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China Signals It Will End Yuan’s Peg to Dollar, Citing Economic Recovery

by on June 19, 2010

By Bloomberg News June 19 (Bloomberg) — China’s central bank said it will allow a more flexible yuan after the nation cemented its economic recovery, indicating the currency’s 23-month- old peg to the dollar may be scrapped. The yuan’s 0.5 percent daily trading band will remain unaltered, the central bank said in a statement on its website today. “The central bank’s statement means China’s exit from the dollar peg,” said Zhao Qingming , an analyst at China Construction Bank in Beijing. “If the euro continues to remain weak, it could also mean that the yuan may depreciate against the dollar.” Allowing the yuan to strengthen may curb inflation by reducing the cost of imported goods and limit the need for central bank dollar buying, which has left the nation with $2.4 trillion in currency reserves. A stronger Chinese currency may also help avert a trade war after U.S. lawmakers urged President Barack Obama to use the threat of trade sanctions to force a policy change. “The global economy is gradually recovering,” the central bank said today. “The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the renminbi exchange rate regime and increase the renminbi exchange rate flexibility.” The central bank was using another word for the yuan. The currency has been trading at about 6.83 per dollar since July 2008. To contact the reporters on this story: Judy Chen in Shanghai at Xchen45@bloomberg.net .

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U.S. Stocks Retreat as Treasuries, Dollar Gain on Housing Data

by on June 16, 2010

By Nick Baker June 16 (Bloomberg) — U.S. stocks fell, Treasuries gained and the dollar strengthened against the euro after reports showed American housing starts declined the most in 14 months and FedEx Corp.’s profit forecast trailed estimates. Oil rose to a one-month high. The Standard & Poor’s 500 Index slipped 0.1 percent to 1,114.61 at 4 p.m. in New York as about three stocks slumped for every two that rallied on U.S. exchanges. The measure had fallen as much as 0.7 percent earlier. Yields on 10-year Treasuries lost 4 basis points to 3.26 percent. The U.S. currency climbed 0.2 percent to $1.2312. Crude oil futures rose 0.9 percent to $77.67 a barrel. Retailers, manufacturers, transportation companies and commodity producers dropped in U.S. stock trading as FedEx’s full-year profit outlook and the biggest drop in housing starts since March 2009 overshadowed better-than-estimated growth in industrial production. BP Plc’s 1.4 percent gain in New York equity trading following an agreement to pay $20 billion to victims of the Gulf of Mexico oil spill wasn’t enough to turn the S&P 500 around. “The recovery is not accelerating, it’s decelerating, and there’s reasons for investors to take a step back and evaluate,” said David Kovacs , head of quantitative strategies at Turner Investment Partners in Berwyn, Pennsylvania, which manages $19 billion. FedEx “is a barometer of economic activity, and the fact that they missed relative to estimates indicates there are some clouds on the horizon.” To contact the reporters on this story: Nick Baker in New York at nbaker7@bloomberg.net .

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Bank of America, Goldman Sachs Said to Offer $5 Billion of Hilton LBO Debt

June 10, 2010

By Sarah Mulholland and Jason Kelly June 10 (Bloomberg) — Bank of America Corp. and Goldman Sachs Group Inc. are seeking to shed as much as $5 billion in debt related to the buyout of Hilton Worldwide, according to people familiar with the negotiations. A $3 billion piece of a mortgage taken out by Blackstone Group LP to finance its acquisition of the hotel chain in 2007 may be packaged and sold as securities, said the people, who declined to be identified because the discussions are private. The banks are marketing more than $2 billion in mezzanine debt to precede the bond offering, the people said. Banks are attempting to clear their books of debt tied to the Hilton buyout as Wall Street tries to revive the $700 billion market for commercial mortgage-backed securities. Less than $1 billion of the debt has been sold this year, compared with $232.4 billion in 2007 when sales peaked, according to data compiled by Bloomberg. Danielle Robinson, a spokeswoman for Charlotte, North Carolina-based Bank of America, and Michael DuVally, a spokesman for Goldman Sachs in New York, declined to comment. Blackstone, the world’s largest private-equity firm, bought Hilton in July 2007 near the top of the real estate market for about $26 billion, including assumed debt. The transaction was financed with $20.6 billion of mortgage and mezzanine debt and about $5.7 billion of equity from New York-based Blackstone. Hilton completed a deal to reduce debt by almost $4 billion and extend its maturity to November 2015 in April. The company bought back and retired $1.8 billion of debt and converted $2.1 billion of junior mezzanine debt to preferred equity. To contact the reporters on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net ; Jason Kelly in New York at jkelly14@bloomberg.net

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Microsoft to Sell $1.15 Billion Convertible Notes in Second Debt Offering

June 8, 2010

By Tim Catts and Dina Bass June 8 (Bloomberg) — Microsoft Corp. , the world’s biggest software maker, plans to sell $1.15 billion of convertible senior notes due in 2013 and will use the proceeds to repay short-term debt. Microsoft may grant underwriters an option to buy an additional $100 million of the notes, the Redmond, Washington- based company said today in a statement. Moody’s Investors Service rated the notes Aaa. The proceeds will let Microsoft retire some of its commercial paper. As of March 31, it had $2.25 billion of short- term debt outstanding, according to a filing with the U.S. Securities and Exchange Commission. The notes give Microsoft more stability with debt at a fixed rate, compared with the more volatile interest of short-term paper. Convertible notes allow investors to exchange debt into common stock at a pre- established rate under specified conditions. “The commercial paper market in the last few years has done some backflips no one would have expected, at times freezing or seizing up entirely, said Michael Holland , who oversees more than $4 billion, including Microsoft shares, as chairman of Holland & Co. in New York. Microsoft’s action indicates the company believes the convertible market is an attractive place to sell now. “If I owned some convertibles now, I’d be looking to sell them,” he said. Microsoft issued $3.75 billion of 5-, 10- and 30-year debt in May 2009 as it tapped the corporate bond market for the first time, according to data compiled by Bloomberg. The company’s $2 billion of 2.95 percent notes maturing in 2014 traded at 103.936 cents on the dollar to yield 1.916 percent at 11:01 a.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. Its shares fell 51 cents, or 2 percent, to $24.78 at 1:33 p.m. New York time in Nasdaq Stock Market trading . To contact the reporters on this story: Tim Catts in New York at tcatts1@bloomberg.net ; Dina Bass in Seattle at dbass2@bloomberg.net

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Buyout Managers Tax Increase Scaled Back Under Senate Democrats’ Proposal

June 8, 2010

By Brian Faler and Ryan J. Donmoyer June 8 (Bloomberg) — Senate Democrats said they will scale back a House-approved tax increase on investment-fund managers as part of their jobs legislation. The plan would tax an increasing amount of the profit share paid to fund executives, known as carried interest, at higher ordinary income tax rates rather than at the lower capital gains rate. The measure also would reinstate a provision dropped by House Democrats that would send state governments $24 billion to help pay for Medicaid health care for the poor. It would pay for that in part by increasing to 41 cents the current 8-cent tax oil companies pay on each barrel of oil they produce. “We have to get more Americans back to work,” said Senate Finance Committee Chairman Max Baucus , a Montana Democrat. Baucus’s proposal, starting next year, would tax half of the carried interest that doesn’t reflect a return on invested capital at ordinary tax rates, while the rest would be taxed at the lower capital gains rate. The share taxed as ordinary income would grow to 65 percent beginning in 2013. Carried interest that is attributed to the sale of assets held for at least seven years would be subject to lower rates. The tax increase on carried interest would raise $14.5 billion over 10 years, down from the $17.7 billion the House plan is projected to generate. Democratic Senator Charles Schumer of New York said the Senate aims to pass the legislation by early next week. To contact the reporters on this story: Brian Faler in Washington at jarowley@bloomberg.net ; Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

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Buffett Says Moody’s Model Not `Bullet-Proof’ as Berkshire Cuts Holdings

June 2, 2010

By Hugh Son and Betty Liu June 2 (Bloomberg) — Warren Buffett , whose Berkshire Hathaway Inc. has been reducing its stake in Moody’s Corp., said the ratings firm has lost some of its competitive advantage. “What was once a bullet-proof franchise may not be bullet- proof,” Buffett said today in New York in an interview with Bloomberg Television before his scheduled appearance at the U.S. Financial Crisis Inquiry Commission. “It’s still quite a franchise.” The commission, led by Phil Angelides , is reviewing the role of credit raters in contributing to the housing collapse by assigning top grades to mortgage-related securities that later plunged in value. Moody’s said last month it may be sued by the U.S. Securities and Exchange Commission for filing false and misleading descriptions of its credit-ratings policies. Angelides said today that ratings by Moody’s were close to fraudulent or “of no use to the marketplace,” Buffett said that New York-based Moody’s made the same mistake as competitors and investors in assuming that housing prices couldn’t fall nationwide. To contact the reporters on this story: Betty Liu in New York at bliu17@bloomberg.net . Hugh Son in New York at hson@bloomberg.net .

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RBS Securities Said to Hire Credit Suisse’s Achoa for Debt Capital Markets

June 1, 2010

By Drew Benson June 1 (Bloomberg) — Charles Achoa is joining RBS Securities Inc. as head of Latin America debt capital markets after 13 years at Credit Suisse Group AG, according to a person familiar with the situation. Brazilian-born Achoa is slated to start with the unit of Royal Bank of Scotland Group Plc, Britain’s biggest government- owned bank, in August, and he will be based in Stamford, Connecticut, said the person, who declined to be identified because Achoa hasn’t started his new job. RBS Securities spokesman Michael Geller declined to comment. Credit Suisse spokeswoman Karen Laureano-Rikardsen confirmed that Achoa left the company last month. E-mails and a phone call to Achoa weren’t returned. To contact the reporters on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net

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Interbank Lending Market `Died With Lehman’ Bankruptcy Chart of the Day

June 1, 2010

By Mark Gilbert and Matthew Brown June 1 (Bloomberg) — Banks have all but stopped lending to each other, driving transactions in the interbank market to the lowest level since August 1994 and undermining the validity of the suite of interest rates known as Libor. The CHART OF THE DAY shows loans between U.S. commercial banks have slumped to $153 billion from a peak of $494 billion in September 2008, the month that Lehman Brothers Holdings Inc. filed for bankruptcy protection. The London interbank offered rate is used to set interest charges on $360 trillion of financial products worldwide, according to the Bank for International Settlements. “The interbank market died with Lehman Brothers,” said David Keeble , head of fixed-income strategy at Credit Agricole Corporate and Investment Bank in London. “Libor is a strange beast, because the market that it’s based upon barely exists. It’s going to take a couple more years to recover, and even then will never regain its former glory.” Loans between banks have evaporated after central banks around the world pumped cash into the banking system by lending money in exchange for debt securities following at least $1.8 trillion of writedowns and losses by financial institutions as of May 18. U.S. commercial banks turned to the Federal Reserve for short-term borrowing after Lehman’s bankruptcy led to a collapse in trust amongst financial institutions, and the Fed opened its discount window to banks. “There’s a lot more certificates of deposit that get issued instead of interbank lending, because they’re eligible if you want to turn them into cash more quickly,” said Keeble. “The whole structure has changed.” (To save a copy of the chart, click here.) To contact the reporters on this story: Mark Gilbert in London at magilbert@bloomberg.net ; Matthew Brown in London at mbrown42@bloomberg.net

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Thai AirAsia Plans IPO as Parent Mulls Dual Listing

May 31, 2010

By Suttinee Yuvejwattana and Susan Li May 31 (Bloomberg) — AirAsia Bhd. , Southeast Asia’s biggest budget airline, is considering an initial public offering of its unit in Thailand next year amid a surge in leisure travel in the region. Sepang, Malaysia-based AirAsia, whose shares are now traded in Kuala Lumpur, is separately considering a dual listing in Thailand, Thai AirAsia Chief Executive Officer Tassapon Bijleveld , said in an interview in Bangkok. He didn’t elaborate. Budget airlines in Asia-Pacific are expanding as travel within the region overtook intra-North America as the world’s biggest aviation market last year. Tiger Airways Holdings Ltd., a discount carrier part-owned by Singapore Airlines Ltd., raised S$233 million ($166 million) in an IPO in January as carriers in Vietnam and Indonesia also consider fund-raising plans. AirAsia rose 4.3 percent to close at 1.22 ringgit in Kuala Lumpur. The shares have fallen 12 percent so far this year. The Malaysian airline’s first-quarter profit increased 10 percent to 224.1 million ringgit ($68.7 million) because of rising passenger numbers, according to its filing to the stock exchange today. To contact the reporters on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net ; Susan Li in Hong Kong at sli31@bloomberg.net

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Barton Biggs Says U.S. Stock Markets Oversold, Set for `Big Pop’ in Days

May 26, 2010

By Shani Raja and Susan Li May 27 (Bloomberg) — U.S. stock markets are oversold and may rally strongly over the next few days, said investor Barton Biggs , who runs New York-based hedge fund Traxis Partners LP. “I think they’re going to stabilize in this general area, and then we’re going to have a significant move to the upside,” Biggs, whose flagship fund returned three times the industry average last year, said in a Bloomberg Television interview. Biggs recommended buying U.S. stocks last year when benchmark indexes sank to the lowest levels since the 1990s. The Standard & Poor’s 500 Index rallied 23 percent in 2009 as government worldwide mounted stimulus programs to counter a recession. On March 22 this year, Biggs told Bloomberg TV that U.S. stocks had the potential to rally a further 10 percent. The S&P 500 has since shed 8.4 percent. The S&P 500 is down 10 percent in May, poised for its worst month since February 2009, as credit-ratings downgrades of Greece, Portugal and Spain add to concern some European nations will struggle to fund deficits. “The market is very, very oversold, and I think we’re going to have a big pop to the upside some time in the next couple of days,” said Biggs. “I wouldn’t be surprised to see us go to a new recovery high, just to make everybody squirm.” The S&P 500 lost 0.6 percent yesterday on concern the credit crisis will worsen. The China Investment Corp. decided to maintain its investments in Europe after having debated lowering its allocation to the region, Reuters cited Gao Xiqing , president of the sovereign wealth fund, as saying. “The European concerns are serious, and I take them seriously,” Biggs said today. “I just don’t think that the worst is going to happen.” To contact the reporters for this story: Shani Raja in Sydney at sraja4@bloomberg.net .

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DLJ Holds a Reunion as Blackstone’s James Lashes Out at `Individual Greed’

May 21, 2010

By Sheila Dharmarajan and Jonathan Keehner May 21 (Bloomberg) — Bankers who worked at Donaldson Lufkin & Jenrette before its 2000 takeover by Credit Suisse AG reunited last night at New York’s Cipriani restaurant in midtown Manhattan. Blackstone Group LP ’s Hamilton ‘Tony’ James and former U.S. Securities and Exchange Commission Chairman William Donaldson were among the DLJ alumni on hand to discuss the firm, the regulatory environment and the financial crisis. James, who chaired DLJ’s investment bank before becoming president of Blackstone, said Wall Street culture has became too oriented toward “individual greed” and not about “doing it as a team and doing it well and enjoying the professionalism of it.” Pending legislation that could reshape the U.S. financial industry and its regulators makes it a “dangerous time,” said James. Donaldson, who co-founded DLJ in 1959, echoed the sentiment. “We need more thought as to just exactly what the unintended consequences are of whatever comes out of this bill,” Donaldson said. The Senate approved a sweeping overhaul of Wall Street regulation last night that would create a consumer protection agency, a mechanism for liquidating large failing financial firms and a council of regulators to monitor companies for threats to the economy. To contact the reporters on this story: Sheila Dharmarajan in New York at sdharmarajan@bloomberg.net ; Jonathan Keehner in New York at jkeehner@bloomberg.net

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Tepper’s Appaloosa Cuts Bank Stocks, Which Made About $4 Billion Last Year

May 14, 2010

By Miles Weiss May 14 (Bloomberg) — Hedge-fund manager David Tepper cut his holdings in bank stocks, which helped him earn an estimated $4 billion last year, while investing in drug manufacturers during the first quarter. Tepper’s Appaloosa Management LP held stakes in Johnson & Johnson, Merck & Co. and Pfizer Inc. with a combined value of about $258 million as of March 31, according to a Form 13F filed today with the U.S. Securities and Exchange Commission. The Short Hills, New Jersey, money-management firm didn’t report owning stock in these companies in its fourth-quarter filing. Appaloosa pared holdings in financial companies during the first quarter, selling more than half of its preferred stock in insurer American International Group Inc. and all of its preferred stake in Bank of America Corp., today’s filing shows. He generated a 117 percent gain at his flagship Appaloosa Investment LP during the first nine months of 2009, in part by investing in bank stocks that surged in April of that year. The money-management firm cut its stake in Citigroup Inc. to 62.4 million shares as of March 31 from 138.1 million on Dec. 31, according to the filing. Appaloosa’s holding in Wells Fargo & Co. common stock declined to 8.96 million shares from 11 million during the period. Tepper’s earnings were tops among hedge-fund managers last year, according to estimates by AR Magazine. To contact the reporters responsible for this story: Miles Weiss in Washington at mweiss@bloomberg.net ;

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Futures Bets on Euro Decline Reach Record on Speculation Bailout May Fail

May 14, 2010

By Ben Levisohn May 14 (Bloomberg) — Futures traders increased bets to a record that the euro will fall against the dollar a day after European leaders announced a 750 billion-euro ($928 billion) bailout package in an effort to contain a sovereign-debt crisis that threatens to shatter confidence in the shared currency. The number of wagers by hedge funds and other large speculators for a decline in the 16-nation currency rose on May 11 to 113,890 contracts more than those anticipating a gain, according to Commodity Futures Trading Commission data. It was the third consecutive week that the amount climbed to a record. “No one wants to buy the euro,” said John Doyle , a strategist at currency-trading firm Tempus Consulting Inc. in Washington. “People looked at details of the plan and it wasn’t able to quell their concerns.” The euro fell to its lowest level since the collapse of Lehman Brothers Holdings Inc. today amid concern that the austerity measures required by the bailout may limit growth in the euro area and leave Europe’s debt woes unresolved. The euro fell 3.1 percent to $1.2365 this week, from $1.2755 on May 7. It traded as low as $1.2354 today, the weakest since October 2008. Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices. Futures are agreements to buy or sell assets at a set price and date. To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net

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Russian Sugar Producer Rusagro Cancels Initial Offer on Market Volatility

May 13, 2010

By Maria Kolesnikova May 13 (Bloomberg) — Sugar producer OAO Rusagro became the second Russian company in two weeks to postpone an initial public offering, citing “market volatility.” Russia’s largest producer of the sweetener confirmed the move in a one-sentence statement sent by e-mail today. The Moscow-based company had sought to raise $246 million to $309 million by selling 18.2 million shares. Russian companies, holding IPOs for the first time since 2007, are struggling to attract investors. Fertilizer producer OAO UralChem postponed an offer last month while OAO Russian Sea Group sold stock at the bottom of its price range. Russian billionaire Oleg Deripaska’s Strikeforce Mining & Resources Plc has delayed a Hong Kong IPO until equity markets stabilize, a person familiar with its plans said last week. Rusagro’s decision came even after the Micex Index of 30 Russian stocks had its biggest two-day gain in almost a year, including an advance of 4.3 percent yesterday. That pared Micex’s decline since its April 15 peak to 9.1 percent. State-run lender Sberbank, Rusagro’s largest creditor, said in a note to investors last week it would buy as much as $200 million of stock, or as much as 81 percent of the total to be sold in the sugar producer’s IPO. Sberbank was managing the postponed sale along with Credit Suisse Group AG, Renaissance Capital and Alfa Capital Markets. Sberbank spokesman Alexander Baziyan couldn’t immediately be reached for comment. Moshkovich’s Stake Russian state development bank VEB bought almost 30 percent of United Co. Rusal’s $2.2 billion IPO in Hong Kong in January. Rusal, Deripaska’s aluminum maker, has slumped 23 percent after the listing. Vadim Moshkovich , a lawmaker in the parliament’s upper house, and his family owns Rusagro. The company said in April that it would sell new and existing shares, including a 14 percent stake Moshkovich controls. “Moshkovich was probably concerned by unsuccessful IPOs by UralChem and Russian Sea, which fell short of demand,” said Ilya Brodsky , vice-president of the Specialized Research and Investment Group in Moscow, before the cancellation. Rusagro accounted for 18 percent of Russian sugar production last year, according to the company. Rusagro has seven plants that can process either 30,000 metric tons of raw sugar beets or 5,350 tons of raw sugar cane a day. To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net

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Fidelity Names Abigail Johnson, BNY’s O’Hanley to Run Mutual-Fund Company

May 10, 2010

By Sree Vidya Bhaktavatsalam and Bradley Keoun May 10 (Bloomberg) — Fidelity Investments, the world’s largest mutual-fund manager, named Abigail P. Johnson to oversee distribution and hired Ronald P. O’Hanley as head of asset management, splitting responsibility for running the company after President Rodger Lawson left in March. Abigail Johnson , the daughter of Chairman Edward C. Johnson III , will oversee all customer- and client-focused businesses as president of the personal, workplace and institutional unit, Boston-based Fidelity said today in an e-mailed statement. O’Hanley, 53, who is joining from Bank of New York Mellon Corp., where he oversaw money management, will become president of asset management and corporate services. Lawson stepped down at the end of last month, leaving the leadership in the hands of Ned Johnson , who turns 80 in June. Fidelity, which manages $1.5 trillion in investor assets, has been controlled by the Johnson family since it was founded by Johnson’s father in 1946. “This new structure will position Fidelity strategically for the future by bringing all of the firm’s distribution resources together,” Ned Johnson said in the statement. “Ron O’Hanley will bring valuable asset management and executive experience to our investing and corporate functions as well as a strong leadership track record.” Ned Johnson , who has led the company since 1977, has given no indication that he plans to retire soon, and has left open the question of who will succeed him. Both Abigail Johnson and O’Hanley will report to Ned Johnson. Jacques Perold, the head of Fidelity Management & Research Co., the firm’s mutual-fund unit, will report to O’ Hanley, who oversaw more than $1 trillion as head of BNY Mellon’s asset-management unit. The executive search that led to O’Hanley’s appointment was done by Goldsmith & Co. in New York. Fidelity has expanded beyond managing mutual funds into stock trading, retirement plans and institutional money management. Along with other asset managers, the company suffered from client withdrawals during the global financial crisis in 2008. Earnings rebounded last year as the company cut expenses and assets under administration rose. Fidelity’s assets under administration rose 23 percent to $3.2 trillion in 2009, including accounts for which it provides services such as recordkeeping. Operating income, which excludes interest and taxes, rose 5.2 percent last year to $2.52 billion. To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net ; Bradley Keoun in New York at bkeoun@bloomberg.net .

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Trichet Indicates Government Bond Purchases Not Supported by Whole Council

May 10, 2010

By David Tweed and Simone Meier May 10 (Bloomberg) — European Central Bank President Jean- Claude Trichet indicated the bank’s decision to buy government and private bonds wasn’t supported by all 22 council members. “On some of the decisions there was unanimity, I won’t give details, and on some there was an overwhelming majority,” Trichet said in an interview with Bloomberg Television in Basel, Switzerland, today. “On bond purchases we had an overwhelming majority.” Trichet earlier today announced an unprecedented package of measures to counter a worsening sovereign-debt crisis after European finance ministers unveiled a loan package worth almost $1 trillion to restore confidence. He said as recently as May 6 that the council hadn’t discussed purchasing government bonds. In addition to buying debt securities, the ECB also said it will offer banks as much cash as they need for three months and six months and reactivate a swap line with the Federal Reserve. “We decided to intervene and to re-establish a more normal functioning of this market in order to be sure that we had an appropriate monetary-policy transmission,” Trichet said after a bi-monthly meeting of global central bankers in Basel, adding that the ECB remains “fiercely independent.” To contact the reporters on this story: Simone Meier in Dublin at smeier@bloombert.net ; David Tweed in Basel at dtweed@bloomberg.net

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VIX, Vstoxx Drop by Records as Stocks Soar on Europe’s Emergency Loan Plan

May 10, 2010

By Jeff Kearns and Julie Cruz May 10 (Bloomberg) — The benchmark indexes for U.S. and European stock options both headed for record drops after Europe’s leaders unveiled an almost $1 trillion loan plan to end the region’s sovereign-debt crisis and global stocks soared. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell 32 percent to 27.67 as of 10:16 a.m. in New York, retreating after a record weekly gain last week. The index measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, which rallied 4.3 percent today, the most intraday since March 2009. The VStoxx Index , a gauge of Euro Stoxx 50 Index options, lost 24 percent to 37.88 for the biggest drop in its 11-year history. “The big brick in the wall of worry has been Europe and that short-term problem has been solved,” said Rob Morgan, chief investment strategist at Fulcrum Securities in McLean, Virgina. “Volatility is back in a big way and this isn’t going to be the end of it by any means.” Stocks rallied around the world today after European policy makers unveiled an unprecedented loan package worth almost $1 trillion, as well as a program of bond purchases. The Stoxx Europe 600 Index surged 6.2 percent to 251.86, the biggest intraday gain since December 2008, as only two stocks declined. The S&P 500 moved in a 3.74 percent range today, almost double the 1.93 percent average over the past four weeks. It traded in an 8.73 percentage-point range May 6, when waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent, the biggest drop since the crash of 1987, before paring losses. To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Julie Cruz in Frankfurt at jcruz6@bloomberg.net .

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ECB Says Will Intervene in Bond Market in Unprecedented Bid to Buoy Euro

May 9, 2010

By Gabi Thesing and Jana Randow May 10 (Bloomberg) — The European Central Bank said it will intervene in government and private bond markets as part of an unprecedented effort to help stave off a sovereign debt crisis that threatens to destroy the euro. “The Governing Council decided to conduct interventions in the euro area public and private debt securities markets to ensure depth and liquidity in those market segments which are dysfunctional,” the Frankfurt-based central bank said in a statement today. “The scope of the interventions will be determined by the Governing Council.” The ECB said it will sterilize the purchases and announced it will hold additional longer term operations at three- and six-month maturities. The central bank also said that it will reactivate temporary liquidity swap lines with the Federal Reserve to resume U.S. dollar tenders at terms of 7 and 84 days. The announcement came after European finance ministers crafted a loan package that may be worth 720 billion euros ($928 billion) in an effort to protect the single currency bloc. To contact the reporters on this story: Gabi Thesing in Brussels at gthesing@bloomberg.net ; Jana Randow in Basel, Switzerland at jrandow@bloomberg.net .

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Berkshire Hathaway Has Smaller Holding of Procter & Gamble, Filing Shows

May 7, 2010

By Andrew Frye May 7 (Bloomberg) — Warren Buffett ’s Berkshire Hathaway Inc. had a smaller shareholding of Procter & Gamble Co. at the end of March than three months earlier, a company filing showed. The market value of Berkshire’s investment in the world’s largest consumer-products company fell to $4.73 billion on March 31 from $5.04 billion at the end of December, Buffett’s firm said today in its quarterly report. Cincinnati-based P&G rose 4.4 percent on the New York Stock Exchange in the first quarter. The investment’s cost basis, a measure of how much was paid to accumulate a stake, declined to $4.46 billion from $4.96 billion, Omaha, Nebraska-based Berkshire said. The cost basis for American Express Co., Coca-Cola Co. and Wells Fargo & Co., the other three top holdings listed in Berkshire’s filing, were unchanged in the quarter. To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net .

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Cameron Set to Oust Brown as Conservatives Win Most U.K. Seats, Poll Shows

May 6, 2010

By Kitty Donaldson and Robert Hutton May 6 (Bloomberg) — Conservative challenger David Cameron was set to end 13 years of Labour rule as the national exit poll projected his party winning more seats in Parliament than Prime Minister Gordon Brown . Cameron’s Conservatives were projected to have won 307 seats in the 650-seat House of Commons to Labour’s 255 and 59 for Nick Clegg ’s Liberal Democrats, the poll showed. It would be the first election since 1974 when no party gained a majority. Cameron’s margin of victory was probably enough for him to form a government and force Brown to resign. Passing his program of immediate spending cuts to tackle a record budget deficit and folding the U.K. financial regulator into the Bank of England would still require the support of other parties. “If you’re a few short, you can still govern as a minority,” said Philip Norton , professor of government at Hull University. “You could probably survive quite a while as a government without doing any deals.” The pound rose against the dollar after the exit poll was published at 10 p.m. when the voting ended. Sterling strengthened to $1.4864 at 10:04 p.m. in London, from $1.4833. It was at 85.06 pence per euro, from 85.09 pence. To contact the reporters on this story: Kitty Donaldson in London at kdonadlson@bloomberg.net . Robert Hutton in London at rhutton1@bloomberg.net .

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Nasdaq Investigating Potential Erroneous Trades After U.S. Market Plunge

May 6, 2010

By Michael Tsang and Elizabeth Stanton May 6 (Bloomberg) — Nasdaq OMX Group Inc. said it’s investigating potentially erroneous trades involving multiple securities between 2:40 p.m. and 3 p.m. New York time, when the U.S. stock market tumbled. The Dow Jones Industrial Average plunged almost 1,000 points today before paring its decline and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock-market value was erased in less than 10 minutes, data compiled by Bloomberg show. Trades in Accenture Plc that drove the second-largest technology consulting company’s stock price down more than 99 percent to a penny were canceled by the CBOE Stock Exchange, according to data compiled by Bloomberg. A total of 19 trades of 100 shares each were executed at 1 cent in seven seconds from 2:47 p.m. to 2:48 p.m. in New York, a minute after the Dow average plunged by the most since the market crash of 1987, the data showed. Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed. Accenture shares closed today at $41.09 , down 2.6 percent in New York Stock Exchange composite trading. The Dow average lost as much as 998.5 points, or 9.2 percent, before paring its drop. The Standard & Poor’s 500 Index fell as much as 8.6 percent, its biggest plunge since December 2008, before trimming its decline to 3.2 percent. To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net ; Michael Tsang in New York at mtsang1@bloomberg.net .

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Euro Weakens Against Dollar for a Fourth Day, Slides Versus Japanese Yen

May 6, 2010

By Lukanyo Mnyanda May 6 (Bloomberg) — The euro declined for a fourth day, trading below $1.28 for the first time in almost 14 months, before a European Central Bank meeting that may announce more measures to contain Greece’s debt crisis. The common currency also fell against the yen before Greek lawmakers debate austerity measures needed as part of an international bailout, after protests in Athens left three people dead yesterday. The ECB will leave its main rate at a record low, all 58 economists surveyed by Bloomberg say. Analysts have speculated the central bank may unveil bond purchases to stabilize the market, potentially depressing the euro further. “I prefer the momentum to the downside for the euro,” said Neil Jones , head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “The potential for monetary measures from the ECB could be groundbreaking.” Europe’s common currency was at $1.2768 as of 7:45 a.m. in London, from $1.2814 in New York yesterday, after earlier touching $1.2752, the weakest since March 12, 2009. The 16- nation euro was at 119.24 yen from 120.22 yen yesterday, and earlier reached 119.12 yen, the lowest since February 2009. The greenback bought 93.38 yen from 93.81 yen. Financial markets have been shut in Japan for the past three days for holidays. Standard Bank Plc cut its forecast for the euro to $1.20 from $1.25 and said the currency may fall as low as $1.15 over the next few months as the region’s sovereign debt crisis deepens. “We see no sign that this crisis is going to end; instead it is likely to get much worse,” Steven Barrow, head of G-10 currency research in London, wrote in a research note today. The pound fell 0.5 percent to $1.5026 against the dollar as polls signaled today’s U.K. election may produce no parliamentary majority for the first time since 1974. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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HP Names Microsoft Veteran Veghte to Lead $3.6 Billion Software Division

May 5, 2010

By Connie Guglielmo and Dina Bass May 5 (Bloomberg) — Hewlett-Packard Co. named Microsoft Corp.’s former Windows marketing executive Bill Veghte to lead its $3.6 billion software division. Veghte, who left Microsoft in January, takes over from Tom Hogan , who was tapped last month to oversee sales, marketing and strategy for Hewlett-Packard’s enterprise business group, the company said today. Veghte, 42, starts May 17. A 20-year Microsoft veteran, Veghte had overseen marketing for the Windows operating system. He played a key role in convincing Chief Executive Officer Steve Ballmer to challenge Apple Inc. ’s Mac-versus-PC television ads in 2008, as Microsoft prepared to revive its flagship brand with Windows 7. At Hewlett-Packard, the world’s largest maker of personal computers and printers, Veghte will oversee a business that had the highest profit margin — 19 percent — of any division last quarter. Hogan, who was hired by CEO Mark Hurd in 2006 to expand software sales, helped with six software acquisitions that totaled more than $6 billion. “I’m a software guy,” Veghte said today in an interview. “I’ve spent a lot of time with customers. They’d like to see H-P do more.” Veghte, who lives in Washington state, said he will move to California, where he will report to Ann Livermore , executive vice president of the company’s enterprise business division. Hewlett-Packard, based in Palo Alto, California, rose 29 cents to $50.93 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 1.1 percent this year. To contact the reporters on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net ; Dina Bass in Seattle at dbass2@bloomberg.net

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Second Mortgages Jeopardize U.S. Housing Market, Amherst’s Goodman Says

May 5, 2010

By Jody Shenn and Margaret Brennan May 5 (Bloomberg) — The U.S. government and the nation’s largest banks are still allowing second mortgages to jeopardize the housing market , according to Laurie Goodman, an analyst at Amherst Securities Group LP. While the Treasury Department created an initiative requiring holders of home-equity debt to adjust terms when first mortgages are changed — a program in which the biggest banks have agreed to participate — the plan falls short of what’s needed, Goodman said today in a Bloomberg Television interview. “It seems like there’s a lot of things in that program that won’t be in the borrowers’ best interest or in the interest of the first-lien holders,” Goodman, a mortgage-bond analyst, said, referring to complaints by investors, including BlackRock Inc. , that their interests are undercut by those of banks. The Treasury’s Second Lien Modification Program allows for “long delays” between when first-lien mortgages get changed and when homeowners may get lower payments on their home-equity debt, Goodman said. The four biggest banks, which own more than 40 percent of about $1 trillion in U.S. second mortgages, began signing up in January. The program was announced April 2009. “As implementation of the Second Lien Modification Program gets under way, the number of second liens that are modified is expected to grow,” Meg Reilly , a Treasury spokeswoman, said in an e-mail. Also under planned changes announced in March to the federal “Home Affordable” modification program designed to encourage reductions to the principal owed by delinquent borrowers whose loans exceed the value of their homes, it appears that second-mortgage holders won’t be forced to forgive debt, Goodman said in a later interview. ‘Unsustainable’ Obligations Without easier second-loan terms, consumers are often left with an “unsustainable level” of debt payments, Goodman said. Additionally, “when you’re deciding whether or not to continue paying,” homeowners will consider the total housing debt balance relative to their property’s value, she said. A fifth of U.S. homes carrying mortgages were worth less than their loans in the fourth quarter, according to Seattle- based Zillow.com. Home prices in 20 metropolitan areas tumbled 33 percent from July 2006 through April 2009, then rose for five months before falling for the next five, leaving them up 2.8 percent from lows, according to an S&P/Case-Shiller index. Goodman, who’s based in New York, is the former head of fixed-income research at UBS AG who was inducted into the Fixed Income Analysts Society Inc.’s Hall of Fame last year. To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net ; Margaret Brennan in New York at mbrennan25@bloomberg.net

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Buffett Names Goldman as Counterparty on Trades That Turned Against Him

May 2, 2010

By Andrew Frye and Jamie McGee May 2 (Bloomberg) — Warren Buffett said Goldman Sachs Group Inc. is among the counterparties on derivative trades that contributed to a first-quarter loss last year at his Berkshire Hathaway Inc. “Goldman Sachs is on the other side of some of our equity- put transactions,” Buffett said today at a press conference in Omaha, Nebraska, a day after Berkshire’s annual meeting of shareholders . To contact the reporters on this story: Andrew Frye in Omaha at afrye@bloomberg.net ; Jamie McGee in New York at jmcgee8@bloomberg.net .

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Thai Army Fires Rubber Bullets as Protesters Try to Rally Outside Bangkok

April 28, 2010

By Daniel Ten Kate and Suttinee Yuvejwattana April 28 (Bloomberg) — Thai security forces fired rubber bullets at a procession of about 5,000 anti-government protesters, thwarting their attempt to rally support outside the capital. Authorities opened fire at a checkpoint to prevent demonstrators from traveling to a fresh-food market north of Bangkok, police spokesman Prawut Thavornsiri said by phone. The army is also attempting to arrest convoy members, army spokesman Sansern Kaewkamnerd said by phone. The protester plan to send “task forces” out from their Bangkok base threatens to provoke clashes after the government yesterday threatened a stern response. A grenade attack on the elevated train line killed one person last week and a failed attempt to disperse the group April 10 left 25 people dead. “We want to show the people at the market that we stand with them,” protest spokesman Sean Boonpracong said by phone. “We will see if the army cracks a whip on us.” The demonstrators, who mostly support fugitive ex-leader Thaksin Shinawatra , have occupied an area roughly the size of New York’s Central Park for the past 25 days. Yesterday they blocked a commuter train line during morning rush hour, prompting the government to warn of a crackdown. “We have been patient for two months,” Deputy Prime Minister Suthep Thaugsuban said yesterday. “But we will use decisive measures under the law from now.” Carrying Rifles Soldiers carrying rifles this morning were stationed on Silom and Sukhumvit roads, Bangkok business arteries that connect with the cordoned-off protest site. Water cannon trucks and riot police are also positioned in the area. The SET index fell 0.6 percent as of the mid-day break, and is Asia’s second-worst performer this month after the benchmark in Shanghai. Thai stocks have risen 3 percent for the year compared with a 4 percent gain for the MSCI Asia Pacific Index . Prime Minister Abhisit Vejjajiva , who last weekend rejected direct talks with the demonstrators, said yesterday the government would provide assistance for businesses affected by the protests. Measures would include rescheduling of tax payments, assistance with wages and help in making rent payments, he said. To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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Whirlpool Advances After Appliance Maker Boosts Annual Earnings Forecast

April 26, 2010

By Andrea Snyder and Matthew Boyle April 26 (Bloomberg) — Whirlpool Corp. , the world’s largest appliance maker, advanced 8 percent in early New York trading after increasing its profit forecast for the year and posting earnings that exceeded analysts’ estimates. Earnings per share will be as much as $8.50 this year, compared with a previous forecast of at most $7, the Benton Harbor, Michigan-based company said in a statement today. Excluding some items, profit will be $8.10 to $8.60, Whirlpool said. Analysts predicted earnings of $6.83, according to the average of estimates compiled by Bloomberg. Whirlpool climbed $8.13 to $110.35 at 8:08 a.m. before the start of New York Stock Exchange composite trading . The shares had gained 27 percent this year before today. First-quarter net income more than doubled to $164 million, or $2.13 a share, from $68 million, or 91 cents, a year earlier, the maker of KitchenAid refrigerators and Maytag washing machines said. Excluding some items, profit was $2.51. Sales increased 20 percent to $4.27 billion. To contact the reporters on this story: Andrea Snyder in Washington at asnyder5@bloomberg.net ; Matthew Boyle in New York at Mboyle20@bloomberg.net .

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SEC’s Schapiro Warns Agency Employees About Viewing Pornography at Work

April 23, 2010

By Joshua Gallu and Jesse Westbrook April 24 (Bloomberg) — U.S. Securities and Exchange Commission Chairman Mary Schapiro said she “will not tolerate” employees viewing pornography in the workplace after an internal investigation found that more than 30 workers had visited sexually explicit Web sites in the past five years. “Those of you who are working night and day to restore the SEC’s credibility deserve better than this,” Schapiro wrote yesterday in a memo to the agency’s staff, according to SEC spokesman John Nester . “I’m angry and frustrated that a very few individuals have demonstrated that they are willing to place the credibility of the SEC at risk.”     The SEC is moving to improve its image after the agency was faulted by lawmakers for its oversight of Wall Street investment banks before the credit crisis and for failing to detect Bernard Madoff ’s Ponzi scheme. Schapiro, in her memo, said the SEC has increased penalties for employees who break agency rules and streamlined the process for taking disciplinary action. “To remove any possible ambiguity, be advised that any person who violates our clear rules against this inappropriate use of the Internet faces termination of employment,” Schapiro wrote. “We cannot and will not tolerate this behavior.” Investigations by the SEC inspector general’s office found that 33 agency employees violated internal policies by viewing pornography in the past five years. The report was requested by Republican Senator Charles Grassley of Iowa, who released the findings on April 22. One investigation involved a senior attorney who worked at the SEC’s headquarters in Washington, according to the report. The attorney admitted to sometimes spending as much as eight hours a day accessing pornography at work and filling his computer hard drive with inappropriate images, the report said. The SEC has about 3,600 total full-time employees. To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net ; Jesse Westbrook in Washington at jwestbrook1@bloomberg.net .

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Fed May Raise Rates in Fourth Quarter if U.S. Employment Gains, Pimco Says

April 23, 2010

By Kathleen Hays and Susanne Walker April 23 (Bloomberg) — The Federal Reserve may raise interest rates earlier than anticipated by Pacific Investment Management Co. if the job market continues to strengthen, according to Pimco strategist Anthony Crescenzi . “There’s a lot of talk building up toward employment gains that could make it possible the Fed could raise rates by the end of the year,” Crescenzi said in an interview on Bloomberg Radio. “The ‘extended period’ phrase is becoming more conditional in terms of what could force the hand.” Pimco, the world’s largest manager of bond funds, forecasts that the Fed won’t increase its target rate for overnight loans between banks until 2011 as unemployment declines on a consistent basis. The Labor Department may say May 7 that the U.S. added 175,000 jobs this month, after adding 162,000 in March, according to the median estimate of 10 economists surveyed by Bloomberg. The March employment report on April 2 showed U.S. companies added the most jobs in three years. The Fed has kept its target rate in a range of zero to 0.25 percent since December 2008. It is scheduled to release the next Federal Open Market Committee policy decision on April 28. Policy makers will boost the rate by a 0.25 percentage point by the end of the year, according to the median forecast of 60 contributors in a Bloomberg survey. “Cyclical tailwinds” may push the yield on the 10-year note to 4 percent or higher, Crescenzi said. “The market believes that in a year, the 10-year will be 4.25 percent.” Treasury Auctions The yield on the 10-year note rose 4 basis points to 3.81 percent and last exceeded 4 percent on April 5. “As the economy improves, all auctions in the U.S. could become more challenging,” Crescenzi said. “A strengthening economy may result in an increase in yield demand because of the supply.” The Treasury said yesterday it will sell a record $129 billion of debt next week at four auctions beginning April 26. The U.S. will sell $44 billion in two-year notes, $42 billion in five-year securities, $32 billion in seven-year debt and $11 billion in five-year Treasury Inflation Protected Securities. To contact the reporters on this story: Kathleen Hays in New York at khays4@bloomberg.net ; Susanne Walker in New York at swalker33@bloomberg.net

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U.S. Stocks Advance After Surprise Jump in New-Home Sales Boosts Optimism

April 23, 2010

By Rita Nazareth April 23 (Bloomberg) — U.S. stocks fell as earnings reports gave mixed signals about the outlook for profits, while growth in durable goods orders excluding transportation triggered speculation that the Federal Reserve will consider lifting interest rates. Amazon.com retreated 4.2 percent after its earnings report showed online buying by consumers is less robust than analysts’ estimates. American Express Co. and Xerox Corp. rose at least 3 percent on better-than-estimated earnings. Johnson Controls Inc. , the world’s largest maker of automotive seats, gained after raising its profit forecast. The Standard & Poor’s 500 Index fell 0.1 percent to 1,207.48 at 9:54 a.m. in New York. The gauge is still up for the week, which would make it the seventh advance in the past eight weeks. The Dow Jones Industrial Average declined 0.2 percent to 11,116.23. Durable goods orders excluding transportation increased 2.8 percent in March, four times the median increase estimated in a Bloomberg survey of economists. “It might be possible that some are concerned about the FOMC changing it stance next week,” said Peter Jankovskis , who helps manage about $1.8 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. “I personally doubt it. The Fed is set to keep rates low for a while. Amazon and Microsoft’s earnings are also holding investors back.” U.S. stocks advanced yesterday, erasing the biggest drop since Goldman Sachs Group Inc. was sued by the government, as investors speculated the bank will prevail and concern about financial regulation eased. Earlier losses in stocks yesterday were triggered by disappointing forecasts from health-care and technology companies and speculation that widening European government deficits will derail the economic recovery. The Group of 20 industrial and developing nations meets today and is expected to discuss Greece amid concern the nation will be forced to restructure its debt. Greek Finance Minister George Papaconstantinou today sent a letter formally requesting the activation of a financial lifeline from the European Union of as much as 45 billion euros ($60 billion). To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net .

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Deutsche Bank Said to Replace Lippmann With Sprenger as CDO Trading Head

April 20, 2010

By Sarah Mulholland and Pierre Paulden April 20 (Bloomberg) — Deutsche Bank AG named Pius Sprenger as head of trading for asset-backed securities and collateralized debt obligations, replacing Greg Lippmann , whose bets against subprime mortgages helped the firm weather the financial crisis. Sprenger previously ran European asset-backed and CDO trading for Deutsche Bank in London, according to two people familiar with the matter who declined to be identified because the move hasn’t been made public. Renee Calabro , a spokeswoman for Frankfurt-based Deutsche Bank, Germany’s largest lender, declined to comment. Sprenger couldn’t be reached for comment. Lippmann, 41, is joining an investment firm being started by Fred Brettschneider , Deutsche Bank’s outgoing head of global markets in the Americas. Brettschneider’s departure and plans were announced internally in a Feb. 24 memo. Lippmann helped create the market for betting against subprime mortgage bonds in 2005 and then profited along with hedge funds when home prices declined and defaults soared to records two years later, sparking the worst financial crisis since the 1930s. To contact the reporters on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net ; Pierre Paulden in New York at ppaulden@bloomberg.net

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UAL Said to Focus on Continental Over U.S. Airways in Merger Negotiations

April 18, 2010

By Zachary R. Mider, Mary Jane Credeur and Mary Schlangenstein April 18 (Bloomberg) — UAL Corp. ’s United Airlines has put merger talks with US Airways Group Inc. on hold as it focuses on a tie-up with Continental Airlines Inc. , people familiar with the matter said. United and Continental plan to begin sharing financial information this week, and may reach a decision on whether to merge by the following week, said two of the people, who asked not to be identified because details are private. Spokesmen for United and Continental declined to comment today on any negotiations involving the airlines. To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net ; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net ; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net .

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Insurance Sales Fall Most on Record as Companies Save by Reducing Coverage

April 15, 2010

By Jamie McGee April 15 (Bloomberg) — U.S. property and casualty insurance sales dropped the most in five decades last year as businesses cut spending and reduced coverage amid the recession, an industry trade group said. Policy sales fell 3.7 percent to $419 billion, a third straight annual decline, the Property Casualty Insurers Association of America said today in an e-mailed statement. The industry group began tracking data in 1959 and 2009’s decline is the largest on record, exceeding the 1.3 percent reduction in 2008. “The recession cut into many of the drivers of premium, things like retail sales, payrolls, the number of autos that get sold,” Michael Murray , an assistant vice president for financial analysis at Verisk Analytics Inc., who collaborated on the study, said today in an interview. “The recession took a terrific bite out of the demand for insurance. At the same time, prices in insurance markets are falling as a consequence of the imbalance of supply and demand.” U.S. commercial rates have dropped each quarter since 2004, and fell 5.6 percent in the last three months of 2009, according to the Council of Insurance Agents and Brokers. Corporations have cut jobs and closed worksites, reducing spending and the need for coverage, and the unemployment rate climbed to a 26- year high of 10.1 percent last year. Policyholders’ surplus, a measure of assets minus liabilities, increased 12 percent to $511.5 billion as investments gained value and net income rose in 2009, according to the statement. Insurers’ net income climbed to $28.3 billion from $3 billion in 2008, when Lehman Brothers Holdings Inc. collapsed and Hurricanes Ike and Gustav struck the U.S., contributing to $27 billion in costs to insurers. In 2007, the net income was $62.5 billion, the trade group said. To contact the reporters on this story: Jamie McGee in New York at jmcgee8@bloomberg.net

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Nomura Says Aaron Kohli Left RBS to Join Firm as Interest-Rate Strategist

April 9, 2010

By Cordell Eddings and Susanne Walker April 9 (Bloomberg) — Nomura Holdings Inc., one of the 18 primary dealers that are required to bid at Treasury sales, hired Aaron Kohli as a U.S. interest-rate strategist, George Goncalves , head of U.S. rates strategy, confirmed. Kohli left the primary dealer Royal Bank of Scotland Plc earlier today, where he worked as a U.S. interest-rate strategist, Michael Geller , a spokesman for RBS in Stamford Connecticut, confirmed. Kohli will report to Goncalves, who joined Nomura in February, and will be focusing on U.S. rates, macroeconomics and agencies. Nomura is building its U.S. operations after expanding in Asia and Europe in 2008 with the purchase of some of Lehman Brothers Holdings Inc.’s businesses following Lehman’s September 2008 collapse. Nomura Securities, the U.S. unit of Japan’s biggest securities firm, hired Charles Spero and Jeffrey Michaels , both former executives at Lehman, as co-heads of fixed income in the Americas in October. The Federal Reserve Bank of New York named Nomura Securities a primary dealer in July. Primary dealers serve as counterparties to the Fed’s open-market operations and underwrite the government’s debt sales. Kholi couldn’t immediately be reached for comment. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net ; Susanne Walker in New York at swalker33@bloomberg.net

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Euro Declines on Speculation Greece Will Struggle to Raise Further Funds

April 5, 2010

By Candice Zachariahs and Ron Harui April 6 (Bloomberg) — The euro fell for a second day against the yen on concern that Greece and other European countries will struggle to raise funds to repay maturing debt. Europe’s currency weakened versus 14 of 16 major counterparts after the Financial Times cited an unidentified official as saying Greece plans to sell up to $10 billion of bonds in the U.S. this month as demand for its debt wanes in Europe. The yen also strengthened on speculation Japanese exporters bought the currency after it fell to a seven-month low against the dollar. “People are still concerned that it’s not just Greece, there are some definite sovereign debt issues in the region,” said Phil Burke , chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. “The market is still bearish on the euro overall and still wants to sell on rallies.” The euro declined to 126.84 yen as of 9:31 a.m. in Tokyo from 127.25 in New York yesterday. The currency dropped to $1.3458 from $1.3484. The yen advanced to 94.26 per dollar from 94.37 yesterday, when it touched 94.79, the lowest level since Aug. 24. Greece needs to borrow a total of 32 billion euros ($43 billion) this year Petros Christodoulou , director general of the Public Debt Management Agency, said last month in a Bloomberg Television interview. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net ; Ron Harui in Singapore at rharui@bloomberg.net .

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Euro Declines on Speculation Greece Will Struggle to Raise Further Funds

April 5, 2010

By Candice Zachariahs and Ron Harui April 6 (Bloomberg) — The euro fell for a second day against the yen on concern that Greece and other European countries will struggle to raise funds to repay maturing debt. Europe’s currency weakened versus 14 of 16 major counterparts after the Financial Times cited an unidentified official as saying Greece plans to sell up to $10 billion of bonds in the U.S. this month as demand for its debt wanes in Europe. The yen also strengthened on speculation Japanese exporters bought the currency after it fell to a seven-month low against the dollar. “People are still concerned that it’s not just Greece, there are some definite sovereign debt issues in the region,” said Phil Burke , chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. “The market is still bearish on the euro overall and still wants to sell on rallies.” The euro declined to 126.84 yen as of 9:31 a.m. in Tokyo from 127.25 in New York yesterday. The currency dropped to $1.3458 from $1.3484. The yen advanced to 94.26 per dollar from 94.37 yesterday, when it touched 94.79, the lowest level since Aug. 24. Greece needs to borrow a total of 32 billion euros ($43 billion) this year Petros Christodoulou , director general of the Public Debt Management Agency, said last month in a Bloomberg Television interview. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net ; Ron Harui in Singapore at rharui@bloomberg.net .

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At Least 35 Killed in Baghdad Blasts; Iran, Egyptian Embassies Targeted

April 4, 2010

By Daniel Williams April 4 (Bloomberg) — Three bombs exploded in Baghdad today as political parties hold talks on forming a new Iraqi government following last month’s parliamentary elections. Al-Jazeera, an Arabic language satellite television channel, said the car bombs, which hit almost simultaneously this morning, killed at least 30 people. One exploded outside the Iranian embassy, another in western Mansour district, and a third detonated near the German ambassador’s residence on a street that houses several other legations. Men disguised as soldiers yesterday killed 25 people in an assault on a village on the southern outskirts of Baghdad. Talks among major political factions to form a new government continue. The March 7 vote followed largely ethnic and religious lines and no party won a majority of the 325 seats at stake. Former Prime Minister Ayad Allawi’s secular Iraqiya bloc won 91 seats to the 89 secured by incumbent Prime Minister Nouri al-Maliki’s Shiite State of Law group. The two men are rivals to become prime minister and need allies to obtain a majority of 163 seats. Delays in forming a new government may hamper President Barack Obama’s plan to reduce U.S. troop strength in Iraq from 96,000 to 50,000 by August. The Iraqi government that emerges will face disputes over sharing oil revenue among regions and whether to include the oil-rich city of Kirkuk in the Kurdish autonomous region, as well as coping with hostilities between Shiites and Sunnis. To contact the reporters on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net .

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At Least 35 Killed in Baghdad Blasts; Iran, Egyptian Embassies Targeted

April 4, 2010

By Daniel Williams April 4 (Bloomberg) — Three bombs exploded in Baghdad today as political parties hold talks on forming a new Iraqi government following last month’s parliamentary elections. Al-Jazeera, an Arabic language satellite television channel, said the car bombs, which hit almost simultaneously this morning, killed at least 30 people. One exploded outside the Iranian embassy, another in western Mansour district, and a third detonated near the German ambassador’s residence on a street that houses several other legations. Men disguised as soldiers yesterday killed 25 people in an assault on a village on the southern outskirts of Baghdad. Talks among major political factions to form a new government continue. The March 7 vote followed largely ethnic and religious lines and no party won a majority of the 325 seats at stake. Former Prime Minister Ayad Allawi’s secular Iraqiya bloc won 91 seats to the 89 secured by incumbent Prime Minister Nouri al-Maliki’s Shiite State of Law group. The two men are rivals to become prime minister and need allies to obtain a majority of 163 seats. Delays in forming a new government may hamper President Barack Obama’s plan to reduce U.S. troop strength in Iraq from 96,000 to 50,000 by August. The Iraqi government that emerges will face disputes over sharing oil revenue among regions and whether to include the oil-rich city of Kirkuk in the Kurdish autonomous region, as well as coping with hostilities between Shiites and Sunnis. To contact the reporters on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net .

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Newcrest Mining Offers $8.4 Billion for Lihir Gold; Lihir Says Bid Too Low

March 31, 2010

By Rebecca Keenan April 1 (Bloomberg) — Newcrest Mining Ltd. , Australia’s largest gold mining company, offered to buy Lihir Gold Ltd. for A$9.2 billion ($8.4 billion) in shares and cash. Newcrest offered one of its shares for every nine Lihir shares plus 22.5 cents cash a share, Port Morseby, Papua New Guinea-based Lihir said today in a statement to the Australian stock exchange. It said the bid undervalued the company. “While the board recognized the strategic merits of the combination of the two companies, following careful review and analysis, directors unanimously determined that the offer did not represent good value for LGL shareholders,” Lihir said in the statement. The offer values Lihir shares at A$3.87 each, the company said. The stock closed at A$3.03 yesterday. Lihir is the second- largest gold mining company on the Australian stock exchange. To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

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Hartford Buys Back U.S. Stake in Insurer for $3.4 Billion to Exit Bailout

March 31, 2010

By Jamie McGee March 31 (Bloomberg) — Hartford Financial Services Group Inc. , the insurer that returned to profitability in the fourth quarter, repurchased preferred shares from the U.S. government for $3.4 billion to end a taxpayer-funded bailout. The government also received a final dividend payment of about $21.7 million, the insurer said today in a statement. Hartford, based in the Connecticut city of the same name, sold debt and stock to help fund the repayment. The Treasury Department still holds warrants to purchase about 52 million shares at $9.79 apiece. Hartford rose 45 cents to $28.49 as of 1:17 p.m. today on the New York Stock Exchange. The insurer said it doesn’t plan to buy back the warrants. “With the capital raise completed and the investment repaid, we are well positioned from both a capital and balance sheet perspective,” Hartford Chief Executive Officer Liam McGee said today in a statement. To contact the reporters on this story: Jamie McGee in New York at jmcgee8@bloomberg.net ;

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Ex-First Lady Barbara Bush Hospitalized for Checks, Houston Chronicle Says

March 28, 2010

By Christian Schmollinger and Kim Jordan March 28 (Bloomberg) — Former First Lady Barbara Bush has been hospitalized and is undergoing routine tests, the Houston Chronicle newspaper reported, citing Jean Becker, chief of staff for her husband, former President George H.W. Bush. “It was not an emergency,” the report quoted Becker as saying. Bush isn’t in any pain, Becker was cited as saying. She is expected to be released in a day or two. The former first lady, 84, underwent open-heart surgery to replace her aortic valve in March 2009, the Chronicle said. Bush was admitted to Methodist Hospital in Houston, the newspaper said. A spokeswoman there, Stefanie Asin, declined to comment to Bloomberg News. Bush family spokesman Jim Appleby didn’t reply immediately to an e-mail for comment. To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net ; Kim Jordan in Houston at kjordan2@bloomberg.net

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Sinopec Profit More Than Doubles on Lower Crude Oil Costs, Higher Sales

March 28, 2010

By Bloomberg News March 28 (Bloomberg) — China Petroleum & Chemical Corp. , Asia’s biggest refiner, more than doubled its net income last year after the government increased fuel prices and crude oil costs fell. Profit rose to 61.8 billion yuan ($9.1 billion) from 28.5 billion yuan in 2008, according to results released today by SSE InfoNet Ltd., a unit of the Shanghai stock exchange. Huang Wensheng , the Beijing-based spokesman of China Petroleum, known as Sinopec, declined to comment. Sinopec was due to announce earnings through the Shanghai and Hong Kong stock exchanges before the market open tomorrow. China raised fuel prices in the world’s fastest-growing major economy five times last year compared with once in 2008, while the average cost of crude oil dropped 38 percent amid the global economic slowdown. Sinopec’s earnings this year may fall as the government reins in energy costs to cool inflation. “I’m not as optimistic as I was for 2009 as inflation may prevent the government from adjusting fuel prices frequently,” Wang Aochao , head of China energy research at UOB-Kay Hian in Shanghai, said before the earnings announcement. “The authorities seem to have been cautious in raising prices so far this year.” Sinopec posted a full-year profit that beat analyst estimates. The median profit forecast of 15 analysts surveyed by Bloomberg News was 61.2 billion yuan. Refining operating profit in 2009 was 23.1 billion yuan, compared with a loss a year earlier, according to today’s statement. Revenue fell to 1.35 trillion yuan. Analyst Forecast Profit may rise to 63.73 billion yuan in 2010, according to a survey of 15 analyst estimates compiled by Bloomberg. Consumer prices rose 2.7 percent from a year earlier in February, the biggest increase in 16 months, the National Bureau of Statistics said on March 11. The government aims to keep the 2010 inflation rate below 3 percent. Sinopec, the country’s second-biggest oil company and supplier of 80 percent of China’s fuel needs, has risen 28 percent in Hong Kong trading over the past year compared with a 49 percent gain in the benchmark Hang Seng Index. Cnooc Ltd., China’s biggest offshore oil producer, has climbed 52 percent in the same period, while PetroChina Co. , China’s largest energy company, has advanced 30 percent. — Wang Ying , Baizhen Chua and John Duce . Editors: Ang Bee Lin , Ryan Woo . To contact the reporters on this story: Wang Ying in Hong Kong at Ywang30@bloomberg.net ;

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Qualcomm Raises Quarterly Forecasts on Semiconductor Demand; Shares Climb

March 25, 2010

By Katie Hoffmann March 25 (Bloomberg) — Qualcomm Inc. , the biggest maker of mobile-phone chips, climbed the most in more than a year in Nasdaq Stock Market trading after boosting its second-quarter profit and sales forecasts. Profit, excluding some items, will be 56 cents to 58 cents a share in the period ending this month, compared with an earlier target of as much as 53 cents, Qualcomm said today in a statement. Sales will amount to at least $2.55 billion, compared with a previous goal of at least $2.4 billion. Chief Executive Officer Paul Jacobs credited the increase to “favorable volume and product mix” in the chip business. Consumers are spending more on advanced phones, increasing the royalties Qualcomm receives from handset makers, said Bill Kreher , an analyst at Edward Jones & Co. in St. Louis. “Tech spending is certainly ramping up,” said Kreher, who recommends buying the shares and doesn’t own any. “Qualcomm stands to benefit more than anyone.” Qualcomm, based in San Diego, rose $2.92, or 7.3 percent, to $43.11 at 10:21 a.m. New York time in Nasdaq trading. Earlier, the shares climbed to $43.84, the most since November 2008. The shares had dropped 13 percent this year before today. The profit forecast indicates Qualcomm’s royalties are rebounding, calming investors after that figure fell short of estimates last quarter, said Stacy Rasgon , an analyst at Sanford C. Bernstein & Co. in New York. “People were really concerned,” said Rasgon, who rates the stock ‘outperform’ and doesn’t own any. Qualcomm gets most of its revenue from supplying chips to phone makers. Global handset sales may climb as much as 13 percent this year after dropping in 2009, according to researcher Gartner Inc. Analysts on average predicted profit of 52 cents a share on sales of $2.57 billion, according to a Bloomberg survey . On March 2, Qualcomm said its earnings would be at the high end of its previous forecast. To contact the reporters on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

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Traders’ Mobile Phones Would Be Recorded in U.K. Plan to Curb Inside Deals

March 18, 2010

By Caroline Binham March 18 (Bloomberg) — Traders’ mobile-telephone calls may be taped in an effort to stamp out insider trading, according to proposals from the U.K. financial regulator. Cell phones used for business shouldn’t be exempt from rules requiring banks and brokerages to record employees’ calls, that the Financial Services Authority can listen to later, under proposals the agency said may take effect as soon as next year. Around 22,000 phones would be covered, the FSA said. “Some would say that it is about time that mobile-phone technology should catch up with the procedures for other communication types,” said Tony Woodcock , a lawyer at London- based Stephenson Harwood. “But it does mean that determined miscreants will find other means such as private mobiles, or others’ mobiles, to effect the trading more clandestinely.” The U.S. insider-trading case against Galleon Group LLC’s chief executive officer, Raj Rajaratnam , was brought using evidence in part from mobile-phone conversations the government got permission to wiretap. The FSA is increasing efforts to stamp out insider trading after criticism from lawmakers that it wasn’t doing enough. It won a jail sentence against a former trader last week for the crime, which carries a maximum sentence of seven years, and this week filed charges in another case against a former banker. Mobile-Phone Ban Companies should make sure employees don’t use private phones or e-mail for business to circumvent the recording, the FSA said. Banks would have the option of banning employees from using mobiles for business use, the regulator said. “Removing the exemption will provide an additional source of contemporaneous voice conversations and electronic communication evidence,” the FSA said today. “This can also help us to counter market abuse, one of our key priorities.” The FSA started to cold-call traders to interview them under caution two years ago about possible insider trading, a strategy that fell prey to hoax calls. The regulator had never filed a case of insider trading before 2008. It has since won all three of the cases it has brought, with another against two former mergers and acquisitions lawyers and an ex-financial officer scheduled to begin next month. FSA Chief Executive Officer Hector Sants said yesterday that insider trading remains “unacceptably high.” Suspicious trades, which can indicate insider trading, have risen in the face of increased FSA activity. They occurred before 29.3 percent of takeovers in 2008, up from 28.7 percent in 2007, and 23.7 percent in 2005, according to FSA data. To contact the reporters on this story: Caroline Binham in London at cbinham@bloomberg.net

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Worst Returns Fail to Make U.S. Telephone Stocks Cheap: Chart of the Day

March 16, 2010

By Lu Wang and Rita Nazareth March 16 (Bloomberg) — Telephone companies in the U.S. including AT&T Inc. have posted the worst returns during the yearlong rally in the Standard & Poor’s 500 Index, and their shares are expensive considering their growth prospects. The top panel on the CHART OF THE DAY shows phone shares have risen 21 percent since March 9, 2009, the smallest advance among 10 industries in the S&P 500. The bottom panel shows the group’s PEG ratio, calculated by dividing its price-to-earnings multiple by forecast profit growth, is the highest at 2.8, according to data compiled by Leuthold Group LLC. The high valuation suggests AT&T and Verizon Communications Inc., the biggest U.S. telephone companies, may keep lagging behind, said Keith Wirtz , who oversees $18 billion as chief investment officer at Fifth Third Asset Management Inc. in Cincinnati. The group is the only one among 10 where analysts don’t foresee profit growth this year, according to average estimates compiled by Bloomberg. “These are going to be slow growers for a while because of the level of competition,” said Wirtz, whose firm is underweight phone stocks, meaning it owns less than their representation in benchmark stock indexes. “They may be pricey if you put on a three-to-five-year perspective.” The combined PEG ratio for the nine phone companies in the S&P 500 is twice the figure for the entire index, data from Minneapolis-based Leuthold show. To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net .

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Twin Lahore Blasts Leave 53 People Dead, 95 Injured, Rescue Service Says

March 12, 2010

By Khalid Qayum and Farhan Sharif March 12 (Bloomberg) — Two suicide bombings in Pakistan’s Lahore killed at least 20 people and wounded 45 others, the second attack in the city this week, police and rescue services said. Bombers targeted two cars in a convoy of army vehicles as they drove through an area where military officers are based, Chaudhry Shafeeq, a police spokesman, told reporters in Lahore. Most of those killed and injured are army members, he said. A suicide car bombing outside a Pakistan police building in the same city, Pakistan’s second largest, killed 12 people on March 8, the first attack this year on major northern cities struck repeatedly by Taliban militants in late 2009. Pakistan’s government blames the Tehrik-e-Taliban militant network based in tribal areas bordering Afghanistan for the terrorist attacks. The militants have increased bombings and gun attacks after the army launched its biggest offensive against Taliban guerrillas in October. The first explosion today occurred at 12:48 p.m. local time on a road near Lahore’s RA Bazar, according to Rescue 1122. The second blast followed seconds later, it said. Lahore is Pakistan’s cultural center and is located to the southeast of the capital, Islamabad. Since the army operation began last year, terrorists have hit major cities and towns killing at least 800 people. In a major setback for the Taliban, Pakistan says their leader, Hakimullah Mehsud, was killed by a missile fired from a U.S. drone aircraft in January. The Taliban deny Mehsud is dead. To contact the reporters on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net ;

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`Bullish’ Biggs Sees U.S. Stocks Advancing 10% to 15% in Next Few Months

March 9, 2010

By Rita Nazareth and Carol Massar March 9 (Bloomberg) — Barton Biggs , who recommended buying U.S. stocks in March of last year when the Standard & Poor’s 500 Index sank to a 12-year low, said American equities may rise 10 percent to 15 percent over the next couple of months. “I’m bullish,” Biggs, who runs New York-based hedge fund Traxis Partners LP, said in an interview with Bloomberg Television today. “Earnings are coming in very, very strong. The surprise is going to be how good economic growth is.” The S&P 500 is up 69 percent since hitting a 12-year low of 676.53 one year ago today , the biggest rally for the index since the 1930s. The U.S. government spent trillions of dollars to stimulate the economy out of the worst contraction since the Great Depression. Biggs also said the world’s most attractive equities are in emerging markets. “I like the Asian emerging markets, and particularly at this point China and India.” To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net ; Carol Massar in New York at cmassar@bloomberg.net ;

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U.S. Economy Could Add 300,000 Jobs This Month, First Trust’s Wesbury Says

March 9, 2010

By Vincent Del Giudice and Thomas R. Keene March 9 (Bloomberg) — The U.S. economy could add 300,000 jobs this month as businesses rebound from blizzards last month that prevented hiring in parts of the country, said Brian Wesbury , chief economist at First Trust Portfolios in Wheaton, Illinois. “We could easily see that,” Wesbury said today in an interview on Bloomberg Radio. “I don’t expect to see consistent gains of that size, but clearly March could be that number.” In February, the unemployment rate held at 9.7 percent and payrolls fell a less-than-forecast 36,000, the Labor Department reported March 5. Snowstorms prevented an estimated 1 million people from getting to work during the week that the Labor Department survey of households. Payrolls, which have fallen by an average of about 309,000 a month since the recession started in December 2007, haven’t increased by more than 300,000 in a single month since March 2006. “We will continue to see increases in economic activity,” Wesbury said. “The economy is getting better because it has an underlying force of productivity, enterprise, technology.” (In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.) To contact the reporters on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net ; Thomas R. Keene in New York tkeene@bloomberg.net .

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Toyota Says Electronics Test Cited in U.S. House Hearing Isn’t Realistic

March 8, 2010

By Jeff Plungis and Alan Ohnsman March 8 (Bloomberg) — Toyota Motor Corp. said a test of its electronic throttle-control system cited in testimony to Congress as possible evidence of a cause of unintended acceleration couldn’t occur in the real world. Toyota said David W. Gilbert, an associate professor of automotive technology at Southern Illinois University, altered a circuit in the accelerator pedal he tested, making it unreasonable to draw conclusions about vehicles on the road. The accelerator circuit in Gilbert’s test was “rewired and reengineered in multiple ways that is impossible in the real world,” a Toyota spokesman, Mike Michels , said at a demonstration at the automaker’s U.S. sales headquarters in Torrance, California, today. Gilbert testified before a House panel last month that he was able to isolate weaknesses in Toyota’s electronic throttles that aren’t found in units from other automakers. Toyota has recalled about 8 million cars and trucks worldwide for defects that may cause sudden acceleration. To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net .

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Toyota Plans Demonstration to Discredit Professor’s Throttle-Control Study

March 5, 2010

By Angela Greiling Keane and Alan Ohnsman March 6 (Bloomberg) — Toyota Motor Corp. plans to duplicate a professor’s findings critical of the automaker’s electronic throttle-control system in order to discredit them. Toyota, which has recalled about 8 million cars and trucks worldwide for defects that may cause sudden acceleration, will host a demonstration on March 8 with company and independent engineers who will refute an experiment by David W. Gilbert of Southern Illinois University, the company said yesterday in a statement. “This presentation will show that the sequence and nature of manipulated faults in the Gilbert demonstration are completely unrealistic under real-world conditions and can easily be reproduced on a wide range of vehicles made by other manufacturers,” Toyota, the world’s largest automaker, said in the statement. The event, available to reporters over the Internet, will take place at Toyota’s U.S. sales headquarters in Torrance, California. Gilbert, an associate professor of automotive technology at the SIU campus in Carbondale, Illinois, said in testimony before a House panel last week that he was able to isolate weaknesses in Toyota’s electronic throttles that aren’t found in units from other automakers. Toyota drew criticism at three congressional hearings in the past two weeks for dismissing electronics as a possible cause of unintended acceleration episodes that forced the recalls. Two Toyota managers resigned from an SIU advisory panel after Gilbert’s testimony. The Toyota City, Japan-based automaker has blamed sticky accelerators and floor mats for the episodes, which the U.S. government said March 2 have been linked in consumer complaints to 43 crashes that caused 52 deaths and 38 injuries. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net .

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