september

AIG Said to Cut Bonuses to Ex-Workers by $21 Million to Meet Feinberg Goal

by on March 14, 2010

By Hugh Son March 15 (Bloomberg) — American International Group Inc. , the bailed-out insurer, cut retention bonuses to be delivered to former employees today by about $21 million to meet a target imposed by U.S. paymaster Kenneth Feinberg , said a person briefed on the company’s plans. AIG will give a total of $46 million to about 70 recipients, a reduction of about one-third from what the New York-based firm originally promised, said the person, who declined to be identified because the payments were private. Some of the former workers from the company’s Financial Products unit are getting smaller bonuses because they took new jobs last year after departing AIG, said the person. “Under certain circumstances, the employee retention program allows them to offset income from other employers,” said Andrew Goodstadt , a partner at Thompson Wigdor & Gilly LLP who said he represents about a dozen of the AIG workers. “I trust AIG will comply with their contractual obligations.” AIG is seeking to satisfy Feinberg’s demand that the derivatives staff return $45 million they pledged to give back after a March 2009 backlash against the awards. The company needed a final $5 million in concessions after current employees opted to receive smaller bonuses in exchange for getting the cash weeks in advance of today’s deadline. Some departed workers rebuffed requests to cut their payouts, the person said. AIG may have surpassed its U.S.-imposed target, absent legal challenges from bonus recipients, the person said. Feinberg, the Obama administration’s special master for executive compensation, has say over some AIG pay because the insurer took a $182.3 billion bailout from the government. Feinberg’s Jurisdiction AIG needs to reach the goal to be allowed to raise salaries for top-earning employees under Feinberg’s jurisdiction, the U.S. Treasury Department has indicated to the insurer. The paymaster may disclose his 2010 compensation determinations for the 25 highest-paid AIG employees this month. Feinberg didn’t return a call or e-mail for comment late yesterday. The insurer handed out about $105 million in retention awards in February to about 200 current Financial Products workers, most of whom agreed to bonus cuts of 10 percent, the person said. AIG employees who were terminated last year were still entitled to their retention awards. While former employees had been asked to accept cuts of 20 percent, most had refused, the person said. Gainfully Employed The insurer responded by mailing questionnaires to ex- workers this month asking whether they’d earned income after leaving AIG. Under the program, compensation earned by former AIG staff last year from another employer would lower payouts to be delivered today. Christina Pretto , an AIG spokeswoman, declined to comment. The employees receiving the bonus awards worked in the Financial Products unit blamed for losses that pushed AIG to the brink of collapse in September 2008. The insurer committed more than $450 million to retain Financial Products workers needed to unwind derivative bets. In 2008 and 2009, AIG gave a combined total of more than $200 million, including $168 million in March of last year that was criticized by lawmakers. Employees pledged to return $45 million last year amid the backlash. When they fulfilled only $19 million of that promise, Feinberg demanded that AIG workers forgo the remaining $26 million when they got their 2010 awards. AIG said last month that it was overhauling its incentive system to reward employees for performance. A backlash against AIG’s bonuses for employees in the derivatives unit peaked in March of last year with President Barack Obama criticizing the awards. Feinberg, 64, formerly oversaw the September 11th Victim Compensation Fund. He is responsible for setting pay at firms including Chrysler Group LLC, GMAC Inc. and AIG that were among the top recipients of bailout funds. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net .

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AIG Said to Cut Bonuses to Ex-Workers by $21 Million to Meet Feinberg Goal

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Asian Stocks Fluctuate as Oil Price, Shipping Rates Drop; Telstra Advances

by on March 9, 2010

By Shani Raja and Satoshi Kawano March 10 (Bloomberg) — Asian stocks fluctuated as shipping lines declined after a measure of cargo-transport-rates fell, while Australia’s largest telephone company rose on speculation it will avoid a forced break-up. STX Pan Ocean Co., South Korea’s largest bulk-shipping line, dropped 1.9 percent in Seoul, and Kawasaki Kisen Kaisha Ltd., Japan’s third-largest line, fell 1.7 percent in Tokyo after shipping rates fell for the first time in almost two weeks. BHP Billiton Ltd. , Australia’s largest oil producer, lost 0.9 percent as crude oil futures declined for a second day. Telstra Corp. climbed 2.1 percent in Sydney after a newspaper said Australia’s government may fail to force it to split. “We don’t have a strong catalyst, so I’m expecting stocks to drift without a clear direction today,” said Hiroichi Nishi , an equities manager at Nikko Cordial Securities Inc. in Tokyo. The MSCI Asia Pacific Index was little changed at 122.73 as of 10:26 a.m. in Tokyo, with about as many stocks advancing as declining. The index has risen 74 percent since March 9 last year, when it sank to its lowest level since the September 2008 bankruptcy filing of Lehman Brothers Holdings Inc. Japan’s Nikkei 225 Stock Average was little changed at 10,551.54, and no major benchmark in the Asia-Pacific region moved more than 0.6 percent. The MSCI Asia Pacific Index has risen in the past year as governments worldwide bolstered their economies through increased spending. Shares in the gauge trade at 18.6 times estimated earnings on average, compared with 15 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Stoxx Europe 600 Index. To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net ; Satoshi Kawano in Tokyo skawano1@bloomberg.net .

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Asian Stocks Fluctuate After Australia Confidence Report; Shippers Decline

March 9, 2010

By Shani Raja and Satoshi Kawano March 10 (Bloomberg) — Asian stocks fluctuated as Australian consumer confidence rose, while shipping lines declined after a measure of cargo transport rates fell for the first time in almost two weeks. Virgin Blue Holdings Ltd. , Australia’s second-biggest airline, climbed 4 percent. David Jones Ltd. , the nation’s No. 2 department store chain, advanced 1.2 percent. STX Pan Ocean Co., South Korea’s largest bulk-shipping line, dropped 1.9 percent in Seoul, and Kawasaki Kisen Kaisha Ltd., Japan’s third-largest line, fell 1.7 percent in Tokyo. “We don’t have a strong catalyst, so I’m expecting stocks to drift without a clear direction today,” said Hiroichi Nishi , an equities manager at Nikko Cordial Securities Inc. in Tokyo. The MSCI Asia Pacific Index was little changed at 122.79 as of 9:30 a.m. in Tokyo, with about as many stocks advancing as declining. The index has risen 74 percent since March 9 last year, when it sank to its lowest level since the September 2008 bankruptcy filing of Lehman Brothers Holdings Inc. Australia’s S&P/ASX 200 Index and Japan’s Nikkei 225 Stock Average were also little changed. To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net ; Satoshi Kawano in Tokyo skawano1@bloomberg.net .

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AIG Top-Earning Managers May Get 2010 Salary Raises After Feinberg Review

March 2, 2010

By Hugh Son and Ian Katz March 2 (Bloomberg) — American International Group Inc. , the bailed-out insurer, may be allowed by the U.S. paymaster to boost salaries for some of its highest-compensated executives, two people with knowledge of the matter said. Among AIG’s 25 top-paid managers, some will get raises of less than 10 percent, while others will have their pay cut, according to one of the people, who declined to be identified because final determinations haven’t been made. The reductions would be smaller than in 2009, the person said. An announcement may be made this month, the people said. AIG’s top leaders had their cash salaries slashed by an average of 91 percent last year as Kenneth Feinberg , the Obama administration special master for executive compensation, used more stock to link awards to company performance. AIG Chairman Harvey Golub told shareholders last week that the cuts made “ little business sense” because the firm couldn’t keep some of its best mangers. “Feinberg realizes that to retain talent, you can’t be as confining as they were last year,” said Jeanne Branthover , a managing director at Boyden Global Executive Search Ltd. in New York. “For AIG to be successful and pay back the government, it’s all about their people.” Feinberg, a Washington lawyer, controls pay for the 25 top- earners at AIG and advises on the compensation for the next 75 workers. Less than half of the group of 25 may get raises, and overall individual awards, including deferred compensation, won’t necessarily increase, said one of the people. Mark Herr , an AIG spokesman, declined to comment. “We are in the middle of discussions with AIG and nothing has been decided,” Andrew Williams , a Treasury spokesman, said in an e-mailed statement. “As we have said before, we are not going to provide a running commentary on Mr. Feinberg’s work.” Benmosche, Hancock In October, Feinberg instituted a $500,000 base salary cap for most employees of AIG, which is majority owned by the government after a bailout that swelled to $182.3 billion. Exceptions were made for those considered essential to AIG’s success, including Chief Executive Officer Robert Benmosche , 65, and Peter Hancock , the former chief financial officer of a predecessor to JPMorgan Chase & Co. Benmosche secured a salary of $3 million in cash and $4 million in stock last year. Hancock, who oversees finance and risk, is getting $1.5 million in cash and $2.4 million in stock, AIG said last month. More than 60 managers have left AIG since its 2008 rescue, including General Counsel Anastasia Kelly , who told Fortune magazine last month that her $900,000 base salary would have been slashed to $500,000 and that she might have jeopardized a severance payment if she stayed. About half the executives on the previous top-25 list have departed since the insurer’s September 2008 bailout, and several managers who had been in the group of 75 last year are now among the top 25 earners, said one of the people. Bailed Out “AIG owes the taxpayer a huge amount of money and we want to make sure that my compensation practices take into account the need for AIG to thrive,” Feinberg said in a Dec. 11 interview with Bloomberg Television. Feinberg, 64, formerly oversaw the September 11th Victim Compensation Fund. He is responsible for setting pay at firms including Chrysler Group LLC, GMAC Inc. and AIG that were among the top recipients of bailout funds. AIG said last month that it was overhauling its incentive system to reward employees for performance. A backlash against AIG’s bonuses for employees in the derivatives unit blamed for the firm’s near-collapse peaked in March of last year with President Barack Obama criticizing the awards. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net Ian Katz in Washington at ikatz2@bloomberg.net .

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Zazi Pleads Guilty to `Martyrdom’ Plot Targeting New York’s Subway System

February 22, 2010

By Patricia Hurtado Feb. 22 (Bloomberg) — Najibullah Zazi, accused of conspiring to detonate a bomb in New York around the anniversary of the Sept. 11, 2001, terrorist attacks, will plead guilty to federal charges, a U.S. judge said. Zazi, an Afghan immigrant who once lived in Queens, New York, will plead guilty to three felony charges, said U.S. District Judge Raymond Dearie at a hearing today in Brooklyn. Zazi, who worked as an airport shuttle-van driver in Denver, was charged in September with training at an al-Qaeda terrorist camp and conspiring to detonate an improvised explosive device in New York. He previously pleaded not guilty. Attorney General Eric Holder called the plot one of the most serious terror threats to the U.S. since the Sept. 11 attacks. Authorities said they found bomb-making instructions on a laptop in Zazi’s possession, including a recipe for an explosive intended for use in the 2001 plot to blow up an airplane by “shoe bomber” Richard Reid , prosecutors said. Zazi and three unidentified associates allegedly bought components for explosive devices from July to September, the U.S. said in an indictment unsealed on Sept. 24. Zazi’s father, Mohammed Wali Zazi , was also charged in the alleged plot. The elder Zazi, charged initially in September with lying to investigators, was indicted on new charges on Feb. 1, accused of conspiring to obstruct a federal grand jury investigation into terrorism. Prosecutors alleged that the father destroyed or hid eyeglasses, masks, liquid chemicals and containers sought in the probe of his son. Father’s Bail A federal magistrate judge ordered on Feb. 17 that Mohammed Wali Zazi be released if he posted a $50,000 bond. Deborah Colson, a lawyer for the elder Zazi, declined to comment when asked last week if her client was cooperating with prosecutors. The younger Zazi faces as long as life in prison if convicted of the charge of conspiracy to use explosives against people or property in the U.S. The Federal Bureau of Investigation said he conspired with at least three others, according to court papers. Assistant U.S. Attorney Jeffrey Knox told the judge at an earlier hearing that the government’s evidence against Zazi was “voluminous” and he said the conspiracy was “international in scope.” Prosecutors alleged in Zazi’s indictment that he traveled last year to Pakistan, attended an al-Qaeda training camp and returned to the U.S. with bomb-making instructions. Beauty Supplies Zazi’s lawyer, Michael Dowling, said after a court appearance in September that his client went to Pakistan and said Zazi later buying beauty supply products containing certain chemicals “that can be used allegedly to make a bomb.” Those chemicals aren’t illegal, Dowling said. Zazi, has been in custody since his arrest after Dearie said there wasn’t any combination of conditions that would ensure his appearance or the safety of the community. The case is U.S. v. Najibullah Zazi, 09-CR-00663, U.S. District Court for the Eastern District of New York (Brooklyn). To contact the reporter on this story: Patricia Hurtado in federal court in Brooklyn, New York, at pathurtado@bloomberg.net .

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Lehman Bankruptcy Advisers Get $641.9 Million in 16 Months, Filings Show

February 21, 2010

By Linda Sandler Feb. 20 (Bloomberg) — Lehman Brothers Holdings Inc. , the investment bank liquidating in bankruptcy, paid its lawyers and other advisers $641.9 million in 16 months since September 2008, according to a regulatory filing. The restructuring firm Alvarez & Marsal LLC, which provided Lehman with its current chief executive officer, Bryan Marsal , led the payments with $233 million in fees for “interim management” through January, according to the filing yesterday with the U.S. Securities and Exchange Commission. Weil Gotshal & Manges LLP of New York collected $149.5 million for acting as the investment bank’s lead bankruptcy law firm. Milbank Tweed Hadley & McCloy LLP got $42.4 million for advising Lehman’s creditors’ committee. Lehman and its affiliates reported cash holdings of $17.6 billion on Jan. 31, an increase from $17.2 billion a month earlier. Lehman, once the world’s fourth-biggest investment bank, is liquidating in bankruptcy to pay creditors. Its payments to advisers haven’t faced major challenges such as those in the case of bankrupt automaker Chrysler LLC, which is using U.S. Treasury loans to wind itself down. Lehman filed the biggest U.S. bankruptcy in September 2008 with assets of $639 billion. Creditors include UBS AG , the New York Giants and Abu Dhabi Investment Authority as well as individuals who hold Lehman bonds. The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net .

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Tehran to privatize 20 power plants by September

February 18, 2010

Tehran to privatize 20 power plants by September

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Housing Starts in U.S. Rose More Than Anticipated in January; Permits Fell

February 17, 2010

By Timothy R. Homan Feb. 17 (Bloomberg) — Housing starts in the U.S. rose in January to a higher level than anticipated, a sign that government support is helping to stabilize the real estate market. Work began on 591,000 houses at an annual rate last month, up 2.8 percent from December, figures from the Commerce Department showed today in Washington. Permits , a sign of future construction, fell less than anticipated after rising in December to the highest level since October 2008. The extension and expansion of a homebuyer tax credit may boost demand in the coming months. At the same time, builders will have to contend with mounting foreclosures and an unemployment rate that’s projected to end the year at 9.5 percent. “The housing recovery is under way,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “Housing starts may be sluggish in the near term until sales pick up and builders gain more confidence about the outlook.” Starts were projected to increase to a 580,000 pace last month according to the median estimate of 77 economists surveyed by Bloomberg News. Projections ranged from 530,000 to 700,000. The government revised December’s reading to a 575,000 pace from the 557,000 previously estimated. For all of 2009, builders broke ground on 554,500 houses, the fewest since records began in 1959. The annual rate was down 39 percent from 905,500 in 2008, the second-lowest level on record. Today’s report showed building permits in January decreased 4.9 percent to a 621,000 pace from a 653,000 rate in December. Permits were forecast to fall 5.1 percent to a 620,000 rate. Single-Family Homes Construction of single-family houses increased 1.5 percent to a 484,000 pace. Work on multifamily homes, such as townhouses and apartment buildings, climbed 9.2 percent to an annual rate of 107,000. Three of four regions showed an increase in starts in January, led by a 10 percent gain in the Northeast. The West showed an 8.9 percent increase and the South posted a 1 percent gain. Part of the increase in January housing starts may reflect warmer weather, compared with the monthly average and colder- than-average temperatures in December. The previous month was the 14th coldest December and the 11th wettest in 115 years of record-keeping, according to the National Climatic Data Center in Asheville, North Carolina. Housing’s Obstacles Obstacles remain to a sustainable housing recovery. Rising foreclosures are adding to inventory and may discourage some builders from beginning construction. A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of that month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April. Confidence among U.S. homebuilders in February rose more than anticipated, the National Association of Home Builders/Wells Fargo said yesterday. The group’s index increased to a three- month high of 17 in February from 15 the prior month. Readings below 50 mean most respondents view conditions as poor. Employment Outlook Any sustained housing recovery will require gains in employment, economists said. The U.S. has lost 8.4 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg earlier this month forecast joblessness will end the year at 9.5 percent, down from January’s 9.7 percent unemployment rate reported by the Labor Department. D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, this month reported its first quarterly profit since 2007. “We expect our September quarter will be the most challenging as a tax credit support for home sales will have expired,” Donald J. Tomnitz, president and chief executive officer, said during a Feb. 2 earnings call. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Housing Starts in U.S. Increased 2.8% in January; Building Permits Fell

February 17, 2010

By Timothy R. Homan Feb. 17 (Bloomberg) — Housing starts in the U.S. rose in January to a higher level than anticipated, a sign that government support is helping to stabilize the real estate market. Work began on 591,000 houses at an annual rate last month, up 2.8 percent from December, figures from the Commerce Department showed today in Washington. Permits , a sign of future construction, fell less than anticipated after rising in December to the highest level since October 2008. The extension and expansion of a homebuyer tax credit may boost demand in the coming months. At the same time, builders will have to contend with mounting foreclosures and an unemployment rate that’s projected to end the year at 9.5 percent. “The housing recovery is under way,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “Housing starts may be sluggish in the near term until sales pick up and builders gain more confidence about the outlook.” Starts were projected to increase to a 580,000 pace last month according to the median estimate of 77 economists surveyed by Bloomberg News. Projections ranged from 530,000 to 700,000. The government revised December’s reading to a 575,000 pace from the 557,000 previously estimated. For all of 2009, builders broke ground on 554,500 houses, the fewest since records began in 1959. The annual rate was down 39 percent from 905,500 in 2008, the second-lowest level on record. Today’s report showed building permits in January decreased 4.9 percent to a 621,000 pace from a 653,000 rate in December. Permits were forecast to fall 5.1 percent to a 620,000 rate. Single-Family Homes Construction of single-family houses increased 1.5 percent to a 484,000 pace. Work on multifamily homes, such as townhouses and apartment buildings, climbed 9.2 percent to an annual rate of 107,000. Three of four regions showed an increase in starts in January, led by a 10 percent gain in the Northeast. The West showed an 8.9 percent increase and the South posted a 1 percent gain. Part of the increase in January housing starts may reflect warmer weather, compared with the monthly average and colder- than-average temperatures in December. The previous month was the 14th coldest December and the 11th wettest in 115 years of record-keeping, according to the National Climatic Data Center in Asheville, North Carolina. Housing’s Obstacles Obstacles remain to a sustainable housing recovery. Rising foreclosures are adding to inventory and may discourage some builders from beginning construction. A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of that month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April. Confidence among U.S. homebuilders in February rose more than anticipated, the National Association of Home Builders/Wells Fargo said yesterday. The group’s index increased to a three- month high of 17 in February from 15 the prior month. Readings below 50 mean most respondents view conditions as poor. Employment Outlook Any sustained housing recovery will require gains in employment, economists said. The U.S. has lost 8.4 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg earlier this month forecast joblessness will end the year at 9.5 percent, down from January’s 9.7 percent unemployment rate reported by the Labor Department. D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, this month reported its first quarterly profit since 2007. “We expect our September quarter will be the most challenging as a tax credit support for home sales will have expired,” Donald J. Tomnitz, president and chief executive officer, said during a Feb. 2 earnings call. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Mail On President’s Day 2010: Status Of Post Offices, President’s Day Mail

February 15, 2010

For those wondering if there is mail on President’s Day 2010, there is not. There is no mail in the United States on President’s Day since it is being observed as a federal holiday (Washington’s Birthday). Post offices are also closed as a result of President’s Day. There are a total of 10 federal holidays that affect mail and the post office. In addition to President’s Day, federal holidays in 2010 include: Friday, January 1 – New Year’s Day Monday, January 18 – Martin Luther King Jr’s Birthday Monday, May 31 – Memorial Day Sunday, July 4 – Independence Day Monday, September 6 – Labor Day Monday, October 11 – Columbus Day Wednesday, November 11 – Veterans Day Thursday, November 25 – Thanksgiving Day Saturday, December 25 – Christmas Day

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Madoff Apartment Goes Into Contract: Unknown Buyer Purchase Madoff Penthouse (PHOTOS)

February 8, 2010

After nearly five months on the market, Bernie Madoff’s penthouse apartment has gone into contract . The swanky Upper East Side pad was originally listed for $9.9 million back in September, but was later cut to $8.9 million. No word yet on who purchased the 133 East 64th Street apartment. CHECK OUT THE PONZI KING’s LAIR:

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Community Capital Corp. Reports Operating Results (10-Q/A)

January 29, 2010

of Business Operations: A significant portion of our loan portfolio is comprised of loans secured by either commercial real estate or single family homes that are under construction. As of September 30, 2009, $177.6 million, or 29.5% of our total loans,

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Apple’s Mac, IPhone Shipments Are Investor `Bogeys’ Following Share Run-Up

January 25, 2010

By Connie Guglielmo Jan. 25 (Bloomberg) — Apple Inc. may need to deliver first-quarter sales of almost 9 million iPhones and more than 3 million Macs to appease investors, who have already driven the shares to a record in anticipation of a new tablet device. “Investors are thinking: 3.1 million to 3.2 million Macs and phones of 8.8 million,” said Gene Munster , an analyst with Piper Jaffray & Co. “Those are the two bogeys.” The holiday shopping season has been Apple’s biggest sales quarter for the past four years, and analysts surveyed by Bloomberg are predicting record revenue and profit when the company reports first quarter earnings today. The iPhone and Mac together accounted for more than 60 percent of its $9.87 billion in sales in the fourth quarter. Apple will follow today’s earnings report with a product event on Jan. 27. The company plans to unveil its long-awaited tablet computer, a person familiar with the matter said earlier this month. Analysts have speculated for at least a year that Apple is building a larger-screen version of its iPod Touch, which would let users watch movies, read books and surf the Internet. Apple , based in Cupertino, California, climbed to a record closing price of $215.04 on Jan. 19, the day after the company sent out invitations to the product event. The shares, which more than doubled last year, rose $3.26 to $201.01 at 11:55 a.m. in Nasdaq Stock Market trading. First-Quarter Earnings “We think the December quarter will be enough to keep the stock going higher into the event,” said Munster, a Minneapolis-based analyst who recommends buying the shares. He doesn’t own the stock personally. “But after the event, history will likely repeat itself with the typical sell on the news.” For the first quarter, analysts are estimating a 19 percent jump in sales to $12.1 billion and profit of $2.08 a share, according to Bloomberg survey . In October, Apple forecast sales of $11.3 billion to $11.6 billion and profit of as much as $1.78 a share. The company typically tops its forecast and analysts’ estimates, Bloomberg data show. Munster predicts Apple will report sales of 9.3 million iPhones and 3.1 million Macs, up from 4.36 million phones and 2.52 million computers a year ago. Toni Sacconaghi , an analyst at Sanford C. Bernstein & Co. in New York, is counting on sales of 8.5 million iPhones and 3.1 million Macs. Andy Hargreaves of Pacific Crest Securities Inc. in Portland, Oregon, says investors are expecting 9.1 million to 9.2 million iPhones. ‘The Key Issue’ “IPhone shipments will be the key issue this quarter,” Sacconaghi, the top-ranked computer analyst by Institutional Investor magazine, said in a note last week. Some investors may have set their expectations too high, at 10 million or more, he said. That enthusiasm may be driven in part by Apple’s entry last quarter into China, the world’s biggest mobile-phone market. China Unicom (Hong Kong) Ltd. said last month that it has sold more than 100,000 iPhones since the product debuted in the country in October. IPhone shipments broke a record in the September quarter, with 7.4 million units sold. Apple ’s release of the faster, thinner 3GS model fueled those orders. The iPhone, which first debuted in June 2007, is now sold in more than 80 markets. Shaw Wu , an analyst with Kaufman Bros. in San Francisco, said he’s looking for shipments of 9.5 million iPhones — with total sales at $12.4 billion and earnings of $2.15 a share. Whether Apple tops his estimates or not, Wu doesn’t expect investors to abandon what he describes as a “cult stock.” “Apple is almost a hero to investors — it’s one of the few companies which is doing extremely well,” said Wu, who recommends buying the shares. “There are high expectations, but there’s also a positive bias toward Apple, which is why we don’t expect it to sell off that much. It’s a must-own stock.” To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

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‘Long, slow burn’ in foreclosure properties

January 18, 2010

prefer not to take a hit on their balance sheets all at once by releasing a flood of distressed properties to market. FirstAmerican CoreLogic, for example, has estimated a at the close of September 009, a rise from 1.1 million at the same time in the

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MBA Sees Distress in Q3 Commercial Real Estate Data

January 5, 2010

may have declared that the recession technically ended with the third quarter, its effects are still plaguing the real estate industry. The Association’s Quarterly Databook for the period ended September 30 shows that the market has yet to show many

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by Macon Ramos Araneta (Manila Standard Today)

January 1, 2010

THE Sandiganbayan will re-open the graft cases against Reps. Rodolfo Valencia and Alfonso Umali of Mindoro Oriental, who were convicted in September of illegal disbursement of government funds.

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Sumitomo Mitsui to Study Share Sale as Banks Urged to Boost Capital Ratios

December 28, 2009

By Finbarr Flynn and Takako Taniguchi Dec. 29 (Bloomberg) — Sumitomo Mitsui Financial Group Inc. will consider whether to sell more stock after regulators called for tighter capital standards and larger rival Mitsubishi UFJ Financial Group Inc. raised 1 trillion yen ($11 billion). “We have to stay competitive,” Sumitomo Mitsui President Teisuke Kitayama , 63, said in an interview at the Tokyo headquarters of Japan’s second-largest bank by market value. “It’s not a case of copying somebody, but we need to fully examine the matter to make sure we’re not slow off the block.” An agreement with shareholders not to sell new stock expired Dec. 21, freeing Sumitomo Mitsui to add to the 861 billion yen it raised in a share sale six months ago. Smaller competitor Mizuho Financial Group Inc. , which has the weakest capital among Japan’s major banks, is barred under a similar agreement from selling stock until Jan. 11. The Basel Committee on Banking Supervision , seeking to avoid a repeat of the global financial crisis, said Dec. 17 that banks worldwide should increase the amount of equity and retained earnings they hold to better shield them from losses. Japanese lenders have weaker capital ratios than their global rivals and their shares have underperformed this year, according to data compiled by Bloomberg. Japan’s Financial Services Agency said banks may have 10 years or more to comply with new capital standards. The Basel Committee won’t make final decisions until the end of 2010, as banks repair balance sheets weakened by $1.7 trillion of losses and writedowns during the credit crisis. Banks Can’t Hide The Topix Banks Index of 84 Japanese lenders has fallen 21 percent since Jan. 1, its fourth straight annual loss. The KBW Bank Index tracking 24 U.S. lenders including Bank of America Corp. slid 2.2 percent in the same period. “It is indisputable that, even though interim measures and transition periods will be put in place, banks will not be able to hide from tougher regulations,” Citigroup Inc. analysts Hironari Nozaki and Kana Saito said in a Dec. 18 report. Sumitomo Mitsui “is likely to raise capital.” Japanese banks’ weaker capital ratios are a legacy of more than $1 trillion of loan losses since the country’s property bubble burst in the early 1990s. Mitsubishi UFJ, Mizuho and Sumitomo Mitsui trail overseas peers such as JPMorgan Chase & Co. and HSBC Holdings Plc in share capital, even after raising 2.8 trillion yen in stock sales in the past 12 months. Explanation Needed Sumitomo Mitsui had a Core Tier 1 ratio, an indicator of its ability to absorb losses, of 5.9 percent at the end of September, according to UBS AG. Mizuho’s ratio was 4.4 percent and that of Mitsubishi UFJ probably rose to 7.9 percent after its share sale this month, UBS has estimated. JPMorgan, the second-largest U.S. bank, had a Core Tier 1 ratio of 8.2 percent at the end of September and HSBC, Europe’s biggest bank, was at 8.8 percent on June 30. Should Sumitomo Mitsui choose to sell shares, it would have to demonstrate to investors how it can boost earnings per share in the next three to four years, Kitayama said. “We’d have to explain unambiguously to investors how this would lead to greater corporate value, and that is important,” he said. Sumitomo Mitsui’s shares have slumped 34 percent this year, after dropping 55 percent in 2008 and 31 percent in 2007, cutting its market value to 2.8 trillion yen. The share drop came even as it rebounded with two quarterly profits after posting a loss of 373.5 billion yen in the 12 months to March 31 on bad loans and declines in its stocks portfolio. Stock Holdings Kitayama also said the company must try to reduce its holdings of equities, citing stock market volatility as a risk for earnings. Sumitomo Mitsui’s banking unit held 1.98 trillion yen of stock investments at the end of September, according to its first-half financial report . Kitayama didn’t provide details on any planned reduction in the portfolio. Sumitomo Mitsui, which in October acquired Citigroup Inc.’s Nikko Cordial Securities Inc. and the underwriting divisions of Nikko Citigroup Ltd., will hire more bankers to boost its corporate and investment banking business, Kitayama said without providing more detail. “We want to be fully equipped in two or three years,” he said. To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

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Dean Baker: Fannie Mae and Freddie Mac: Just a Four-Letter Word?

December 28, 2009

That word would be “TARP” of course. The night before Christmas, the Treasury announced that these two bankrupt mortgage giants would get an unlimited draw on the taxpayers’ dollars. This looks a lot like TARP. Just to remind everyone, the original TARP program was about buying up bad assets from banks. It had the appearance of the mother of all bailouts, as it seemed likely that the government would overpay for these assets, handing public money to bankrupt banks. The TARP changed course, with the government providing hundreds of billions of dollars of loan money to banks at a time when the private sector had no confidence in the banking system. The TARP, along with the much larger lending programs from the Federal Reserve Board and the FDIC, succeeded in preventing the financial system from collapsing. The banks are now back on their feet, with near record profits and near record bonuses for the executives who are so skilled in getting public money. The largest banks have now repaid their TARP money, with many smaller banks anxious to follow suit in order to avoid troubling questions about how they have used their taxpayer dollars. The major exception to the happy picture in the financial sector is the plight of Fannie Mae and Freddie Mac. Officially, the Treasury reports that together the two companies have drawn just over $100 billion on their $400 billion line of credit from the government. But this story is very hard to reconcile with the decision to enlarge this line of credit without limit. The Treasury claims this was done to assure the financial markets that the government would stand behind the debt of the two mortgage giants. Since Fannie and Freddie went into conservatorship in September of 2008, it has been explicit policy that the government would back up their debt. Originally, $200 billion was committed for this purpose. That amount was subsequently doubled to $400 billion (almost half of the ten-year cost of the health care bill). If the bad debts to date have only forced Fannie and Freddie to draw just $100 billion, isn’t a commitment equal to four times prior losses sufficient to maintain the confidence of financial markets? The arithmetic on this is very hard to understand. While Fannie and Freddie did get into subprime near the peak of the bubble in 2005, the vast majority of their assets were still tied to prime mortgages. These are mortgages in which people had to put 20 percent down or buy mortgage insurance. The combined portfolios and guarantees of the two companies were $5.5 trillion at the time of their takeover. Suppose that 10 percent of their mortgages went bad (an extremely high rate for prime mortgages). This would put $550 billion at risk. If the loss rate on these mortgages was 25 percent (a very high loss rate for prime mortgages), then Fannie’s and Freddie’s combined losses would be just $163 billion, not even half of the line of credit. Furthermore, Fannie and Freddie had combined reserves of more than $50 billion going into this disaster, and make money on ongoing operations. On the face of it, it is very difficult to see how Fannie and Freddie could go more than $400 billion in the hole, based on their September 2008 assets. In fact, this possibility seems so far out, it is hard to imagine that the financial markets need any further evidence of the government’s commitment to these mortgage giants. This raises the possibility that Fannie and Freddie are incurring losses on assets purchased after September of 2008. This would mean that they were paying too much for mortgages and mortgage-backed securities bought from banks after the financial meltdown was already in full swing. This was the original purpose of the TARP program. Of course, TARP came with at least some restrictions and disclosure requirements. If Fannie and Freddie are overpaying for mortgages, then there are no conditions whatsoever put on the banks that get the money. It is possible that there is some other more innocent explanation for the sudden need to raise Fannie’s and Freddie’s credit limits. If so, then the Obama administration should make its case to the public and explain how losses could conceivably run above $400 billion (credit markets don’t need reassurance against inconceivable events). While they are it, the Obama administration might also want to explain why the CEOs of these bankrupt companies now stand to pocket $6 million a year, a fact released in another Christmas Eve announcement. Surely, there are people who can run bankrupt companies at a much lower pay rate. This looks like yet another case where Santa is being very generous to the financial industry boys, while leaving the rest of us with a lump of coal. Christmas Eve announcements were a favorite trick of the Bush administration. It is disappointing to see this practice continue under President Obama.

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Asia’s Start-up Hedge Funds Beat Peers, Boosting Growth Prospects For 2010

December 21, 2009

By Tomoko Yamazaki and Komaki Ito Dec. 22 (Bloomberg) — Asian start-up hedge funds have returned an average 22 percent this year, beating global peers and boosting their chances of attracting investors in 2010. Galaxy China Deep Value Fund and Wisdom of Japan Fund are among new offerings measured by Singapore-based hedge-fund consultant GFIA Pte that helped start-ups outperform an 18 percent average gain through November for the Eurekahedge Hedge Fund Index of more than 2,000 funds globally. The outperformance may help the region’s start-ups overcome investor reticence that curbed growth in assets managed this year. “The continuing challenge throughout 2010 for start-up hedge funds will be raising capital, however, it is generally expected that it will be more accessible than in 2009,” said Skip Hashimoto , the Japan representative at Ogier Fiduciary Services in Tokyo, which provides corporate services to hedge funds. “Funds of funds based in this region are aggressively seeking out new Asia-based start-up opportunities.” Managers of Asia-focused new funds raised just $3.06 billion through November this year, compared with $20 billion attracted by global start-ups and $3.8 billion by Asian start- ups in 2008, according to Eurekahedge Pte . The year-to-October average return of 27 start-up hedge funds in Asia excluding Japan that commenced since September 2008 and have more than six months of track record totaled 29 percent, according to data provided by GFIA. For Japan, 12 new funds yielded an average return of 6.5 percent, the firm said. Asia Comeback Among the strategies likely to be favored by new hedge funds next year are event driven, which takes advantage of corporate events such as mergers and acquisitions, and trading related, with a focus on investing across Asia, according to GFIA. Geographically, Greater China-focused funds are likely to be prevalent, reflecting demand for wagers on China, the world’s fastest-growing major economy. Galaxy Asset Management (HK) Ltd. , which invests in Chinese equities, manages one of this year’s best-performing start-ups. Its $30 million Galaxy China Deep Value Fund has quadrupled since the September 2008 inception, investing in “deep value stocks that got killed in the financial crisis,” said Joe Chan , a former Morgan Stanley managing director and Galaxy founder. In Japan, Epic Partners Investments Co. ’s Wisdom of Japan Fund, which employs a so-called market-neutral strategy, has returned more than 10 percent through November since inception in March, according to the firm. The fund, which is run by Tadashi Mukai , grew in size to 2.5 billion yen ($27 million) from 400 million yen at the start, according to Mukai. Under the Radar The fund has raised money mainly through Japanese high-net- worth individuals and pension funds and expects assets to increase to 4 billion yen in January, said Mukai in a telephone interview on Dec. 9. Mukai was the top performer in 2007 among Japan-focused funds that employ the strategy that seeks to make money regardless of the market’s direction. Akito Fund, a Japan-focused hedge fund set up by former UBS AG bankers, has returned more than 26 percent since its July start and has managed to boost assets to 7.5 billion yen from 1.4 billion yen at inception by raising money mainly from foreign investors, according to Koichiro Yamaguchi and Tetsuya Hamano who run the fund. “Managers might not like the idea of launching with a smaller amount of money, but the advantage of that is that you find out all your mistakes when fewer people are looking,” said Peter Douglas , principal of GFIA. As existing funds take in less money to limit their trading capacity in the wake of global credit crisis, start-ups are set to benefit from investors seeking to take a slice of Asia’s economic growth, Douglas said. Lower Closes Brevan Howard Asset Management LLP, Europe’s largest hedge- fund firm, limited the flow of money into three funds as client assets approached last year’s high, according to people familiar with the matter. Paul Tudor Jones’s Tudor BVI and Lansdowne Partners LP’s $9.3 billion Lansdowne UK funds restricted inflows this year after replacing money pulled by investors in 2008. In Asia, Riley Paterson Investment Management Pte said it closed its Asian hedge fund to investors after assets under management swelled 15-fold to $300 million. Economic growth in Asia will probably accelerate to 5.8 percent next year from 2.8 percent this year, the International Monetary Fund said in October. That compares with forecast growth of 1.25 percent in 2010 in the Group of Seven economies. “You’ve got managers closing at much lower levels, you’ve got a lot more people coming back to the region, and a wave of money flowing back to the Asian hedge-fund industry, which is good news for start-ups,” Douglas said. “So long as they produce reasonable performance numbers, their life will get much easier through next year or by the end of next year and most of the funds will be pleased with themselves that they launched when they did.” To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net ; Komaki Ito in Tokyo at kito@bloomberg.net

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Halvern REIT readies $400 million IPO to buy distressed offices

December 21, 2009

This story published in Real Estate Investment SmartBrief on 12/21/2009 More from SmartBrief: Friday, September 18, 2009 Tuesday, September 1, 2009 Get stories like these delivered daily for FREE: Real Estate Investment SmartBrief is a

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Australia’s Record Rate Rises Give `Flexibility,’ RBA Says; Currency Falls

December 14, 2009

By Jacob Greber Dec. 15 (Bloomberg) — The Australian central bank says its decision to raise borrowing costs two weeks ago for an unprecedented third straight month gives policy makers increased flexibility at future meetings. “The question for members was whether it was more appropriate to take a further step at this meeting or to hold the cash rate steady pending a further evaluation of developments” in February, when they next meet, officials said in minutes released today of their Dec. 1 gathering. Governor Glenn Stevens boosted the overnight cash rate target this month by a quarter-percentage point to 3.75 percent amid evidence economic growth will accelerate next year after expanding in the three months through September for a third straight quarter, today’s minutes said. Policy makers weighed the potential for adverse affects on confidence of such a move. “Members saw the arguments as finely balanced, but concluded that the stance of monetary would best reflect the circumstances facing the economy over the period ahead” if borrowing costs were increased, the minutes said. Australia’s currency fell to 91.45 U.S. cents as of 11:35 a.m. in Sydney, from 91.63 before the minutes were published. Stevens, who also raised the key lending rate by a quarter point in October and November, is the only policy maker in the world to increase the benchmark lending rate three times since the height of the global financial crisis. The three adjustments were seen as “materially shifting the stance of policy to a less accommodative setting and, therefore, as increasing the flexibility available to the board at future meetings,” the Reserve Bank of Australia said. Rate Outlook Investors are betting there is a 64 percent chance Stevens will increase the key rate by another quarter point when policy makers next meet on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:34 a.m. Prior to today’s minutes, there was a 76 percent chance of such a move. “Members agreed that, if developments unfolded as currently expected, monetary policy would need to be adjusted further over time to lessen the degree of stimulus,” the minutes said. “That adjustment would not be intended to slow demand compared with the current forecast path, but aimed simply at keeping the stance of policy appropriate for improving economic conditions.” Gross domestic product probably rose 0.4 percent in the three months through September from the second quarter, when it gained 0.6 percent, boosted by Prime Minister Kevin Rudd’s decision to spend A$22 billion ($20 billion) on roads, railways and schools, according to a Bloomberg survey of economists ahead of a report to be published at 11:30 a.m. in Sydney tomorrow. Growth Accelerating Figures available at the time of the central bank’s board meeting two weeks ago “suggested a rise in GDP for the quarter,” today’s minutes said. The central bank predicts Australia’s economy, one of the few including China and India to skirt the global recession, will accelerate to grow at annual pace of more than 3 percent in 2010. A report published last week showed employers added almost 100,000 workers between the start of September and Nov. 30, the biggest three-month surge in hiring since 2006, boosted by demand for staff at projects such as Chevron Corp.’s Gorgon liquefied natural gas venture off Western Australia. Business confidence surged last month to the highest level in more than seven years, a survey by National Australia Bank Ltd. showed on Dec. 8. Investment plans by companies are “much better than expected earlier in the year,” and engineering construction “was at very high levels and likely to rise further as LNG projects picked up,” today’s minutes said. “The recent data also suggested strong growth in public-sector investment, with construction spending at high levels, including spending on both educational facilities and broader infrastructure.” Policy makers considered the “likely long-run pressures on the economy from the combined demand for housing and infrastructure and resources sector investment over the years ahead.” To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net ;

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Barnwell Industries, Inc. Reports Year-End and Fourth Quarter Results

December 14, 2009

HONOLULU, Dec. 14, 2009 (GLOBE NEWSWIRE) — Barnwell Industries, Inc. (NYSE Amex:BRN) today reported a loss of $24,362,000 ($2.96 per share – diluted) for the year ended September 30, 2009, as compared to earnings of $11,732,000 ($1.39 per share – diluted) for the year ended September 30, 2008. For the quarter ended September 30, 2009, Barnwell reported a loss of $4,554,000 ($0.55 per share – diluted) as compared to net earnings of $3,195,000 ($0.38 per share – diluted) for the quarter ended September 30, 2008.

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Economists Who Foresaw November’s Better Labor Market Now Expect Job Gains

December 5, 2009

By Timothy R. Homan Dec. 5 (Bloomberg) — Some of the economists who anticipated the U.S. job market would see marked improvement in November now project job gains are around the corner, and possibly in the rearview mirror. Payrolls fell by 11,000 workers, while the unemployment rate dropped to 10 percent. Jobs were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The drawdown in inventories and rising corporate profits are the most compelling reasons for payrolls to begin showing sustainable increases as soon as this month, these economists said. What’s more, the recent trend of upward revisions will probably continue, signaling the worst employment slump in the postwar era may have already ended. “We could see a positive number for November next month,” said Stefane Marion , chief economist at National Bank Financial Inc. in Montreal, whose forecast of a 30,000 payroll drop was the closest. “Firms now are beginning to redeploy some of their cash flows” by hiring new workers, he said. Revisions added 159,000 jobs to payroll figures previously reported for October and September, a report from the Labor Department showed yesterday in Washington. The previous month’s report added 91,000 for September and August. Profits, Inventories Corporate profits climbed 21 percent from January through September, the biggest three-quarter gain in five years, while inventories plunged at a record pace, according figures from the Commerce Department. Leaner stockpiles set the stage for recovery in production. “If you run down your inventories hard, you also cut your labor force,” said Peter Possing Andersen , an economist at Danske Bank A/S in Denmark who projected a decline of 50,000 jobs for November. He said the ramp up in production means the manufacturing industry, which has cut workers for the past two years, may stabilize and begin hiring in “a couple of months.” Still, some economists say that even if November’s figures are revised into positive territory, payrolls may not have reached their low point yet. “Revisions lately have been in the favorable direction,” said Neal Soss , chief economist at Credit Suisse in New York who forecast a 50,000 drop in payrolls. “We shouldn’t take that as evidence that we’re at the bottom.” The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, said the head of the group charged with making the call. Yesterday’s report “makes it seem that the trough in employment will be around this month,” Robert Hall , who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Economists Who Foresaw November Payroll Surprise Now See Job Market Gains

December 5, 2009

By Timothy R. Homan Dec. 5 (Bloomberg) — Some of the economists who anticipated the U.S. job market would see marked improvement in November now project job gains are around the corner, and possibly in the rearview mirror. Payrolls fell by 11,000 workers, while the unemployment rate dropped to 10 percent. Jobs were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The drawdown in inventories and rising corporate profits are the most compelling reasons for payrolls to begin showing sustainable increases as soon as this month, these economists said. What’s more, the recent trend of upward revisions will probably continue, signaling the worst employment slump in the postwar era may have already ended. “We could see a positive number for November next month,” said Stefane Marion , chief economist at National Bank Financial Inc. in Montreal, whose forecast of a 30,000 payroll drop was the closest. “Firms now are beginning to redeploy some of their cash flows” by hiring new workers, he said. Revisions added 159,000 jobs to payroll figures previously reported for October and September, a report from the Labor Department showed yesterday in Washington. The previous month’s report added 91,000 for September and August. Profits, Inventories Corporate profits climbed 21 percent from January through September, the biggest three-quarter gain in five years, while inventories plunged at a record pace, according figures from the Commerce Department. Leaner stockpiles set the stage for recovery in production. “If you run down your inventories hard, you also cut your labor force,” said Peter Possing Andersen , an economist at Danske Bank A/S in Denmark who projected a decline of 50,000 jobs for November. He said the ramp up in production means the manufacturing industry, which has cut workers for the past two years, may stabilize and begin hiring in “a couple of months.” Still, some economists say that even if November’s figures are revised into positive territory, payrolls may not have reached their low point yet. “Revisions lately have been in the favorable direction,” said Neal Soss , chief economist at Credit Suisse in New York who forecast a 50,000 drop in payrolls. “We shouldn’t take that as evidence that we’re at the bottom.” The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, said the head of the group charged with making the call. Yesterday’s report “makes it seem that the trough in employment will be around this month,” Robert Hall , who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Credit Card Delinquencies Hit Five-Month High In October

December 2, 2009

NEW YORK — Struggling credit card holders fell behind on their payments in October at the highest rate in five months, according to Fitch Ratings. The agency said Wednesday that the weak job market and the high debt loads consumers are carrying pushed its measure of the 60-day credit card delinquency rate to 4.41 percent from 4.22 percent in September. That’s just below the record rate of 4.45 percent seen in June. Late payments declined during the summer months. Early stage delinquencies, or payments that are just one month past due, also rose, Fitch said. The increases followed bumps for both measures in September. Fitch uses 60-days-past-due as an indicator of potential default. While it is still possible for consumers to make up payments when they are just two months past due, credit card companies often block further card use at that point, said Senior Director Cynthia Ullrich. The result of the higher late payment rate will likely be higher charge-offs for banks and other credit card issuers. Charge-offs occur when a lender concludes the customer will no longer make payments, and writes down the balance on the account. For October, Fitch’s measure of credit card charge-offs declined to 10.09 percent from 10.75 percent in September, but that improvement doesn’t seem likely to last long. Fitch Managing Director Michael Dean said the problem is “the persistent weakness in the labor markets.” The agency expects to keep its ratings on the senior securities backed by credit cards debt despite the trend.

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Manufacturing in U.S. Expands a Fourth Month as Factories Lead Recovery

December 1, 2009

By Bob Willis Dec. 1 (Bloomberg) — Manufacturing in the U.S. expanded in November for a fourth consecutive month, putting factories at the forefront of the recovery . The Institute for Supply Management’s manufacturing index fell to 53.6, lower than forecast, from October’s three-year high of 55.7, according to the Tempe, Arizona-based group. Readings above 50 signal expansion. Growing exports and lean inventories may keep manufacturing growing into 2010, helping drive the economic expansion. Factory production , which rose at the fastest pace in a quarter century in the three months through September, will probably climb at a slower pace in coming months as mounting unemployment restrains American consumers. “This dip down is more of a mid-course correction rather than a sign the boom is over.” Ethan Harris , head of North America economics at BofA Merrill Lynch Global Research in New York, said before the report. October was “a little too strong relative to other information on the economy, which generally looks like a very moderate recovery.” The figure compared with economists’ median forecast for a decrease to 55, according to 76 projections in a Bloomberg News survey. Estimates ranged from 53.5 to 57. Fifty is the dividing line between expansion and contraction. Manufacturing accounts for about 12 percent of the economy. Pending Sales The number of contracts to buy previously owned homes unexpectedly rose in October as consumers rushed to take advantage of a tax credit that was due to expire, another report today showed. The index of signed purchase agreements, or pending home sales, climbed 3.7 percent to 114.1 after increasing 6 percent in September, the National Association of Realtors said. The ninth consecutive gain compares with the median forecast of a decline in a Bloomberg News survey of economists. The ISM’s production index fell to 59.9 from 63.3, which was the highest level since July 2004, and the new orders index improved to 60.3 from 58.5. A gauge of export orders increased to 56, the highest level since August 2008, from 55.5. The employment index fell to 50.8 from 53.1. The index of prices paid dropped to 55 from 65. The supplier delivery gauge, a measure of the time it takes to receive goods, fell to 55.7 from 56.9 the prior month. The measure of orders waiting to be filled decreased to 52 from 53.5. Inventories Drop The inventory index dropped to 41.3 from 46.9. A figure below 50 means manufacturers are reducing stockpiles. General Motors Co . is among auto companies leading the rebound in output after emerging from bankruptcy. Sales are now stabilizing after slumping in September following the expiration of the government’s “cash-for-clunkers” incentives. “The encouraging thing for the industry and for GM is that this is being accomplished now without either ‘cash for clunkers’ or any federal stimulus,” Michael DiGiovanni , GM’s sales analyst, said on a conference call on Nov. 19. “Our sales appear to be right on target.” Economists surveyed by Bloomberg at the beginning of November forecast the economy would grow at a 3 percent pace in the last three months of the year, following a 2.8 percent pace in the third quarter. Global Rebound A rebound in global growth and a 16 percent drop in the dollar since March against a basket of six major trading partners is helping spur demand from abroad. Exports climbed 9.4 percent in the five months through September, the biggest such gain since comparable records began in 1992, according to figures from the Commerce Department. China’s manufacturing grew last month at the fastest pace in five years, a purchasing managers’ survey issued today showed. President Barack Obama’s renewal last month of tax credits for first-time homebuyers should spur demand for homes and new construction into next year, while infrastructure-related construction projects are expected to ramp up in the new year. “Final demand shows signs of strengthening, supported by the broad improvement in financial conditions,” Federal Reserve Chairman Ben S. Bernanke said Nov. 19 in a speech before the Economic Club of New York. “Additionally, the beneficial influence of the inventory cycle on production should continue.” To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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U.S. Manufacturing Expands for a Fourth Month as Factories Propel Recovery

December 1, 2009

By Bob Willis Dec. 1 (Bloomberg) — Manufacturing in the U.S. expanded in November for a fourth consecutive month, putting factories at the forefront of the recovery . The Institute for Supply Management’s manufacturing index fell to 53.6, lower than forecast, from October’s three-year high of 55.7, according to the Tempe, Arizona-based group. Readings above 50 signal expansion. Growing exports and lean inventories may keep manufacturing growing into 2010, helping drive the economic expansion. Factory production , which rose at the fastest pace in a quarter century in the three months through September, will probably climb at a slower pace in coming months as mounting unemployment restrains American consumers. “This dip down is more of a mid-course correction rather than a sign the boom is over.” Ethan Harris , head of North America economics at BofA Merrill Lynch Global Research in New York, said before the report. October was “a little too strong relative to other information on the economy, which generally looks like a very moderate recovery.” The figure compared with economists’ median forecast for a decrease to 55, according to 76 projections in a Bloomberg News survey. Estimates ranged from 53.5 to 57. Fifty is the dividing line between expansion and contraction. Manufacturing accounts for about 12 percent of the economy. Pending Sales The number of contracts to buy previously owned homes unexpectedly rose in October as consumers rushed to take advantage of a tax credit that was due to expire, another report today showed. The index of signed purchase agreements, or pending home sales, climbed 3.7 percent to 114.1 after increasing 6 percent in September, the National Association of Realtors said. The ninth consecutive gain compares with the median forecast of a decline in a Bloomberg News survey of economists. The ISM’s production index fell to 59.9 from 63.3, which was the highest level since July 2004, and the new orders index improved to 60.3 from 58.5. A gauge of export orders increased to 56, the highest level since August 2008, from 55.5. The employment index fell to 50.8 from 53.1. The index of prices paid dropped to 55 from 65. The supplier delivery gauge, a measure of the time it takes to receive goods, fell to 55.7 from 56.9 the prior month. The measure of orders waiting to be filled decreased to 52 from 53.5. Inventories Drop The inventory index dropped to 41.3 from 46.9. A figure below 50 means manufacturers are reducing stockpiles. General Motors Co . is among auto companies leading the rebound in output after emerging from bankruptcy. Sales are now stabilizing after slumping in September following the expiration of the government’s “cash-for-clunkers” incentives. “The encouraging thing for the industry and for GM is that this is being accomplished now without either ‘cash for clunkers’ or any federal stimulus,” Michael DiGiovanni , GM’s sales analyst, said on a conference call on Nov. 19. “Our sales appear to be right on target.” Economists surveyed by Bloomberg at the beginning of November forecast the economy would grow at a 3 percent pace in the last three months of the year, following a 2.8 percent pace in the third quarter. Global Rebound A rebound in global growth and a 16 percent drop in the dollar since March against a basket of six major trading partners is helping spur demand from abroad. Exports climbed 9.4 percent in the five months through September, the biggest such gain since comparable records began in 1992, according to figures from the Commerce Department. China’s manufacturing grew last month at the fastest pace in five years, a purchasing managers’ survey issued today showed. President Barack Obama’s renewal last month of tax credits for first-time homebuyers should spur demand for homes and new construction into next year, while infrastructure-related construction projects are expected to ramp up in the new year. “Final demand shows signs of strengthening, supported by the broad improvement in financial conditions,” Federal Reserve Chairman Ben S. Bernanke said Nov. 19 in a speech before the Economic Club of New York. “Additionally, the beneficial influence of the inventory cycle on production should continue.” To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Manufacturing in U.S. Probably Grew in November, Taking Lead in Recovery

December 1, 2009

By Bob Willis Dec. 1 (Bloomberg) — Manufacturing in the U.S. probably expanded in November for a fourth consecutive month, putting factories at the forefront of the recovery , economists said before reports today. The Institute for Supply Management’s manufacturing index fell to 55 from October’s three-year high of 55.7, according to the median forecast of 72 economists surveyed by Bloomberg News. Other reports may show pending sales of existing homes and construction spending declined in October. Growing exports and lean inventories may keep manufacturing growing into 2010, helping drive the economic expansion. Factory production , which rose at the fastest pace in a quarter century in the three months through September, will probably climb at a slower pace in coming months as mounting unemployment restrains American consumers. October was “strong by historical standards,” said Michael Moran , chief economist at Daiwa Securities USA Inc. in New York. “Such results seem out of line with the moderate pace of growth in the economy and corrections are likely to unfold.” The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time. Forecasts ranged from 53.5 to 57. Fifty is the dividing line between expansion and contraction. Manufacturing accounts for about 12 percent of the economy. Factory output increased 3.4 percent from July through September, the biggest three-month gain since 1984, according to figures from the Federal Reserve. Government Help Government-assisted rebounds in housing and auto-making, two of the most depressed areas during the recession, contributed to the initial burst of activity. Reports today may show those areas are now stabilizing. Pending homes sales fell 1 percent in October, the first decrease in nine months, according to the survey median ahead of a report from the National Association of Realtors at 10 a.m. in Washington. Cars and light trucks probably sold at a 10.5 million annual pace last month, little changed from October, industry figures may show. President Barack Obama last month signed legislation extending a first-time homebuyers credit through April, and expanded it to include to current owners. The $8,000 tax credit gave home sales and construction a lift for much of this year. Also at 10 a.m., a Commerce Department report may show spending on construction projects fell 0.5 in October after rising 0.8 percent a month earlier, according to the survey median. Rising Stocks The Standard & Poor’s 500 Index gained 5.7 percent in November, capping a 62 percent increase since it reached a 12- year low March 9, on prospects the economy was recovering. Other manufacturing surveys have shown improvement. The Institute for Supply Management-Chicago Inc.’s business barometer rose in November to 56.1, its highest level since August 2008, the group said yesterday. Gains in the gauges for new orders and backlogs signaled the recovery will persist. Regional Fed Bank reports last month showed manufacturing in the New York district expanded in November for a fourth month and grew in the Philadelphia region at the fastest pace in more than two years. General Motors Co . is among auto companies leading the rebound in output after emerging from bankruptcy. Sales are now stabilizing after slumping in September following the expiration of the government’s “cash-for-clunkers” incentives. Auto Sales “The encouraging thing for the industry and for GM is that this is being accomplished now without either ‘cash for clunkers’ or any federal stimulus,” Michael DiGiovanni , GM’s sales analyst, said on a conference call on Nov. 19. “Our sales appear to be right on target.” Economists surveyed by Bloomberg at the beginning of November forecast the economy would grow at a 3 percent pace in the last three months of the year, following a 2.8 percent pace in the third quarter. A rebound in global growth and a 16 percent drop in the dollar since March against a basket of six major trading partners is helping spur demand from abroad. Exports climbed 9.4 percent in the five months through September, the biggest such gain since comparable records began in 1992, according to figures from the Commerce Department. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Zhu Zhu Pet Sales Madness: This Year’s Hottest Toy (VIDEO)

November 27, 2009

Parents beware, Zhu Zhu Pet madness is spreading. It’s highly contagious and has been known to infect small children — and their parents. (Please do not confuse this particular malady with Tickle Me Elmo disease.) In a toy trend that’s seemingly come out of nowhere, holiday shoppers are going nuts over Zhu Zhu Pets, the tiny robotic hamsters that seem to do little else besides drive tiny metallic cars and make cute noises. Where did this bewildering retail trend come from? Last week, BusinessWeek took a look . “The pets are made by Cepia, a seven-year-old outfit in St. Louis. It’s the second toy startup for company CEO Russell Hornsby, a Mattel veteran who says his first company, Trendmasters, went under in the 2002 recession after his bank cut his funding…Hornsby, 56, says Zhu Zhus were inspired by his own family’s pet hamster (which, regrettably, isn’t around to bask in the fame: It got eaten by the family cat). The toys were just a prototype as recently as last November. The company tested them with focus groups of kids at Wal-Mart (WMT) and Toy “R” Us stores in Phoenix this past May. The company even changed the product name from Go Go Pets right before the September retail launch.” Which doesn’t exactly explain the appeal of the toys during this holiday season. At $7.99 each, they’re certainly priced for our economic times. And, as the New York Times put it , “Children are delighted at how they coo and scoot about unpredictably. Parents are delighted not to have to clean up after them.” As the crowds of shoppers began lining up late Thursday night for Black Friday sales, Zhu Zhu pets have caused minor riots across the country. Even Bloomberg reported on this year’s most annoying and inexplicably ubiquitous holiday toy. Toys “R” Us, based in Wayne, New Jersey, opened stores at midnight, five hours earlier than last year, offering 220 doorbusters, compared with 150 in 2008. It promised to have thousands of the Zhu Zhu Pets, the robot hamsters that have sold out in recent months. “We have been more aggressive than ever before in our marketing and in our pricing,” Toys “R” Us Chairman and Chief Executive Officer Jerry Storch said in a telephone interview Nov. 25. My Fox Tampa Bay got some live footage of near-rabid Zhu Zhu hunters in action. Interestingly, even some of the shoppers who lined up at Toys R’ Us in Clearwater, Florida, were a bit confused as to why they were buying the Zhu Zhu Pet. As My Fox Tampa Bay’s reporter put it, “It was hard to pick out one voice above the din, but cries of ‘Where are you?’ and ‘Pass it! Pass it!’ were audible as the boxes disappeared.” In the below video, one shopper adds: “I don’t know what we got, but we got it, girl.” WATCH My Fox Tampa Bay’s report: Get HuffPost Business On Facebook and Twitter !

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Orders for Durable Goods in U.S. Unexpectedly Decline on Defense Equipment

November 25, 2009

By Courtney Schlisserman Nov. 25 (Bloomberg) — Orders for goods meant to last several years unexpectedly fell in October, restrained by a drop in demand for defense equipment and a reminder the economic recovery will be slow to gain speed. The 0.6 percent decrease in bookings for durable goods followed a revised 2 percent gain in September that was larger than previously estimated, figures from the Commerce Department showed today. Excluding defense bookings, orders rose 0.4 percent. Concern that consumer spending may retrench as unemployment mounts will probably cause companies to limit spending on new equipment and keep inventories lean. While another Commerce Department report showed consumer spending rose more than forecast last month, the world’s largest economy needs a rebound in manufacturing and housing for the recovery to gain momentum. “Many firms are still hesitant to make capital investments,” said Guy Lebas , chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “What we saw in the month of October was a big, big drop in machinery orders after a large increase in September.” Commerce Department figures also showed spending by consumers rebounded in October more than anticipated. The 0.7 percent increase in purchases was larger than the median estimate of economists surveyed by Bloomberg News and followed a 0.6 percent September drop. Incomes climbed 0.2 percent, also exceeding expectations. Jobless Claims A separate report from the Labor Department today showed the number of Americans filing claims for unemployment benefits fell last week to the lowest level since September 2008. Claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, the report showed. Futures on the Standard & Poor’s 500 Index were up 0.4 percent to 1,107.2 at 9:08 a.m. in New York. Economists forecast durable-goods orders would increase 0.5 percent, according to the median of 75 projections in a Bloomberg News survey. Estimates ranged from a decline of 1 percent to a 2.1 percent gain. Excluding transportation equipment, orders fell 1.3 percent, the biggest decrease since March. These bookings were forecast to increase 0.7 percent. Less demand for machinery, computers, communications equipment in addition to defense gear contributed to last month’s decrease. Shipments for non-defense capital goods excluding aircraft, which is used in calculating gross domestic product, fell 0.2 percent in October. Bookings for such goods, a proxy for future business spending, decreased 2.9 percent in October. Emerging Rebound The figures raise questions on the sustainability of the emerging rebound in business investment. A report from the Commerce Department yesterday showed the economy grew at a 2.8 percent annual pace last quarter, less than previously estimated. Spending on equipment and software climbed at a 2.3 percent annual pace, the first gain in more than a year. Demand for transportation equipment increased 1.5 percent, led by a 51 percent surge in orders for commercial aircraft. Auto bookings fell 0.1 percent. Auto production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to buy cars expired in late August. Motor vehicle and parts production fell 1.7 percent in October, after an 8.1 percent increase a month earlier, according to industrial production figures released from the Federal Reserve on Nov. 17. Auto Sales Even so, auto sales rose at a 10.45 million annual rate in October, according to Bloomberg data. Ford Motor Co. Chief Executive Officer Alan Mulally said Nov. 3 he is taking a “cautiously optimistic point of view” on 2010 and the automaker will be “solidly profitable” in 2011. Inventories were little changed last month, today’s report showed. Smaller reductions in inventories following the biggest plunge in stockpiles on record will probably support economic growth in comings months. The economy will grow at a 3 percent annual rate this quarter, according to the median projection of economists in a Bloomberg News survey earlier this month. “We exited the year pretty low on inventory — we saw higher demand for printers as we went through the end of the year,” Hewlett-Packard Co. Chief Executive Officer Mark Hurd said in an interview Nov. 23. Hewlett-Packard reported personal- computer sales for its fiscal fourth quarter that topped some analysts’ estimates. Also helping support manufacturing, exports rose in the five months through September, according to Commerce Department data. To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net

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Consumer Spending, Incomes in U.S. Increase More Than Economists Forecast

November 25, 2009

By Timothy R. Homan Nov. 25 (Bloomberg) — Spending by U.S. consumers rebounded in October more than anticipated, an indication that mounting unemployment has yet to stifle American’s willingness to buy. The 0.7 percent increase in purchases was larger than the median estimate of economists surveyed by Bloomberg News and followed a 0.6 percent September drop, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent, also exceeding expectations. A jobless rate that is projected to exceed 10 percent through the first half of next year means households will probably contribute less to growth as the economy recovers. Nonetheless, retailers such as J.Crew Group Inc. are among companies seeing improving demand heading into the holiday shopping season. “People have been too negative for too long on the consumer,” said John Herrmann , chief economist at Herrmann Forecasting in Summit, New Jersey, who accurately forecast the gain in spending. “We’re seeing very positive spending signals for November.” A separate report from the Labor Department today showed the number of Americans filing claims for unemployment benefits fell last week to the lowest level since September 2008. Claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, the report showed. U.S. stock-index futures extended gains after the reports. Futures on the Standard & Poor’s 500 Index rose 0.7 percent to 1,110.60 at 8:37 a.m. in New York. Durable Goods Another Commerce Department report showed orders for long- lasting goods unexpectedly dropped last month, depressed by a slump in bookings for defense gear. The median estimate of 75 economists surveyed called for a 0.5 percent increase in spending after an originally reported decrease of 0.5 percent the prior month. Projections ranged from no change to a gain of 0.8 percent. The gain in incomes followed a similar 0.2 percent increase in September and exceeded the 0.1 percent median estimate in the Bloomberg survey. Wages and salaries were unchanged last month after decreasing 0.1 percent in September. Today’s report showed prices were stabilizing. The inflation gauge tied to spending patterns rose 0.2 percent from October 2008, the first year-over-year gain since April. The Fed’s preferred price measure, which excludes food and fuel, climbed 0.2 percent in October from the previous month and was up 1.4 percent from a year earlier. Adjusted for inflation, spending climbed 0.4 percent following a 0.7 percent drop the prior month. Savings Rate Because the increase in spending was larger than the gain in incomes, the savings rate fell to 4.4 percent from 4.6 percent the prior month. Disposable income, or the money left over after taxes, increased 0.4 percent, the most since May. Adjusted for inflation, disposable income increased 0.2 percent. J.Crew, the U.S. clothing retailer, yesterday reported that third-quarter profit more than doubled. Its shares have more than tripled so far this year. Still, uneven gains in spending are even hurting companies that appeal to bargain shoppers, such as Target Corp. , the second-largest U.S. discount chain. The Minneapolis-based company last week said it’s planning for a modest increase in fourth-quarter comparable sales. “We haven’t seen that rebound or that lift yet,” Chairman and Chief Executive Officer Gregg Steinhafel said in a Nov. 17 interview. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 2 percent last month after falling 8.7 percent the prior month. Purchases of non-durable goods increased 0.2 percent, and Spending on services, which account for almost 60 percent of all outlays, climbed 0.3 percent. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Eurozone factory orders rise in September

November 25, 2009

Eurozone factory orders rise in September

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Shasta County real estate up one month, down the next (The Record Searchlight)

November 25, 2009

Up one month, down the next.It’s been a theme for Shasta County’s real estate market in 2009, and it continued in October.After a month that saw a 13 percent increase in transactions, home sales declined – albeit slightly – last month, DataQuick Information Systems reported this week.There were 164 closed escrows of new and used homes in Shasta County, a 1.8 percent dip from September , when …

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U.S. Two-Year Treasury Yields Fall to Lowest This Year on Refuge Buying

November 21, 2009

By Susanne Walker Nov. 21 (Bloomberg) — Treasury two-year note yields fell to the lowest level this year on concern the rally in risk assets has outpaced growth prospects and as Federal Reserve officials signaled interest rates will remain near zero. Three-month bill rates turned negative on Nov. 19 for the first time since last year’s credit freeze as a 62 percent rally in the Standard & Poor’s 500 Index from a 12-year low in March pushed valuations to about 22 times its companies’ earnings, the highest level since 2002. The minutes of the Fed’s Nov. 4 Federal Open Market Committee meeting will be released Nov. 24. “Investors are trying to lock in a good year and are reversing risk positions,” said Michael Pond , an interest-rate strategist in New York at Barclays Plc, one of the 18 primary dealers that trade directly with the Fed. “They are not taking new risks as they go into year-end.” The two-year note yield touched 0.67 percent yesterday, the lowest level since December. It fell nine basis points on the week, the most since the five days ended Oct. 30, to 0.72 percent, according to BGCantor Market Data. The 1 percent note due in October 2011 rose 5/32 this week, or $1.56 per $1,000 face amount, to 100 17/32. The three-month bill rate was 0.005 percent, down five basis points, or 0.05 percentage point, for the week, according to Bloomberg data. The 10-year yield fell six basis points to 3.36 percent on the week. Bill rates were negative last December for the first time since the government began selling the securities in 1929 as investors sought to preserve their principal following the collapse of Lehman Brothers Holdings Inc. Bullard Comments Fed Bank of St. Louis President James Bullard said on Nov. 18 that experience indicates policy makers may not start to increase borrowing costs until early 2012. “If you look at the last two recessions, in each case the FOMC waited two and a half to three years before we started our tightening campaign,” Bullard said in a speech in St. Louis. “If we took that as a benchmark, that would put us in the first half of 2012.” Bullard’s comments followed a Nov. 16 speech by Chairman Ben S. Bernanke in which he indicated that the central bank’s extended period of low borrowing costs may be even longer amid economic “headwinds.” “There have been recent comments from a lot of people at the Fed hinting that they may not hike for a long, long time,” said Ajay Rajadhyaksha , head of U.S. fixed-income strategy in New York at Barclays. “That’s why the two year has gotten the support it has.” Consumer Prices The Fed cut its target for overnight lending between banks to a range of zero to 0.25 percent in December and repeated that pledge on Nov. 4 at the end of a two-day meeting. At that time, Fed officials also specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. They said businesses are reducing staffing and investment “at a slower pace” and household spending appears to be growing slowly. Consumer prices rose 0.3 percent last month, according to figures from the Labor Department on Nov. 18. Economists forecast the consumer price index would rise 0.2 percent, according to the median of a Bloomberg News survey. A report on Nov. 17 showed producer prices increased less than forecast in October. The 0.3 percent increase in prices paid to factories, farmers and other producers was smaller than forecast and followed a 0.6 percent drop in September, according to Labor Department data. ‘Dovish Stance’ “The emphasis on low inflation and economic slack solidifies the message once again that the Fed’s dovish stance of a lower-for-longer policy with respect to rates is here to stay,” said John Spinello , chief technical strategist in New York at primary dealer Jefferies Group Inc. The difference between rates on 10-year notes and Treasury Inflation Protected Securities, or TIPS , which reflects the outlook among traders for consumer prices, widened to 2.19 percentage points yesterday from about zero at the end of last year. The figure is in line with the five-year average. The Treasury will auction a record $118 billion of 2-, 5- and 7-year notes on three consecutive days beginning Nov. 23. Treasury Purchases Foreign purchases of U.S. debt totaled $44.7 billion in September compared with purchases of $28 billion a month earlier, according to Treasury data released on Nov. 17. China remained the biggest foreign holder of U.S. Treasuries, after its holdings rose $1.8 billion to $798.9 billion, according to data from the Treasury Department’s Treasury International Capital report. Japan, the second-largest holder, increased its holdings $20.3 billion to $751.5 billion. U.S. marketable debt totaled $6.95 trillion in October, after climbing to a record $7.01 trillion in September as President Barack Obama borrows unprecedented amounts to fund spending programs and service record deficits. Two-year notes , among the most sensitive to Fed interest rates because of their short maturity, returned 1.65 percent this year through Nov. 19, according to indexes compiled by Bank of America’s Merrill Lynch unit. Ten-year notes, which are more sensitive to inflation, have fallen 6.4 percent. To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net .

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Sell Japan Stocks, Buy Bonds as Loan Costs Climb: Chart of the Day

November 20, 2009

By Masaki Kondo and Satoshi Kawano Nov. 20 (Bloomberg) — Investors should sell Japanese stocks and buy government bonds as deepening deflation caused real interest rates to diverge from stock prices for the first time in 18 years, according to MU Investments Co. The CHART OF THE DAY shows real interest rates, derived by subtracting inflation rates from yields on 10-year government bonds, have risen since the beginning of this year, while the Topix index, a benchmark equities gauge, lagged behind. Consumer prices, excluding fresh food and energy, slid 1 percent in September, the steepest fall since May 2001. “Under Japan’s deflationary environment, investors will probably be better off by selling stocks and buying government bonds with short maturity for income gains,” said Hiroshi Morikawa , a senior strategist at Tokyo-based MU Investments. October’s consumer price data is due Nov. 27, leaving real interest-rate data through September, the trend will be little changed in upcoming reports, he said. Returns on 10-year government notes climbed to 1.475 percent on Nov. 9, a level not seen in five months on concern debt sales will rise, data compiled by Bloomberg showed. Last month, state agencies proposed in initial budgets to spend a record 95.04 trillion yen ($1.07 trillion) in the fiscal year from April 1, even as Japan posted a shortfall in corporate taxes for the first time on record in a first-half period. “Interest rates are rising not because of expectations for an economic recovery but because of concern the budget deficit will worsen,” said MU’s Morikawa. Japan’s debt burden is approaching 200 percent of gross domestic product, the Organization for Economic Cooperation and Development estimates, as the government pledged cash to child- raising families and lower school tuition. Falling wages and a worsening job outlook are discouraging consumers from spending, prompting companies to cut prices. (To save a copy of this chart, click here.) To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Satoshi Kawano in Tokyo skawano1@bloomberg.net .

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Eurozone trade surplus hits $5.5b in September

November 18, 2009

Eurozone trade surplus hits $5.5b in September

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CRIC Reports Third Quarter 2009 Results

November 17, 2009

SHANGHAI, China, Nov. 17, 2009 (GLOBE NEWSWIRE) — China Real Estate Information Corporation (“CRIC” or the “Company”) (Nasdaq:CRIC), the leading provider of real estate information, consulting, advertising and online services in China, today announced its unaudited financial results for the fiscal quarter and nine months ended September 30, 2009.

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Sonesta Announces 2009 Third Quarter Earnings

November 16, 2009

BOSTON, Nov. 16, 2009 (GLOBE NEWSWIRE) — Sonesta International Hotels Corporation (Nasdaq:SNSTA) today reported net income of $27,379,000, or $7.41 per share, in the quarter ended September 30, 2009, compared to net income of $2,792,000, or $0.76 per share, in the quarter ended September 30, 2008. Operating revenues, excluding other revenues from managed and affiliated properties, were $14,517,000 in the 2009 quarter, compared to $16,398,000 in the 2008 quarter. The Company had operating income of $148,000 in the third quarter of 2009, compared to operating income of $4,411,000 during the same period in 2008.

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Remittances to Philippines up 8.6% in September

November 16, 2009

Remittances to Philippines up 8.6% in September

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Canada’s vehicle sales climb 1.2% in September

November 14, 2009

Canada’s vehicle sales climb 1.2% in September

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US trade deficit hits $36.5 billion in September

November 14, 2009

US trade deficit hits $36.5 billion in September

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Video: Herrmann Discusses September U.S. Trade Deficit, Economy: Video

November 13, 2009

Nov. 13 (Bloomberg) — John Herrmann, president of Herrmann Forecasting, talks with Bloomberg Television about today’s report showing the U.S. trade deficit widened in September by the most in a decade. (This is an excerpt from the full interview. Source: Bloomberg)

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Foreign investors, debt seen bolstering REIT balance sheets

November 13, 2009

on the bandwagon if the opportunity is there,” he said. REIT.com| 11/12 This story published in Real Estate Investment SmartBrief on 11/13/2009 More from SmartBrief: Thursday, September 10, 2009 Tuesday, October 13, 2009 Get stories like these delivered

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U.S. Economic Recovery Has Downside in Trade Gap as Imported Goods Surge

November 13, 2009

By Carlos Torres Nov. 13 (Bloomberg) — The U.S. economic expansion that began last quarter has a downside: the trade deficit will probably swell as imports jump. Purchases of goods made overseas climbed 5.8 percent in September to $168.4 billion, the Commerce Department reported today in Washington. The gain was the biggest since 1993 and reflected growing demand for crude oil, automobiles, metals, machines and even artwork. The figures illustrate the challenge faced by world leaders as they try to rebalance global growth away from American consumption and toward demand in emerging markets. President Barack Obama today began an eight-day trip focusing on trade that will take him from Singapore to Korea. “The numbers are a wake-up call,” Gary Hufbauer , a senior fellow at the Peterson Institute for International Economics in Washington, said in an interview. “American imports are very sensitive to the turnaround in the economy. Unless there is pretty severe action, the deficit will balloon back up.” The jump in imports caused the trade deficit to widen to $36.5 billion in September, exceeding the highest estimate of 77 economists surveyed by Bloomberg News. The report showed exports also increased. The deepest recession since the 1930s caused American purchases of foreign goods to plummet, helping the gap narrow to an almost decade low of $26.4 billion in May. The deterioration since then is fastest since November 1997. Needed Action Among the steps U.S. policy makers need to take is to narrow the government budget deficit and take steps to promote household savings, Hufbauer said. “What the government can do about that is very unclear because past efforts to increase savings haven’t been very successful,” he said. For its part, China needs to spur spending by its own consumers and boost the value of its currency, the yuan, to spur an increase in purchases of goods from abroad, Hufbauer said. The pickup in imports isn’t only, or even mainly, a function of a rise in U.S. consumer spending, said Ken Mayland , president of ClearView Economics LLC in Pepper Pike, Ohio. Increasing demand for metals, machinery and computers during the last few months shows that business investment is also strengthening, he said. “This smells like a rebound of capital spending on equipment, an important element of a general economic recovery,” Mayland said in a note to clients. The world’s largest economy grew at a 3.5 percent annual pace in the third quarter, the first gain in more than a year, according to the Commerce Department. Investment in equipment and software rose at a 1.1 percent pace from July through September, the first increase since the fourth quarter of 2007, when the recession began. To contact the reporter on this story: Carlos Torres in Washington at ctorres@bloomberg.net

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Auto Leasing Returns as Production Cuts Spur Record Values for Used Cars

November 13, 2009

By Keith Naughton Nov. 13 (Bloomberg) — Auto leasing, once a cheap way to drive an expensive car, is making a comeback. General Motors Co. and Chrysler Group LLC resumed offering leases to buyers in August and September through their shared financing arm, GMAC Financial Services, after halting the practice as car demand fell in 2008. Ford Motor Co. plans more leasing promotions this year, while Toyota Motor Corp. makes it part of a $1 billion fourth-quarter marketing push. Automakers and finance companies are returning to leasing as it becomes profitable. U.S. used-car prices surged to a record this year as fewer vehicles were traded in at dealerships, letting automakers get better prices for models turned in when leases end. The return of leasing may boost new- car sales after demand fell to an almost three-decade low. “Leasing is coming back,” Jeremy Anwyl , chief executive officer of researcher Edmunds.com of Santa Monica, California, said in an interview yesterday. He predicts the practice will soon account for 20 percent of U.S. auto sales, more than doubling from the first half of 2009. Increased used-car values are “making leasing more attractive,” he said. Higher resale values let automakers offer lower monthly lease payments without taking a loss when they have to sell the car. Ford, which has whittled its lease business to about 5 percent of sales this year from 17 percent in 2007, considers more used-car demand a harbinger of returning sales. Ford, Cadillac Benefit “Leasing is really a critical piece of the business because people who lease have much higher loyalty to your brand,” Jim Farley , Ford’s group vice president of marketing, said in an interview. “This is something the dealers have been asking for for a long time.” The biggest beneficiaries may include luxury brands such as GM’s Cadillac, which generated as much as half its sales from leases before stopping the practice for a year in August 2008. Cadillac sales have fallen 39 percent this year, outpacing a 25 percent slide for the industry, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey. GM resumed leasing for all brands in August and Cadillac had its best month this year in September, with sales down 8.8 percent as the industry slid 23 percent. Cadillac sales fell 22 percent in October, mostly from a 30 percent drop in sales in its CTS sedan model, said Susan Docherty , GM’s U.S. sales chief. “As we get our feet and toes back into leasing, we’ll see the CTS number improve,” Docherty said on a Nov. 3 conference call discussing sales. Luring Buyers Leasing made the difference for insurance salesman Richard Birns. He chose a dark gray, 2010 Cadillac SRX Sept. 26 with a pop-up navigation screen, because of the $673 monthly payment. GM’s offer included a $1,000 rebate on the car with a sticker price of $42,000. “I can get a more expensive car for less money,” said Birns, of Jericho, New York, who previously leased an Audi T7. “I don’t have to worry about getting killed on the trade-in in three years.” Bayerische Motoren Werke AG’s BMW is offering a $349 lease payment for 36 months on the 328i sedan, plus a $1,500 cash rebate. The car’s starting price is $32,850. “One thing that tends to draw showroom traffic is a low lease payment because we can all relate to that,” said Jack Pitney , vice president of marketing for North America at Munich- based BMW. The higher used-car values let finance companies offer lower monthly payments, attracting more buyers, said James Clark, general manager of Automotive Lease Guide, which sets used-car values that serve as an industry benchmark. Record Resale Value Used-car values soared this year as the supply of those vehicles fell because owners held onto cars longer. The Manheim Used Vehicle Value Index rose to its highest level in September since it began tracking that data in 1995. While the index slipped last month, it’s still 13 percent higher than October 2008. The used-car supply will fall 34 percent by 2013 from 2008, Automotive Lease Guide projects. That’s a reversal from December, when used-car values plunged after years of loose leasing practices created a glut, Clark said. As higher gasoline prices reduced demand for SUVs in 2007 and 2008, automakers discounted leases to stoke sales instead of cutting production. Automakers had to sell vehicles returned when leases ended at a loss in used-car auctions. The practices contributed to record losses at Ford in 2008 and GM in 2007, leaving automakers cautious. Leasing will fall to about 15 percent of U.S. auto sales in the fourth quarter, down from 22 percent in 2008’s first quarter, said auto analyst Jeff Schuster , a Detroit-based researcher for J.D. Power & Associates. “This is not the time to jump into the deep end,” said George Pipas , Dearborn, Michigan-based Ford’s sales analyst. “I describe it as jumping into the shallow end.” To contact the reporter on this story: Keith Naughton in Southfield, Michigan at Knaughton3@bloomberg.net

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Australian Employers Unexpectedly Hire 24,500; Currency Jumps on Rate Bets

November 11, 2009

By Jacob Greber Nov. 12 (Bloomberg) — Australian employers unexpectedly added workers in October, pushing up the nation’s currency on speculation the central bank will raise interest rates for a record third straight month. The number of people employed rose 24,500 from September, the statistics bureau said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 10,000. The jobless rose to 5.8 percent from 5.7 percent. Australia’s economy is expanding with “less spare capacity than earlier thought likely,” according to the central bank, as Chinese-led demand for resources spurs companies such as Chevron Corp. to hire workers. Reserve Bank Governor Glenn Stevens will raise the benchmark interest rate by a quarter percentage point on Dec. 1 to 3.75 percent, economists surveyed by Bloomberg say. “A labor market that’s not as weak as expected will provide more support to consumer spending,” which accounts for about 60 percent of the economy, Joshua Williamson , an economist at Citigroup Inc. in Sydney, said ahead of today’s report. “A quarter-point increase is on the table and the market will now be looking at a half-point rise in December.” The Australian dollar rose to the highest this year at 93.45 U.S. cents as of 11:31 a.m. in Sydney from 93.10 cents just before the report was released. The two-year government bond yield climbed to 4.76 percent from 4.68 percent. Investors are betting there is a 70 percent chance of a quarter-point boost in December, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 8:36 a.m. Full-Time Jobs The number of full-time jobs gained 2,900 in October and part-time employment increased 21,500, today’s report showed. Australia’s economy is growing faster and generating more jobs than the government and central bank forecast earlier this year, helped by Stevens’s decision to slash borrowing costs by a record 4.25 percentage points between September 2008 and April to a half-century low of 3 percent. Growth was also boosted in the first half of the year by more than A$20 billion ($19 billion) in cash handouts to households from Prime Minister Kevin Rudd’s government. Another A$22 billion is being spent on roads, ports and schools. “This is a significantly better outcome than is currently being experienced in other advanced economies,” Alex Joiner , an economist at Australia & New Zealand Banking Group Ltd. in Melbourne, said ahead of today’s report. The jobless rate will remain around 6 percent to 6.5 percent in 2010, ANZ predicts. The unemployment rate in the U.S. jumped to 10.2 percent last month, the highest level since 1983 and the European Union’s rate climbed to 9.7 percent in September, the worst result since January 1999. Interest Rates Signs of a rebound in Australian employment were among reasons Stevens raised the overnight cash rate target by a quarter point in October and this month to 3.5 percent, and signaled further “gradual” increases. “The Australian economy is operating with less spare capacity than earlier thought likely, and the outlook for the next few years has improved,” the central bank said in its quarterly monetary policy statement published last week. While employment growth is expected “to be subdued” over the next couple of quarters, before accelerating in 2010, the outlook for the labor market has “improved” since the bank’s August policy statement, it said on Nov. 6. It didn’t provide specific forecasts for the jobless rate. Australian gross domestic product growth will accelerate from 1.75 percent this year to 3.25 percent in 2010, the central bank said. In August, the bank forecast gains of 0.5 percent and 2.25 percent respectively. The economy expanded 1 percent in the first half of this year. Business Investment The economy is forecast to continue its expansion in 2011 and 2012 as companies boost investment in resources, including Western Australia’s A$43 billion Gorgon liquefied natural gas project owned by Chevron, Exxon Mobil Corp. and Royal Dutch Shell Plc. Projects such as Gorgon, which is expected to generate 10,000 jobs, were among reasons the government this month scrapped a May prediction that the jobless rate would rise to 8.25 percent in the second quarter of next year. Treasurer Wayne Swan said on Nov. 2 that unemployment will peak at 6.75 percent by the June quarter of 2010 before decreasing to 6.5 percent the following year. The lower forecast means the equivalent of 250,000 fewer full-time jobs will be lost, he said. Recent reports showed business confidence rose in October to near its highest level in almost six years, home-loan approvals gained in September by the most in six months and house prices jumped 8.4 percent in the six months through Sept. 30. The participation rate, which measures the labor force as a percentage of the population aged over 15, held at 65.2 percent in October, today’s report showed. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Unilife Announces Appointment of New Independent Director

November 11, 2009

LEWISBERRY, PA–(Marketwire – November 11, 2009) – As announced on 1 September 2009, Unilife Medical Solutions Limited (“Unilife” or “the Company”) ( ASX : UNI ) ( PINKSHEETS : UNIFF ) is currently undertaking a transaction to redomicile the Unilife group in the United States of America (“US”) and is also seeking to list on NASDAQ. With a view to strengthening the credentials of the Unilife board prior to Unilife’s redomiciliation in the US (“Proposed Transaction”) and to meet NASDAQ independence requirements, the Company today announced it has appointed Mr John M. Lund to its Board of Directors as a non-executive member.

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Japan’s machinery orders rise 6% in September

November 11, 2009

Japan’s machinery orders rise 6% in September

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Japan’s machinery orders rise 6% in September

November 11, 2009

Japan’s machinery orders rise 6% in September

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