22. Forecast for Rate Increases To contain inflation expected to rise to the government’s 4.5 percent target by year-end, policy makers will increase the benchmark interest rate to 10.75 percent from a current 8.75 percent, a central bank survey published this week shows. The $1.6 trillion economy will grow 5.2 percent this year, the most since 2007, according to the survey of about 100 economists. Today’s industrial report “was a surprise but not a bad one,” Julio Gomes de Almeida, a former economic policy secretary at the Finance Ministry, said in an interview at the Bloomberg office in Sao Paulo. “In terms of inflation this number couldn’t be better.” Production rose 5.1 percent from the year-ago month, its first annual increase since the start of the global recession, though less than the 5.5 percent median estimate in a Bloomberg survey. Production of capital goods, a measure of future investment, rose 6.1 percent from October. It was the biggest jump since January 2009. Consumer goods production fell 0.6 percent, the first decline since June, 2009. Capital Goods Uncertainty regarding the extension of tax breaks on durable goods hurt total output in November, said Gomes, who is now a professor at the State University of Campinas. “But the production of capital goods was magnificent and that is what Brazil needs,” he said. Sales of passenger cars and light trucks rose 13 percent last year over 2008 after the government cut taxes and state- owned banks boosted lending , Brazil’s national dealership federation said yesterday. Sales may rise another 10 percent this year to a fourth straight record, the group said. Seeking to tap the domestic market of 192 million people General Motors Co., Volkswagen AG and Ford Motor Co. have announced plans to invest a total 14.2 billion reais ($8.2 billion) in coming years to develop new vehicles and increase output capacity. Rising Investment Foreign direct investment will surge 80 percent to $45 billion this year from an estimated $25 billion in 2009, as construction of infrastructure projects for the 2014 World Cup begin, the central bank said Dec. 17. Manufacturers increased the use of installed capacity in October to the highest level since December 2008 to keep up with rising domestic demand, the national industrial confederation said Dec. 7. The 63-stock Bovespa stock index surged 83 percent in 2009 as international investors added 20.5 billion reais to their Brazilian holdings, the most since the exchange began tracking inflows in 1994. The index may surpass the 73,920.38 intraday record from May 2008 in the next six weeks, according to technical analysis by Auerbach Grayson & Co. Inflation accelerated for the third month in November, as consumer prices rose 0.41 percent from the previous month, the biggest jump since May. Economists’ expectations for year-end 2010 inflation have risen steadily from 4.3 percent on Sept. 18 to 4.5 percent, the midpoint of the target range, in the final weekly survey by the central bank last year. — With assistance from Iuri Dantas in Brasilia. Editors: Joshua Goodman , Bill Faries To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net ; Camila Fontana in Sao Paulo at cfontana@bloomberg.net

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Metals Gain as Cold Weather Threatens Production; Stocks, Greek Bonds Fall

January 6, 2010

By Stuart Wallace Jan. 6 (Bloomberg) — Metals rose for a fourth day and European stocks fell as icy weather across the Northern Hemisphere threatened to disrupt production. The yen weakened, while Greek bonds declined on deficit concerns. Copper advanced to the highest price since August 2008 and aluminum increased the most since October 2008. The Dow Jones Stoxx 600 index lost 0.1 percent at 10:25 a.m. in London as two shares fell for every one that rose. Futures on the Standard & Poor’s 500 Index slipped 0.4 percent. The yen declined against all 16 of its most-traded counterparts. The yield on the Greek two-year note jumped 8 basis points to 3.02 percent. Near-record snowfalls and below-average temperatures from Beijing to London closed airports and roads, while the U.S. may suffer its worst winter in 25 years, AccuWeather.com predicted. The freeze may hamper the global economic recovery after the deepest slump since World War II. Investors speculated that China, the world’s biggest aluminum producer, will struggle to maintain output. “The cold snap in many parts of the world will weigh on gross domestic product,” Steven Barrow , head of Group of 10 foreign-exchange strategy at Standard Bank Plc in London, wrote in an e-mailed note today. “The impact might not be huge but coupled with hints of underlying softness in the global economy’s performance it could raise question marks over recent stock strength and bond market weakness.” Copper, Platinum Copper for delivery in three months rose 2 percent to $7,636 a metric ton on the London Metal Exchange and aluminum gained 1.4 percent to $2,334 a ton. Lead added 4.1 percent to $2,625 a ton. Platinum, used in catalytic converters, rose 1.3 percent to $1,549.25 an ounce, the highest level since August 2008, after U.S. automakers reported a 15 percent increase in sales last month. U.S. natural gas futures gained as much as 1.7 percent to $5.73 a million British thermal units and orange juice jumped to a two-year high in New York yesterday on concern freezing weather will damage crops. In the U.K., gas dropped as imports from Belgium and Norway increased. Oil was little changed at $81.76 a barrel in New York, near a 14-month high. The MSCI World Index of 23 developed nations’ stocks slipped 0.1 percent. Retailers led declines in European stocks. Marks & Spencer Group Plc slid 4.9 percent in London after sales missed estimates and U.K. consumer confidence fell the most in more than a year. U.S. Futures The decline in U.S. futures indicated that the S&P 500 may retreat from a 15-month high. A 10-month rally has left the benchmark gauge for U.S. equities valued at more than 24 times its companies’ reported earnings, the most expensive level since 2002, according to Bloomberg data. “The stock rally is not sustainable at the current pace,” Suki Mann , a strategist at Societe Generale SA in London, wrote in a research note. “There will be many bad days and periods where the data will leave much to be desired.” A report scheduled for 10 a.m. New York time may show service industries in the U.S. expanded in December for the third time in four months, indicating the recovery is extending beyond factories, economists said. A separate report from ADP Employer Services due at 8:15 a.m. in New York may show companies last month cut the fewest jobs since January 2008. Economists surveyed by Bloomberg News project the U.S. government will say on Jan. 8 that payrolls were unchanged in December, the first month employment didn’t contract since the recession began two years ago. Greek Bonds Greek bonds snapped two days of gains after Italy’s Il Sole 24 Ore newspaper cited European Central Bank policy maker Juergen Stark as saying markets can’t assume the country will be bailed out. European Union officials are starting a three-day visit to Athens as the government struggles to cut its budget deficit, estimated at 12.7 percent of gross domestic product last year. Treasuries dropped, with the yield on the benchmark 10-year note rising 2 basis points to 3.78 percent. The extra yield investors demand to hold bank bonds rather than government securities fell 4 basis points to 244, from as much as 881 in March, Merrill Lynch index data show. Landwirtschaftliche Rentenbank, the German agricultural agency, plans to sell five-year bonds in dollars today, a banker involved in the deal said, after $23.8 billion of dollar offerings from financial companies made yesterday the biggest day for issuance since Feb. 18, 2009, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. Turkey’s government said it received $7.3 billion of orders for a $2 billion sale of 30-year bonds yesterday. The bonds were little changed in the first day of trading. The extra yield investors demand over Treasuries to own emerging-market bonds fell 4 basis points to 271 basis points, matching the lowest spread in 19 months. The yen dropped 1 percent against the South Korean won and 0.9 percent against the Australian dollar as gains in Asian stocks spurred investors to seek higher-yielding assets. To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net

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Asian Stocks Gain on U.S. Manufacturing Report, Commodities; STX Advances

January 4, 2010

By Masaki Kondo Jan. 5 (Bloomberg) — Asian stocks rose, lifting the MSCI Asia Pacific Index to the highest level in 16 months, after U.S. manufacturing expanded at the fastest pace in more than three years and commodities gained. Sony Corp., Japan’s biggest exporter of televisions, rose 1.2 percent. Mitsubishi Corp. , a Japanese trading company that gets 39 percent of its sales from commodities, added 3.6 percent on higher oil and metal prices. STX Pan Ocean Co. , South Korea’s biggest bulk carrier, climbed 4 percent after a gauge of rates to ship commodities advanced. The MSCI Asia Pacific Index advanced 1 percent to 123.29 as of 11:41 a.m. in Tokyo, set to close at the highest level since Aug. 29, 2008. The gauge climbed 34 percent last year as lower interest rates and stimulus measures dragged the global economy out of the worst slowdown since World War II. “What we had last year were expectations for a better economy,” said Naoki Fujiwara , chief fund manager at Shinkin Asset Management Co., which oversees the equivalent of $3.86 billion in Tokyo. “This year, I’m expecting to see a firm economic recovery to shore up demand, which will be confirmed by better company earnings.” Japan’s Nikkei 225 Stock Average added 1 percent. Elpida Memory Inc. , the country’s biggest computer-memory chipmaker, surged 7.8 percent after a newspaper reported the company’s Taiwanese unit will double output. Hong Kong’s Hang Seng Index climbed 1.1 percent, while the S&P/ASX 200 Index gained 1.1 percent in Sydney. Risky Assets Malaysia’s FTSE Bursa Malaysia KLCI Index rose 1.1 percent, set for the highest close since May 2008. Emerging-market equity and bond funds closed 2009 with record annual inflows as a recovery from the global financial crisis boosted demand for riskier assets, EPFR Global said. Futures on the Standard & Poor’s 500 Index fell 0.1 percent. The gauge rose 1.6 percent in New York yesterday, the most since Nov. 9, after the Institute for Supply Management said its factory index rose to 55.9, the highest level since April 2006. The median estimate by economists was 54.3. Readings greater than 50 signal expansion. Stocks around the world rallied last year on signs economies were recovering from the credit crisis. The MSCI Asia Pacific Index ’s 2009 advance outpaced gains of 23 percent by the S&P 500 and 28 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the gauge are valued at an average of 20 times estimated earnings, compared with 18 times for the S&P and 13 for the Stoxx. Sony, Nikon Sony, the maker of the PlayStation 3 game machine, added 1.2 percent to 2,763 yen. Nikon Corp. , a camera maker that counts North America as its biggest market by revenue, rose 3.1 percent to 1,891 yen. Electronics makers contributed the most to Japan’s Topix index, which rose 1.2 percent. Raw-material producers and energy companies accounted for a quarter of the MSCI Asia Pacific Index’s advance today. Mitsubishi, Japan’s biggest trading company by market value, gained 3.6 percent to 2,401 yen. Korea Zinc Co., which produces gold and silver, jumped 2 percent to 205,500 won. Crude oil for February delivery rose 2.7 percent to $81.51 a barrel in New York yesterday, the highest settlement since October 2008, as freezing weather and improving global economies bolstered the outlook for fuel demand. Gold prices surged the most in two months, or 2 percent, and copper futures for March delivery climbed 1.8 percent. “We can see from the positive U.S. economic data and rising commodity prices that there is a strong anticipation of a global self-sustaining recovery,” said Fumiyuki Nakanishi , a strategist at Tokyo-based SMBC Friend Securities Co. Baltic Dry In Seoul, STX Pan Ocean climbed 4 percent to 11,750 won after the Baltic Dry Index , a measure of shipping costs for commodities, jumped 4.5 percent in London yesterday, the first gain since Dec. 4. Nippon Yusen K.K., Japan’s biggest shipping line, gained 3.9 percent to 297 yen. Elpida climbed 7.8 percent to 1,625 yen and was the second- biggest winner on the MSCI Asia Pacific Index. Rexchip Electronics Corp., Elpida’s Taiwanese subsidiary, will invest about 40 billion yen ($433 million) to convert all its production lines to Elpida’s new 45-nanometer chip technology and double production in fiscal 2010, the Nikkei newspaper reported today, without citing anyone. To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net .

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Stocks Rally, Dollar Falls on Manufacturing Expansion; Oil Rises Above $80

January 4, 2010

By Nikolaj Gammeltoft and David Merritt Jan. 4 (Bloomberg) — Stocks and commodities rallied and the dollar slumped on the first trading day of 2010 amid signs that manufacturing is improving around the world. Oil climbed above $80 a barrel after freezing weather hit the U.S. The Standard & Poor’s 500 Index gained 1.5 percent at 2:31 p.m. in New York. The MSCI Emerging Markets Index jumped 1.6 percent to a 17-month high. Natural gas for February delivery gained as much as 5.8 percent, crude oil rose for an eighth day and orange-juice futures surged the most allowed amid cold temperatures in the U.S. The dollar weakened against 15 of 16 major currencies, sending gold up the most in two months. Copper rallied to a 16-month high after a strike at a mine in Chile. Manufacturing in China, which led the recovery from the first global recession since World War II, expanded by the most since April 2004 last month, an industry report showed. The U.S. Institute for Supply Management’s factory gauge climbed to 55.9, the highest level in more than three years. “The expectations for the new year are supported by some reasonably positive U.S. manufacturing data this morning” and China “remains a bright spot,” said Kevin Caron , a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, which manages about $95 billion in client assets. “The bulls still make the case that the global economy is on the mend and there’s a decent amount of optimism among strategists for market performance in 2010.” Energy, Tech Lead Exxon Mobil Corp. and Chevron Corp. climbed at least 1.2 percent to pace gains in U.S. energy shares. Technology companies contributed the most to the gain in the S&P 500 as Intel Corp. rallied 2.6 percent after the world’s largest chipmaker was raised to “outperform” from “neutral” at Robert W. Baird & Co. on speculation demand from personal- computer makers will continue to strengthen. The S&P 500, which surged 23 percent in 2009, climbed to a 15-month high on a closing basis. The dollar’s retreat was led by 1.6 percent declines against the Mexican peso, Australian dollar and New Zealand dollar. Europe’s Dow Jones Stoxx 600 Index gained 1.5 percent as all 19 industry groups rose. The measure rallied 28 percent last year, its biggest annual gain since 1999. BHP Billiton Ltd. , the world’s largest mining company, added 3.4 percent in London. Alcon Deal Nestle SA gained 1.5 percent in Zurich after Novartis AG exercised an option to acquire its stake in Alcon Inc., the world’s largest eye-care company, for a total of $39.9 billion. The maker of Nescafe coffee also today announced an additional share buyback worth 10 billion Swiss francs ($9.65 billion). Air Berlin Plc advanced 5.6 percent in Frankfurt. Europe’s third-biggest discount carrier was upgraded to “buy” from “hold” at Deutsche Bank AG. Renault SA , France’s second- largest carmaker, added 5.5 percent in Paris. Sales volumes will be “very strong” in the first half of 2010, Bernard Cambier , sales director for France, said in an interview on BFM radio. The MSCI Asia Pacific Index climbed 1.3 percent, building on its 34 percent gain last year, the best annual advance since 2003. Japan Airlines Corp. soared 31 percent in Tokyo after the government said the Development Bank of Japan will double the amount of credit for the carrier. Treasury two-year notes rose for the first time in two weeks as investors bet that the rally that pushed yields to the highest level since August is overdone. The yield on the 1 percent note maturing December 2011 fell five basis points to 1.09 percent. Shunning Bonds Pacific Investment Management Co., which runs the world’s biggest bond fund, is reducing holdings of U.S. and U.K. debt as government borrowing expands, and is “more cautious” on corporate debt, according to the 2010 outlook of Paul McCulley , a money manager and member of the investment committee. “We’re making a very active decision to run light on risk,” he wrote. U.S. natural gas for February delivery rose as much as 32.2 cents to $5.894 per million British thermal units on the New York Mercantile Exchange. Cold, windy weather enveloping the U.S. from the northern Plains to the East Coast may continue to break records today, forecasters said. U.S. crude oil for February delivery rose as much as 2.9 percent $81.68 a barrel in Nymex trading. Orange-juice futures for March delivery rose 10 cents, or 7.8 percent, to $1.3905 a pound following a cold snap in Florida. The ICE Futures U.S. exchange limits daily movements in prices to 10 cents. Gold for February delivery added 2 percent to $1,118.30 an ounce in New York. Copper for delivery in March rose 1.7 percent to $3.4045 a pound in New York after earlier reaching a 16-month high of $3.429. The MSCI emerging markets index added to last year’s record 75 percent rally as Credit Suisse analysts Sakthi Siva and Kin Nang Chik said in a report that the index may rise more than 20 percent this year. To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net ; David Merritt in London on dmerritt1@bloomberg.net .

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Networking For Business Professionals – Commercial Real Estate …

January 3, 2010

This website has the most up to date national news, distressed and government news, and robust search engine for Commercial Real Estate on the internet. If you spend an enormous amount of time searching for information Stop and look to …

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The Realities of Real Estate: A look at the past decade of real estate (The Capital)

January 2, 2010

Even the most gut-wrenching rollercoaster ride doesn’t do justice in describing the last decade for real estate. Never before in this industry have we experienced such turbulent times.

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The Realities of Real Estate: A look at the past decade of real estate (The Capital)

January 2, 2010

Even the most gut-wrenching rollercoaster ride doesn’t do justice in describing the last decade for real estate. Never before in this industry have we experienced such turbulent times.

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Stores Open On New Year's Day 2010: Walmart, Target, Best Buy All …

January 1, 2010

Buying distressed commercial real estate is fraught with peril, the most glaring of which is that you will get a double-digit return on your investment. Original post: Secrets for Buying Distressed Commercial Real Estate – Part 1 of 3 … …

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Secrets for Buying Distressed Commercial Real Estate – Part 1 of 3 …

January 1, 2010

Buying distressed commercial real estate is fraught with peril, the most glaring of which is that you will get a double-digit return on your investment.

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Secrets for Buying Distressed Commercial Real Estate – Part 1 of 3 …

January 1, 2010

Buying distressed commercial real estate is fraught with peril, the most glaring of which is that you will get a double-digit return on your investment. Original post: Secrets for Buying Distressed Commercial Real Estate – Part 1 of 3 …

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The 4 Best Real Estate Investments for 2010, Part II (Guru Focus)

December 31, 2009

By Daily Reckoning. yesterday’s edition of the Daily Reckoning, next year is going to be the most exciting one real estate investors have seen in a decade. I’ve got my eye on four spots, in particular – diverse opportunities around the globe, each of which represents an excellent value play. Read more » »

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The 4 Best Real Estate Investments For 2010, Part II

December 31, 2009

As I mentioned in , next year is going to be the most exciting one real estate investors have seen in a decade. I’ve got my eye on four spots, in particular – diverse opportunities around the globe, each of which represents an excellent value

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Commodities Post Biggest Annual Gain in Four Decades as China’s Use Surges

December 31, 2009

By Stuart Wallace and Chanyaporn Chanjaroen Dec. 31 (Bloomberg) — Commodities posted the biggest annual gain in four decades, led by a doubling in copper, sugar and lead prices, as Chinese demand compensated for the longest slump in the global economy since World War II. In 2009, the S&P GSCI Index of 24 raw materials rose 50 percent, the most since at least 1971, and commodities drew record investment of $60 billion this year, Barclays Capital estimated. This year, the MSCI World Index of stocks in 23 developed nations climbed 27 percent, and U.S. Treasuries fell 3.5 percent, according to Bank of America Merrill Lynch indexes. China, the biggest consumer of commodities such as copper and iron ore, expanded 8.5 percent this year, according to the median estimate of economists surveyed by Bloomberg. The nation imported record amounts of both raw materials this year, making up for slack demand in the U.S. and Europe. “If you look at the theoretical or global portfolio of assets that are out there, the percentage of commodities allocation is tiny, less than 1 percent,” said Kevin Norrish , a commodity analyst at Barclays Capital in London. “If you look at what investors think that they should have, clearly that would suggest there’s a lot of potential for growth.” This year, the Reuters/Jefferies CRB Index of 19 raw materials advanced 23 percent, the most since 1979. Lead Surges China’s central bank will maintain a “moderately loose” monetary policy because 2010 will be a crucial year for strengthening the recovery, Governor Zhou Xiaochuan said today. Among industrial metals traded in London, lead posted the biggest gain. Since the end of 1999, the metal more than quadrupled, leading gains among 36 exchange-traded raw materials in the U.S., Europe and Asia. Copper also doubled this year, leading gains in the CRB gauge. The metal climbed almost fourfold in the decade. Lead for delivery in three months rose $21, or 0.9 percent, to $2,432 a metric ton today on the London Metal Exchange. Copper gained 0.6 percent to $7,375 a ton. In 2009, gold futures in New York rose 24 percent, the ninth straight annual gain. The dollar’s slump spurred demand for precious metals as an alternative investment. Crude oil advanced 78 percent this year. The Organization of Petroleum Exporting Countries, accounting for 40 percent of global supply, reduced output in response to the worldwide economic slump. Raw-sugar futures in New York more than doubled this year, trailing only copper’s advance in the CRB index. Cane harvests in Brazil and India, the biggest producers, were hurt by adverse weather. To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net ; Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

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Stocks Rise as World Index Heads for Best Year Since 2003; Copper Rallies

December 31, 2009

By Sandy Hendry and Will Kennedy Dec. 31 (Bloomberg) — Stocks rose around the world, set for the biggest annual gain since 2003, and copper headed for its best rally in at least a decade after China pledged to maintain policies that helped pull the world from recession. The MSCI World Index climbed 0.4 percent at 12:05 p.m. in London, bringing its 2009 advance to 28 percent. Standard & Poor’s 500 Index futures added 0.2 percent. The dollar dropped against higher-yielding currencies, including Australia’s dollar. Treasury futures fell, with bonds heading for the worst performance since at least 1978. The S&P GSCI Index of 24 raw materials rose 0.8 percent, taking its annual gain to 51 percent, the best year since at least 1970. The governor of China’s central bank, Zhou Xiaochuan , said today he will maintain “moderately loose” monetary policy because 2010 will be “a crucial year in strengthening the stabilization and recovery of the economy and defeating the international financial crisis.” U.S. jobless claims probably stayed below 500,000 for a sixth week, the best performance since 2008, according to a Bloomberg survey of economists before a government report. “This year has certainly been the year of China, which single-handedly pushed up commodity prices, held up intra- regional trade and benefited its neighbors,” said Daphne Roth , head of Asian equity research in Singapore at ABN Amro Private Banking, which oversees about $21 billion in the region. “We’re still positive on 2010, as there remains a lot of filtering down of fiscal stimulus.” Low Interest Rates Stocks worldwide have risen the most since 2003 this year on speculation interest rates near zero and increased government spending will sustain the recovery from the first global recession since World War II. The MSCI World Index plunged 42 percent in 2008, the most in its 40-year history, hurt by the collapse of the subprime-mortgage market in the U.S. and the bankruptcy of Lehman Brothers Holdings Inc. The U.K.’s FTSE 100 index rose as much as 0.6 percent today, headed for a 22 percent annual increase, the biggest since 1997. France’s CAC 40 climbed 0.6 percent, bringing this year’s gain to 23 percent, the most since 2005. The MSCI Emerging Markets Index added 0.9 percent for a yearly gain of 75 percent, the biggest since records began in 1988. Russia’s RTS Index added 0.6 percent to this year’s 128 percent rally, the biggest worldwide. Turkish Bonds Turkey’s ISE National Index climbed 1.5 percent to the highest level in almost 12 months, while yields on government bonds plunged the most since 2004, after politicians who attended a meeting with Prime Minister Recep Tayyip Erdogan said the nation is close to signing a loan agreement with the International Monetary Fund. Separately, the Referans newspaper said the country will cut taxes on bond income for domestic investors. Asian companies cemented their position among the world’s biggest by market value. PetroChina Co. ’s 41 percent advance this year makes China’s largest oil company the most valuable, and Industrial & Commercial Bank of China Ltd. is ranked fourth after Exxon Mobil Corp. and Microsoft Corp., following the lender’s 56 percent climb this year. PetroChina climbed 0.9 percent today and ICBC gained 1.4 percent. The Shanghai Composite Index rose 80 percent this year. The dollar fell 0.6 percent to $1.4419 per euro, bringing its decline this year to 3.1 percent. Australia’s dollar climbed 0.6 percent to 89.96 U.S. cents and added 0.4 percent to 83.03 yen. The so-called Aussie strengthened against 14 of its 16 most-traded counterparts this year as raw-materials prices gained. New Zealand’s dollar, another so-called commodity currency, gained 0.7 percent. China Rebound Commodities and the currencies of raw-materials producers have rallied as China’s economic rebound sucks in imports of industrial metals and energy. Gross domestic product probably grew 8.5 percent in 2009, topping the government’s 8 percent target, economists forecast, after the government revised higher its data for the last two years. Copper rose as much as 1.2 percent in London to $7,415 a metric ton, doubling this year for the biggest increase in more than two decades. Gold for immediate delivery rose 0.9 percent to $1,102 an ounce, taking this year’s advance to 24 percent, a ninth straight annual gain. The yield on 10-year Treasury futures contracts for March delivery rose 1 basis point to 4.07 percent. The yield on the benchmark note climbed to as high as 3.82 percent yesterday, approaching the 3.86 percent reached on Dec. 29, the highest level since Aug. 10. It has increased 1.58 percentage points this year. Obama Borrows President Barack Obama is borrowing unprecedented amounts for programs to revive the economy. U.S. marketable debt increased to a record $7.17 trillion in November, from $5.80 trillion at the end of last year. U.S. securities have fallen 3.5 percent this year, the most among Group of Seven countries, according to Bank of America Merrill Lynch indexes. The cost of insuring corporate bonds against default using credit-default swaps tumbled around the world this year. Contracts on the Markit CDX North America Investment-Grade Index dropped about 115 basis points to 84, according to CMA DataVision prices. In Japan, the benchmark gauge fell about 150 basis points to 133 and the Markit iTraxx Europe Index fell about 110 to 73. The appetite for corporate bonds has surged. The extra yield, or spread, that investors demand to buy investment-grade corporate bonds instead of Treasuries shrank to 1.93 percentage points from 6.04 last year, according to Merrill Lynch & Co.’s U.S. Corporate Master index. The bonds yield 4.87 percent on average. The spread for European investment-grade bonds over government debt shrank to as little as 1.68 percentage points this year, down from a record 4.63 percentage points in March, Merrill Lynch indexes show. To contact the reporters on this story: Sandy Hendry in Hong Kong at shendry@bloomberg.net ; Will Kennedy in London at wkennedy3@bloomberg.net .

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In The Pipeline: 2009′s Top Construction and Development Stories

December 28, 2009

For most commercial real estate developers, 2009 can’t end soon enough. In the tight financing market, credit was available for only the most fail-safe construction and development projects. Many planned developments fell out of the pipeline as plunging…

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U.S. Economy Poised for Growth Surge as Most Accurate Forecaster Sees It

December 28, 2009

By Timothy R. Homan and Bob Willis Dec. 28 (Bloomberg) — The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki , the most-accurate forecaster in a Bloomberg News survey. The world’s largest economy will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. in New York. The rebound in stocks and rising incomes will prompt Americans to do what they do best –consume, said Maki, a former economist at the Federal Reserve. Faced with dwindling inventories and growing demand, companies will soon become confident the expansion will be sustained, he said. Household spending “will pick up steam as we move into the second half of 2010,” said Maki, 44, who topped all 60 forecasters in the Bloomberg News ranking of gross domestic product projections for the first three quarters of 2009. “The overall picture for 2010 will be an economy growing rapidly enough to bring down the unemployment rate” to an average of 9.6 percent. Maki, who specialized in researching household finances at the Fed from 1995 to 2000, said the economic recovery this time will be similar to past rebounds. Consumer purchases improved after last year’s 61 percent plunge in gasoline prices and will keep growing in 2010, reflecting the surge in stocks. Faster growth will push Treasury yields higher and help the dollar strengthen as the Fed raises interest rates, he predicts. Consumer Behavior Maki holds a doctorate in economics from Stanford University near Palo Alto, California. His dissertation addressed Americans’ response to the phasing out of tax deductions for interest on consumer loans. He received a bachelor’s degree in economics from St. Olaf College in Northfield, Minnesota, and joined the investment banking unit of London-based Barclays in 2005. “One area that we put more weight on perhaps than others is the stock market,” he said in an interview. The 67 percent gain in the Standard & Poor’s 500 Index since a 12-year low on March 9 has helped shore up family balance sheets, putting Americans in a better position to spend. The prospects for a stronger rebound are consistent with recoveries from past recessions, he said. “We don’t believe this time is different from all other business cycles ,” said Maki. “The consensus view that growth will stay subdued all through next year — there’s no parallel to that in modern U.S. history.” Goldman More Pessimistic Maki’s forecast for 2010 is among the highest of the 58 economists in a Bloomberg News survey this month. He is more optimistic than Jan Hatzius , chief U.S. economist at Goldman Sachs Group Inc. in New York, who was No. 1 among forecasters of GDP during the 12 months through June 2009. Hatzius, 41, estimates the economy will expand 2.4 percent in 2010, and his 2.5 percent first-quarter growth forecast is half the pace Maki anticipates. Ed McKelvey , who works with Hatzius, said the Goldman team forecasts “subpar growth” next year because “employers will be reluctant to hire” and households will exhibit “a bias toward higher saving .” Budget difficulties at state and local governments and credit constraints will also restrain the economy, he said. Maki’s projected 5 percent rate of expansion in the first quarter, the fastest since the same three months in 2006, will reflect the need for companies to replenish inventories cut at a record pace in the first nine months of this year. Stocking Shelves Ramped-up production to increase stockpiles and investment in equipment will propel the expansion early in the year, leading to employment gains that will bolster spending in the second half, he said. “Businesses overreacted to the downside during the recession,” said Maki, who says he tries to keep fit by playing tennis and jogging with his dogs. “As firms turn to expansion mode rather than survival mode, they start raising both employment and investment spending in a similar way.” A rebound in corporate spending may be one reason investors have been eager to snap up shares of industrial equipment makers. The Standard & Poor’s 500 Industrial Machinery Index , which includes Cleveland-based Eaton Corp., a producer of circuit breakers and fuel pumps, and Craftsman brand tool-maker Danaher Corp., based in Washington, has outperformed the broader measure, rising 35 percent so far this year, compared with a 25 percent increase for the S&P 500. Higher Treasury Yields Economic growth will push the yield on the 10-year Treasury note up to 4.5 percent by year-end, Maki said, compared with a yield of 3.8 percent at the end of last week. Maki says central bankers will lift the U.S. overnight bank lending rate target to 0.5 percent in the third quarter, from zero to 0.25 percent currently, and to 1 percent by year-end. His colleague at Barclays, David Woo, global head of foreign- exchange strategy, predicts the dollar will end 2010 around $1.40 per euro. Maki’s top position in the Bloomberg ranking is based on estimates submitted in January for GDP. He forecast that month a 2 percent expansion for the third quarter. The U.S. economy expanded at a 2.2 percent annual pace, according to a Dec. 22 Commerce Department report. He also predicted a 4.5 percent contraction for the first quarter of 2009, followed by a 1 percent decline in the period from April through June. The Commerce Department later reported contractions of 6.4 percent and 0.7 percent. Soss and Lonski Neal Soss , 60, chief economist at Credit Suisse in New York, was the second most-accurate forecaster of GDP over the first three quarters of 2009. He projects the economy will grow 3.3 percent next year. John Lonski , 58, chief economist at Moody’s Capital Markets Group in New York, was No. 3. He sees a 2.7 percent expansion. Robert MacIntosh , chief economist at Boston-based Eaton Vance Management, was the most pessimistic forecaster on employment this year — and the most accurate. He expected unemployment to reach 10 percent in the fourth quarter and average 9 percent this year. The rate fell to 10 percent in November from a 26-year high of 10.2 percent the previous month, according to the Labor Department. MacIntosh, 52, agrees with Maki that the economy will rebound in 2010, forecasting growth of 3.5 percent, and that the jobless rate will average 9.5 percent. ‘Decent-Looking Economy’ “The combination of exports, investment and consumption will be enough to give us, on paper at least, a decent-looking economy,” said MacIntosh, a graduate of Harvard University in Cambridge, Massachusetts, with an MBA from Dartmouth College in Hanover, New Hampshire. He manages $4 billion in municipal bonds for Eaton Vance. He sees an “upward trend” in payrolls, with the first positive reading coming as early as January. The gains in hiring will lower unemployment “modestly,” he said. Hatzius and the economists at Goldman Sachs project the unemployment rate will average 10.3 percent next year, compared with a median estimate of 10 percent for 58 responses in this month’s survey. Bart van Ark , chief economist at the Conference Board, a New York-based research firm, forecasts a 10.4 percent average unemployment rate next year that he said will restrain household purchases. Van Ark, the best forecaster of consumer spending for the period from January through September, said he sees household purchases rising 1 percent in 2010 after falling 0.6 percent this year. Maki forecasts a 2.1 percent gain in 2010. “Even though we do see a pickup in recent quarters, it’s not a signal that the consumer is going to lead us out of the recession into solid growth territory,” said van Ark, a 49- year-old Dutch native. “The consumer cannot play that role” any longer. To contact the reporters on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net Robert Willis in Washington at bwillis@bloomberg.net .

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Video: Barclays’s Maki Discusses Outlook for U.S. Labor Market: Video

December 28, 2009

Dec. 28 (Bloomberg) — Dean Maki, the chief U.S. economist at Barclays Capital Inc., talks with Bloomberg’s Matt Miller about the outlook for the U.S. labor market. Maki is the most-accurate forecaster in a Bloomberg News survey. (This is an excerpt of the full interview. Source: Bloomberg)

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Stocks Rise on China’s GDP Growth Data; Emerging-Market Currencies Advance

December 28, 2009

By Nicolas Johnson and Matthew Brown Dec. 28 (Bloomberg) — Stocks advanced around the world, sending the Standard & Poor’s 500 Index higher for a sixth day, after China said its economy grew faster than estimated this year. Emerging-market currencies rose, and Treasuries fell. The S&P 500 added 0.3 percent at 9:36 a.m. in New York, posting the longest winning streak in almost two months. Europe’s Dow Jones Stoxx 600 Index climbed to a 15-month high. The Brazilian real advanced against the 16 most-traded currencies tracked by Bloomberg. Treasuries dropped before this week’s record-tying $118 billion sale of debt. China’s economy, which is leading the world out of the first global recession since World War II, grew faster than previously estimated, the government said. The U.S. will turn in its best performance since 2004 next year as spending picks up and companies increase investment, said Dean Maki , the most- accurate forecaster in a Bloomberg News survey. “The global economy is just about bottoming out,” said Masaru Hamasaki , chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.” U.S. stocks gained as metal and energy producers rallied with commodities prices. Exxon Mobil Corp. , the biggest U.S. oil company, and Barrick Gold Corp. , the world’s largest producer of the precious metal, climbed as crude rose a fourth day and gold advanced. The Reuters/Jefferies CRB Index that tracks metal, agricultural product and energy prices added 0.6 percent. Gains in Europe Germany’s DAX Index climbed 0.7 percent, while France’s CAC 40 rallied 1 percent. ArcelorMittal, the world’s biggest steelmaker, and Boliden AB led European basic-resources companies higher as metal prices rose. Seadrill Ltd., the drilling company founded by billionaire John Fredriksen , and Aker Solutions ASA gained as crude oil traded approached $79 a barrel in New York. Asian stocks rose, led by South Korean engineering companies after they won a $20 billion nuclear order, and as China raised its economic growth figures and Japan said industrial production increased. Brazil’s real rose the most among 16 major currencies against the dollar, appreciating 1.5 percent to 1.7378. The U.S., the world’s largest economy, will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. The rebound in stocks and rising incomes will prompt Americans to do what they do best — consume, said Maki, a former economist at the Federal Reserve. Faced with dwindling inventories and growing demand, companies will soon become confident the expansion will be sustained, he said. Treasury two-year note yields touched the highest levels since October before the U.S. sells a record-tying $44 billion of the securities, the first of three note sales this week totaling $118 billion. To contact the reporters for this story: Nicolas Johnson in Tokyo at nicojohnson@bloomberg.net ; Matthew Brown in London at mbrown42@bloomberg.net .

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Korea Electric, Doosan Jump After Winning $20 Billion U.A.E. Nuclear Order

December 27, 2009

By Saeromi Shin Dec. 28 (Bloomberg) — Korea Electric Power Corp. , Doosan Heavy Industries & Construction Co. and other South Korean builders jumped the most in a year after winning a $20 billion nuclear-plant contract from the United Arab Emirates, the first such order awarded by a Gulf Arab nation. Korea Electric gained 11 percent to 36,500 won as of 9:19 a.m. on the Korea Exchange, while Doosan Heavy climbed the daily limit of 15 percent to 84,900 won. Both rose by the most since Dec. 8, 2008. The benchmark Kospi stock index advanced 0.7 percent. A Korea Electric-led group, which also includes Hyundai Engineering & Construction Co. and Samsung C&T Corp., will design, build and help operate four 1,400-megawatt nuclear power units to be completed from 2017 to 2020, Emirates Nuclear Energy Corp. said yesterday in an e-mailed statement. The order is part of a “fleet of power plants” the U.A.E. wants to build, Chief Executive Officer Mohammed al-Hammadi said. “This industry has just started to grow, and there’s strong growth potential for the next two decades,” said Lee Jin Woo , a fund manager at KTB Asset Management Co. in Seoul, which manages the equivalent of $8.5 billion. “There are expectations for winning additional orders.” Hyundai Engineering rose 9.4 percent to 74,400 won, while Samsung C&T gained 8.6 percent to 58,000 won. Both stocks advanced the most since Dec. 15, 2008. To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net .

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Financial Crisis Memorabilia: The Most Popular T-Shirts From The Panic

December 24, 2009

There were bailout designs on 143,000 products; Wall Street got poked fun of on 114,000; and recession themes made 85,600 items. Even TARP jokes found their way to 5,360 products. So which were the best selling financial shirts, bags and bumper stickers of the year? We’ve got ‘em here, counting down to the most popular.

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Asian Stocks Advance for a Third Day on Commodities, Semiconductor Prices

December 23, 2009

By Shani Raja Dec. 24 (Bloomberg) — Asian stocks rose for a third day, led by chip-related companies and commodity producers, after an index of semiconductor prices jumped to its highest level in almost six weeks and as oil and metals rallied. Mitsubishi Corp. , Japan’s biggest trading company and which generates more than half its profit from raw materials, climbed 3.9 percent Tokyo. BHP Billiton Ltd. , the world’s largest mining company, rose 1.5 percent in Sydney. Advantest Corp., the world’s No. 1 maker of memory-chip testers, climbed 3.4 percent. Canon Inc. gained 6.1 percent after the electronics maker kept its dividend unchanged and won approval for a takeover, and a report showed American consumer spending and incomes climbed. The MSCI Asia Pacific Index rose 0.7 percent to 119.45 as of 10:32 a.m. in Tokyo, with three times as many stocks advancing as declining. The gauge has climbed 33 percent this year, poised for its biggest annual increase since 2003, as central banks worldwide reduced borrowing costs and governments boosted spending to shore up their economies. “We’re encouraged by the fact that the global economy is continuing to improve,” said Angus Gluskie , who oversees $300 million at White Funds Management Pty in Sydney. “The economic fundamentals moving into 2010 are likely to be better than they have been in the last six months. Still, we have to recognize that many more steps are needed to achieve a lasting recovery.” Nikkei, Kospi Japan’s Nikkei 225 Stock Average added 1.2 percent, the biggest gain among Asia-Pacific markets open for trading. Japanese markets were closed yesterday for a holiday. South Korea’s Kospi Index rose 1 percent, with On*Media Corp., a cable-television operator, surging 15 percent after CJ O Shopping Co. said it will buy control of the company. Australia’s S&P/ASX 200 Index rose 0.9 percent in Sydney. The MSCI Asia Pacific Index ’s surge this year has outpaced gains of 24 percent by the U.S. S&P 500 and 27 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the MSCI gauge are valued at an average of 22.5 times estimated earnings, compared with 18.1 times for the S&P 500. Futures on the Standard & Poor’s 500 Index advanced 0.1 percent. The gauge gained 0.2 percent yesterday, with raw- materials and energy producers having the biggest and third- largest gains in the index. American consumers’ spending and incomes climbed in November, figures from the Commerce Department showed yesterday in Washington, indicating the biggest part of the economy is poised to strengthen as the labor market recovers. Commodities Rally Mitsubishi climbed 3.9 percent to 2,265 yen. BHP Billiton added 1.5 percent to A$42.53. Crude oil for February delivery increased 3.1 percent in New York yesterday, the biggest gain since Nov. 16. Gold prices advanced 0.7 percent, the most in a week, as the U.S. dollar sank for the first time in seven days, boosting demand for precious metals as a haven. Copper futures for March delivery rose 2.1 percent, the most since Nov. 16. “Trading houses and oil companies are likely to remain strong from the commodity rally,” said Mitsushige Akino , who oversees the equivalent of $450 million at Tokyo-based Ichiyoshi Investment Management Co. Advantest gained 3.4 percent to 2,415 yen. The Dramexchange Index , which tracks prices of the most widely used computer- memory chips, jumped 2.3 percent in Taiwan yesterday, to the highest level since Nov. 12. Tokyo Electron Ltd. , the world’s second-biggest maker of equipment to manufacture semiconductors, advanced 3.5 percent to 5,930 yen. Elpida Memory Inc. climbed 3 percent to 1,429 yen. Canon gained 6.1 percent to 4,020 yen. The world’s largest camera maker said it plans to leave its annual dividend at 110 yen a share, and obtained European Union regulatory clearance for its acquisition of the Dutch office equipment maker OCE NV. On*Media Corp. surged 15 percent to 4,495 won in Seoul, after CJ O Shopping said it will purchase control of the company for 434.5 billion won ($369 million). Hyundai Motor Co., South Korea’s largest automaker, jumped 3.4 percent to 120,500 won after workers voted in favor of this year’s wage agreement with the company. To contact the reporters for this story: Shani Raja in Sydney at sraja4@bloomberg.net .

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U.S. Treasuries Little Changed as Rise in Oil Fuels Concern on Inflation

December 19, 2009

By Cordell Eddings Dec. 19 (Bloomberg) — Treasury 10-year notes were little changed as the Federal Reserve pledged to keep interest rates near zero and rising commodity prices spurred concern inflation will increase in coming months. Treasury 10-year notes declined yesterday as crude oil rose after Iranian forces entered Iraq and occupied an oil well. The U.S. dollar posted its biggest weekly gain against the euro since October amid concern Greece and other European nations may struggle to pay their debts. Consumer spending rose 0.7 percent in November, according to the median estimate in a Bloomberg survey before a Commerce Department report Dec. 23. “The market took its direction from flows after the FOMC announcement,” said Ian Lyngen , senior government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “The announcement was more upbeat on growth than in the past, but still, the extended period language is still there. The big take-away is we are in a range until the facts change.” The yield on the 10-year note fell one basis point on the week, or 0.01 percentage point, to 3.54 percent, according to BGCantor Market Data. The 3.375 percent security due November 2019 rose 2/32, or 63 cents per $1,000 face amount, to 98 20/32. Treasuries have lost investors 2.2 percent this year through Dec. 17, according to Bank of America Corp. Merrill Lynch indexes. Fed officials said on Dec. 16 after the conclusion of their two-day policy meeting that the U.S. economy isn’t improving enough for them to raise interest rates and that rates would remain ‘exceptionally low” for an “extended period.” ‘Sword of Damocles’ “They’ve got the Sword of Damocles hanging over them,” Richard Schlanger , who helps invest $13 billion in fixed-income securities as vice president at Pioneer Investments in Boston. “They’re not going to move until the indicators are definitely pointing that there is inflation concern and the economy really has sustained growth momentum and unemployment is going to come down significantly.” Ten-year note yields fell on Dec. 17 as much as 13 basis points, the most since Oct. 1, after the number of Americans filing initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12. Economists surveyed by Bloomberg forecast a drop to 465,000. “The bias is for lower yields,” said Sergey Bondarchuk , an interest-rate strategist in New York at primary dealer BNP Paribas. “We have a more certain outlook after the Fed restated low rates for longer, which continues to give support to the front end. The weakness in the long end should be contained.” Positioned Tanks Fed Chairman Ben S. Bernanke said on Dec. 7 that conditions warranting a low interest rate have not changed even as a Labor Department report on Dec. 4 showed the jobless rate fell to 10 percent in November from a 26-year high of 10.2 percent the previous month. The U.S. is still in a recession and home prices may resume declines, Harvard University economics professor Martin Feldstein said. “The recession isn’t over,” Harvard’s Feldstein said Dec. 17 in an interview on Bloomberg Radio in New York. “It will be a while before we have enough information to know if the recession ended.” Crude oil for January delivery rose as much as 2.8 percent yesterday as Iraq’s National Security Council said that Iran violated their shared border and Iraq’s “territorial integrity.” Iranian forces entered Iraq on Dec. 17. and occupied a well in the East Maysan oil field. Crude Oil “Oil prices have spiked some as a result of political intrigue, which leads to inflation expectation concerns,” said Eric Lascelles , chief rates strategist and economist at TD Securities Inc. in Toronto. “The Fed earlier this week indicated that they weren’t concerned about inflation, but you still had inflation data in general coming in higher than expected.” The yield spread between 10-year notes and Treasury Inflation Protected Securities, a gauge for price-growth expectations, rose to 231 basis points this week, the most in 16 months. Ten-year yields on Dec. 15 touched their highest levels since August after a report showed a 1.8 percent increase in prices paid to factories, farmers and other producers, more than twice as large as anticipated. Investors sought the relative safety of government debt after Standard & Poor’s cut Greece’s credit rating on Dec. 16. ‘Too Much Money’ “Sovereign nations have borrowed too much money with relation to GDP, so that’s what’s impacting the ratings agencies downgrade,” said Thomas L. di Galoma , head of U.S. rates trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. Bill Gross , who runs the world’s biggest bond fund at Pacific Investment Management Co., cut holdings of government debt and boosted cash to the most since Lehman Brothers Holdings Inc. collapsed in September 2008. Gross increased cash in the $199.4 billion Total Return Fund to 7 percent in November, from a negative 7 percent in October, according to Newport Beach, California-based Pimco’s Web site. The fund can have a so-called negative position by using derivatives, futures or by shorting. He reduced government-related securities to 51 percent from a five-year high of 63 percent in October. To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net

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Video: Facebook IPO Can Wait Following Russian Investment: Video

December 18, 2009

Dec. 18 (Bloomberg) — Facebook Inc., the most popular social-networking Web site, can take more time to decide on an initial public offering after Russia’s Digital Sky Technologies bought a stake, said Chief Executive Officer Yuri Milner. Bloomberg’s Cris Valerio reports. (Source: Bloomberg)

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Asian Stocks Fall on U.S. Jobs Data, Bank Capital Rules; Mizuho Declines

December 17, 2009

By Masaki Kondo and Satoshi Kawano Dec. 18 (Bloomberg) — Asian stocks fell after claims for unemployment benefits in the U.S. unexpectedly increased, FedEx Corp. forecast lower-than-estimated profit and international regulators said banks must hold more capital. BHP Billiton Ltd., the world’s biggest mining company, dropped 1.8 percent in Sydney after metal prices declined. Mizuho Financial Group Inc. , Japan’s No. 3 bank by market value, and Seoul-based Woori Finance Holdings Co. lost at least 2 percent. Telstra Corp., Australia’s largest telephone company, retreated 2.8 percent after cutting annual sales forecast. “Concerns that the global economy is going to slow will increase as people recognize the fragility of U.S. employment,” said Juichi Wako , a senior strategist at Nomura Holdings Inc., Japan’s biggest brokerage. “Money is moving away from risk assets.” More than three stocks retreated for each that rose on the MSCI Asia Pacific Index , which fell 0.2 percent to 118.15 as of 9:38 a.m. in Tokyo. The gauge has declined 1.3 percent in the past five days, set for a second week of slumps, on concern China will take steps to curb property speculation and that the U.S. Federal Reserve will raise interest rates. Japan’s Nikkei 225 Stock Average slid 0.8 percent, and the S&P/ASX 200 Index fell 1.2 percent in Sydney. The Kospi Index dropped 0.4 percent in Seoul. U.S. Stocks Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The benchmark index sank 1.2 percent in New York yesterday, the most in three weeks, after FedEx, the second-largest U.S. package-shipping company, said earnings for the three months ending in February will be in a range of 50 cents to 70 cents a share, compared with the 84 cents estimated by analysts. Initial claims for joblessness benefits rose to 480,000 in the week ended Dec. 12, a report from the U.S. Labor Department showed, while economists had projected a decline to 465,000. The MSCI Asia Pacific Index has rallied 32 percent this year, outpacing gains of 21 percent by the S&P 500 and 25 percent for Europe’s Dow Jones Stoxx 600 Index . Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 15 times for the Stoxx. The London Metal Exchange Index of six metals including copper and zinc tumbled 2.2 percent yesterday, the most since Oct. 30. Gold futures for February delivery sank 2.5 percent. Banks should increase the quality of the capital they hold by the end of 2012 to cope with losses, the Basel Committee on Banking Supervision said in a report yesterday. Banks’ core capital should exclude stock or instruments that may require lenders to make payments to third parties, as these could reduce reserves needed for meeting losses, the committee said. To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Satoshi Kawano in Tokyo at skawano1@bloomberg.net .

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Distressed debt thrives

December 16, 2009

The market for distressed debt has staged a remarkable recovery, as money flows into these securities shunned not too long ago. Prices for the most- distressed debt have recovered the most; bonds rated triple C have returned more than …

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Factory Output in U.S. Expands More Than Estimated; Wholesale Prices Jump

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’ll continue to see growth in manufacturing output, given strong exports and that consumers are spending,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York, who forecast a production gain of 0.9 percent. “You’re seeing a decent amount of breadth in terms of the increases.” Stock futures were lower after the report and separate releases that showed higher producer prices and slower growth at New York-area factories. The contract on the Standard & Poor’s 500 Index was down 0.4 percent to 1,104 at 9:24 a.m. in New York. A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. New York Manufacturing Factories in the New York region expanded less than anticipated this month, figures from the Fed Bank of New York also showed. The bank’s general economic gauge, known as the Empire State Index , fell to a five-month low of 2.6 from 23.5 in November. Readings greater than zero signal expansion. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Warmer Weather Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding Auto Production Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Global Growth Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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Factory Output in U.S. Expands More Than Estimated; Wholesale Prices Jump

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’ll continue to see growth in manufacturing output, given strong exports and that consumers are spending,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York, who forecast a production gain of 0.9 percent. “You’re seeing a decent amount of breadth in terms of the increases.” Stock futures were lower after the report and separate releases that showed higher producer prices and slower growth at New York-area factories. The contract on the Standard & Poor’s 500 Index was down 0.4 percent to 1,104 at 9:24 a.m. in New York. A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. New York Manufacturing Factories in the New York region expanded less than anticipated this month, figures from the Fed Bank of New York also showed. The bank’s general economic gauge, known as the Empire State Index , fell to a five-month low of 2.6 from 23.5 in November. Readings greater than zero signal expansion. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Warmer Weather Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding Auto Production Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Global Growth Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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U.S. Industrial Output Rises Most in Three Months as Recovery Gains Speed

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’re seeing rising production to meet consumer demand and increased business spending,” said John Herrmann , chief economist at Herrmann Forecasting in Summit, New Jersey. “Businesses are beginning to incrementally increase their inventories, and that means ramping up production.” A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. Manufacturing Up 1.1% The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Automobile Sales Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. ‘Business Has Strengthened’ “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Meeting Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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U.A.E. Shares Advance the Most in a Year, Led by Emaar Property, DP World

December 14, 2009

By Vivian Salama Dec. 14 (Bloomberg) — United Arab Emirates shares surged the most in more than a year after the Abu Dhabi government provided $10 billion to Dubai to help pay debt, including the $4.1 billion needed for Nakheel PJSC’s bond maturing today. Emaar Properties PJSC , the country’s biggest developer, climbed 15 percent, the most permitted by exchange rules. Emirates NBD PJSC , the U.A.E.’s largest lender, added the most since October. DP World Ltd., the Middle East’s biggest ports operator and a unit of Dubai World, climbed to the highest this month. First Gulf Bank PJSC jumped the most since May 2005. The DFM General Index added 10 percent, the biggest intraday gain since October 2008, to 1,866.99 at 11:23 a.m. in the emirate. The measure had tumbled 19 percent since Dubai World on Nov. 25 sought a “standstill” agreement on its debt. The ADX General Index, in the neighboring sheikhdom of Abu Dhabi, rose 7.5 percent. “This is a shot in the arm for the U.A.E. markets,” said Ian Munro , an equity analyst at MAC Capital Advisors in Dubai. “There was some speculation yesterday that this would occur and now that it has, it should really provide the boost needed to take our markets into the new year.” ‘Tackling Concerns’ Abu Dhabi provided $10 billion to Dubai’s Financial Support Fund to help Dubai World, the state-owned holding company, meet its obligations, including Nakheel’s Islamic bond. Dubai will use the rest of the money to pay trade creditors and contractors as well as meet “interest expenses and company working capital through April 30, 2010 — conditioned on the company being successful in negotiating a standstill as previously announced,” the Dubai government said in an e-mailed statement today. Dubai World said Dec. 1 it’s seeking to restructure $26 billion of debt, less than half the $59 billion of liabilities it had at the end of 2008. Nakheel’s bond repayment was the biggest maturity for a Dubai entity since global credit markets froze after the September 2008 collapse of Lehman Brothers Holdings Inc. “This is terrific news,” said Rabih Sultani , a fund manager at Duet Mena Ltd. in Dubai. “The support covers the upcoming Nakheel maturity, it tackles most of Dubai’s longstanding concerns, including support to the banking system, outstanding trade and contractor dues, and most importantly, it confirms the one nation policy.” ‘Skeptical’ Dubai ruler Sheikh Mohammed bin Rashid Al-Maktoum said Nov. 9 that those who doubt the unity of Dubai and Abu Dhabi, which holds 8 percent of the world’s oil reserves, should “shut up.” Nakheel accumulated debt during a five-year real-estate boom in Dubai, when the sheikhdom borrowed $10 billion and its state-controlled companies $70 billion to help diversify the economy. Asian stocks and U.S. index futures rebounded from losses. The euro and the pound rallied. Global stocks tumbled following Dubai World’s announcement last month. “Markets tend to change moods fairly quickly, and while I think some damage has been done, a good thing may come from this,” said Marios Maratheftis , Dubai-based economist at Standard Chartered Bank. “Markets will be a bit more skeptical about implicit guarantees. That’s the way it should have been in the first place.” Emaar surged to 3.61 dirhams. Emirates NBD added 4.8 percent, the most since Oct. 25, to 3.29 dirhams. The lender is the biggest creditor to Dubai World with outstanding loans of $3 billion, the Financial Times reported on Dec. 3, citing a banker with knowledge of the debt. DP World , which said last month it is not involved it the restructuring of its parent company, soared 10 percent to 41.9 cents. First Gulf Bank, an Abu Dhabi-based lender owned by the emirate’s ruling family, also added 10 percent to 15.95 dirhams. Oman’s MSM30 Index rose 2.3 percent, Qatar’s benchmark climbed 2.8 percent, Bahrain’s measure advanced 1 percent and the Kuwait Stock Exchange Index increased 0.5 percent. To contact the reporter on this story: Vivian Salama in Dubai vsalama@bloomberg.net

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Lloyd Chapman: The Best Jobs Bill for 2010 Was Passed In 1953

December 11, 2009

56-Year-Old Could Slash National Unemployment Rate In 1953 Congress passed the Small Business Act. The law established the Small Business Administration (SBA) and a government wide goal to ensure that a “fair portion” of the total value of all federal contracts and subcontracts were awarded to small businesses. The 1953 Small Business Act also defined a small business as being “independently owned.” The Small Business Act was one of the first economic stimulus bills. It was also one of the most effective. In 1953 Congress realized most Americans work for small businesses, most of the Gross Domestic Product (GDP) came from small businesses and the overwhelming majority of new jobs came from small businesses. The original Small Business Act was a win-win for the federal government and for the American people. In 1953 Congress realized there was no better way to invest the taxpayers dollars than to reinvest them back into the small businesses that employ the majority of the taxpayers. Now lets flash forward 56-years and see how the Small Business Act is doing in 2009. Today Congress interprets the “fair portion” to be 23 percent. According to SBA Administrator Karen Mills that is around $150 billion a year. http://www.nytimes.com/2009/10/30/business/smallbusiness/30mills .html When you consider the fact that 99 percent of all U.S. firms are small businesses and that those firms are responsible for more than 97 percent of all net-new jobs, 23 percent seems a little low to me, but we’ll let that go for now. We have bigger problems to address. Since 2003, twenty-five federal investigations have found rampant fraud, blatant abuse and an intentional total lack of oversight over nearly every federal program originally established by the Small Business Act. The most widely investigated and publicized problem has been the diversion of federal small business contracts to Fortune 500 firms and thousands of large businesses around the world. In 2005, the SBA Office of Inspector General (OIG) released Report 5-15. It referred to the diversion of federal small business contracts to corporate giants as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” For the last five consecutive years the SBA OIG has continued to report the diversion of federal small business contracts to large businesses as the number one challenge facing the SBA. President Obama recognized the magnitude of the issue during his campaign, when he released the statement, “It is time to end the diversion of federal small business contracts to corporate giants.” To date he has failed to adopt any policy or legislation to honor that promise. http://www.barackobama.com/2008/02/26/the_american_small_business_le.php The most recent federal small business contracting data released by the Obama Administration indicated that the largest recipient of federal small business contracts was Textron. Textron is a Fortune 500 firm with 43,000 employees, which received over $775 million in government small business contracts. Other recipients of small business contracts included Xerox, Bechtel, Lockheed Martin, Boeing, Raytheon and Northrop Grumman. http://www.asbl.com/documents/20090806BechtelSB_DOE.pdf http://www.asbl.com/documents/20091202Xerox_Created_20091002.pdf The American Small Business League (ASBL) estimates that of the approximately $150 billion a year in federal contracts that should go to legitimate small businesses, less than $30 billion actually go to small businesses as a result of the rampant abuses. This projection is based on information provided by current and former federal officials, and from information obtained through a series of successful Freedom of Information Act (FOIA) lawsuits against the federal government. One of the most effective and efficient ways to cut record unemployment would be to simply clean up the rampant abuses in existing federal economic stimulus plans. It is absurd for President Obama and Congress to be considering a new jobs bill when over $400,000,000 a day in federal small business contracts are being diverted to large businesses. We already have a 56-year-old federal program that could redirect over $100 billion a year in existing federal infrastructure spending to the small business that create over 97 percent of all net new jobs. The simplest way for President Obama and Congress to stimulate the national economy and slash record unemployment is to end rampant fraud and abuse in one of America’s most efficient and effective economic stimulus programs, the Small Business Act of 1953.

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