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FOREX: Dollar Attempts a Weak Recovery on In-Line 1Q GDP Reading, Risk Trends Still the Critical Catalyst

by on April 29, 2011

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FOREX: Dollar Attempts a Weak Recovery on In-Line 1Q GDP Reading, Risk Trends Still the Critical Catalyst

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FOREX: Dollar Attempts a Weak Recovery on In-Line 1Q GDP Reading, Risk Trends Still the Critical Catalyst

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Financial Crisis Inquiry Commission Report Creeping Onto Best-Seller Lists

by on February 16, 2011

Good news for people who like the published findings of government inquiries! “The Financial Crisis Inquiry Report,” by the Financial Crisis Inquiry Commission, is something of a modest best-seller. And the chairman of the commission, Phil Angelides, is doing book signings . Dale Kasler of the Sacramento Bee has the good news : While it’s no threat to “The Girl with the Dragon Tattoo” mysteries, the book has climbed up several charts since its release in late January. The report, which documents the causes of the 2008 crash in the financial markets, is No. 10 on the New York Times’ list of best-selling nonfiction paperbacks, for instance. It’s also made lists compiled by the Washington Post and USA Today. It sounds pretty good to me that people are taking an interest in the commission’s findings. If you’d like some recommendations for further reading on the subject, I personally enjoyed Diary Of A Very Bad Year: Interviews With An Anonymous Hedge Fund Manager , 13 Bankers , and I.O.U.: Why Everyone Owes Everyone And No One Can Pay . Kasler reports that the commission’s report had an initial print run of 25,000 copies, which have sold well enough that its publisher, Public Affairs has “since run off another 5,000 copies.” It’s also available as a Kindle edition . To put this in perspective, it’s still lagging behind the all-time best selling government inquiry report, “The 9/11 Commission Report,” which “sold more than 1 million copies.” SPOILER ALERT: The financial crisis was “avoidable.” Also, Dumbledore dies. (By “Dumbledore,” I mean “the entire economy” and “most of the jobs.”) RELATED: ‘Financial Crisis Inquiry Report’ book is a best-seller [Sacramento Bee] PREVIOUSLY, on the HUFFINGTON POST: Financial Crisis Inquiry Commission’s 10 Major Findings [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Financial Crisis Inquiry Commission Report Creeping Onto Best-Seller Lists

Marc Althen Named President of Penske Logistics as Vincent Hartnett Announces Retirement

September 15, 2010

READING, PA–(Marketwire – September 15, 2010) –  Penske Logistics President Vincent Hartnett has announced his intention to retire in January 2011 after more than 38 years of service to the Penske organization. Penske Logistics is a wholly-owned subsidiary of Reading, Pa.-based Penske Truck Leasing.

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Marc Althen Named President of Penske Logistics as Vincent Hartnett Announces Retirement

September 15, 2010

READING, PA–(Marketwire – September 15, 2010) –  Penske Logistics President Vincent Hartnett has announced his intention to retire in January 2011 after more than 38 years of service to the Penske organization. Penske Logistics is a wholly-owned subsidiary of Reading, Pa.-based Penske Truck Leasing.

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Danny Schechter: Is the Depression Coming? Or Is It Here?

July 1, 2010

Lying and Spying: The Economy is Sinking, Confidence is Down Along With the Market. Is a Depression Coming? The FBI arrests 1,200 Americans for mortgage fraud in the largest crackdown of its kind in history. There is no media focus on the companies that securitized and insured their toxic loans. This white-collar crime sweep is, at best, a one-day story with most of the reports carried by local outlets. Clearly the FBI did not get the media punch it had hoped for. The issue of financial industry fraud did not even register on the media’s Richter scale. Two weeks later, the FBI tried again, this time with an ill-timed, years in the making bust of 11 alleged Russian spies accused, so it seems, of impersonating Americans with no sign that they carried out successful espionage missions. The story grew legs, in several senses, after it was discovered that one of the “spies” posted sexy pictures of herself on Facebook and other sites. Ooo la-la: Predictably, she has now become the story. No one knows what to think about the FBI’s motives in pumping up this cold war like drama. Their big spy-catch was questioned in both the US and Russia. Now watch for payback in the form of arrests of Americans in Moscow. Meanwhile, the financial “reform” bill may go down after the lobbyists persuaded, cajoled and paid off legislators to water it down, and defang it. If it passes, the Wall Street lobby is already working to insure any proposed regulations are as weak as can be. Did you know that firms such as Citigroup and Goldman Sachs could exploit loopholes until 2022 before withdrawing from “illiquid” funds such as private equity? The long gestation period is an example of the degree of compromise inserted into the package following months of lobbying on Capitol Hill by powerful banks, according to Bloomberg News. This is a scandal that has yet to be fully disclosed as Amped Status reported: A devastating report in the NY Times documents how Tim Geithner’s New York Fed worked tirelessly to make sure that AIG was forced to pay banks such as Goldman Sachs 100 percent on dubious contracts that might otherwise have been slashed or subjected to lawsuits. Geithner, of course, was promoted for his efforts to run the rest of the nation’s economy. The article is full of revelations that would be mind-numbing if we weren’t so used to reading about how taxpayers have been fleeced in the meltdown. At the same time, the economy is heading for a dive. Reports the Washington Post : The recession has directly hit more than half of the nation’s working adults, pushing them into unemployment, pay cuts, reduced hours at work or part-time jobs, according to a new Pew Research Center survey. The economic shock has jolted many Americans into a new, more austere reality, which is likely to have lasting consequences for an economy fueled mostly by consumer spending. More than six in 10 Americans say they have cut down on borrowing and spending, the survey found. The reason: Nearly half of the survey’s respondents say they are in worse financial shape as a result of the downturn, which destroyed 20 percent of Americans’ wealth. And who is going to fix it? The New York Times doubts that the private sector can or will: In cutting spending to rein in deficits, governments are effectively betting that the private sector can make up for lost stimulus spending — and the markets are skeptical. It’s worse than that. The markets have been turbulent and volatile. Explains the AP, “Investors have been so burned by the financial crisis of 2008-09 that they fear any hint of a slowdown means the economy will start tanking again.” The quarter, which ended June 30th, was at the lowest level in a year. Paul Farrell offers this analysis on Marketwatch: Tragically for future generations of Americans the guidance system of capitalism’s Invisible Hand has been replaced by the guiding hand of Wall Street: With no public conscience, no soul, no ethics, no moral values, nothing other than the addict’s obsession to get as rich as possible, fast as possible.” At the same time, the focus by governments on “austerity” in the name of containing deficits will bring enormous pain to working people but is unlikely to generate jobs or economic stability. Economist Paul Krugman — and others — fears the onset of a depression. Some like Mish’s Global Economic Trends analysis say it is already here, writing: “By the way, a depression is not coming, we are clearly in one, a deflationary one at that. Once again, those chanting hyperinflation all missed the boat by light-years. Various safety nets like food stamps, unemployment insurance, and of course people no longer paying their mortgage and living in their houses for free all mask over the depression.” But, whether its here or coming, the once unthinkable idea of a depression is being taken seriously as the Columbia Journalism Review observes, “What with Washington still unable to get its act together on a new round of stimulus spending, warnings about the consequences of inaction are taking on a much more serious tone, and the word “depression” is starting to creep into the coverage.” And what about international cooperation and regulation some hoped would emerge in this age of globalization? No one at the G20 even wanted to talk about that. The German Parliament killed a tough measure to ban naked short selling. The G 20 would not consider called for a global regime of needed regulations. “It’s the responsibility of government to make the world financial system less dangerous. Judging from the G20 summit this weekend, we are making no progress at all in that direction,” writes Economist Simon Johnson on Baseline Scenario. 

 No wonder consumer confidence is said to be “dipping.” “Americans, worried about jobs and the sluggish economic recovery, had another relapse in confidence, causing a widely watched barometer to tumble in June, reported AP. The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip slightly to 62.8.” So where are we? Nowhere at all! The next jobs report is already said to be bad. The Republicans blame Democrats and vice versa. Wall Street has shifted the blame away from them. Why aren’t people in the streets? No wonder it’s more fun to read about sexy Russian spies or even Sarah Palin spying on Russia from her front porch. News Dissector Danny Schechter directed Plunder The Crime of Our Time . You can read about his investigation of the crisis as a crime story on Plunderthecrimeofourtime.com. Comments to dissector@mediachannel.o rg

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Jim Randel: The Cutting Edge

June 15, 2010

THE CUTTING EDGE My company is trying to develop new and unique content for the print and digital book world. Our premise is that internet-age readers (basically all of us today) absorb, process and retain information differently than did prior readers (our parents). And so we find ourselves at what some might call “the cutting edge,” that spot where change takes place. Also that spot where enormous resistance comes with the territory. Back before I got into publishing, I was a real estate developer and investor. I was always trying to find new areas to invest in – locations that were not that well established but were due for some gentrification or other upward change. Sometimes I was right, sometimes wrong. And when I was wrong, the phrase “cutting edge” took on new meaning – OUCH! I know that I am right now. I know that digital media and the internet have changed the way that people interact with the printed word. I know that it is just a matter of time – BUT, it is sure painful (cutting) at times when people look at me with a blank stare and that “he must be nuts” look on their face. What gives me strength is the feedback we are receiving from readers of our Skinny book series. And from educators who have tried our books in their classroom. And from others who see “the writing on the wall” (pun intended) as to where the reading experience is headed. In that regard, I am just finishing an excellent new book titled, The Shallows , written by Nicholas Carr. Carr is a well-respected journalist and columnist who attracted a lot of attention in 2008 with an article he wrote for The Atlantic titled: “Is Google Making Us Stupid?” The Shallows is a detailed and comprehensive study of how certain technologies change the way people think… here are a few quotes as applies to my own particular quest: “As people’s minds become attuned to the crazy quilt of Web content, media companies have to adapt to the audience’s new expectations. Many producers are chopping up their products to fit the shorter attention spans of online consumers …When access to information is easy, we tend to favor the short, the sweet, and the bitty.” “Changes in reading style will also bring changes in writing style, as authors and their publishers adapt to readers’ new habits and expectations.” My company and others will struggle to create content that will be standard fare in a few short years. It’s just that for now, being at the cutting edge, can be a little dicey. Jim Randel is the Founder of The Skinny On™ book series. See www.theskinnyon.com .

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U.S. Stocks Drop on Report Lebanon Fired on Israeli Warplanes

June 1, 2010

By Elizabeth Stanton and Nikolaj Gammeltoft June 1 (Bloomberg) — U.S. stocks fell, adding to losses from the Dow Jones Industrial Average’s worst May since 1940, as BP Plc ’s failure to plug a leaking oil well dragged down energy producers and AFP reported Lebanon fired on Israeli warplanes. Transocean Ltd ., Anadarko Petroleum Corp . and Halliburton Co . fell more than 11 percent after BP gave up trying to plug the worst oil spill in U.S. history any sooner than August. Benchmark indexes erased earlier gains triggered by growth in construction spending and manufacturing after a senior Israeli security official told AFP that the nation’s aircraft were targeted by Lebanese anti-aircraft guns. The Standard & Poor’s 500 Index decreased 1.7 percent to 1,070.71 at 4 p.m. in New York. The S&P 500 lost 8.2 percent in May, its worst month since February 2009, on concern Europe’s debt crisis will hamper the global economic recovery and China will take more steps to cool its economy. The Dow lost 112.61 points, or 1.1 percent, to 10,024.02 today. “The nervousness about the global economic recovery continues,” said Giri Cherukuri , portfolio manager and head trader at Oakbrook Investments in Lisle, Illinois, which manages $2.2 billion. “Also, political tension across the world is making investors more cautious.” The S&P 500 has fallen 12 percent from a 19-month high on April 23 on concern that widening budget deficits in Europe could derail global growth. The five-week slide is consistent with a temporary pullback within a bull market, said Thomas J. Lee , the chief U.S. equity strategist at JPMorgan Chase & Co. ‘Pretty Normal’ “It is a pretty normal correction in a bull market,” Lee said today in a Bloomberg Television interview. “It pays up to be a slow buyer here. If you start to get enough positive headlines to offset the negatives, that would be a way to build confidence. Investors are seeing good opportunities to buy.” Stocks fell to the lowest levels of the day after AFP said Lebanon’s military fired at Israeli planes as they flew over its airspace, according to a senior Israeli security official. The report came a day after nine people were killed in an Israeli commando raid on boats carrying pro-Palestinian activists to the Gaza Strip. Israeli forces killed two Palestinians who tried to infiltrate from the enclave today and another three who tried to fire a rocket, according to an army statement. Energy companies extended losses after Attorney General Eric Holder said the U.S. Justice Department is investigating whether any criminal or civil laws were violated in the BP oil spill in the Gulf of Mexico. ‘A Tragedy’ “We will prosecute to the fullest extent of the law anyone who has violated the law,” Holder said. “This disaster is nothing less than a tragedy.” BP plunged 15 percent in New York, its largest retreat since at least 1980. Transocean , owner of the Deepwater Horizon rig that exploded April 20, declined 9.4 percent to $51.45. Halliburton, which provided oilfield services on the well, dropped 13 percent to $21.72. Anadarko Petroleum Corp. , which owns a 25 percent stake in the well, lost 16 percent to $43.99 for the biggest drop in the S&P 500. Tenet Healthcare Corp. fell 15 percent to $4.89 for the second-biggest drop in the S&P 500. The third-largest publicly held U.S. hospital chain said it is discussing a potential acquisition of Healthscope Ltd., the second-largest private hospital company in Australia. China, Europe Slowdown Concern that economic growth in China and Europe will slow also weighed on equities. China’s Purchasing Managers’ Index slid to 53.9 from 55.7 in April, the Federation of Logistics and Purchasing said today. That was less than the median 54.5 estimate in a Bloomberg News survey of 18 economists. Readings above 50 indicate expansion in manufacturing. China is the world’s biggest consumer of industrial metals including copper and zinc, and the second-biggest consumer of crude oil after the U.S. Emerging markets such as China are driving the global economy, which the Organization for Economic Cooperation and Development estimates will expand 4.6 percent this year. Excluding emerging countries, the forecast is 2.7 percent. The euro touched a four-year low against the U.S. dollar after the European Union’s statistics office said the jobless rate in the 16-nation currency zone increased to 10.1 percent in April, the highest since June 1998. The currency has lost 14 percent of its value against the dollar this year as the ability of countries such as Greece, Spain and Portugal to avoid debt restructuring has discouraged investment in the region. ISM, Construction Spending U.S. benchmark indexes temporarily recovered from their lows of the day after the Institute for Supply Management’s factory index came in at 59.7 for May, topping the reading of 59 in a Bloomberg survey of economists. Commerce Department figures showed construction spending rose 2.7 in April after a gain of 0.2 percent the prior month. That exceeded economists’ estimates that it would remain even. Manufacturing has been a leader in the U.S. economic recovery as demand from abroad strengthened and firms picked up production and spending to meet demand after a record drawdown in inventories last year. “The underpinning of the economic recovery in the U.S. and emerging markets appear to be sustainable despite what’s going on in Europe,” said Jason Pride , director of investment strategy at Glenmede in Philadelphia, which manages $18 billion. “This is not a crystal-clear resolution that we’ll have enduring growth, because the debt bogeyman can peak around the corner and surprise anyone at almost any time.” RadioShack rose 2.8 percent to $21.01 for the biggest advance in the S&P 500. The New York Post reported that Blackstone Group LP is a leading bidder for the electronics chain and said KKR & Co., Bain Capital LLC and TPG are also likely to be involved in the bidding. Hershey Co. increased 2.6 percent to $48. The candy maker said it may cut 500 to 600 jobs in a plan to modernize its manufacturing. Ev3 Inc. rallied 17 percent to $22.22 for the second- biggest advance in Russell 2000 Index. Covidien Plc, the medical-device company spun off from Tyco International Ltd., agreed to buy ev3 for $2.6 billion to add treatments for heart disease. To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net ; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net .

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U.S. Stocks Fluctuate as Economic Reports Offset Slump in Energy Producers

June 1, 2010

By Elizabeth Stanton June 1 (Bloomberg) — U.S. stocks fluctuated as higher- than-estimated growth in construction spending and manufacturing offset a drop in energy shares. Wal-Mart Stores Inc. and AT&T Inc. led gains in the Dow Jones Industrial Average as the 30-stock gauge rebounded from a 98-point drop in early trading. Transocean Ltd. and Halliburton Co. fell more than 9 percent to help lead losses in energy shares after BP Plc failed to halt the flow of oil from a leaking Gulf of Mexico well. RadioShack Corp. rose on a report naming several private-equity firms as bidders for the company. The Standard & Poor’s 500 Index decreased 0.2 percent to 1,086.82 at 2:01 p.m. in New York. The S&P 500 lost 8.2 percent in May, its worst month since February 2009, on concern Europe’s debt crisis will hamper the global economic recovery and China will take more steps to cool its economy. The Dow rose 23.2 points, or 0.2 percent, to 10,159.83 today. “The manufacturing sector is still showing some good growth despite the headlines from Europe and the perceived slowdown from China,” said Chris Hensen , part of a group that manages $3 billion of U.S. stocks at MFC Global Investment Management in Toronto. “If you get major selloffs on that I’d see it as an opportunity, because we’re getting down to valuation levels that are attractive.” ‘Normal Correction’ The S&P 500 has fallen 11 percent from a 19-month high on April 23 on concern that widening budget deficits in Europe could derail global growth. The five-week slide is consistent with a temporary pullback within a bull market, said Thomas J. Lee , the chief U.S. equity strategist at JPMorgan Chase & Co. “It is a pretty normal correction in a bull market,” Lee said today in a Bloomberg Television interview. “It pays up to be a slow buyer here. If you start to get enough positive headlines to offset the negatives, that would be a way to build confidence. Investors are seeing good opportunities to buy, and that could be as a sign of potential capitulation as well.” Early losses in stocks came after China’s Purchasing Managers’ Index slid to 53.9 from 55.7 in April, the Federation of Logistics and Purchasing said today. That was less than the median 54.5 estimate in a Bloomberg News survey of 18 economists. Readings above 50 indicate an expansion. China, the world’s third-largest economy, is the world’s biggest consumer of industrial metals including copper and zinc, and the second-biggest consumer of crude oil after the U.S. Emerging economies such as China are driving the global economy, which the Organization for Economic Cooperation and Development estimates will expand 4.6 percent this year. Excluding those economies, the forecast is 2.7 percent. Euro’s 4-Year Low Also damping demand for equities in early trading, the euro touched a four-year low against the U.S. dollar after the European Union’s statistics office said the jobless rate in the 16-nation currency zone increased to 10.1 percent in April, the highest since June 1998. The currency has lost 14 percent of its value against the dollar this year as the ability of countries such as Greece, Spain and Portugal to avoid debt restructuring has discouraged investment in the region. U.S. benchmark indexes reversed losses after the Institute for Supply Management’s factory index came in at 59.7 for May, topping the reading of 59 in a Bloomberg survey of economists. Commerce Department figures showed construction spending rose 2.7 in April after a gain of 0.2 percent the prior month. That exceeded economists’ estimates that it would remain even. Manufacturing has been a leader in the U.S. economic recovery as demand from abroad strengthened and firms picked up production and spending to meet demand after a record drawdown in inventories last year. Recovery ‘Sustainable’ “The underpinning of the economic recovery in the U.S. and emerging markets appear to be sustainable despite what’s going on in Europe,” said Jason Pride , director of investment strategy at Glenmede in Philadelphia, which manages $18 billion. “This is not a crystal-clear resolution that we’ll have enduring growth, because the debt bogeyman can peak around the corner and surprise anyone at almost any time.” BP Plc of the U.K. plunged 13 percent in London, the biggest drop since 1992, after a failed attempt to plug the leaking well in the Gulf of Mexico. Transocean , owner of the Deepwater Horizon rig that exploded April 20, beginning what has become the biggest-ever U.S. oil spill, declined 9.4 percent to $51.43. Halliburton, which provided oilfield services on the well, dropped 11 percent to $22.01. Anadarko Petroleum Corp. , which owns a 25 percent stake in the well, lost 14 percent to $44.76 for the second- biggest drop in the S&P 500. RadioShack rose 4.5 percent to $21.36 for the biggest advance in the S&P 500. The New York Post reported that Blackstone Group LP is a leading bidder for the electronics chain and said KKR & Co., Bain Capital LLC and TPG are also likely to be involved in the bidding. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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Asia’s Export-Led Recovery Exposes Risk of Europe Slowdown, Currency Gains

May 20, 2010

By Shamim Adam May 21 (Bloomberg) — Asia’s growth is accelerating as companies ship more cars, computers and commodities overseas, highlighting the role of exports in the region’s recovery and the risk of a slowdown should Europe’s debt crisis worsen. Trade accounted for more than half the 4.9 percent annualized growth in Japan’s gross domestic product in the first quarter. Taiwan’s economy grew 13.3 percent from a year earlier, the fastest in three decades, and Singapore expanded at a 38.6 percent annualized rate, reports showed yesterday. Asia’s rebound is outpacing the rest of the world as companies from Nissan Motor Co. to Taiwan Semiconductor Manufacturing Co. increase exports and domestic spending strengthens. The recovery may slow as Europe’s debt woes hurt consumer and business confidence in advanced economies, and a weaker euro makes Asian goods more expensive. “We should expect a moderation in exports because of the negative impact from Europe and the currency appreciation against the euro can really affect sales,” said Sebastien Barbe , head of emerging-market research for Credit Agricole CIB in Hong Kong. “Asian exports to Europe are likely to decelerate but those to the U.S. and emerging markets will remain resilient.” An escalation of Europe’s crisis forced the European Union and the International Monetary Fund to offer as much as 750 billion euros ($925 billion) to countries in danger of financial instability. Fiscal woes may push Europe into a “double-dip” recession while growth in advanced nations will be “anemic,” New York University professor Nouriel Roubini said May 12. ‘Downside Risks’ Singapore’s exports gained for six straight months through April, prompting the government to raise its 2010 overseas sales projection yesterday. Taiwan’s exports jumped 52.5 percent in the first quarter from a year earlier. Taiwan Semiconductor, the world’s largest custom chipmaker, plans a record $4.8 billion in capital expenditure and may hire 3,000 workers this year. The cargo business of China Airlines Ltd., Taiwan’s biggest airline company, almost tripled in the first quarter from a year earlier as it benefited from “robust export growth,” spokesman Bruce Chen said yesterday. At the same time, Asian officials warned of the possible repercussions from Europe’s turmoil. “Developments in recent weeks suggest that downside risks have intensified,” the Singapore trade ministry said. “There is heightened market anxiety over the possibility of a sovereign debt default in Europe. While policy makers in the EU have introduced timely and forceful interventions to reduce the downside risk in the near term, significant uncertainties remain beyond the immediate horizon.” Currency Gains The economy of Organization for Economic Cooperation and Development members will have “mediocre” growth in the next two years, Secretary General Angel Gurria said May 19. Its leading indicator index for Asia was little changed in March from February, while the reading for China fell, suggesting signs of stagnation in some economies, according to data released May 10. Asia’s developing nations are more reliant on overseas shipments than the rest of the world, with 60 percent of their sales abroad ultimately destined for the U.S., Europe and Japan, according to the Asian Development Bank. The 10 Asian currencies tracked by Bloomberg, including the South Korean won and the dollar-pegged Chinese yuan, have risen between 12 percent and 21 percent against the euro this year. The MSCI Asia Pacific Index of stocks dropped to an eight-month low yesterday and has lost about 10 percent this month. Japan’s Finance Minister Naoto Kan said the recovery in the world’s second-largest economy is still not self-sustaining. The first-quarter expansion was the fastest in three quarters. U.S. Consumers Besides turmoil in Europe, Asian economies also face the risk of a slowdown in demand from the U.S. and China. Sales at U.S. electronics and appliance stores dropped in April even as Americans snapped up 1 million Apple Inc.’s iPad that month. “U.S. retail sales, which registered a second consecutive month of falling electronics sales, were an important reminder that the U.S. consumer may not be relied upon as a lasting driver of Asia’s trade,” said Frederic Neumann , a Hong Kong- based economist at HSBC Holdings Plc. “Leading indicators for a whole range of OECD economies have started to turn, suggesting that growth may begin to slow sequentially.” China’s Shanghai Composite Index has dropped 22 percent this year on concern government efforts to cool property speculation will slow the world’s third-largest economy. Asset Bubbles China and Hong Kong accounted for 44 percent of Taiwan’s exports in April, compared with about 10 percent each for the U.S. and Europe. For Singapore, 21.4 percent of overseas shipments went to China and Hong Kong so far this year, compared with 13.8 percent for European nations. Growth may also slow as Asian central banks start to withdraw monetary stimulus to stem inflation and asset bubbles. China has ordered banks to set aside more reserves three times this year, the Reserve Bank of India increased interest rates twice, and Malaysia boosted borrowing costs in March and May. Among Southeast Asian nations, Singapore and Malaysia’s export-dependent economies will be worst hit by any slowdown in European growth and demand, economists at Morgan Stanley said in a May 10 report. To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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South Korea’s Exports Increase for Sixth Straight Month on Global Recovery

April 30, 2010

By Jungmin Hong and Eunkyung Seo May 1 (Bloomberg) — South Korea’s exports increased for a sixth consecutive month in April as a recovering global economy boosted demand for semiconductors and cars. Overseas shipments rose 31.5 percent from a year earlier to $39.88 billion, the Ministry of Knowledge Economy said in Gwacheon today. That compared with the median forecast of a 31.8 percent gain in a Bloomberg News survey of ten economists. Imports climbed 42.6 percent to $35.47 billion, leaving a trade surplus of $4.41 billion. Economies across Asia are reporting faster growth as the region leads the world out of the worst global recession since World War II. Samsung Electronics Co. , Asia’s biggest maker of semiconductors, flat screens and mobile phones, posted a seven- fold increase in profit for the first quarter and Hyundai Motor Co. boosted sales in the U.S. and China this year. “Both exports and imports will likely grow further as the global economy is gathering pace,” Kim Jae Eun , an economist at Hyundai Securities Co. in Seoul, said before the report. “It will lead to a strong start for the second quarter.” Overseas sales to China, the biggest buyer of South Korean goods, rose 50.4 percent in the first 20 days of April, today’s report showed. Shipments to the U.S. climbed 28.5 percent and those to Japan gained 32.4 percent over the same period. The World Bank forecasts China’s economy will expand 9.5 percent this year, with imports climbing 16.4 percent. The International Monetary Fund this month upgraded its global growth forecast for 2010 to 4.2 percent from 3.9 percent. Display Panels Shipments of semiconductors increased 97.9 percent last month and display-panel exports gained 38.4 percent, according to today’s report. Overseas sales of cars advanced 61.8 percent. South Korea, Asia’s fourth-largest buyer of crude oil, imported 1 percent less of the fuel in April from a year earlier, the ministry said today. Imports declined to 69.6 million barrels last month from 70.3 million barrels a year ago. Taiwan’s exports climbed in March for a fifth month, soaring 50.1 percent from a year earlier, as a pickup in global growth boosted demand for the island’s electronic goods. Malaysia’s shipments rose 18.4 percent in February from a year earlier after advancing 37 percent in the previous month, the most in more than 11 years. South Korea’s government forecasts exports will rise 13 percent this year to $410 billion, compared with a 14 percent decline in 2009. The nation’s trade surplus in the second quarter is expected to be bigger than the reading in the first three months of the year which was $3.3 billion, the ministry said today. Factory Output Industrial production in South Korea grew for a ninth straight month in March, jumping 22.1 percent from a year earlier, the statistics office said yesterday. That was more than the 19.8 percent median forecast in a Bloomberg News survey of 14 economists. Asia’s fourth-largest economy accelerated more than estimated last quarter as the global recovery spurred demand for electronics and consumer spending advanced, prompting the government to warn about speculative gains in the currency . As stronger growth pushed the won close to a 19-month high against the U.S. dollar, the Ministry of Strategy and Finance said on April 27 that investors have bet “excessively” on the currency’s rise. A strong won could hurt exporters. ‘Upward Pressure’ The government’s comments on the won put a brake on the currency’s appreciation. The currency, which has gained 15 percent in the past year, rose 2.1 percent in April. The Kospi stock index yesterday closed 0.8 percent higher at 1,741.56, advancing for the 12th straight week, the longest winning streak since June 2007. “Strong exports and foreign investors’ purchase of Korean stocks and bonds will likely add upward pressure on the won, which will likely prompt more government intervention,” Kim at Hyundai Securities said. The Bank of Korea kept the benchmark interest rate at a record-low 2 percent for a 14th straight month on April 9 as the government presses for low borrowing costs to spur the economy ahead of provincial elections in June. To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net Jungmin Hong in Seoul at jhong47@bloomberg.net

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BlackRock Wields ETF Weapon to Expand Share of $2.7 Trillion 401(k) Market

April 22, 2010

By Amy Feldman and Sree Vidya Bhaktavatsalam April 22 (Bloomberg) — BlackRock Inc. is seeking to grab a larger slice of the $2.7 trillion 401(k) retirement market by using its position as the world’s biggest manager of exchange- traded funds to win over small companies. BlackRock is going after retirement plans with $50 million or less that have been largely ignored by big providers such as Fidelity Investments and Vanguard Group Inc. Investors in 401(k) plans have bought more than $2 billion of BlackRock’s iShares ETFs since the New York-based company began its push last year, Darek Wojnar , head of iShares strategy and research, said in a telephone interview. “Because iShares is so big, they’re a bellwether of where things are headed,” said Teresa Epperson, a partner at Mercatus, a Boston-based financial consultant. “I think it’s inevitable.” Exchange-traded funds have struggled to break into the retirement market as Fidelity, the largest 401(k) provider, Vanguard, the fifth largest, and most other large administrators have shunned them, saying they aren’t appropriate for long-term retirement savers. BlackRock is seeking to appeal to smaller plans, which often pay more for investment products, according to Wojnar. The funds are baskets of individual securities that are structured as stocks and bought and sold on an exchange. ETF costs are generally less than investments available to smaller plans. BlackRock is the biggest ETF manager, with $509 billion in iShares assets, followed by Boston-based State Street Corp. at $205 billion. Level Playing Field “It might level the playing field between the big employers and the small sponsors,” said Lawrence Petrone, director of research at Boston-based Financial Research Corp., which studies the asset-management industry. Raylon Corp., a third-generation family business in Reading, Pennsylvania, which sells furniture and hair-styling products to salons, switched from a mutual-fund plan managed by AXA Equitable to one built around ETFs run by Portland, Oregon- based Invest n Retire , according to Chris Raszkiewicz, Raylon’s director of finance. Raylon, which has $2.3 million in retirement assets among 90 participants, was able to almost halve its expense rate to 1.18 percent, Raszkiewicz said. “The bigger companies get better pricing, but for someone like us, this was perfect,” he said. The average expense ratio for ETFs was 0.57 percent of assets in 2009, compared with 0.99 percent for index funds and 1.41 percent for actively managed U.S. stock mutual funds, data from Chicago-based Morningstar Inc . show. Market Will Grow “Lower fees could mean the difference between an OK retirement and a very nice retirement over the long term,” said Tom Lydon , president and chief executive officer of Global Trends Investments in Newport Beach, California. The 401(k) market is estimated to increase 41 percent to $3.7 trillion in assets by the end of 2014, according to Boston- based Cerulli Associates. Exchange-traded funds now account for between $5 billion and $10 billion of 401(k) assets, according to Petrone at Financial Research. He said BlackRock’s ETFs used in 401(k) plans and other retirement accounts could surpass $100 billion over the next decade. Assets in 401(k) plans may grow to about 20 percent of iShares’ net inflows in five years, or about $10 billion a year, BlackRock’s Wojnar said. Higher Costs Fidelity, Vanguard, T. Rowe Price Group and Charles Schwab Corp., which collectively administer more than $1.2 trillion in 401(k) plan assets, said trading costs are higher for ETFs, because investors have to pay broker commissions on every trade. Savers who contribute small amounts from their paychecks in weekly or biweekly increments can get hit hard by those costs, according to Stephen Utkus, director of the Vanguard Center for Retirement Research. Pegi Almond, a T. Rowe Price vice president who works with 401(k) plans for the Baltimore-based firm, said that ETFs aren’t appropriate for 401(k)s for the same reason. “We have not received much demand from plan sponsors to offer it,” according to Fidelity’s Beth McHugh, a vice president in the Boston-based company’s 401(k) unit. Fidelity, the largest 401(k) administrator with $706 billion in assets, allows savers to buy ETFs only in plans that permit individual brokerage trading, according to McHugh. Fidelity doesn’t track how many people buy ETFs that way. Schwab does the same thing, according to James McCool , an executive vice president for 401(k)s at the San Francisco-based company. ‘Apples-to-Oranges’ Vanguard, the third-largest seller of ETFs, uses them for taxable accounts only, and sticks with mutual funds for its 401(k)s, according to Utkus, of the Valley Forge, Pennsylvania- based company. ETFs generally aren’t taxed until sold while mutual funds distribute taxable capital gains. Vanguard’s fees are low enough that there’s no cost advantage to its ETFs, he said. The Vanguard Total Stock Market Fund charges 6 basis points for institutional shares. The equivalent Vanguard Total Stock Market ETF costs 7 basis points. A basis point equals 0.01 percentage point. “Mutual funds don’t have bid-ask spreads, and they don’t have brokerage commissions,” Utkus said. “It’s an apples-to- oranges comparison.” State Street declined to comment. Fidelity, Vanguard, T. Rowe and Schwab are 401(k) administrators that also sell investment products for the plans, which may give them an advantage, and fees are often bundled together for both services. BlackRock, which has $276 billion in retirement plan assets, isn’t in the plan administration business. Small Companies Smaller companies often retain insurance companies and third-party administrators to run their plans, said T. Rowe Price’s Almond. Insurers handle 53 percent of the country’s 401(k) plans, representing 25 percent of assets, according to Cerulli. Insurance companies with large 401(k) businesses include Great-West Life & Annuity Insurance Co., Prudential Financial Inc. and Principal Financial Group Inc., according to an April 5 ranking of 2009 data by Pensions & Investments magazine. Exchange-traded fund assets in the U.S. surged 67 percent to $750 billion in the year ended in February, according to data from the Investment Company Institute in Washington, as investors sought low-cost alternatives to active funds, which are composed of individual securities picked by portfolio managers. Mutual funds in the U.S. held $10.97 trillion as of February, according to the ICI. Bruce Lavine , president and chief operating officer of New York-based WisdomTree Investments Inc., an ETF provider backed by hedge-fund investor Michael Steinhardt , said his company has about $50 million in assets from 401(k) investors from about 25 plans. ‘Blown Away’ “One advantage of ETFs that’s overlooked by the people entrenched in the 401(k) business is that ETFs have blown away the offerings in the index mutual fund space,” said Lavine, whose firm manages about $7.3 billion in ETFs. WisdomTree’s Emerging Markets SmallCap Dividend Fund is available only as an ETF and not through an index mutual fund, according to Lavine. The WisdomTree ETF returned 71 percent in the past year, compared with a 67 percent return for the MSCI Emerging Markets Index , Bloomberg data show. Larger plans sponsors may start exploring ETFs for their employees to stay competitive, Lavine said. “A year ago there were questions about whether it would be adopted,” BlackRock’s Wojnar said of ETFs. “The questions today are, how quickly? And how widespread?” To contact the reporters on this story: Amy Feldman in New York at afeldman16@bloomberg.net . Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net ;

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SEC’s Greenberg Probes Muni Market `Egregious Conduct’ as Scrutiny Widens

March 25, 2010

By Martin Z. Braun March 25 (Bloomberg) — Elaine Greenberg , whose crackdown on regulatory abuses in the $2.8 trillion U.S. municipal bond market is the most ambitious since the 1990s, knows a public- debt scandal when she sees one. In more than 20 years at the Securities and Exchange Commission , Greenberg, 49, sued officials of Pennsylvania’s biggest non-profit hospital system for fraud and stripped the securities license from an underwriter who sold risky debt to school districts. Now she’ll direct the SEC’s attention to states and cities as part of a focus on the tax-exempt market by Chairman Mary Schapiro , 54. In her sights are possible bid-rigging for municipal-investment contracts by banks including JPMorgan Chase & Co . and Bank of America Corp ., public officials who hire advisers based on political contributions and local governments that fail to disclose their true financial condition. “There’s some very egregious conduct that goes on,” Greenberg said in an interview at the SEC’s Philadelphia office, where she’s an associate director. “The deterrent effect of cases the SEC brings in this area has the potential to be high.” Greenberg was tapped in January to head the SEC’s municipal securities and public pensions unit, one of five task forces created after the global credit crisis and the SEC’s failure to detect Bernard Madoff’s $65 billion Ponzi scheme. It comes as states and cities confront more than $1 trillion of budget and pension deficits, according to the Center on Budget and Policy Priorities and the Pew Center on the States , two Washington- based researchers. Municipal Digressions The new scrutiny also follows the collapse of the $330 billion auction-rate securities market that left governments and investors with debt they couldn’t trade, a sewer-bond default and bribery scandal in Alabama’s biggest county exposing corruption in derivatives sales to municipalities, and probes into public-pension investment practices in New York, California and New Mexico. Municipal securities enforcement “was terribly neglected in recent years,” said Arthur Levitt , SEC chairman from 1993 to 2001. “Fraud in the municipal market and incompetence, which in some ways is worse than fraud, has never been greater,” said Levitt, a director of Bloomberg LP, parent of Bloomberg News. Greenberg and her deputy, Mark Zehner , 50, a former tax- exempt bond lawyer involved in SEC municipal enforcement for 12 years, are recruiting ex-investment bankers, traders and pension specialists who can sniff out wrongdoing and new areas of risk. The size of the unit, staffed from SEC offices around the U.S., hasn’t been set. A job posting for a municipal securities specialist offers a salary of $126,661 to $198,333 a year. School for Enforcers “More resources means we can do more to police the municipal securities market,” said Greenberg, a graduate of Temple University and its law school, the alma mater of two SEC enforcement chiefs, William McLucas and Richard Walker . Greenberg is the ideal defender of investors’ interests in a market where 50,000 issuers sell more than $400 billion of securities a year, said Daniel Hawke , head of the SEC’s Philadelphia office. “She knows going in where she wants to end up,” Hawke, who was named in January to run the agency’s market-abuse unit, said in an e-mail. “When defense counsel seeks to chip away at penalty amounts, she will hold the line. She’s very tough.” Greenberg, a mother of three who commutes to Philadelphia from Bucks County, about 20 miles (32 kilometers) north, joined the SEC in October 1987, days after the Black Monday stock market crash in which the Dow Jones Industrial Average fell 22.6 percent, its biggest-ever percentage decline. First Assignment Her first municipal-bond assignment came a decade later, when she settled a case against Meridian Securities, a Reading, Pennsylvania-based dealer. The SEC said Meridian marked up prices of Treasury securities used by municipalities in Pennsylvania and West Virginia to refund older debt. Meridian consented to $3.7 million of penalties without admitting or denying wrongdoing. The practice of artificially lowering yields on Treasuries to a level permitted by U.S. rules on municipal-bond investments was known as yield burning. Greenberg’s bid-rigging inquiry, in which at least seven companies disclosed that they were subject to SEC suits, follows the late-1990s yield-burning probes where 21 financial firms paid $170 million of penalties. The SEC, Justice Department and Internal Revenue Service are looking into the possible manipulation of bids by brokers that allowed banks to pay municipalities below-market interest rates on the investment of proceeds of bond issues. The commission has informed companies including JPMorgan Chase, Bank of America, UBS AG, Wachovia Corp. and General Electric Capital Corp .’s Trinity Funding unit that it determined sufficient wrongdoing occurred to warrant civil charges. Core Group “When you look at the market participants in terms of the underwriting firms, the investment-banking firms, it’s really a core group that’s involved in the majority of these transactions,” said Greenberg, who declined to be more specific. The SEC is also enforcing a rule barring securities-firm executives from making political donations to win municipal business. It said March 18 that the so-called pay-to-play ban applies to corporate officers after it found an unidentified JPMorgan Chase vice chairman had raised funds for former California Treasurer Phil Angelides in 2002, less than two years before the bank’s securities unit underwrote $15.8 billion of state bonds. JPMorgan consented to the inquiry’s conclusions without admitting or denying wrongdoing, the agency said. Alabama Suits In November, two former JPMorgan Securities Inc. managing directors were sued by the SEC for alleged pay-to-play activity that allowed the New York-based bank to get $5 billion of bond and interest-rate-swap business from Jefferson County, Alabama. The transactions nearly bankrupted the state’s most populous county. Yesterday, the SEC said Southwest Securities Inc. , a Dallas-based broker, agreed to pay $470,000 to settle allegations it violated the pay-to-play rule when a one-time executive gave money to former Massachusetts Treasurer Timothy Cahill from 2003 to 2008. That was within two years of $14 billion of state bond sales co-underwritten by the firm, the SEC said. Southwest didn’t admit or deny wrongdoing. The municipal market, where 70 percent of the debt is held by individual investors, deserves regulatory attention , Greenberg said. Federal law exempts state and local issuers from the disclosure required of companies, putting public-bond holders at a disadvantage, she said. “When a municipality or a state or any local issuer goes out and seeks to raise money from investors across the country, it’s critical they adequately disclose their liabilities,” Greenberg said. Unwound Contracts States and localities have also turned to unregulated derivatives to lower borrowing costs and generate cash to close budget deficits. Many of the contracts had to be unwound at a cost of billions of dollars because the floating-rate debt they were hedging was affected when bond insurers lost their top credit ratings. “You combine difficult financial circumstances with some of these complex issues of valuations or assessing liabilities, and that contributes to our conclusion that this is an area worthy of specialized focus,” Robert Khuzami , the SEC’s director of enforcement, said in a telephone interview. Greenberg’s next municipal case after Meridian was an administrative proceeding in 2000 against the Allegheny Health Education and Research Foundation. The system of 14 Pennsylvania hospitals overstated income by more than $150 million, boosting risk for investors holding more than $900 million of debt. Fines Paid Two former Allegheny chief financial officers and an accountant at PricewaterhouseCoopers LLP agreed to pay a total of $105,000 in fines to settle the case without admitting or denying wrongdoing. In 2006, Greenberg oversaw a suit against Dolphin & Bradbury, a Pennsylvania investment bank that sold school districts risky short-term notes issued to finance a golf course. The notes defaulted, resulting in $11 million in losses. The firm’s securities registration was revoked and it, along with its chairman, Robert Bradbury , and his wife paid $5 million in fines. Bradbury, who agreed to be barred from the industry, pleaded guilty in a criminal case and was sentenced to a year and a day in prison. “You see what happened to Mr. Bradbury,” said Greenberg. “There’s no safe harbor out there by virtue of where you work.” To contact the reporters on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net

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Nokia Said to Unveil No New Phone at Mobile Event for First Time in Decade

February 11, 2010

By Diana ben-Aaron Feb. 11 (Bloomberg) — Nokia Oyj , the world’s largest mobile-phone maker, has ruled out showing new devices at the industry’s biggest annual gathering next week, the first time in at least a decade the company has done that, a person involved in the planning said. Nokia won’t have a stand at the Mobile World Congress in Barcelona. The Espoo, Finland-based company made a “strategic” decision not to unveil any new phones at the event, according to the person, who didn’t want to be identified because the plans are not public. The company’s low-key presence may disappoint those expecting to see Nokia’s newest devices to take on Samsung Electronics Co. and Apple Inc. It gives rivals the chance to dominate the show with touchscreen devices at lower prices. Technology blogs Fonehome.co.uk and Phonesreview have raised expectations by reporting that Nokia plans to show a new range of phones called the C Series at the event. “It would be a problem to have no introduction now because people want to see Nokia has something up its sleeve for summer,” said Tero Kuittinen , an analyst with MKM Partners in Greenwich, Connecticut, who has a “sell” rating on the stock. “Last year, they had a huge presence. The Nokia booth was like a spaceship.” Nokia will focus instead on announcements related to its services business, highlighting Chief Executive Officer Olli- Pekka Kallasvuo ’s effort to transition from a pure mobile phone maker to a company offering customers paid applications and media on its devices, the person said. Nokia spokesman Doug Dawson declined to comment. The company will hold offsite briefings during the event in Barcelona, Nokia says on its Web site. New Devices Nokia shares fell as much as 4 cents, or 0.4 percent, to 9.49 euros and were trading up 0.2 percent to 9.54 euros as of 2:17 p.m. in Helsinki. The company introduced six new devices at last year’s show including the E75 and E55 smartphones with push e-mail. It rolled out four devices at the Mobile World Congress in 2008 and four in 2007, including the E61i Qwerty smartphone and its first phone with navigation, the 6110 Navigator. The company “will undoubtedly unveil new devices” in Barcelona, Ben Wood , a London-based analyst with CCS Insight, wrote in a report on Feb. 5. In an interview yesterday, Wood said, “They need to get devices addressing the low-cost Qwerty and touch segment into the market as soon as possible. Samsung and LG in particular have stolen quite a march on Nokia in the $50-$150 bracket and if they leave gaps in the portfolio, their market share is vulnerable to a slow and steady decline. The longer they leave it, the more share they will cede.” Android Domination Products based on Android, the smartphone software from Google Inc., can be expected from Dell Inc., HTC Corp., Samsung Electronics Co. and Sony Ericsson Mobile Communications AB, he wrote in his report. “We expect Android to dominate this year’s events with a plethora of device announcements and more than 50 devices on the show floor,” Wood wrote. Nokia’s Symbian operating platform is losing ground to competitors, declining to 47.2 percent of smartphones last year from 52.4 percent in 2008, as Android, Research In Motion Ltd.’s BlackBerry, and Apple ’s iPhone gained, Reading, U.K.-based market researcher Canalys said. The company has said it plans major product announcements in the second half after completing a new version of Symbian. To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

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Treasuries Tumble After Record-Tying $25 Billion Auction of 10-Year Notes

February 10, 2010

By Susanne Walker and Cordell Eddings Feb. 10 (Bloomberg) — Treasuries tumbled after the U.S. sold a record-tying $25 billion of 10-year securities, the second of three note and bond auctions this week totaling $81 billion, and as investors weighed the prospects of European aid for Greece. The notes drew a yield of 3.692 percent, compared with the average forecast of 3.680 percent in a Bloomberg News survey of nine of the Federal Reserve’s 18 primary dealers. The bid-to- cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.67, compared with a 10- sale average of 2.76. Federal Reserve Chairman Ben S. Bernanke said policy makers may raise the discount rate “before long.” “The auction was weaker than others,” said Richard Bryant , senior vice president in fixed income at MF Global Inc. in New York, a broker of exchange-traded futures. “Treasuries were well bid as market participants tried to make sense of what was going on in Europe. Some of the fears didn’t come to fruition and as a result, there was room for yields to rise.” The yield on the current 10-year note climbed six basis points, or 0.06 percentage point, to 3.70 percent at 1:18 p.m. in New York, according to BGCantor Market Data. It rose as much as nine basis points yesterday, the most this year. Indirect bidders, an investor class that includes foreign central banks, bought 33.2 percent of the notes. They purchased 29 percent at the last sale of the securities on Jan. 13. The average for the past 10 auctions is 39.3 percent. Direct bidders, non-primary dealers that bid on their own accounts, bought 17.3 percent of the securities at the January sale, the most since May 2005. They purchased 13 percent at today’s sale. 3-, 30-Year Auctions At the last 10-year sale, a $21 billion offering, investors bid for 3 times the amount of securities offered. The securities drew a yield of 3.754 percent. Today’s offering followed a record-tying $40 billion sale of three-year notes yesterday. At that auction, investors bid for 2.83 times the available debt, compared with an average of 2.85 for the past 10 sales. The U.S. will sell $16 billion in 30-year bonds tomorrow. Chairman Ben S. Bernanke said in prepared testimony today the central bank may raise the discount rate charged on direct loans to commercial banks “before long” as part of the “normalization” of Fed lending, a move he said wouldn’t signal any change in outlook for monetary policy. Bernanke repeated the Federal Open Market Committee’s statement that low interest rates are warranted “for an extended period.” Fed Funds Replacement The Fed may also temporarily replace the federal funds rate as a policy guide with interest it pays on banks’ deposits should fed funds become a “less reliable indicator than usual,” Bernanke said. His remarks were prepared for the House Financial Services Committee hearing that was postponed because of snow. European Union leaders meeting in Brussels tomorrow will probably press Greece to present more detailed budget cuts and stop short of announcing an aid package for the debt-stricken nation, a German government official said. As officials in Berlin, Paris and Brussels thrashed out potential aid plans to add to political pressure, Greece faced street protests and strikes that shut down schools, hospitals and flights in response to government plans to freeze wages and cut benefits. Greek Yield Premium Greece Prime Minister George Papandreou ’s struggle to contain the EU’s largest budget deficit sent the yield premium for the country’s debt over German bunds last month to the highest since 1998. Retail sales rose 0.3 percent in January, after a 0.3 percent decline in December, a separate Bloomberg survey showed. The Commerce Department tentatively postponed the release of the retail sales report until Feb. 12. Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents. The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other EU nations signaled they may help support Greece’s government finances. To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net ; Cordell Eddings in New York at ceddings@bloomberg.net

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Dollar Optimism Rises to 15-Month High as Global Budget Woes Damp Outlook

February 10, 2010

By Daniel Kruger Feb. 10 (Bloomberg) — Investors are the most bullish on the U.S. dollar since November 2008 on concern that weakening government finances in European nations will hurt the global economic recovery, a survey of Bloomberg users showed. The world’s reserve currency will rise over the next six months, according to respondents in the Bloomberg Professional Global Confidence Index. Confidence about the outlook for the global economy among the 2,486 participants in the survey, taken before European Union officials said they may aid Greece yesterday, dropped from the highest level since the series began two years ago. The dollar rose last week to its strongest level against the euro since May as Greece struggled to convince investors the government can cut its deficit below the European Union’s ceiling of 3 percent of gross domestic product. Spain and Portugal are also trying to control widening deficits, prompting investors to drive the euro down 3.8 percent this year. The drop in the euro “shows you the magnitude and momentum of the fears associated with Greece,” said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago, and a survey participant. Sentiment toward the dollar reached 55.72 this month, from 53.11 in January and 42.42 in December, according to the survey. The measure is a diffusion index, meaning a reading above 50 indicates Bloomberg users expect the dollar to strengthen. The last time the reading was this high was November 2008, when it was 59.83. That was when the U.S. pledged to spend record amounts to bail out the financial system as credit markets froze. The Bloomberg Correlation-Weighted Index for the dollar rose as much as 10 percent the next four months. Euro Confidence Tumbles The fallout from the budget crisis in Greece has led German investors to become the most bearish on the 16-nation currency since November 2007, when Bloomberg began tracking survey data. Sentiment from German participants dropped to 37.5, while the readings for respondents in Spain declined to 25.19 and slid to 30 for those in France. European officials said yesterday they may assist Greece to prevent its budget deficit from eroding confidence in the euro. Options for Greece include bilateral aid or a package put together by a group of countries using the euro, said Michael Meister , financial affairs spokesman for German Chancellor Angela Merkel ’s Christian Democratic Union. “We are talking about support in the broad sense,” Olli Rehn, the EU’s economic affairs commissioner, said yesterday. Meister said that aid would come “under strict conditions and if the Greek government undertakes far-reaching state reforms.” Paradigm Shift Speculation that economic growth will lag behind the U.S. and that the region’s debt won’t fall to pre-financial crisis levels for at least five years also are weighing on the euro, as well as assets denominated in the currency. “There does seem to be a slight shift in the paradigm,” said Samarjit Shankar , a managing director for the foreign- exchange group in Boston at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration and a survey participant. “No longer is just risk aversion beneficial to the dollar. The dollar has its own set of drivers.” The Bloomberg Correlation-Weighted Index for the dollar has risen 6 percent from last year’s low on Nov. 25 as U.S. government reports showed the unemployment rate fell last month. Before the Dec. 4 payrolls report, the index fell about 21 percent from its peak last year in March as investors bought higher-yielding assets funded with dollars. Government Bond Yields “There are some good reasons to be confident about the dollar,” Busch said. “The economy’s coming back.” The U.S. economy will expand 2.7 percent in 2010, about twice as much as in the euro zone and Japan, according to the median forecasts in Bloomberg surveys of economists. The budget crisis in Greece has also bolstered the appeal of U.S. government debt. Yields on 10-year notes ended yesterday at 3.65 percent, down from the 4 percent high for the past year set in June. The prospect for an increase in 10-year Treasury note yields declined to 68.30 in February, from a peak of 76.65 a month earlier, the survey showed. Expectations for higher yields also declined in Germany, France and Spain last month. The index for German respondents dropped to 69.08 from 72.71. Pessimism fell to 66 from 72.08 among French participants, the least since October. In Spain, the measure slumped to 73.36 from 75.2, which was the highest since the surveys began. To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

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Global Confidence Declines on Concern Widening Deficits Will Hurt Rebound

February 10, 2010

By Shamim Adam and Timothy R. Homan Feb. 10 (Bloomberg) — Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents. The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances. Greece, Spain and Portugal are among European nations struggling to control widening budget deficits, prompting investors to dump the countries’ assets and question the sustainability of the recovery in the global economy. More than $4.5 trillion has been wiped from stocks worldwide since Jan. 14, while credit-default swaps have risen as investors seek protection against deteriorating European government finances. “The situation in Greece and other European economies shows us that the global deleveraging process is not over and governments cannot continue the pace of stimulus they’ve been undertaking,” said Venkatraman Anantha-Nageswaran , global chief investment officer at Julius Baer & Co., which manages about $142 billion in assets. “We see global confidence fluctuating from month to month as growth disappoints.” Group of Seven The survey of 2,486 Bloomberg users was done between Feb. 1 and Feb. 5. Since the previous survey, China unexpectedly raised reserve requirement ratios for lenders, the Group of Seven finance ministers pledged to continue economic stimulus measures and a report showed the U.S. economy expanded at the fastest pace in six years last quarter. “People aren’t concerned about the exit strategies from countries, they’re concerned about the total debt level,” said Chris Rupkey , chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York who participated in this month’s survey. “The global economy is a little bit more unsteady than it was a month ago.” The fallout from the budget crisis in Greece has led investors to become the most bullish on the U.S. dollar since November 2008. The dollar confidence index rose to 55.7 from 53.1 in January. Most survey respondents in Europe turned more pessimistic on the outlook for the euro, expecting it to weaken against its U.S. counterpart over the next six months. ‘Downside Risk’ “If people start worrying about a big developed economy as they did Greece, that could start to affect the global growth outlook,” said Nick Kounis , chief European economist at Fortis Bank Nederland NV in Amsterdam, and a regular survey participant. “Credit concerns have remained well-contained for the big countries. That suggests so far the global economic outlook is not seriously affected by this, although there are big problems about public finances and it remains a downside risk.” The confidence gauge for Western Europe fell to 49.8 from 55.5 last month, dropping below 50 for the first time since November. Greek Finance Minister George Papaconstantinou has struggled to convince investors that the government can push its deficit below the European Union’s ceiling of 3 percent of gross domestic product. Germany is considering assistance for Greece after the country’s deficit threatened the stability of financial markets, two lawmakers from Chancellor Angela Merkel ’s governing coalition said yesterday. The European Union is scheduled to hold a summit in Brussels tomorrow. Greek Tragedy “The officials need to give a clear indication that it’s not just about fire-fighting Greece but also putting forward a wider European bailout mechanism that is applicable to other countries that get into trouble,” said Fortis’s Kounis. “That could stem the confidence crisis and boost credibility.” A measure of U.S. participants’ confidence in the economy fell to 41.3 this month from 54.4 in January. More Americans unexpectedly filed first-time claims for unemployment insurance even as the jobless rate dropped in January, while Federal Reserve policy makers are attempting to gauge whether the economy is strong enough for them to withdraw unprecedented stimulus. “It’s a jobless recovery,” said Jonathan Basile , an economist at Credit Suisse Group AG in New York and a regular survey participant. “The U.S. economy is still going to expand, it’s just not going to expand as quickly as the fourth quarter. We’re a long way from acceptable levels of unemployment” of about 5 percent that the Fed is comfortable with, he said. Asia’s index fell to 70.8 in February from 79.8, while the confidence gauge for Japan dropped to 40.6 from 44.1. Japan’s government must heed the warning on soaring debt loads stemming from the turmoil in Greece and concerns about the credit quality of some European countries shouldn’t be regarded as “a burning house on the other side of the river,” Bank of Japan board member Seiji Nakamura said Feb. 4. Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. Survey participants in the U.S. and Europe remained confident short-term interest rates will rise in the next six months, the survey showed. To contact the reporters on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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U.S. Stock Futures Fluctuate on Prospects for Greece Rescue; Dell Advances

February 10, 2010

By Rita Nazareth Feb. 10 (Bloomberg) — U.S. stock-index futures fluctuated, a day after the Dow Jones Industrial Average rallied back above 10,000, as investors weighed the prospects of Germany bailing out Greece. Futures erased most of an earlier advance as a German official said no decision has been made yet on a Greek rescue. Sprint Nextel Corp. lost 4.9 percent as the third-largest U.S. wireless carrier reported sales that trailed analyst estimates, while Dean Foods Co. slumped after the nation’s biggest dairy processor forecast profit below projections. Dell Inc. , the world’s third-largest maker of personal computers, advanced as Bank of America Corp. analysts recommended the shares. Futures on the Standard & Poor’s 500 Index expiring in March added 0.1 percent to 1,067.6 at 8:25 a.m. in New York after earlier climbing as much as 0.6 percent. Dow futures climbed 0.2 percent to 10,067.7 while Nasdaq-100 Index futures added 0.2 percent to 1,755. “It’s going to continue to be pretty choppy,” Mark Bronzo , a money manager in Irvington, New York, at Security Global Investors, which oversees $22 billion, told Bloomberg Radio. “Domestically, the economy is very slowly getting better. That’s the good news. But, of course, we have the sovereign risk issues in Europe. And hopefully they won’t spread to other parts of the world. We’re going to remain in a choppy, volatile market.” Dow 10,000 U.S. stocks yesterday rallied, sending the Dow Jones Industrial Average back above 10,000, as prospects for a bailout of Greece eased concern that deteriorating government finances will derail the global economic recovery. The Dow increased 1.5 percent, the biggest gain since Nov. 9. Futures rose earlier after an official said German Finance Minister Wolfgang Schaeuble told lawmakers that options for helping Greece extended beyond loan guarantees. The lawmaker, who attended a briefing at the Parliament in Berlin today, spoke on condition of anonymity because the discussions were confidential. Federal Reserve Chairman Ben S. Bernanke ’s testimony on the central bank’s strategy to exit stimulus programs will be released at 10 a.m. in Washington. He was originally scheduled to speak before the House Financial Services Committee on “Unwinding Emergency Federal Liquidity Programs and Implications for Economic Recovery.” The hearing was postponed due to snow and hasn’t been rescheduled. More than 300 companies in the S&P 500 have reported fourth-quarter earnings since Jan. 11, and about 76 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. Sprint Nextel Corp., Dean Foods, Equinix Inc. and Omnicom Group Inc. are among companies announcing results today. Falling Confidence Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents. The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances. Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. To contact the reporter on this story: Rita Nazareth at rnazareth@bloomberg.net .

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Bank of America E-Mails Show Board Thought Lehman, Not Merrill, Was Target

February 5, 2010

By Linda Sandler Feb. 5 (Bloomberg) — When Bank of America Corp. ’s board met to approve the acquisition of an investment bank on Sept. 15, 2008, members thought they were going to buy Lehman Brothers Holdings Inc. , not Merrill Lynch & Co., according to New York Attorney General Andrew Cuomo . The bank bought Merrill after examining its books for just 25 hours, Cuomo claimed. Shareholders approved the deal on Dec. 5, 2008. The acquisition closed Jan. 1, 2009, after Merrill losses had increased by billions of dollars, a change the bank didn’t disclose before the shareholder vote, Cuomo said. “It’s the way we approved acquisitions that ticks me off the most!!!” director Chad Gifford later wrote in an e-mail about the last-minute switch, according to a securities-fraud complaint Cuomo filed yesterday in state court in New York. Lehman filed for bankruptcy on Sept. 15, 2008. Cuomo’s complaint was filed against Bank of America, former Chief Executive Officer Kenneth Lewis and ex-Chief Financial Officer Joe Price over their handling of the Merrill deal. E-mails and written notes that were gathered by Cuomo for his investigation of the matter show personal reactions of executives as they learned of Merrill’s rising losses, which reached $16 billion before taxes by December 2008. They also show Merrill kept Price informed of the losses as they grew, yet he resisted pressure from his lawyers to disclose them to shareholders. ‘Read and Weep’ “Read and weep,” Bank of America accounting officer Neil Cotty wrote Price on Nov. 4, 2008, when Merrill’s financial reporting unit forwarded preliminary October results with a loss of $6 billion. The merger documents had already gone out to shareholders. Five days later, the October loss was put at $7.5 billion before taxes. When Price asked in November for a review of whether the losses — then $5 billion after taxes — should be disclosed to shareholders, his general counsel Timothy Mayopoulos said they should. An e-mail from Eric Roth , a partner at the bank’s outside law firm, Wachtell, Lipton, Rosen & Katz, sought research within his firm on “the duty to disclose,” according to the lawsuit. Roth’s notes from a call with Wachtell Lipton partner Warren Stern say, “duty to bring to shareholders all info material to vote.” The firm told the bank it should disclose the losses, Cuomo claims. The law firm was “marginalized” after that by the bank, which chose not to disclose the losses, Cuomo claimed. Mayopoulos was later fired by Price and replaced by Brian Moynihan , who later became CEO, Cuomo said. ‘Fair Reading’ “We believe a fair reading of all the evidence does not support these charges,” Robert Stickler , a spokesman for the Charlotte, North Carolina-based bank, said yesterday in a phone interview. “The SEC had access to all of the evidence and concluded there was no basis to charge any individuals nor to file a charge of fraud.” Lawyers for Lewis and Price denied wrongdoing. Wachtell declined to comment in a statement. When Bank of America prepared to disclose more write-downs after the merger in a Jan. 16, 2009, release, Gifford and another director, Thomas May, swapped e-mails on the belated notice to shareholders, according to Cuomo’s filing. “Unfortunately it’s screw the shareholders!!” Gifford wrote. May wrote back, warning about potentially embarrassing e-mails: “No trail.” The ‘Downside’ Cotty warned Price in December e-mails that Merrill’s evaluation of its securities might be too optimistic, so there may be “downside” in its estimated results. Lewis by then was worried about his job, according to an e-mail from Federal Reserve Bank of Richmond Senior Vice President Mac Alfriend that is cited by Cuomo. Lewis “is worried about stockholder lawsuits; knows they did not do a good job of due diligence and the issues facing the company are finally hitting home and he is worried about his own job after cutting loose lots of very good people,” Alfriend wrote on Dec. 23. Lewis didn’t want to tell shareholders of the pending government bailout and asked Fed Chairman Ben Bernanke “whether he could use as a defense” that the government didn’t want him to disclose it, according to an e-mail from Bernanke. “I said no,” Bernanke responded to Lewis. The case is People of State of New York v. Bank of America, State Supreme Court (Manhattan). To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net .

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Pearl Jam, Jay-Z, Cohen CDs Mixed Passion, Provocation in 2009 U.S. CDs

December 22, 2009

By Douglas Lytle Dec. 23 (Bloomberg) — It was Jurassic City in my iPod this year. Time and again I slid past plucky parvenus such as Grizzly Bear, Animal Collective and Lady Gaga to get at songs by Pearl Jam , Phish, Nirvana and Leonard Cohen . Good pop is supposed to push forward relentlessly by offering fresh sounds. So what was I doing glomming onto artists who are ripe enough to be played on “golden oldies” stations? The new sounds I heard from Animal Collective’s “Merriweather Post Pavilion” were intriguing, yet never moved me in the way Nirvana’s “Live at Reading” caused me to annoy the neighbors with overly loud playings of “School” or listen to Pearl Jam’s “Backspacer” with the delight of a 17-year- old. The heart knows what it wants, and in 2009 I chose the sounds of performers who have honed their craft over long careers and are still producing exciting material. Here are some of my favorite U.S. releases. Album of the Year: Pearl Jam “Backspacer” (Monkeywrench/Universal) — “Got some/If you need it,” sings Eddie Vedder . The group does, in spades. From the opening thunder of the Who-like “Gonna See My Friend” to the gentle “The End,” we get 11 songs from a “grunge” band that has endured long after the era’s flannel shirts were returned to the second-hand store. If hard rock can sound relaxed, this is the sound of a band completely at home with itself in its 20th year, writing songs of yearning and angst that draw on rock’s back pages, including Thin Lizzy (“Johnny Guitar”) Tom Petty (“Amongst the Waves”) and, of course, the Seattle sound of the early 1990s (“Supersonic”). No revelation here, just good fun. Song of the Year: Jay-Z “D.O.A. (Death of Auto-Tune)” (Roc Nation/Atlantic) — This is one part love letter, one part slap-upside-the-head to an industry that’s steroiding music by using pitch control to fix the songs. That’s before the singers go out and lip-sync them to audiences paying $150 or more for premium seats sold through Internet rip-off brokers sanctioned by the same people who juiced the songs. It’s a provocative challenge to artists who look good but have little actual musical ability. Other Records of Note: Nirvana “Live at Reading” (Geffen) — I had already heard some of this 1992 performance over the years but was pleased to see the official release. I still doubt that Nirvana was as “fresh” as everyone thought the group was, when bands such as the Pixies, Husker Du and the Replacements were well ahead of their game. Still, to listen to this performance is to bear witness to a Zeitgeist in pop and a melding of minds between the band and its growing fan base. Kurt Cobain , fresh off an overdose, cuts holes in the songs with singing as savage as jagged fingernails piercing soft flesh. Yes Virginia, there’s a difference between Yowling and Howling. Kurt does both well. Leonard Cohen “Live in London” (Columbia) — I feel privileged to have seen Cohen live on his 2008 and 2009 world tour. It was the victory lap that he should have had years earlier when he was still a musician’s musician. This is song as grace, redemption, desire and eternity. Honorable Mentions: Phish “Joy,” Yeah Yeah Yeahs “It’s Blitz!,” Grizzly Bear “Veckatimest,” Them Crooked Vultures “Them Crooked Vultures,” Black Eyed Peas “The E.N.D.,” Wilco “Wilco (The Album),” Neko Case “Middle Cyclone,” Danger Mouse and Sparklehorse “Dark Night of the Soul.” ( Douglas Lytle writes for Bloomberg News. The opinions expressed are his own.) To contact the writer on the story: Douglas Lytle in Prague at dlytle@bloomberg.net .

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Stock Rally Stalls as U.S. Service Economy Shrinks; Treasury Bonds Decline

December 3, 2009

By Michael P. Regan Dec. 3 (Bloomberg) — A three-day rally in stocks stalled after American service industries unexpectedly shrank, while Treasuries fell as the U.S. said it will sell $74 billion of notes and bonds next week. Oil and the dollar fluctuated. The Standard & Poor’s 500 Index drifted between gains and losses, adding 0.1 percent to 1,110.41 at 2:05 p.m. in New York. The MSCI World Index of 23 developed markets added 0.3 percent after climbing 0.8 percent earlier. Treasuries fell for a third day, the longest losing streak in almost a month, sending the 10-year note’s yield up six basis points to 3.37 percent. An early advance in U.S. stocks was snuffed out after the Institute for Supply Management said its gauge of non- manufacturing businesses dropped to 48.7 last month, below economists’ estimates and the reading of 50 that indicates growth. “The ISM was certainly a surprising drop, so that would bring some pause,” said James Dunigan , chief investment officer at PNC Wealth Management in Philadelphia, which oversees $104 billion. “It won’t be a smooth path to a sustainable growth pattern, both domestically and globally.” Early gains came after the government said U.S. jobless claims last week were 457,000, about 5 percent less than economists estimated in a Bloomberg survey. The figures precede data tomorrow forecast to show the jobless rate held at 10.2 percent, the highest level in 26 years. The economy probably lost 125,000 jobs in November, the smallest drop since March 2008, after a 190,000 decrease the prior month, economists forecast in a survey. Bank of America’s Payback Plan Bank of America Corp. rallied 3.4 percent on plans to repay $45 billion in bailout funds. General Electric Co. added 1.3 percent in New York after Comcast Corp., the largest U.S. cable- television company, agreed to buy a majority stake in NBC Universal through a venture with GE that values the entertainment company at about $37 billion. Comcast’s Class A shares surged 6.4 percent. Europe’s Dow Jones Stoxx 600 Index slipped 0.2 percent. The European Central Bank announced today the first steps toward scaling back emergency lending. “We expect 2010 to mark the transition from a ‘hope’ driven to a ‘growth’ driven market phase,” Peter Oppenheimer , an equity strategist at Goldman Sachs Group Inc. in London, wrote in a research note. “Earnings will take over the baton,” he wrote. Oppenheimer predicts a 22 percent gain in European stocks by the end of next year. The MSCI AC Asia Pacific Index advanced 1.5 percent to a 15-month high. Mitsubishi Motors Corp. surged 13 percent in Tokyo, while PSA Peugeot Citroen , Europe’s second-biggest carmaker, slipped 2.7 percent in Paris after the companies started talks on forming a “strategic partnership.” Emerging Markets Gain The MSCI Emerging Markets Index advanced 0.8 percent, heading for the highest closing level since August 2008. Qatar’s DSM Index increased for a second day, rising 1.2 percent as concerns diminished that Dubai will default. Dubai World, the state-controlled investment company, is in talks with lenders to restructure $26 billion of debt, easing concern that a default would add to the $1.7 trillion in writedowns and losses reported by financial companies after the collapse of U.S. subprime mortgages froze credit markets. “We’ve made it past Dubai World,” said Philip Dow , the Minneapolis-based director of equity strategy at RBC Wealth Management, which oversees $112 billion. “That was a bolt from the blue that scared the hell out of everybody.” The euro advanced 0.3 percent against the dollar. European Central Bank President Jean-Claude Trichet indicated the terms of this month’s tender of 12 month funds may tighten over the next year. The Dollar Index, which gauges the U.S. currency against a basket of six major trading partners, slipped less than 0.1 percent after weakening as much as 0.5 percent and strengthening as much as 0.1 percent. Crude oil for January delivery added 30 cents, or 0.3 percent, to $76.83 a barrel after earlier slumping as much as 1.4 percent. Prices are up 71 percent this year. Futures have traded between $74.79 and $82 since Oct 15. To contact the reporter on this story: Michael P. Regan in New York at mregan12@bloomberg.net

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Stocks in U.S. Fluctuate as Concern About Economy Offsets Banks’ Advance

December 3, 2009

By Mary Childs Dec. 3 (Bloomberg) — U.S. stocks fluctuated as service industries unexpectedly shrank and the White House said the jobless rate may rise, offsetting gains in financials on Bank of America Corp.’s plan to pay back government bailout funds. American Express Co., Home Depot Inc. and Exxon Mobil Corp. helped lead declines after the Institute for Supply Management said its index of non-manufacturing businesses fell to 48.7 percent last month, below economists’ estimates and the reading of 50 that indicates growth. Bank of America, the nation’s biggest lender, rallied 3.3 percent on plans to pay back $45 billion in rescue funds. “It’s a fragile recovery,” said Mirko Mikelic , who helps manage $19 billion at Fifth Third Asset Management in Grand Rapids, Michigan. “All the jobs we lost at the beginning of this recession may not be recovered till 2012, 2013, so it’s going to be longer versus in the past.” The S&P 500 declined less than 0.1 percent to 1,109.06 at 10:35 a.m. in New York after climbing as much as 0.7 percent. The Dow Jones Industrial Average lost 16.7 points, or 0.2 percent, to 10,435.98. Stocks rose at the start of trading on Bank of America’s plan and after the number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest level in more than a year. Initial jobless claims declined by 5,000 to 457,000 in the week ended Nov. 28, the fewest since September 2008, a Labor Department report showed. Jobs Data The figures precede a government report tomorrow on November employment. The jobless rate probably held at 10.2 percent, the highest level in 26 years, economists in a survey forecast. The White House expects the jobless rate “might tick up” when the number is reported tomorrow, press secretary Robert Gibbs said. Shares of Bank of America climbed 3.3 percent to $16.17 as the nation’s largest lender said it will repay the Troubled Asset Relief Program using $26.2 billion of “excess liquidity” and $18.8 billion from the sale of securities. The firm plans to increase equity by $4 billion through asset sales and will issue $1.7 billion of restricted stock instead of year-end bonuses to some employees . Bank of America’s spokesman Robert Stickler said no decision has yet been made on who will replace Chief Executive Officer Kenneth D. Lewis , with both internal and external candidates under consideration. The firm’s plan to repay the bailout funds “removes the stigma we’ve had as a company,” Stickler said in an interview. “The less involvement financial institutions have with governments the better,” said John Haynes , a U.S. equity strategist at Rensburg Sheppards Plc in London. “Clearly Bank of America shareholders would agree.” Comcast and GE Comcast Corp., the largest U.S. cable-television company, added 5.8 percent to $15.80 after saying it will start a joint venture with General Electric Co.’s NBC Universal entertainment unit. The venture with NBC Universal is valued at about $37 billion. Comcast will merge cable channels worth $7.25 billion with the NBC Universal assets, valued at $30 billion, the companies said today in a statement. Comcast also will contribute $6.5 billion in cash. The cable operator will own 51 percent of the new entity. The S&P 500 rebounded 64 percent since March through yesterday, pushing valuations to about 22 times its companies’ reported operating earnings, the most expensive level since 2002. Analysts expect full-year earnings in the measure to drop 11 percent on average before rebounding 22 percent in 2010, estimates compiled by Bloomberg show. To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net .

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Fortune’s Stanley Bing: The Attack of the Killer Holiday E-Discounts

November 30, 2009

This news arrived via e-mail just this morning: Canon USA wants me to Wrap Up All My Holiday Shopping right now, and has many ways for me to save money. Lulu.com, which helps people make vanity books, has a Cyber-Monday Sale. Fantagraphic Books, which is a premiere publisher of comics for the intellectually robust, has a 30% off sale on all comix published in 2009. JetBlue Airways is offering a Great Trio Sale with airfares of $39/$69/$99. My experience with JetBlue sales is that I never qualify for them or am interested in where they are going. My last airfare between New York and San Francisco on JetBlue was more than $400. Apple is offering Great Pricing on Exclusive Accessories. They must be really great, because they sent me the e-mail twice. Amazon.com wants me to Give The Gift of Reading with their Kindle. Sur La Table, which has been contacting me almost daily since I bought four placemats a month ago, wants to offer me an entire 14-pice set of Wusthoff knives for only $119. With free shipping! That’s a good deal. Except I already have that set. Somebody else may need one, though. I’m not sure yet. Perhaps instead I should get the Supreme Joyful Tidings Gift Tower from Wolferman’s Bakery. I have no idea how I got on their e-mailing list, but they’ve been on my case for a while now. Nice tower. EBay has Hot Gifts for Stanley Bing for under $50, with Free Shipping also. Or I could Save 10% off everything at Ace Hardward today only! Cushman Fruit Company, whoever they are, wants me to know that it’s my Last Chance to Enjoy 25% off on selected gifts, with Free Standard Delivery on Others. Cushman’s spokeslogo seems to be a talking orange. Red Envelope’s 25% off sale has been extended another 24-hours. This has always appeared to me to be a sign of weakness, but perhaps it was because demand is so high? The Republic of Tea has holiday news. There are gifts under $15 plus a special holiday offer that I will learn about if I decide to open the e-mail. PayPal, which is owned by EBay and offers me a way to pay online without much hassle, wants to inform me that there are Cyber Deals from Wal-Mart, plus other holiday offers. The Museum of Modern Art wants me to shop their Holiday Gift Guide. Members get 20% off Today Only. And all of that before 7:30 AM Eastern Time. That seems like a lot to me. It’s not even counting the stuff I put an automatic Junk Mail label on, which now resides in my Deleted Files folder, unread. Perhaps I’d better check that now. I don’t want to miss all the opportunities now being offered to me by Walgreens.

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Case-Shiller September: Home Prices Rise For 4th Month In A Row

November 24, 2009

WASHINGTON — The summer’s trend of rising home prices is ebbing as the traditional home shopping season ends, two reports Tuesday showed. The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 0.3 percent to 144.96 in September, the fourth monthly increase in a row. The seasonally adjusted index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in April 2006. Another reading of home prices by the Federal Housing Finance Agency held steady from August to September. Analysts expect prices to dip again this winter as foreclosures increase and economic growth remains modest. The government said Tuesday that the economy grew at a 2.8 percent rate last quarter – less than originally estimated. And forecasts for the next several months are no better. Unemployment, meanwhile, could rise from the current 10.2 percent to as high as 11 percent next year. “As long as the unemployment rate stays elevated, you’re going to see pressure on the pace of foreclosures, which are going to find their way back onto the market, depressing prices,” said Dan Greenhaus, chief economic strategist with Miller Tabak & Co. Home prices are a key ingredient to rebuilding the economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth. Currently, roughly one in four homeowners are in that situation, according to First American CoreLogic. And a record 14 percent of homeowners with a mortgage are either behind on their payments or in foreclosure, data from the Mortgage Bankers Association showed. That will likely force many consumers to shorten their Christmas shopping lists. Americans’ confidence in the economy improved slightly in November from October, but shoppers are still gloomy, the Conference Board reported Tuesday. While home prices nationally are likely to keep rising through November, “we are very worried about the potential for a huge wave of supply next year, both from private sellers and banks,” wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. “Prices could easily reverse their recent gains.” Home prices rose in 11 major cities, with the strongest gains in San Francisco and Minneapolis, according to the Case Shiller report. That’s a shift from the summer, when price gains were more widespread. In July, for example, prices were up in 17 cities. Prices fell by the most in Las Vegas and Cleveland. Compared with a year earlier, the 20-city index was down 9.4 percent, the smallest year over year decline since January 2008. “With housing remaining an albatross around the economy’s neck, nothing would perk things up more than some increases in home prices,” wrote Joel Naroff, chief economist at Naroff Economic Advisors. “That seems to be happening.” The price reports came a day after the National Association of Realtors said home resales surged by more than 10 percent in October as buyers took advantage of a special tax credit for first-time owners. The Commerce Department on Wednesday will release new home sales data for October. Economists expect a 2 percent increase from September to an annualized rate of 410,000, according to Thomson Reuters. __ AP Economics Writer Jeannine Aversa contributed to this report.

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Kindle, Sony Electronic Readers May Get Biggest Payoff From Textbook Sale

November 20, 2009

By Joseph Galante Nov. 20 (Bloomberg) — As Sony Corp. ’s e-book devices vie with the Kindle to win over readers, the real showdown may come later: when a shift to electronic textbooks at schools threatens to eclipse the current market for the products. Sony and Amazon.com Inc. ’s Kindle are both expanding into the academic world. Students at Blyth Academy in Toronto do all their reading on Sony devices, and five U.S. universities are testing the Kindle. The days of students lugging around heavy textbooks may be numbered, said Sony executive Steve Haber . “The only ones upset about this are going to be chiropractors,” Haber, who oversees the digital reading unit, said this week in an interview. “It makes perfect sense to move to education.” Within five years, textbooks will be the biggest market for e-book devices, dwarfing sales to casual readers, predicts Sarah Epps , an analyst at Forrester Research Inc. in Cambridge, Massachusetts. Corning Inc. , which is developing glass screens for e-readers, expects textbooks to fuel about 80 percent of demand for those components by 2019. “Print will expire faster in the textbook world than in the trade book world,” Epps said. “The technical barriers will disappear and five years is enough for the content to catch up with demand. The potential is there.” Wave of Products The Kindle accounts for about 60 percent of the U.S. digital reader market, while Tokyo-based Sony has 35 percent, according to Forrester. Sales of digital reading devices will double next year to 6 million units, Forrester estimates. While the Kindle and Sony lead the field, Barnes & Noble Inc. has developed its own e- reader. And a wave of startups, including IRex Technologies BV and Plastic Logic Ltd. , aim to win customer loyalty while the market is still young. “When we talk to the folks in the industry, whether it’s at the university or publishing level, everybody thinks, ‘Yes, things could be a lot less expensive if delivered electronically,” said Ian Freed , a vice president at Amazon.com . “With textbook publishing there is an opportunity to make everything a lot more convenient at a lower cost.” Amazon.com , based in Seattle, fell 7 cents to $128.92 at 10:56 a.m. New York time in Nasdaq Stock Market trading. Sony declined 2.4 percent to 2,410 yen in Tokyo trading today. Textbook companies are open to the idea of electronic versions, in part because they could reduce sales of used textbooks. An electronic book can’t be transferred to another Kindle, so there’s no “used” version to worry about. “That’s a revenue stream publishers and authors are not participating in,” said Frank Lyman, executive vice president at CourseSmart LLC , an online marketplace started by five publishing companies to sell their textbooks. Twenty Percent E-textbooks accounted for about 3 percent of total U.S. college textbook spending during the current school semester, according to Student Monitor LLC in Ridgewood, New Jersey. Digital textbooks may reach 20 percent of total textbook sales in five years, CourseSmart’s Lyman said. McGraw-Hill Cos. started a digital learning service this year called Connect. The format lets it bundle more interactive learning tools with books, the company says. The transition to digital “can’t happen quickly enough,” said Rik Kranenburg , group president for higher education professional and international publishing at New York-based McGraw-Hill. “The books and digital products will merge and become much larger than the market for traditional content providers.” Blind Students E-readers face other challenges in the textbook market. The University of Wisconsin-Madison and Syracuse University said last week that they won’t recommend the Kindle for their schools unless Amazon.com makes it easier for blind students to use the product. Intel Corp. introduced a handheld device this month for $1,499 that reads printed text aloud. The market for digital textbooks goes beyond colleges. There are 68 million potential customers in the U.S. if you include primary and secondary schools, according to the National Center of Education Statistics . The shift also could be a boon for component makers, including Corning . “I see a lot of possibilities for electronic textbooks,” said Jill VanDewoestine, a program manager at the Corning, New York-based company . “The availability of color displays is really going to enable this whole new market.” For now, most e-readers are black and white. The Kindle DX model, which Amazon.com released in May, has a 9.7-inch screen and costs $489. IRex, based in Eindhoven, Netherlands, makes a device with an 8.1-inch screen for $399. Sony has multiple versions of its reader, including a touch-screen model, and Barnes & Noble unveiled a $259 reading device called the Nook last month. “The Millennials are very comfortable reading things online in a way their parents and grandparents are not,” said San Jose State University Professor Joel West, referring to the generation born in recent decades. “We will be seeing electronic textbooks become commonplace in the next 10 years.” To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

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Weekend Reading: Gold, Vegas, Sex, and Commercial Real Estate

November 8, 2009

Weekend Reading: Gold, Vegas, Sex, and Commercial Real Estate . By Paul Kedrosky · Sunday, November 8, 2009 ·. A few links from my weekly Weekend Reading column: Inside the Global Frenzy for Gold (NYT); Las Vegas construction nears …

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Stocks in U.S. Tumble the Most in Three Months on Manufacturing, Jobs Data

October 1, 2009

By Elizabeth Stanton Oct. 1 (Bloomberg) — U.S. stocks tumbled the most in a month as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast, spurring concern the seven-month rally in equities outpaced prospects for an economic recovery. JPMorgan Chase & Co., DuPont Co. and Bank of America Corp. led declines in 28 of 30 stocks in the Dow Jones Industrial Average . Microsoft Corp. retreated 3 percent as Goldman Sachs Group Inc. removed the shares from its “conviction buy” list. Benchmark indexes for European and Asian shares dropped, while the dollar strengthened against most major trading partners. The Standard & Poor’s 500 Index slid 2.1 percent to 1,034.52 at 3:29 p.m. in New York a day after capping its biggest back-to-back quarterly rally since 1975. The Dow sank 158.63 points, or 1.6 percent, to 9,553.65. Both gauges lost the most since Sept. 1. About 14 stocks fell for each that rose on the New York Stock Exchange, the broadest sell-off since July 2. “The market had gotten a little ahead of the economy,” said Wayne Wilbanks , chief investment officer at Wilbanks, Smith & Thomas in Norfolk, Virginia, which manages $1.3 billion. “For the month of October we are on alert for a correction driven by the acknowledgment of a weak economic recovery.” Benchmark indexes opened lower after the number of Americans filing first-time claims for unemployment benefits climbed by 17,000 to 551,000 last week. Stocks extended losses after the Institute for Supply Management said its manufacturing index dropped to 52.6 in September, lower than the reading of 54 projected by economists in a Bloomberg survey. Recovery Concern Rising unemployment and the waning effects of President Barack Obama’s $787 billion stimulus program will restrain a U.S. economic recovery next year, the International Monetary Fund predicted. The world’s largest economy is forecast to expand 1.5 percent next year, after contracting 2.7 percent in 2009, the IMF said today. In July, the Washington-based lender projected 0.8 percent growth for 2010. “The market has discounted something on the order of a 20 percent-plus gain in earnings for next year,” said Kevin Bannon , chief investment officer at Highmount Capital LLC in New York, which manages $1.3 billion. “Some of the more recent news is suddenly making people wonder whether, once we get through the current quarter, the recovery is going to have achieved lift-off stage and be self-sustaining.” Microsoft Slumps Microsoft fell 3 percent, the most since July, to $24.95. The world’s largest software company was removed from Goldman Sachs’s “conviction buy” list, which cited “some degree of risk to” first-quarter earnings. The bank retained a “buy” rating on the stock. FMC Corp., which provides lithium used in electric cars, declined 7.4 percent to $52.10. Credit Suisse Group AG downgraded Rockwood Holdings Inc., the world’s largest maker of metal-based chemicals, to “neutral” from “outperform” because of price cuts by Soc. Quimica y Minera de Chile SA, the world’s largest lithium producer. Rockwood lost 20 percent to $16.54. MetroPCS Communications Inc. sank 9 percent to $8.52. The Dallas-based pay-as-you-go wireless carrier was cut to “neutral” from “overweight” by JPMorgan Chase & Co., which cited “high penetration and heavy competition.” Comcast Corp. fell 6.9 percent to $15.72. The largest U.S. cable network is in talks with General Electric Co. to buy a stake in NBC Universal Inc., said three people with knowledge of the discussions. Negotiations for Comcast to buy about 50 percent of NBC Universal have been under way for at least two months and a deal would depend in part on Vivendi SA making a decision to sell its 20 percent holding, said one of the people, who declined to be identified because the talks are private. UAL Tumbles UAL Corp. tumbled 18 percent to $7.53. The parent of United Airlines, the third-largest U.S. airline, said it will sell at least 19 million shares of common stock and $175 million in convertible debt. United is the fourth major U.S. carrier to raise money this month, before the seasonal slowdown in air travel. Ford Motor Co. slumped 2.8 percent to $7.01. Auto manufacturers said U.S. sales slumped in September after the expiration of the government’s “cash for clunkers” incentive. General Motors Co.’s deliveries dropped 45 percent, Chrysler Group LLC’s slid 42 percent and Ford’s fell 5.1 percent. Honda Motor Co. and Nissan Motor Co. of Japan also reported declines in U.S. sales. U.S. stocks declined yesterday as an unexpected drop in a gauge of business activity spurred concern the economy is struggling to recover. The S&P 500, the benchmark gauge of U.S. stocks, climbed for a seventh straight month in September for its longest streak of gains in almost three years. Quarterly Rally The S&P 500 jumped almost 15 percent in the July-to- September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent surge in the first half of 1975. The Dow also rose 15 percent over the past three months and gained 29 percent since the end of March, its steepest two- quarter advance since 1986. The rally has pushed the S&P 500 up 53 percent from a 12- year low in March and sent its price-to- earnings valuations last month to the highest levels since 2004. The measure is valued at about 19.9 times its companies’ reported operating profits, according to weekly Bloomberg data. “With the substantial run-up we’ve seen since March, it is more difficult to find companies that are substantially undervalued,” said Matthew DiFilippo , director of research at Stewart Capital Advisors LLC in Indiana, Pennsylvania, which manages $1 billion. “But we still do find values out there,” he said, particularly in industrial, materials and health-care companies. Takeovers Pick Up Takeovers have escalated in recent weeks, with acquisitions by Xerox Corp., Abbot Laboratories and Baker Hughes Inc. Mergers and acquisitions involving U.S. companies totaled $50.8 billion in September, compared with $26.6 billion in August and $36.8 billion in July, based on Bloomberg data. “You continue to see a meaningful pickup in takeovers,” said David Katz , chief investment officer at Matrix Asset Advisors in New York, which manages $1.2 billion. “That’s a strong indication that companies perceive value and opportunity out there.” U.S. stocks may fall as much as 12 percent before resuming their rally, said Ralph Acampora , who retired from Knight Capital Group Inc. as one of Wall Street’s best-known technical analysts in 2007 and went back to work managing money this year at Geneva-based Altaira Wealth Management. “I don’t think the advance that started on March 9 is over yet,” Acampora said in a Bloomberg Radio interview yesterday. “I would not be surprised to see a pullback” of 8 percent to 12 percent, followed by an advance of 20 percent to 25 percent, he said. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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Stocks in U.S. Decline as Manufacturing, Jobless Data Fuel Growth Concerns

October 1, 2009

By Elizabeth Stanton Oct. 1 (Bloomberg) — U.S. stocks tumbled the most in a month as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast, spurring concern the seven-month rally in equities outpaced prospects for an economic recovery. Caterpillar Inc., Boeing Co. and DuPont Co. helped lead declines in 28 of 30 stocks in the Dow Jones Industrial Average . Microsoft Corp. retreated 3 percent as Goldman Sachs Group Inc. removed the shares from its “conviction buy” list. Benchmark indexes for European and Asian shares dropped, while the dollar strengthened against most major trading partners. The Standard & Poor’s 500 Index declined 1.8 percent to 1,038.32 at 12:44 p.m. in New York a day after completing its biggest back-to-back quarterly rally since 1975. The Dow average slipped 145.11 points, or 1.5 percent, to 9,567.17. About 10 stocks fell for each that rose on the New York Stock Exchange. “The market had gotten a little ahead of the economy,” said Wayne Wilbanks , chief investment officer at Wilbanks, Smith & Thomas in Norfolk, Virginia, which manages $1.3 billion. “For the month of October we are on alert for a correction driven by the acknowledgment of a weak economic recovery.” Benchmark indexes opened lower after the number of Americans filing first-time claims for unemployment benefits climbed by 17,000 to 551,000 last week. Stocks extended losses after the Institute for Supply Management said its manufacturing index dropped to 52.6 in September, lower than the reading of 54 projected by economists in a Bloomberg survey. Recovery Concern Rising unemployment and the waning effects of President Barack Obama’s $787 billion stimulus program will restrain a U.S. economic recovery next year, the International Monetary Fund predicted. The world’s largest economy is forecast to expand 1.5 percent next year, after contracting 2.7 percent in 2009, the IMF said today. In July, the Washington-based lender projected 0.8 percent growth for 2010. “The market has discounted something on the order of a 20 percent-plus gain in earnings for next year,” said Kevin Bannon , chief investment officer at Highmount Capital LLC in New York, which manages $1.3 billion. “Some of the more recent news is suddenly making people wonder whether, once we get through the current quarter, the recovery is going to have achieved lift-off stage and be self-sustaining.” Microsoft Slumps Microsoft fell 3 percent to $24.95. The world’s largest software company was removed from Goldman Sachs’s “conviction buy” list, which cited “some degree of risk to” first-quarter earnings. The bank retained a “buy” rating on the stock. FMC Corp., which provides lithium used in electric cars, declined 7.6 percent to $51.99 for the biggest drop in the S&P 500. Credit Suisse Group AG downgraded Rockwood Holdings Inc., the world’s largest maker of metal-based chemicals, to “neutral” from “outperform” because of price cuts by Soc. Quimica y Minera de Chile SA, the world’s largest lithium producer. Rockwood lost 17 percent to $17.09. MetroPCS Communications Inc. fell 6.9 percent to $8.71. The Dallas-based pay-as-you-go wireless carrier was cut to “neutral” from “overweight” by JPMorgan Chase & Co., which cited “high penetration and heavy competition.” Comcast Corp. fell 6.9 percent to $15.72. The largest U.S. cable network is in talks with General Electric Co. to buy a stake in NBC Universal Inc., said three people with knowledge of the discussions. Negotiations for Comcast to buy about 50 percent of NBC Universal have been under way for at least two months and a deal would depend in part on Vivendi SA making a decision to sell its 20 percent holding, said one of the people, who declined to be identified because the talks are private. UAL Tumbles UAL Corp. fell 14 percent to $7.92. The parent of United Airlines, the third-largest U.S. airline, said it will sell at least 19 million shares of common stock and $175 million in convertible debt. United is the fourth major U.S. carrier to raise money this month, before the seasonal slowdown in air travel. U.S. stocks declined yesterday as an unexpected drop in a gauge of business activity spurred concern the economy is struggling to recover. The S&P 500, the benchmark gauge of U.S. stocks, climbed for a seventh straight month in September for its longest streak of gains in almost three years. The S&P 500 jumped almost 15 percent in the July-to- September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent surge in the first half of 1975. The Dow also rose 15 percent over the past three months and gained 29 percent since the end of March, its steepest two- quarter advance since 1986. Valuations Climb The rally has pushed the S&P 500 up 54 percent from a 12- year low in March and sent its price-to- earnings valuations last month to the highest levels since 2004. The measure is valued at about 19.9 times its companies’ reported operating profits, according to weekly Bloomberg data. “With the substantial run-up we’ve seen since March, it is more difficult to find companies that are substantially undervalued,” said Matthew DiFilippo , director of research at Stewart Capital Advisors LLC in Indiana, Pennsylvania, which manages $1 billion. “But we still do find values out there,” he said, particularly in industrial, materials and health-care companies. Takeovers have escalated in recent weeks, with acquisitions by Xerox Corp., Abbot Laboratories and Baker Hughes Inc. Mergers and acquisitions involving U.S. companies totaled $50.8 billion in September, compared with $26.6 billion in August and $36.8 billion in July, based on Bloomberg data. “You continue to see a meaningful pickup in takeovers,” said David Katz , chief investment officer at Matrix Asset Advisors in New York, which manages $1.2 billion. “That’s a strong indication that companies perceive value and opportunity out there.” To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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Stocks in U.S. Decline as Manufacturing, Jobless Data Fuel Growth Concerns

October 1, 2009

By Elizabeth Stanton Oct. 1 (Bloomberg) — U.S. stocks tumbled the most in a month as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast, spurring concern the seven-month rally in equities outpaced prospects for an economic recovery. Caterpillar Inc., Boeing Co. and DuPont Co. helped lead declines in 28 of 30 stocks in the Dow Jones Industrial Average . Microsoft Corp. retreated 3 percent as Goldman Sachs Group Inc. removed the shares from its “conviction buy” list. Benchmark indexes for European and Asian shares dropped, while the dollar strengthened against most major trading partners. The Standard & Poor’s 500 Index declined 1.8 percent to 1,038.32 at 12:44 p.m. in New York a day after completing its biggest back-to-back quarterly rally since 1975. The Dow average slipped 145.11 points, or 1.5 percent, to 9,567.17. About 10 stocks fell for each that rose on the New York Stock Exchange. “The market had gotten a little ahead of the economy,” said Wayne Wilbanks , chief investment officer at Wilbanks, Smith & Thomas in Norfolk, Virginia, which manages $1.3 billion. “For the month of October we are on alert for a correction driven by the acknowledgment of a weak economic recovery.” Benchmark indexes opened lower after the number of Americans filing first-time claims for unemployment benefits climbed by 17,000 to 551,000 last week. Stocks extended losses after the Institute for Supply Management said its manufacturing index dropped to 52.6 in September, lower than the reading of 54 projected by economists in a Bloomberg survey. Recovery Concern Rising unemployment and the waning effects of President Barack Obama’s $787 billion stimulus program will restrain a U.S. economic recovery next year, the International Monetary Fund predicted. The world’s largest economy is forecast to expand 1.5 percent next year, after contracting 2.7 percent in 2009, the IMF said today. In July, the Washington-based lender projected 0.8 percent growth for 2010. “The market has discounted something on the order of a 20 percent-plus gain in earnings for next year,” said Kevin Bannon , chief investment officer at Highmount Capital LLC in New York, which manages $1.3 billion. “Some of the more recent news is suddenly making people wonder whether, once we get through the current quarter, the recovery is going to have achieved lift-off stage and be self-sustaining.” Microsoft Slumps Microsoft fell 3 percent to $24.95. The world’s largest software company was removed from Goldman Sachs’s “conviction buy” list, which cited “some degree of risk to” first-quarter earnings. The bank retained a “buy” rating on the stock. FMC Corp., which provides lithium used in electric cars, declined 7.6 percent to $51.99 for the biggest drop in the S&P 500. Credit Suisse Group AG downgraded Rockwood Holdings Inc., the world’s largest maker of metal-based chemicals, to “neutral” from “outperform” because of price cuts by Soc. Quimica y Minera de Chile SA, the world’s largest lithium producer. Rockwood lost 17 percent to $17.09. MetroPCS Communications Inc. fell 6.9 percent to $8.71. The Dallas-based pay-as-you-go wireless carrier was cut to “neutral” from “overweight” by JPMorgan Chase & Co., which cited “high penetration and heavy competition.” Comcast Corp. fell 6.9 percent to $15.72. The largest U.S. cable network is in talks with General Electric Co. to buy a stake in NBC Universal Inc., said three people with knowledge of the discussions. Negotiations for Comcast to buy about 50 percent of NBC Universal have been under way for at least two months and a deal would depend in part on Vivendi SA making a decision to sell its 20 percent holding, said one of the people, who declined to be identified because the talks are private. UAL Tumbles UAL Corp. fell 14 percent to $7.92. The parent of United Airlines, the third-largest U.S. airline, said it will sell at least 19 million shares of common stock and $175 million in convertible debt. United is the fourth major U.S. carrier to raise money this month, before the seasonal slowdown in air travel. U.S. stocks declined yesterday as an unexpected drop in a gauge of business activity spurred concern the economy is struggling to recover. The S&P 500, the benchmark gauge of U.S. stocks, climbed for a seventh straight month in September for its longest streak of gains in almost three years. The S&P 500 jumped almost 15 percent in the July-to- September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent surge in the first half of 1975. The Dow also rose 15 percent over the past three months and gained 29 percent since the end of March, its steepest two- quarter advance since 1986. Valuations Climb The rally has pushed the S&P 500 up 54 percent from a 12- year low in March and sent its price-to- earnings valuations last month to the highest levels since 2004. The measure is valued at about 19.9 times its companies’ reported operating profits, according to weekly Bloomberg data. “With the substantial run-up we’ve seen since March, it is more difficult to find companies that are substantially undervalued,” said Matthew DiFilippo , director of research at Stewart Capital Advisors LLC in Indiana, Pennsylvania, which manages $1 billion. “But we still do find values out there,” he said, particularly in industrial, materials and health-care companies. Takeovers have escalated in recent weeks, with acquisitions by Xerox Corp., Abbot Laboratories and Baker Hughes Inc. Mergers and acquisitions involving U.S. companies totaled $50.8 billion in September, compared with $26.6 billion in August and $36.8 billion in July, based on Bloomberg data. “You continue to see a meaningful pickup in takeovers,” said David Katz , chief investment officer at Matrix Asset Advisors in New York, which manages $1.2 billion. “That’s a strong indication that companies perceive value and opportunity out there.” To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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Business Activity in U.S. Improves More Than Estimated, ISM-Chicago Shows

August 31, 2009

By Courtney Schlisserman Aug. 31 (Bloomberg) — Business activity in the U.S. rose more than forecast in August, adding to signs the economy is improving. The Institute for Supply Management-Chicago Inc. said today its business barometer increased to 50, the highest level since September, from 43.4 in July. A reading of 50 is the dividing line between contraction and expansion. Automakers are likely to be at the epicenter of a rebound in manufacturing over coming months as assembly lines speed up after the government’s “cash-for-clunkers” plan left dealer lots bare. Increasing demand from overseas and a record reduction in inventories mean a pickup in factory orders and production may last for much of the rest of the year. “The manufacturing sector is sparking back to life,” Avery Shenfeld , chief economist at Canadian Imperial Bank of Commerce in Toronto, said before the report. “It’s not just cash-for-clunkers, auto plants were already scheduled to be coming back online and that creates additional demand for steel and parts.” Economists surveyed by Bloomberg News forecast the index would rise to 48, according to the median of 53 projections. Estimates ranged from 46 to 52.5. Early Reading Economists watch the Chicago index for an early reading on the outlook for overall U.S. manufacturing, which makes up about 12 percent of the economy. The Institute for Supply Management is scheduled to release its August factory report tomorrow. According to a Bloomberg survey, that measure will show expansion for the first time since January 2008. Other reports this month also showed manufacturing improving. The Federal Reserve Bank of Philadelphia ’s economic index expanded this month for the first time since September, and the New York Fed’s barometer gained for the first time since April 2008. The Chicago report’s orders gauge climbed to 52.5, the highest level in a year, from 48 in July and the production index rose to 52.9 from 43.3. The employment index increased to 38.7 from 35.3. A measure of prices paid for raw materials jumped to 50 from 35, while a gauge of delivery times increased to 54.6 from 49.6. Factories at General Motors Co. and Chrysler Group LLC are resuming production after exiting bankruptcy proceedings. Also, plants have boosted output to meet demand from the government’s “cash-for-clunkers” trade-in program, which ended Aug. 24. ‘Clunkers’ The plan offered auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The program produced almost 700,000 auto sales before it ended, the Transportation Department said Aug. 26. Whirlpool Corp. is among manufacturers continuing to cut payrolls. The world’s largest appliance maker said Aug. 28 it will close its Evansville, Indiana, plant, resulting in the elimination of 1,100 jobs. The job cuts will occur next year and some of the production from the facility will be moved to an existing factory in Mexico. Smaller inventories will contribute to a rebound in output as orders rise to restock shelves. Inventories dropped at a record $159.2 billion annual rate in the second quarter, the Commerce Department said last week. They dropped at a $113.9 billion in the first three months of the year. Companies are cautious about any recovery. Boeing Co. executives said Aug. 27 they wouldn’t be able to give a forecast for 2010 until January. “I fully expect the pressures of the current economic climate to remain with us for some time to come,” Chief Executive Officer Jim McNerney said in an employee newsletter, adding that he wasn’t seeing many signs of a quick recovery. “That’s going to mean another tight year for us in 2010.” To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net .

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Obama May Give Up Effort to Reach Health-Care Agreement With Republicans

August 21, 2009

By Edwin Chen Aug. 21 (Bloomberg) — President Barack Obama is likely next month to end Democratic efforts to work with Republicans on health-care legislation and push for a party-line vote if the stalemate in the U.S. Senate persists, a person close to the White House said. The president and his advisers have begun devising a legislative strategy to pass a measure by relying only on the Democratic majority in each house of Congress, said the person, who spoke on condition of anonymity. In a separate interview, former Senate Majority Leader Tom Daschle said Obama is losing patience with negotiations between three Democrats and three Republicans on the Senate Finance Committee, the only congressional panel seeking a bipartisan consensus on a plan to remake the nation’s health-care system. “He’s waited and waited,” Daschle said today after meeting with the president. “He has indicated, much to the chagrin of people in his party, that virtually everything’s on the table,” Daschle said. “And he’s gotten almost nothing in return for it.” A move by Democrats to seek a partisan bill may provoke a backlash from Republicans and weaken public support for the health-care overhaul, Obama’s top domestic priority. It might also result in watered-down legislation. Former Senate Republican Leader Bob Dole told reporters earlier this summer that while he believed the Democrats could pass a bill on a party-line vote, it would be a mistake. “If there’s not a Senate Republican vote for the package, then the American people are going to be very skeptical,” Dole said. Pressing for Legislation Obama, who declared yesterday “we’re going to get this done one way or another,” is pressing the lawmakers to revamp a health-care system that accounts for about a sixth of the nation’s economy and leaves about 46 million people uninsured. The effort has been stalled by debates over whether to create a government-run insurance program to compete with private insurers, mandate that employers cover workers, and impose potentially unpopular new taxes, from a surtax on the richest Americans to a levy on the most-generous health plans. While three House committees and one Senate panel have passed legislation, talks among the so-called Gang of Six negotiators on the Senate Finance Committee have dragged on for months. Senate Democrats such as Charles Schumer of New York have said that if the negotiators can’t strike a deal by Sept. 15, the party may go it alone. Holding Out Hope Daschle, who was Obama’s first choice to lead the health- care overhaul drive, said the president continues to hope that Republican Senators Charles Grassley of Iowa, Mike Enzi of Wyoming and Olympia Snowe of Maine will support his agenda, as a result of their talks with finance panel chairman Max Baucus , a Montana Democrat. Yet Daschle said, “there’s a realization that we have to be prepared for a Plan B” — a legislative maneuver known as reconciliation. That process allows the Senate to pass, by a simple 51-vote majority instead of 60, measures intended to cut the deficit, either through spending cuts or tax increases. While the Democrats control 60 seats in the Senate, enough to quash Republican efforts to block action on the bill, they can’t rely on all those votes because of the illnesses of two lawmakers, Senator Edward Kennedy of Massachusetts, and Robert Byrd of West Virginia. Reconciliation is complicated, though “it’s not without precedent,” Daschle said. He said both across-the-board tax cuts during President George W. Bush ’s first term were enacted through the process. Feeling Left Out The other finance committee negotiators are Democrats Kent Conrad of North Dakota and Jeff Bingaman of New Mexico. Annoyance has grown among some senators who feel excluded. One lawmaker, John D. Rockefeller IV of West Virginia, has publicly criticized the Baucus-led talks. “There are 94 other senators that probably want to be involved in this process,” Daschle said. He said while Obama hasn’t made a firm decision to abandon a bipartisan approach, “it’s important to put policy ahead of process. And at some point he has to make that decision.” Two top White House advisers in mid-July telegraphed the possibility of a partisan strategy, saying in interviews that near-unanimous resistance from Republicans may force Obama to push the legislation through. Rahm Emanuel , White House chief of staff, said reconciliation wasn’t the president’s preferred route, yet was “an alternative vehicle.” David Axelrod , the president’s top political strategist, reinforced that view. ‘Swiss Cheese’ Conrad, who as chairman of the Senate Budget Committee, would oversee attempts to use reconciliation, has criticized the idea. Senate procedures would require the measure be stripped of anything not related to the budget, and the timeframe for the legislation to become deficit-neutral would be five years, instead of the 10 years that lawmakers are currently using. “You’ll be left with Swiss cheese for legislation,” Conrad said in an Aug. 3 interview with PBS’s Charlie Rose . “Those who say blithely, ‘we’ll just go for reconciliation,’ I don’t think they’ve done their homework.” Democrats would also be forced to take complete ownership of the plan and might face retaliation from Republicans. Under Senate rules, Republicans could tie the chamber in knots by demanding procedures such as the reading of 1,000-page bills before they are brought to the floor, slowing Senate business. To contact the reporters on this story: Edwin Chen in Washington at echen32@bloomberg.net . Hans Nichols in Washington at Hnichols2@bloomberg.net

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Lisa Earle McLeod: Support Doesn’t Always Mean Saying You’re Wonderful

August 12, 2009

Who’s got your back? Do you have people in your life that you can count on to support you, no matter what? Sometimes it all depends on how you interpret the word “support.” We all need people who will be there for us in our darkest hours. People who will drop everything to come hold our hand in the hospital as we await news about a sick parent, spouse or child. And who doesn’t want to have someone in their life who will stick up for you if others try to take you down? But how many people do you have in your life who will tell you the truth? You know, the kind of people who will be candid with you, and who care enough about your success to give you real honest feedback, even when you’re messing up. We might like to believe that success comes from within; after all, we’re the country of the Lone Ranger. But more often than not, super successful people usually have a close intimate circle of what Keith Ferrazzi calls “lifeline relationships” – deep, close relationships based on mutual generosity, vulnerability, candor and accountability. (Yes, candor, you know that thing where people tell you what they really think.) Your mother may be generous to a fault, your preacher or shrink may encourage you to get comfortable with your vulnerabilities and your spouse may be bitingly candid and hold you singularly accountable for everything. But Ferrazzi suggests that a true lifeline relationship – one designed to catapult your personal or professional growth – possess all four qualities: generosity, candor, vulnerability and accountability. Because it doesn’t matter whether you’re trying to lose weight or climb the ranks of corporate America, the difference between success and failure is often determined by the amount of support you get. And while we may like to think of support in terms of praise and validation; if you really want to get better at something, you can’t just surround yourself with people who only feed you compliments. For example, if your mother keeps telling you that your jelly belly makes you more cuddly as she pulls another batch of cookies out of the oven, or your employees continually fawn over your brilliance as they line up for their bonuses, chances are, you’re not going to get thinner or become a better leader. (Are your reading this Mr. CEO?) In “Who’s Got Your Back,” Ferrazzi suggests that becoming a winner in any field of endeavor – be it overcoming bad habits or creating world peace – requires a trusted team of advisers who can offer guidance and hold you accountable for achieving your goals. Ferrazzi defines these deep, trusting lifeline relationships as “someone who will never let you fail.” If you’re shooting for the moon (or the corner office) you’d be well served to create a team of at least three people who are willing to offer encouragement, feedback and generous mutual support. Three people are enough, Ferrazzi says, to dramatically change your life. Think about it. How might your last boss have behaved if he or she had a trusted friend they could count on to be candid about their leadership skills? How might your parents have benefited from getting expert, unfiltered feedback on their parenting skills? (What parent couldn’t benefit from good coaching? ) And where might you be, if you had a team of knowledgeable advisers holding you accountable for accomplishing what you really want to do with your life? Life is too short to go it alone. Everybody needs someone to cover their back. Who has yours? Lisa Earle McLeod is a syndicated columnist, author, and inspirational thought-leader. A popular keynote speaker, she is an expert in in why seemingly normal people make each other crazy. Her newest book, The Triangle of Truth: The Surprisingly Simple Secret to Resolving Conflicts Large and Small is slated for release January 5, 2010 from Penguin Putnam. Visit her site www.TriangleofTruth.com

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Confidence in Global Economy Jumps on Signs Recession Is Approaching End

August 12, 2009

By Shamim Adam Aug. 12 (Bloomberg) — Confidence in the world economy surged to a 22-month high in August on signs the worst global recession since World War II is coming to an end, a Bloomberg survey of users on six continents showed. The Bloomberg Professional Global Confidence Index jumped to 58.12 this month from 39.13 in July. It is the first time the reading exceeded 50, which means optimists outnumber pessimists. A measure of U.S. participants’ confidence in the world’s largest economy rose to 47.3 from 29.5, the survey showed. “It’s clear the recession is over and some kind of recovery is underway,” said Nick Kounis , chief European economist at Fortis Bank Nederland Holding NV in Amsterdam, and a regular survey participant. “We have the biggest monetary and fiscal stimulus policy in history, globally, and we’re starting to see it work. Probably the next debate will be about how strong and sustainable the recovery is.” The MSCI World Index has increased 12 percent in the past month and President Barack Obama said last week’s unexpected drop in the U.S. unemployment rate indicates the worst may be over. Nobel Prize-winner Paul Krugman said Aug. 10 that the world, now in a “rough stabilization” mode, has averted another Great Depression. The survey of more than 2,300 Bloomberg users was conducted between Aug. 3 and Aug. 7. Since the previous survey, the U.S. jobless rate declined, second-quarter growth in the U.S. and China was better than expected, and the European Central Bank held interest rates at a record low. Jobless Rate U.S. payrolls fell by 247,000 in July, after a 443,000 loss in June. The jobless rate unexpectedly dropped to 9.4 percent from 9.5 percent. The Standard & Poor’s 500 Index closed above 1,000 for the first time since November last week. The U.S. economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median forecast in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003. In Europe, a recession is also showing signs of bottoming out. ECB President Jean-Claude Trichet said on Aug. 6 that the euro-region economy will show a “gradual recovery” followed by a return to growth in 2010. The gauge for Western Europe rose to 41.1 from 31. Manufacturing and service industries in Europe contracted at a slower pace in July and business confidence in Germany, its largest economy, rose for a fourth month. Linde AG , the world’s second-largest maker of industrial gases, forecast business to pick up in the second half of 2009 from the previous six months, it said Aug. 3. ‘Much Faster’ “Government and central bank measures are starting to show an impact,” said Peter Leonhardt , an analyst at Dekabank in Frankfurt, and a regular survey participant. “Sentiment is improving much faster than expected. There’s a need to catch up after a deep slump.” In Asia, respondents were more optimistic, with the index reaching 74.2 from 59.4. Goldman Sachs Group Inc. this week raised its forecast for China’s 2009 economic growth to 9.4 percent, and said Asian nations excluding Japan will expand faster than earlier expected as well. The CLSA China Purchasing Managers ’ Index reached the highest level in a year last month. Samsung Electronics Co., Hyundai Motor Co. and LG Electronics Inc. are among South Korean exporters that reported increased profits last quarter. Asia’s Recovery “A lot of the recovery we see in Asia is driven by government spending and restocking,” said Tai Hui , head of Southeast Asian economic research at Standard Chartered Plc in Singapore. “We need a genuine recovery or stabilization in consumer spending and private investment to ensure the slack will be picked up when the fiscal policy fades away and the restocking phenomenon disappears.” Confidence also rose in Japan, where the economy is forecast to have expanded for the first time in more than a year last quarter. Elections in the world’s second-largest economy at the end of the month may result in a victory for the opposition Democratic Party of Japan, which has never held power. The index for Japan climbed to 50 from 34.1. Bloomberg users became more optimistic on the outlook for their equity markets in the next six months. Respondents in Japan, the U.K. and Italy predict stocks will extend gains, while those in the U.S. and Germany are mixed about the direction of their markets. The global equity rally has added more than $15 trillion to the value of global stocks since this year’s low on March 9. ‘Risk Appetite’ “Risk appetite is returning to a much more normal level,” Standard Chartered’s Hui said. The U.S. dollar may weaken in the next six months against the world’s most active currencies, with the index falling to 38.8 from 43.8 in July, the survey showed. Users in Japan are divided on the direction of the yen against the dollar, with the index dropping to 50.3 from 59.6. Most respondents in Western Europe are more optimistic the euro will strengthen against its U.S. counterpart. Survey participants in the U.S., Japan and Western Europe are also more confident short- and long-term interest rates will rise in the next six months, the survey showed. The Federal Reserve will forego raising its benchmark rate until the third quarter of 2010, according to the monthly Bloomberg survey. The Fed’s Open Market Committee will today keep the target rate at zero to 0.25 percent, all 47 economists in a separate Bloomberg survey predict. Globally, “it’s too early to start tightening policy,” Kounis of Fortis Bank said. “In general, it’s not something that should be considered this year.” To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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Kindle Suffers Frm Books Riddld W/th Typ*s: Commentary by Rich Jaroslovsky

July 24, 2009

Commentary by Rich Jaroslovsky July 24 (Bloomberg) — If Amazon.com’s Kindle electronic- book reader is going to save publishing, both the publishers and Amazon have to do a better job.

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Milk Lovers May Live Longer Because of Lower Heart Disease, Stroke Risk

July 22, 2009

By Albertina Torsoli July 22 (Bloomberg) — The secret to a longer life may be this simple — milk. Drinking milk can lessen the chances of dying from illnesses such as heart disease and stroke by as much as 20 percent, researchers led by Peter Elwood at Cardiff University and Ian Givens from the University of Reading said today in a statement distributed by the AlphaGalileo Web site.

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