switzerland

HSBC Private Bank Says Data Were Stolen on 15,000 Accounts in Switzerland

by on March 11, 2010

By Dylan Griffiths and Warren Giles March 11 (Bloomberg) — HSBC Holdings Plc ’s Swiss private bank said it suffered “serious data theft” affecting about 15,000 Swiss-based accounts. The data was stolen by a former information technology employee about three years ago, the Geneva-based unit of HSBC said today in a statement. French authorities, which seized the data, have told their Swiss counterparts that they won’t use the information “inappropriately,” the bank said. “The bank does not believe that the stolen data has or will allow any third party to access any client account,” HSBC said in the statement. The accounts were all opened before October 2006, the bank said. The willingness of governments to pay for stolen data is fanning tensions with France and Germany as Switzerland seeks to negotiate treaties implementing its commitment to cooperate with international tax probes. The Swiss government said in January it will draft a law barring officials from assisting foreign countries in cases involving theft of client details. The French Finance Ministry said in December that it had data on Swiss bank accounts held by French taxpayers, including names provided by a former HSBC employee. Switzerland suspended treaty negotiations with France in December because of the HSBC case. After talks in January, France agreed to return the original data to Switzerland and not ask for assistance from Swiss authorities based on the stolen information. France will continue to use the data to pursue tax evaders at home. HSBC’s private bank said today that clients withdrew 4.1 billion Swiss francs ($3.8 billion) last year and made deposits with rivals offering higher interest rates. “Our competitors continue to overpay on deposits to attract funds,” HSBC said. “We made a decision not to compete on rates, which helped secure our net interest income, but contributed to an outflow of deposits.” To contact the reporter on this story: Dylan Griffiths in Geneva at dgriffiths1@bloomberg.net

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HSBC Private Bank Says Data Were Stolen on 15,000 Accounts in Switzerland

Food Recalls From Salmonella May Rise to 10,000 in Industry ‘Wake-Up Call’

by on March 11, 2010

By Matthew Boyle March 11 (Bloomberg) — Salmonella contamination at a Nevada food-flavoring plant may trigger the recall of as many as 10,000 products, according to a Consumers Union scientist. PepsiCo Inc. joined Procter & Gamble Co. , Nestle SA and McCormick & Co. yesterday in recalling food containing hydrolyzed vegetable protein, or HVP. The widespread use of the flavoring means more companies will follow, said Michael Hansen, senior scientist at Consumers Union, the Yonkers, New York-based advocacy group that publishes Consumer Reports magazine. More than 100 items, including two flavors of P&G’s Pringles and a store-brand ranch dip found in Wal-Mart Stores Inc., had been pulled as of yesterday, according to the U.S. Food and Drug Administration’s Web site. Soups, sauces, chili, hot dogs, snack foods, dips and dressings are among the processed foods that often contain the vegetable protein, according to the FDA. “It’s a wake-up call for the food industry as a whole to be more thorough in evaluating the safety of ingredients,” said Michael Doyle, director of the Center for Food Safety at the University of Georgia. “Big companies are putting their trust in suppliers, which is their Achilles heel.” The tally of products will rise over the next few weeks, FDA officials said March 4, declining to provide an estimate. The recall has the potential to be the largest ever by number of products, although the total isn’t yet known, said Rita Chappelle , an FDA spokeswoman. The contaminated HVP was made by Las Vegas-based Basic Food Flavors and discovered by one of its customers, which alerted the FDA, officials of the agency said on a March 4 conference call. Dave Wood, director of sales and marketing at Basic Food Flavors, wasn’t available to comment. No Illnesses To date, there are no known illnesses associated with the contaminated HVP, which is sometimes referred to as a “natural flavor” on ingredient labels. The FDA has said the overall risk to consumers is low because most products containing HVP are cooked during processing or are cooked by consumers, which would eliminate any salmonella. In uncooked, ready-to-eat products, like chips and dips, the risk is greater. In an inspection report sent to Basic Food Flavors, FDA investigators said they found salmonella on “non-food contact surfaces” near some food processing equipment. The contaminations were found where the HVP powder is mixed with other ingredients to be packaged into final products, according to the report. Basic Food Flavors continued to make and distribute HVP for several weeks after it knew its plant was contaminated, the FDA said in the report. ‘Abundance of Caution’ PepsiCo said yesterday in a statement that it voluntarily recalled its Quaker Baked Cheddar Snack Mix. HVP is a “very minor” ingredient in the seasoning of the snack, which was recalled “out of an abundance of caution,” the Purchase, New York-based company said. On March 5, McCormick, the seller of spices and herbs, recalled four products, including a French onion dip mix. Three days later, a North American unit of Nestle said it was recalling about 6,000 pounds (2,722 kilograms) of a ready-to-eat bacon base product. The same day, Cincinnati-based P&G recalled the two flavors of Pringles. Wal-Mart’s Great Value Ranch Chip Dip, manufactured for the world’s largest retailer by the T. Marzetti Co. of Columbus, Ohio, has been pulled from the shelves, according to Wal-Mart spokeswoman Anna Taylor. PepsiCo rose 7 cents to $64.43 yesterday in New York Stock Exchange composite trading. McCormick , based in Sparks, Maryland, rose 13 cents to $38.10. Nestle, based in Vevey, Switzerland, rose 35 centimes to 53.90 Swiss francs in Zurich. Rising Costs The costs associated with tainted products for food companies worldwide will balloon to as much as $15 billion annually in coming years, up from about $400 million in 2004, according to Constanze Freienstein, a senior principal at A.T. Kearney’s consumer and retail practice in Chicago. Eating products containing salmonella can cause fatal infections in young children, frail or elderly people. A nationwide salmonella outbreak traced to a South Georgia peanut processing plant in late 2008 was blamed for at least nine deaths and hundreds of illnesses. Legislation passed last year by the House and held up in the Senate would require companies to check their products and manufacturing process for contaminates, said Chappelle , the FDA spokeswoman. Under the proposed law, the FDA would be able to mandate food recalls when contaminations occur, a process that is currently voluntary for companies, she said. “We’re dealing with much more complicated processes and contaminations than when the current law was passed,” Sandra Eskin, director of the food safety campaign with the Pew Health Group, said in a telephone interview yesterday. “This is a legislative shift that’s necessary so the FDA will have authority to develop food safety plans, see where contaminations could occur, and set up procedures to prevent them from happening.” To contact the reporter on this story: Matthew Boyle at Mboyle20@bloomberg.net .

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Food Recalls From Salmonella May Rise to 10,000 in Industry ‘Wake-Up Call’

UBS’s Biggest Shareholder Is Now Singapore’s GIC After Conversion of Notes

March 5, 2010

By Lars Klemming and Elena Logutenkova March 5 (Bloomberg) — Government of Singapore Investment Corp. said it completed the conversion of 11 billion Swiss francs ($10.2 billion) of notes in UBS AG into stock, generating an unrealized loss of about two-thirds of the investment. GIC, manager of more than $100 billion of the city-state’s foreign reserves, exchanged the mandatory convertible notes for shares today, said Jennifer Lewis , a spokeswoman for GIC. GIC becomes the bank’s biggest shareholder with a 6.6 percent stake. UBS is Switzerland’s biggest bank. UBS shares have lost 69 percent to 15.86 francs since the bank announced the sale of the mandatory convertible notes on Dec. 10, 2007 to shore up capital eroded by subprime writedowns. Together with an unidentified Middle Eastern investor who injected a further 2 billion francs, GIC received 9 percent annual interest for the past two years. That means they face combined paper losses of 6.3 billion francs at UBS’s closing share price. GIC has said previously that it has “confidence” in the “long-term prospects” of UBS. Since then, UBS’s writedowns and losses from the credit crisis swelled almost threefold to more than $57 billion, the most of any other European financial company, and the bank had to turn to investors including the Swiss government three more times to boost capital. The bank last month reported its first quarterly profit in more than a year, helped by a recovery at the investment bank and a lower charge on the company’s debt. Chief Executive Officer Oswald Gruebel , who aims to boost UBS’s annual pretax earnings to 15 billion francs in three to five years, is battling to stop withdrawals by wealthy clients, who’ve removed a net 228.1 billion francs over the 21 months through December. UBS may report its first annual profit since 2006 this year after spinning off $38.7 billion in assets into a central bank fund, cutting 18,500 jobs and appointing 11 new managers to the executive board, according to analysts’ estimates . To contact the reporters on this story: Lars Klemming in Singapore at lklemming@bloomberg.net Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Singapore’s GIC, Abu Dhabi Face $10 Billion Loss on UBS, Citigroup Stakes

March 2, 2010

By Elena Logutenkova and Yalman Onaran March 2 (Bloomberg) — It took the Government of Singapore Investment Corp. three days in 2007 to agree to prop up UBS AG , ailing from subprime losses. It may take a decade to recoup that investment of 11 billion Swiss francs ($10 billion). GIC, manager of more than $100 billion of the city-state’s foreign reserves , faces a paper loss of about 5.6 billion francs when it becomes the biggest shareholder of UBS on March 5, as shares of Switzerland’s largest bank trade at a third of the conversion price on notes it holds. Singapore isn’t alone among sovereign wealth funds facing losses from supporting banks in Europe and the U.S. in the credit crisis. More than $69 billion in investments by such funds has so far produced $20 billion in realized and paper losses, according to data compiled by Bloomberg. Hurt by their contributions to the health of the financial system and stuck with some of the investments for years, sovereign wealth funds may shy away from coming to the banks’ aid the next time. “Once burned, twice shy,” said Charles Whitehead , a finance law professor at Cornell University in Ithaca, New York, who has tracked the strategy of such funds. “If a weak bank came back to them again for capital in the next crisis, the sovereign wealth funds won’t be there.” European and U.S. bank chiefs made personal pitches to the funds during the height of the mortgage market meltdown. Marcel Ospel , then chairman of Zurich-based UBS, called GIC Chief Investment Officer Ng Kok Song , according to comments they made at the time. Talks began on Dec. 6, 2007, and by the evening of Dec. 9, GIC had committed to make its biggest single purchase at the time. ‘Long-Term Prospects’ Acknowledging that recouping the money might take longer than initially expected, Ng said in GIC’s annual report, published in September, that he still has “confidence” in the “long-term prospects” of the investment. GIC, which declined to comment for this article, will receive 230.7 million UBS shares for its mandatory convertible notes this week for 47.68 francs each. UBS shares closed yesterday at 14.98 francs. “The game turned out not as easy as it may have seemed,” said Florian Esterer , who helps manage about $55 billion, including UBS shares, at Swisscanto Asset Management in Zurich. “It will take probably more like a decade than three years” for UBS shares to return to 2007 levels. Qatar, Abu Dhabi There were some profitable deals too, such as Qatar and Abu Dhabi funds that waited until the depth of the crisis to invest in London-based Barclays Plc and Credit Suisse Group AG of Zurich. Yet one third of the winnings, which totaled $12 billion, resulted from a regulatory change rather than timing. After the U.S. government required troubled banks to have more common equity instead of weaker tiers of capital, Citigroup Inc. had to offer favorable prices for its preferred shareholders to convert to common. That led to windfall profits of $4 billion for Kuwait and GIC on investments that would have lost $9 billion under their original agreements. Abu Dhabi Investment Authority didn’t benefit because it didn’t buy preferreds when it came to the aid of New York-based Citigroup. So it may face a $4.8 billion paper loss when it is forced to convert its so-called equity units to shares starting this month at a price almost 10 times higher than the current value. Abu Dhabi filed an arbitration claim against Citigroup, which has the most writedowns and losses from the credit crisis, alleging the bank wasn’t forthcoming about its financial health when it was seeking capital. In a December statement, Citigroup said the claim is “without merit.” A spokesman for the Abu Dhabi Investment Authority declined to comment. More Due Diligence “One lesson that all investors, including the sovereign wealth funds, learned from this crisis is that you have to do the due diligence before investing,” said Rachel Ziemba , a senior analyst who tracks such funds at Nouriel Roubini’s RGE Monitor in New York. “The funds are already looking at fundamentals more closely. They’ll be more wary to take such big stakes in banks in the future.” The funds’ banking investments in the crisis diverged from their traditional strategy of taking smaller stakes in an array of companies, Ziemba said. The diverse distribution of stakes in close to 100 firms in the U.S. that the China Investment Corp. revealed in a regulatory filing last month is proof that they’re going back to their original goals, she said. CIC, Morgan Stanley In June, CIC increased its investment in New York-based Morgan Stanley by $1.2 billion, even though its first purchase was out of the money by about $2 billion on the $5.6 billion it put in the Wall Street firm. The fund took part in Morgan Stanley’s sale of new shares, saying it expects the investment bank to become more competitive. The equity units CIC bought in 2007 will convert to stock at $48 in August. Morgan Stanley shares closed yesterday at $28.19. CIC declined to comment. Sovereign wealth funds tend to support the companies in which they had invested in times of need, said Nuno Fernandes, professor of finance at IMD Business School in Lausanne, Switzerland, who has been studying the funds. Still, the recent losses “had huge implications internally, and the funds were criticized by their local constituencies. They will invest less in financials going forward.” Temasek Holdings Pte, a separate Singapore government fund that oversees more than $120 billion, sold its shares in Charlotte, North Carolina-based Bank of America Corp. for a $4.6 billion loss in early 2009. It had acquired the stock during the conversion of its stake in Merrill Lynch & Co. when the investment bank was bought by Bank of America. Surging Losses After the initial round of investments by the sovereign wealth funds in late 2007 and early 2008, banks and brokers announced more losses on their mortgage assets. And they kept going back to investors for more money. The dilutions since then and the losses — $1.25 trillion worldwide — may make it difficult for some bank shares to recover to 2007-08 levels. In the two years following GIC’s investment, UBS’s writedowns and losses from the credit crisis swelled almost threefold to more than $57 billion. UBS boosted the number of its shares by 98 percent since the end of 2007. Citigroup’s share count jumped almost six times in the same period. After UBS’s capital raising was announced on Dec. 10, 2007, it drew criticism from other shareholders. Profond, a Swiss pension fund, said it was treated unfairly by the bank because it wasn’t offered the same deal, which included a 9 percent interest payment on the mandatory convertible notes sold to GIC and an unidentified Middle Eastern investor. Swiss tabloid Blick christened UBS the “United Bank of Singapore.” “The majority of people at the end of 2007 expected this crisis to be a lot less severe than it in the end turned out,” said Dirk Hoffmann-Becking , a London-based analyst at Sanford C. Bernstein Ltd. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net ; Yalman Onaran in New York at yonaran@bloomberg.net .

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Soros Signals Gold Bubble as Momentary Buyer While Goldman Predicts Record

March 1, 2010

By Nicholas Larkin and Pham-Duy Nguyen March 1 (Bloomberg) — George Soros is helping drive up gold prices by doubling his bet in a market even he considers a “bubble” as Goldman Sachs Group Inc., Barclays Capital and HSBC Holdings Plc predict more gains before it bursts. Soros Fund Management LLC, which manages about $25 billion, increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter, a Feb. 16 Securities and Exchange Commission filing shows. While prices have fallen 8.9 percent since reaching a record on Dec. 3, 15 of 22 analysts in a Bloomberg survey say gold will reach a new high, with the median forecast predicting a 16 percent advance to as much as $1,300 an ounce this year. “When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Soros said at the World Economic Forum’s annual meeting in Davos, Switzerland, in January. “The ultimate asset bubble is gold,” he said. In a Jan. 28 Bloomberg Television interview, the 79-year- old billionaire recalled that former Federal Reserve Chairman Alan Greenspan warned of “irrational exuberance” in financial markets three years before the technology bubble burst in 2000. The Standard & Poor’s 500 Index rose 89 percent in the period. Buying at the start of a bubble is “rational,” Soros said. Gold’s fourfold rally since the end of 2000 has also attracted money managers John Paulson , Paul Tudor Jones and David Einhorn . Paulson’s Credit Opportunities Fund soared almost sixfold in 2007 by betting that subprime mortgages would plummet. Einhorn said in October that his Greenlight Capital Inc. bought gold to bet against the dollar. ‘Just an Asset’ Tudor Investment Corp., based in Greenwich, Connecticut, increased its stake in Newmont Mining Corp., the largest U.S. gold producer, almost fourfold in the final quarter of 2009. Gold is “just an asset that, like everything else in life, has its time and place. And now is that time,” Paul Tudor Jones said in an October letter to clients. Funds of the four-biggest ETF firms hold 1,583 metric tons of the metal, according to data compiled by Bloomberg. Only the central banks or governments of the U.S., Germany, Italy and France and the International Monetary Fund hold more. Investment demand , including in bars and coins, doubled to 1,820 tons last year as investors sought a refuge from the global recession, according to GFMS Ltd. That exceeded jewelry demand for the first time in three decades, the London-based research firm said Jan. 13. Prices reached the record $1,226.56 a decade after the metal fell to a 20-year low of $251.95 amid sales by central banks. Gold was at $1,117.15 today in London. Dollar Rally The price fell as the economic recovery sparked a dollar rally that has pushed the U.S. Dollar Index , a gauge against six counterparts, up 3.5 percent this year. Gold ended last week at $1,117.60, up 18 percent in the past 12 months and 21 percent since the start of the third quarter, when Soros accumulated 2.44 million shares of the SPDR Gold Trust. “Perhaps Soros thinks gold is going to bubble but the bubble is going to last for a while and he wants to profit from it,” said Jeffrey Nichols, managing director of American Precious Metals Advisors and an adviser to central banks and mining companies. “We could have a bubble but gold can reach $2,000 or $3,000 before it’s over.” Soros’ New York-based firm became the fourth-biggest investor in the SPDR Gold Trust by the end of 2009, 17 years after he made $1 billion breaking the Bank of England’s defense of the pound. The SPDR fund holds 1,107 tons, more than either Switzerland or China. Paulson, Einhorn Paulson & Co. is the ETF’s biggest investor, with 31.5 million shares, regulatory filings show. With each representing almost a 10th of an ounce of gold, the hedge fund firm’s stake is the equivalent of about 96 tons, exceeding the holdings of Australia and Kuwait. New York-based Paulson is also the biggest investor in Johannesburg-based AngloGold Ashanti Ltd. , Africa’s top producer. The Market Vectors Gold Miners ETF is Einhorn’s seventh-largest holding, according to a Feb. 16 filing. Goldman predicts gold will reach $1,235 in three months and $1,380 in 12 months. Barclays Capital says the metal will average $1,235 in the fourth quarter. HSBC says it may peak at $1,300 this year. “I absolutely believe it’s heading into a bubble, but that’s why you buy it,” said Charles Morris , who manages $2.5 billion at HSBC Global Asset Management’s Absolute Return Fund in London. “A bubble is good,” he said, forecasting the metal may rise to $5,000 in five years to explain why 11 percent of his fund is in gold. World Economic Growth The metal dropped from the record high as recovering economies pushed up the dollar. The Washington-based IMF increased its forecast for world economic growth in 2010 to 3.9 percent in January, from 3.1 percent in October. Gold may drop 28 percent to $800 this year if the U.S. raises interest rates, said New York-based Tom Winmill , who manages $120 million at the Midas Fund. Gold generally only earns interest for banks that lend it, so its lure over cash diminishes as borrowing costs increase. Fed Chairman Ben S. Bernanke said Feb. 24 that the U.S. economy is in a “nascent” recovery that still requires low borrowing costs. U.S. policy makers likely will start raising the target rate for overnight loans between banks from the record low range of zero to 0.25 percent in the third quarter, according to the median estimate of 72 economists. ‘Very Expensive’ “Gold looks very expensive right now,” said Brian Nick , an investment strategist at Barclays Wealth in New York, which manages $221 billion. “Yes, rates are low but are they low enough to produce runaway inflation? Actual inflation numbers haven’t pointed to a worrying trend” that would prompt Fed action to cool an overheating economy, he said. U.S. consumer prices will rise 2.15 percent this year, compared with last year’s 0.35 percent decline, according to the median of 60 estimates. Stock-option traders are boosting bearish bets against gold-mining companies’ shares, paying the most in more than a year for options to protect them from declines. Bearish options on the Market Vectors Gold Miners ETF, which tracks 31 producers, were 12 percent more expensive than bullish ones last week, the highest premium since December 2008, according to data compiled by Bloomberg. Hedge funds and speculators are paring bets that gold will keep rising. There were 200,622 more outstanding futures contracts that profit on the metal gaining than wagers that pay when prices fall as of Feb. 23, down from 262,331 in November, U.S. Commodity Futures Trading Commission data show. More Bullish Traders remain more bullish than in past years, with speculative long bets on gold on the New York Mercantile Exchange outnumbering short wagers by more than 7-to-1, compared with less than 5-to-1 in the three years before the September 2008 collapse of Lehman Brothers Holdings Inc. spurred demand for gold’s perceived safety. Central banks likely will expand their reserves for a second straight year, said CPM Group, a New York commodities researcher. The last time they added to stockpiles, in 1988, gold fell 15 percent and then took 15 years to recoup its losses, suggesting they may not be the best indicator of investment timing. Central banks hold about 18 percent of all gold ever mined. Through the end of last year, gold was up about 29 percent since its 1980 peak. In that same period, Treasuries rose about 1,090 percent. The S&P 500 earned more than 2,300 percent with dividends reinvested over the three decades. Even cash in the average U.S. checking account outdid gold, gaining 92 percent. Premature Bubble The combined holdings of the biggest ETF providers — State Street Corp., ETF Securities Ltd., Zuercher Kantonalbank and Barclays Capital — rose more than 16 times from 95 tons five years ago. It may be premature to declare a bubble by the standards of other commodities. Copper rose 188 percent in the year to May 2006 before falling 38 percent in nine months. Crude oil doubled in about 11 months before peaking in July 2008 and slumped 77 percent in the next five. Gold hasn’t had a 12-month gain of more than 55 percent since October 1980. Adjusted for inflation , it’s still worth about half of its 20th century peak of $850 on Jan. 21, 1980. Touradji Capital Management LP founder Paul Touradji said in a March 2008 letter to his hedge fund clients that the commodity market was a “buying orgy” of inflated prices. Oil, which had gained 80 percent in the previous 12 months, went up 35 percent more in the next four months. Touradji’s largest equity holding at the end of the fourth quarter was a stake in Toronto-based Barrick Gold Corp., the world’s biggest producer of the metal. “Gold makes sense as an investment,” said Jeffrey Christian , the managing director of CPM Group. “Just because the price of gold is going up for the 10th year doesn’t mean it’s a bubble.” To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net ; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net .

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Transgene Attack on Lung Cancer May Yield $1.6 Billion Tumor-Fighting Drug

February 26, 2010

By Andrea Gerlin Feb. 26 (Bloomberg) — Investors are counting on Transgene SA to attract a drugmaker to help fund development and promote what may become the first product to attack lung cancer by stimulating patients’ immune systems. Transgene, whose biggest shareholder is the French family headed by Alain Merieux , needs a partner to meet the $30 million to $50 million cost of final tests on the TG4010 vaccine, said Gary Waanders , a London analyst at Nomura Code Securities Ltd., citing his estimate for the price of a 1,000-patient trial. The chances Transgene will attract a drugmaker rose Dec. 1 when U.S. regulators granted TG4010 fast-track status, meaning a shortened review for a product that may be better than available treatments. TG4010 helped prolong the median survival time by about six months for people with normal levels of a type of immune cell known as natural killer cells, Transgene said in February 2009. Twice as many patients responded to treatment with TG4010 as with chemotherapy alone, the company said . “It’s two times better than what we have today, than other products for non-small cell lung cancer,” said Arnaud Guerin , an analyst at Portzamparc Societe de Bourse SA in Nantes. Transgene rose 5 cents, or 0.2 percent, to 20.50 euros in Paris trading yesterday. The shares, bolstered by the U.S. Food and Drug Administration recommendation and the prospect of a licensing deal, have climbed 17 percent since Dec. 1. Waanders is the only one of six analysts in a Bloomberg survey who doesn’t recommend buying the stock. Possible Announcement The company is close to selling rights on TG4010, said Pierre Corby , an analyst at Aurel BGC in Paris, in a Feb. 16 interview. Pfizer Inc. , Roche AG, Novartis AG and Sanofi-Aventis SA are potential partners, Corby said. Corby said he was told by Transgene Chief Executive Officer Philippe Archinard and another company official in January that terms of a deal had been set. Transgene, based near Strasbourg, France, said in a Dec. 1 statement that it “hoped to reach a collaborative agreement” around the end of last year. The company’s financial chief, Philippe Poncet , said in 2008 that Roche, Novartis and Sanofi may be interested in TG4010. Transgene executives haven’t commented publicly this year on their search for a drugmaking partner. Archinard and Poncet declined to comment for this article, Elisabetta Castelli, a spokeswoman, said on Feb. 23. She cited the possibility of a news announcement in early March as the reason. Sales Forecast Nina Schwab-Hautzinger , a spokeswoman for Basel, Switzerland-based Roche, declined to comment. So did Eric Althoff , a spokesman for Basel-based Novartis. Geoffroy Bessaud , a spokesman for Sanofi-Aventis in Paris, and Ray Kerins , a spokesman for Pfizer in New York, also had no comment. Peak sales may reach 1.15 billion euros ($1.6 billion) in 2018 if TG4010 makes it to the market, possibly as early as 2015, said Aurel’s Corby. The analyst recommended buying Transgene in December 2008, when the market price was 12.10 euros, according to data compiled by Bloomberg. His price target was 16 euros, later raised to 22.50 euros and most recently to 26 euros, a level set after the FDA granted fast-track status to TG4010. If the medicine is cleared for other types of cancer, annual sales may reach $3 billion, said Guerin of Portzamparc Societe de Bourse, assuming a treatment price of 10,000 euros. Transgene currently has no marketed products. TG4010 is designed to spur the immune system to fight malignancies. Enlisting the help of a large drugmaker may help Transgene reach the market before GlaxoSmithKline Plc and Merck KGaA , which are also developing lung cancer vaccines, Corby said. Survival Benefit Data released in February 2009 from a mid-stage study of 148 patients indicated that TG4010 combined with chemotherapy extended survival of advanced non-small cell lung-cancer patients with normal levels of natural killer cells by 17 months, compared with 11 months for chemotherapy alone. “The data they showed from this trial was a dream, so it makes sense to pursue it,” said Robert Dreicer, chairman of solid-tumor oncology at the Cleveland Clinic in Ohio, in a Feb. 4 interview. Dreicer, a member of Transgene’s scientific advisory board, led a mid-stage trial of TG4010 for prostate cancer. Christoph Rochlitz, an oncologist at University Hospital Basel, in Switzerland, said he doubts the survival benefit. “Very frequently, the inclusion criteria for Phase II studies lead to a seemingly ‘better survival’ compared to Phase III trials,” Rochlitz said in a Feb. 2 e-mail. Phase III is the last of three sets of trials ordinarily required for regulatory approval. ‘Well Tolerated’ Rochlitz was involved in a Phase I trial of TG4010. That research, published in August 2003, found the medicine “was generally well tolerated in patients with metastatic tumors.” Lung cancer kills about 1.3 million people each year, more than any other malignancy, according to the Geneva-based World Health Organization. About 85 percent of patients die within five years of diagnosis. Unlike immunizations that prevent disease from taking hold, so-called therapeutic cancer vaccines are aimed at helping the body to fight disease once it occurs. The only such product on the market is Vitespen, which was approved in Russia for kidney cancer last year after being rebuffed in the U.S., according to Cornelia Thomas , an analyst for WestLB AG in London. Vitespen is made by Antigenics Inc., a biotechnology company based in Lexington, Massachusetts. ‘Promising’ Data More vaccines may be coming down the track. Twelve of the 50 cancer therapies in late-stage clinical trials as of 2008 were therapeutic vaccines, according IMS Health Inc., a research company in Norwalk, Connecticut. “The Phase III data which is coming forward from a number of trials looks promising,” said Karen Anderson, an oncologist at the Dana Farber Cancer Institute’s Cancer Vaccines Center, in Boston, in a Feb. 4 interview. “The actual benefit remains to be proven.” Anderson has no ties to Transgene. Glaxo, of London, began the final trials of its MAGE-A3 vaccine for lung cancer in 2007 and for melanoma in 2009. Family-controlled Merck KGaA — based in Darmstadt, Germany, and not affiliated to Merck & Co. of Whitehouse Station, New Jersey — began final tests of its Stimuvax vaccine in lung cancer in 2007 and in breast cancer last year. The lung cancer studies may take four to five years to complete. The biggest investor in Transgene is Institut Merieux , the Lyon, France-based holding company for Alain Merieux and his family. Forbes magazine last year estimated Merieux’s fortune at $2.4 billion, ranking him 285th among the world’s richest people. The institute owns 55 percent of Transgene as well as 59 percent of BioMerieux SA, a publicly traded diagnostics company based in Marcy L’Etoile, France. Natural Killers Transgene plans to enroll 1,000 patients with normal levels of natural killer, or NK, cells in TG4010’s final test. People with that cell type survived longer in mid-stage tests than those without it. About 75 percent of the population has normal levels of NK cells, a type of white blood cell. Glaxo is enrolling patients with early or moderately advanced lung cancer. Merck KGaA is focusing on patients with more advanced levels of the disease, while Transgene is targeting those with the gravest prognoses. Transgene had 72.9 million euros of cash as of Sept. 30. It expects to use 25 million to 30 million euros a year this year and next. Corby estimated a partnership may bring in as much as 400 million euros. Transgene also has a 218 million-euro agreement with Roche, the world’s biggest maker of cancer treatments, for the development of TG4001, an experimental vaccine to treat precancerous lesions that might lead to cervical cancer. To contact the reporter responsible for this story: Andrea Gerlin in London at agerlin@bloomberg.net

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Two More UBS Clients Win Swiss Court Ruling Blocking Data Transfer to U.S.

February 26, 2010

By Joseph Heaven Feb. 26 (Bloomberg) — A Swiss court ordered tax officials to drop two more cases involving UBS AG account holders, adding urgency to the government’s effort to save a data-sharing agreement with the U.S. through the political process. The court, in a decision published today, told Switzerland’s tax authority to comply with an earlier ruling that blocked it from sending information on as many as 26 UBS customers to the U.S. The court said Switzerland could only lift bank secrecy rules when there is evidence of tax fraud. “No grounds have been asserted or are apparent, as to why the case before us” should “differ from the one decided,” the five judges wrote. The ruling increases pressure on the Swiss to find a way to salvage the agreement to hand over data on as many as 4,450 UBS account holders to the U.S. as part of a crackdown on tax evasion. Ministers said this week they will ask the parliament to approve the U.S. settlement to get around the court rulings. The two UBS clients involved in today’s decision are among 26 covered by last month’s ruling. The court said that the account holders’ conduct, failing to complete tax forms or declare income, was merely tax evasion rather than tax fraud. Under Swiss law, tax fraud is a criminal offense, which allows the government to lift bank secrecy laws. Evasion is a civil matter. The court last month ruled the U.S. deal isn’t fully enforceable because it doesn’t alter the terms of an existing international treaty. With parliamentary approval, the court won’t be able to “regard the UBS agreement as merely a mutual agreement” as it will have the same legal weight as a treaty, the government said this week. Approval would allow the country to “bring a final resolution to its legal and sovereignty dispute with the USA.” Today’s Federal Administrative Court cases are: A. vs. Eidgenoessiche Steuerverwaltung (ESTV), A-7929/2009. A. vs. Eidgenoessiche Steuerverwaltung (ESTV), A-7814/2009. To contact the reporter on this story: Joseph Heaven in Zurich at jheaven1@bloomberg.net

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Canada Faces Russia in Olympic Hockey Quarterfinals

February 24, 2010

By Michael Buteau and Erik Matuszewski Feb. 24 (Bloomberg) — Canada faces Russia in Winter Olympics hockey competition today in a match-up of two of the world’s top teams after Canada beat Germany 8-2 last night. Jarome Iginla scored twice yesterday to lead Canada. Joe Thornton , Shea Weber , Sidney Crosby , Mike Richards , Scott Niedermayer and Rick Nash each added a goal for the host country. Eric Staal had three assists. Today’s quarterfinal game will pit Crosby, who captained the National Hockey League’s Pittsburgh Penguins to the 2009 Stanley Cup title, against Russia’s Alex Ovechkin , the NHL’s most valuable player the past two seasons. Crosby and Ovechkin are tied for the NHL lead with 42 goals each this season. “That’s a big rivalry, we all know it,” Crosby told reporters after the win over Germany. “It’s something that everyone’s been talking about even before the Olympics. I expect it to be a pretty incredible atmosphere.” In the win over Germany, the red-and-white clad home crowd of 17,723 filled the arena with chants of “we want Russia,” during the final minutes of the third period. Canada was forced to play Germany after losing to the U.S. in its final preliminary round game on Feb. 21, the first win by the U.S. over Canada at an Olympics in 50 years. Roberto Luongo , who replaced Martin Brodeur in goal for Canada, turned aside 21 German shots to earn his second win of the tournament. The U.S. will face Switzerland, which knocked off Belarus 3-2 in a shootout yesterday, in another quarterfinal game today. Slovakia plays Sweden after beating Norway 4-3, while the Czech Republic advanced to meet Finland with a 3-2 win over Latvia. Mancuso’s Quest Julia Mancuso will seek to return the U.S. to the Alpine skiing podium today in the women’s giant slalom. Bode Miller was disqualified for missing a gate on the first run of yesterday’s men’s giant slalom. It was the first time in seven Alpine events at the Vancouver Games that the U.S. had failed to medal. Mancuso, defending Olympic gold medalist in the giant slalom, won silver in the women’s downhill and Super-G events. Among her challengers will be Tanja Poutainen of Finland, the 2006 Olympic silver medalist in the giant slalom and a two-time World Cup giant slalom champion. Lindsey Vonn of the U.S., who won gold in the downhill and bronze in the Super-G during the Vancouver Games, never has finished in the top three of a World Cup giant slalom. Other Medals Other medals will be awarded today in women’s bobsled, women’s 3,000-meter short track speedskating relay, women’s 5,000-meter speedskating and women’s freestyle skiing aerials. Yesterday, Seung-Hoon Lee of South Korea won the men’s 10,000-meter speedskating gold medal when Sven Kramer of the Netherlands was disqualified for failing to change lanes. Carlo Janka won the men’s giant slalom, giving Switzerland its sixth gold medal of the Games. In the speedskating race, Lee finished in 12 minutes, 58:55 seconds, followed by Ivan Skobrev of Russia and Bob de Jong of the Netherlands at the Richmond Oval in British Columbia. Kramer was disqualified after finishing in 12:54.92, eclipsing the Winter Games record Lee had set earlier in the final. Judges ruled the Dutch athlete failed to make a proper change of lanes with eight laps remaining in Olympic speedskating’s longest race. Kramer Pushes Coach Kramer, 23, threw his sunglasses to the ice and pushed Dutch coach Gerard Kemkers after learning of the disqualification. Kramer, who won the 5,000-meter race on Feb. 13, blamed Kemkers for the mistake. “I wanted to go on the outer lane,” Kramer told reporters through a translator after the race. “Then, just before the cone, Gerard shouted ‘inner lane.’ I thought he’s probably right and went to the inner lane. I should have gone with my own thoughts. This really sucks.” Janka, 23, finished his two slalom runs in a combined time of 2 minutes, 37.83 seconds at Whistler Creekside in British Columbia. Norway picked up the silver and bronze medals with Kjetil Jansrud and Aksel Lund Svindal . Miller was more than a second behind Janka’s split times when he missed a gate, pulled to the side of the course and didn’t finish the run. Miller won a gold medal in the super- combined two days ago, and also has claimed silver and bronze medals at these Games. Switzerland’s six gold medals are tied with Canada and Norway for third behind the U.S. and Germany, which have seven apiece. Austrians Shut Out Austria, which has an Olympic-record 103 Alpine skiing medals, missed out this time. Marcel Hirscher finished fourth, followed by teammates Romed Baumann and Benjamin Raich . Giant slalom is similar to the slalom, with fewer, wider and smoother turns. The times for the two runs are combined, with the fastest total time determining the winner. Austria won the four-man Nordic combined relay yesterday after Mario Stecher pulled away from U.S. skier Bill Demong with about 500 meters to go. The U.S. took silver, its first Nordic combined medal, while Germany won bronze. Nordic combined includes ski jumping and cross-country skiing. Medals also were awarded yesterday in the women’s 4×6- kilometer biathlon relay and women’s ski cross. Russia took the gold in the biathlon event. France won the silver medal, followed by Germany. Vancouver native Ashleigh McIvor, 26, won gold in ski cross, giving host Canada its 11th medal. Hedda Berntsen of Norway won the silver, while Marion Josserand of France was third. Ski cross, in which groups of skiers race down a narrow mountain run at the same time, made its debut at these Games. Germany now has 23 medals, three behind the U.S., which leads the Vancouver Winter Games. Norway is third with 17 medals. The U.S.’s medal count tops its total at the 2006 Winter Olympics in Turin, Italy. To contact the reporters on this story: Michael Buteau in Vancouver, at mbuteau@bloomberg.net ; Erik Matuszewski in Vancouver, at matuszewski@bloomberg.net

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Swine Flu Protection Added to Seasonal Flu Vaccine (Update1)

February 22, 2010

By Tom Randall Feb. 22 (Bloomberg) — Protection against swine flu will be added to the 2010-2011 seasonal influenza vaccine, putting an end to separate shots deployed against the pandemic, according to a U.S. Food and Drug Administration advisory committee. The pandemic H1N1 flu should replace the H1N1 strain from last year’s vaccine, the panel said today in a unanimous vote. Each year the three most commonly circulating strains are selected to be included in the shot. The panel’s recommendations are routinely adopted and used to guide vaccine manufacturers. The decision, which follows a similar recommendation by the World Health Organization in Geneva last week, may mean the end of the separate pandemic flu shots that London-based GlaxoSmithKline Plc , Novartis AG , based in Basel, Switzerland, and Paris-based Sanofi-Aventis SA have been selling since September. The previous strain of H1N1 “most likely poses a low risk in the forthcoming Northern Hemisphere season,” Nancy Cox, director of the flu division at the U.S. Centers for Disease Control and Prevention, said today at the panel hearing. The new strain of H1N1 will be added because it spreads easily in a population that had little immunity to it before this year, she said. Companies typically receive U.S. government advice on the flu shot’s composition in February so they can begin the manufacturing process months before the next flu season. The U.S. season lasts from November to March, according to the Atlanta-based CDC. The WHO recommended in September that the pandemic strain of the virus be included in the seasonal flu shot to be given in the Southern Hemisphere in 2010. Almost one in five Americans was infected by swine flu since the virus emerged in April, the CDC reported on Feb. 12. Ninety percent of the people who died were younger than age 65, the reverse of a typical flu season. About 12,000 Americans have died, compared with about 36,000 in an average season, when circulating strains attack the vulnerable elderly. To contact the reporter on this story: Tom Randall in New York at trandall6@bloomberg.net

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Bode Miller of U.S. Wins His First Olympic Gold Medal

February 21, 2010

By Erik Matuszewski and Michael Buteau Feb. 21 (Bloomberg) — Bode Miller of the U.S., who considered retiring last year, claimed his first Olympic gold medal in the men’s super-combined Alpine skiing event at the Vancouver Winter Games. Miller, 32, finished in a time of 2 minutes, 44.92 seconds to beat Ivica Kostelic of Croatia and Silvan Zurbriggen of Switzerland. Miller was seventh after the downhill portion of the event before recording the third-fastest time in the slalom runs to fulfill his goal of becoming an Olympic champion. “I had to just get fully fired up to take maximum risk,” Miller told reporters. “When I crossed the line, I did my normal thing where I stood for a second. For my first Olympic gold, it’s perfect.” The most successful Alpine skier in U.S. history with 32 World Cup victories, Miller won two silver medals at the 2002 Salt Lake City Games. He then failed to medal in any of his five races at the 2006 Turin Games and took a hiatus from the sport while considering retirement last year. Miller decided to return to the U.S. ski team and won a silver medal and a bronze in his first two races of the Vancouver Games before today’s gold. His five Olympic medals are the most by a U.S. Alpine skier. “It feels great to have the freedom to ski the way I want without worrying about results,” Miller said in an interview broadcast on Canada’s CTV. “In Turin, I didn’t want to be there.” Eighth U.S. Alpine Medal Miller’s gold was the eighth medal in Alpine events for the U.S., which tops the Winter Games standings with 23 overall. The previous high for Alpine medals in a Winter Olympics for the U.S. was five at the 1984 Games in Sarajevo. The U.S. now has seven gold medals in Vancouver, two better than Germany, Norway and Switzerland, and three ahead of host Canada. Germany is second in the total medal standings with 16, followed by Norway with 12. Magdalena Neuner claimed her second gold medal of the Games for Germany in the women’s biathlon 12.5-kilometer mass sprint at Whistler Olympic Park. Russia’s Olga Zaitseva took the silver and Germany’s Simone Hauswald received the bronze. Russia’s Evgeny Ustyugov , 24, won the men’s 15-kilometer biathlon, the second gold medal of the Games for Russia. Martin Fourcade of France was second, while Pavol Hurajt took the bronze for Slovakia. Michael Schmid of Switzerland won the gold medal in the men’s ski cross, an event making its Olympic debt in Vancouver. Austria’s Andreas Matt was the silver medalist, with Norway’s Audun Groenvold taking bronze. Two More Medals Medals also will be awarded in women’s 1,500-meter speedskating and men’s two-man bobsleigh. The start time for the bobsleigh event was pushed back 2 1/2 hours to 4 p.m. due to warm weather at the track on Blackcomb Mountain. Canada will play the U.S. today in men’s preliminary round hockey, as the Americans look to end a 50-year drought against the Canadians in Olympic competition. The matchup, scheduled for 4:40 p.m. local time, precedes a game between Sweden, the defending Olympic champions, and Finland. Russia beat the Czech Republic 4-2 in an earlier game. Canada and the U.S. have faced each other 15 times in Olympic competition, with Canada winning 10 and tying three. The last U.S. victory came in 1960 in Squaw Valley, California. U.S. forward Chris Drury said his squad is relishing the chance to upset the Canadians on home ice. “Clearly no one is picking us to win,” Drury, who plays for the National Hockey League’s New York Rangers, said yesterday. “No one’s betting a nickel on us. U.S. hockey has come so far. Now, it doesn’t take a miracle for us to win.” To contact the reporters on this story: Erik Matuszewski in Whistler, British Columbia, at matuszewski@bloomberg.net Michael Buteau in Vancouver, at mbutea@bloomberg.net , and

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U.S. Seeks to End 50-Year Olympic Hockey Drought Against Canada

February 21, 2010

By Michael Buteau and Erik Matuszewski Feb. 21 (Bloomberg) — It’s been 50 years since the U.S. last beat Canada in men’s Olympic hockey competition. The Americans will look to end that drought today in one of three preliminary-round games at the Vancouver Winter Olympics. The U.S.-Canada matchup, scheduled for 4:40 p.m. local time, follows a meeting between Russia and the Czech Republic and precedes a game between Sweden, the defending Olympic champions, and Finland. Canada and the U.S. have faced each other 15 times in Olympic competition, with Canada winning 10 and tying three. The last U.S. victory came in 1960 in Squaw Valley, California. U.S. forward Chris Drury said his squad is relishing the chance to upset the Canadians on home ice. “Clearly no one is picking us to win,” Drury told reporters yesterday. “No one’s betting a nickel on us. U.S. hockey has come so far. Now, it doesn’t take a miracle for us to win.” With no guarantee that the U.S. would face Canada again in the medal round, Drury, who plays for the National Hockey League’s New York Rangers, said he’s making sure his younger teammates relish the opportunity. “Playing in Canada, against Canada at the Olympics, doesn’t happen too often in our lifetime,” he said. “You blink and it’s over. You have to look around and just realize how lucky we are to be doing this.” Easy Event Canada, coming off a 3-2 shootout win over Switzerland, defeated the U.S. for the gold medal in the 2002 Games in Salt Lake City. Canada defeated Norway 8-0 in its opening game in Vancouver, while the U.S beat Switzerland 3-1 and Norway 6-1. Six medal events will be contested today, including the men’s super-combined Alpine race, where Bode Miller of the U.S. will be seeking his third medal of the Games following a bronze in the downhill and silver in the Super-G. The super-combined, a combination of a downhill and a slalom run, was rescheduled from Feb. 16 due to heavy snow in Whistler, British Columbia. “Not to be arrogant but the super-combined is a pretty easy event for me,” Miller told reporters. “If I ski anywhere near my potential in either of those events, it’s rare that I would be off the podium.” Bobsleigh Delay Medals also will be awarded in men’s and women’s biathlon; women’s 1,500-meter speedskating; men’s two-man bobsleigh and men’s ski cross. The start time for the bobsleigh event was pushed back 2 ½ hours to 4 p.m. due to warm weather at the track on Blackcomb Mountain. Ski cross, which features skiers racing against each other at the same time over a course made up of turns and jumps, is making its Olympic debut. Yesterday, Jung-Su Lee of South Korea won the men’s 1,000- meter short-track speedskating event with countryman Ho-Suk Lee taking silver. Jung-Su Lee also won the 1,500-meter event on Feb. 13. Apolo Ohno of the U.S. won bronze to pass speedskater Bonnie Blair as the most decorated U.S. Winter Olympian. Ohno has seven medals, including a silver in the 1,500 meters in Vancouver. “It means a lot to me,” Ohno, 27, told reporters after yesterday’s race. “I never came to these Games thinking about breaking any records. It feels amazing. I’m all smiles.” Dutch Speed Mark Tuitert of the Netherlands won the men’s 1,500-meter speedskating race to deny Shani Davis of the U.S. a second gold medal. Tuitert, 29, won the 1,500-meter race in a time of 1:45.57 as Davis, the world record-holder in the event, matched his silver-medal finish at the 2006 Turin Games. Davis had won the 1,000-meter race three days ago and now has four Olympic medals in his career. Andrea Fischbacher claimed Austria’s first Alpine skiing gold medal of this year’s Games with her victory in the Super-G at Creekside in Whistler. Tina Maze of Slovenia took the silver medal and Lindsey Vonn of the U.S. received the bronze. The U.S. has 23 medals to top the Winter Games standings, seven of those coming in Alpine events. The previous high for Alpine medals in a Winter Olympics for the U.S. was five at the 1984 Games in Sarajevo. Germany is second with 14 medals, including four golds. Norway has 11 medals, including five gold, and host Canada has eight medals, half of which are gold. To contact the reporters on this story: Michael Buteau in Vancouver, at mbutea@bloomberg.net , and Erik Matuszewski in Whistler, British Columbia, at matuszewski@bloomberg.net

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Fischbacher Wins Alpine Gold for Austria at Olympics

February 20, 2010

By Erik Matuszewski Feb. 20 (Bloomberg) — Andrea Fischbacher claimed Austria’s first Alpine skiing gold medal of the Vancouver Winter Olympics with her victory in the Super-G. Fischbacher, 24, finished in a time of 1 minute, 20.14 seconds at Creekside in Whistler, British Columbia. Tina Maze of Slovenia took the silver medal and Lindsey Vonn of the U.S. received the bronze. “It’s just a great feeling,” Fischbacher told reporters. “It was a crazy run and I had to push myself to attack from the start to the finish. It’s really cool that I got the first gold medal. It’s really a dream come true.” Austria had one bronze medal through the first four Olympic Alpine events after entering the Vancouver Games with 101 Alpine medals, almost double that of the next closest country, Switzerland with 53. Austria’s lone gold medal before Fischbacher’s win had come from Andreas and Wolfgang Linger in luge doubles. The country ranks sixth for total medals at the Vancouver Games with six. “Skiing is so popular in Austria so if you win a medal you are one of the best in the country,” she said. The U.S. has 21 medals to top the Winter Games standings, seven of those coming in Alpine events. Germany is second with 13 medals, including four golds. Norway has 10 medals, half of which are gold, and host Canada has eight medals, including four golds. Switzerland claimed its fourth gold medal of the games today as Simon Ammann won the individual large hill ski jump title over Adam Malysz of Poland and Gregor Schlierenzauer of Austria. Four Golds It was the second gold of the Games for Ammann, 28, who now has four in his career after winning twice in Salt Lake City in 2002. Vonn, 25, was considered the favorite coming into today’s race, having already captured this season’s World Cup Super-G title by winning five of seven races. She started 17th in the field of 53 and briefly held the lead with a time of 1:20.88. Fischbacher beat Vonn’s time two skiers later to join Sigrid Wolf, in 1988, and Michaela Dorfmeister , in 2006, as Austrian gold medalists in the event. The Super-G is a single- run Alpine event combining the speed of downhill with the more precise turns of giant slalom. Double Medalist “I’m a double medalist now and that’s something to be very proud of,” said Vonn, who won gold in the downhill event. “It’s still very special. Olympic medals are hard to come by.” The previous high for Alpine medals in a Winter Olympics for the U.S. was five at the 1984 Games in Sarajevo. Apolo Ohno can pass speedskater Bonnie Blair as the most decorated U.S. Winter Olympian with a medal in today’s 1,000- meter short-track event. Ohno has six Olympic medals, including a silver in the 1,500 meters in Vancouver. Canada’s Charles Hamelin is the world record holder in the event, while other top contenders include Jung-Su Lee, Ho-Suk Lee and Si-Bak Sung of South Korea. Gold medals will also be awarded today in women’s 1,500- meter short-track speedskating, men’s 1,500-meter speedskating, and the men’s 30-kilometer pursuit cross-country race. To contact the reporter on this story: Erik Matuszewski in Whistler, British Columbia, at matuszewski@bloomberg.net

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UBS Defers Bonuses on Compensation Above $250,000 After Unprofitable Year

February 19, 2010

By Elena Logutenkova, Gavin Finch and Ambereen Choudhury Feb. 19 (Bloomberg) — UBS AG , the biggest Swiss bank, is awarding deferred stock bonuses for senior employees whose total pay for 2009 exceeds $250,000 to limit compensation costs for the unprofitable year. Beyond that level, 60 percent of bonuses will be paid out in so-called equity ownership plan awards and 40 percent in cash, John F. Bradley , head of human resources for the Zurich- based bank, said in a memo to directors and more senior employees, on Feb. 9. UBS confirmed the memo’s contents. One-third of the grant under the equity ownership plan will vest annually over three years. The awards can be clawed back if an employee’s conduct or judgment results in “significant financial losses or significant downward restatements of the published results, material breaches of compliance rules, guidelines and policies, and other material breaches of duties or applicable regulatory requirements that lead to a significant reputational risk for UBS,” the memo said. UBS said last week that its net loss in 2009 will trigger the bank’s bonus claw-back mechanism for the first time, depriving bankers of 300 million Swiss francs ($276 million) of deferred pay they were due to receive this year. The bank, under pressure from the Swiss government and financial regulators to limit bonus payments, said the total bonus pool for 2009 was cut by the decision to defer a greater proportion of variable compensation into future years. ‘Significant Benefits’ “While the equity ownership plan changes we made reflect the general trend in our industry as well as the desires of regulators, what they reflect most is our commitment to sustainable success,” Bradley said in the memo. “They will result in significant benefits for those who remain with UBS to help it achieve its strategic goals.” UBS is paying out 34 percent more in cash bonuses for 2009 than for the previous year, when it reported the biggest net loss in Swiss corporate history. The bank is carrying over 3.2 billion francs of deferred compensation into 2010 and beyond, Chief Financial Officer John Cryan said on Feb. 9, declining to say how much of that relates to 2009 awards. It had paid 9.92 billion francs in 2007 bonuses. Credit Suisse Group AG , Switzerland’s biggest bank by market value, said last week it deferred 40 percent of about 6.85 billion francs in bonuses for 2009 into future years. The bank revised its compensation plan in October, saying bonuses will be paid out in cash if they don’t surpass $100,000, while for higher amounts a portion will be awarded in deferred compensation, split equally between equity and cash awards. UBS revamped its compensation system for top executives in November 2008, introducing claw-back provisions and scrapping a bonus entitlement for the chairman. Chief Executive Officer Oswald Gruebel , who isn’t getting a bonus for 2009, said last week that the bank’s “top performers are paid to stay.” The bank boosted salaries for senior bankers at the investment bank by an average of 50 percent last year to stem defections after bonuses were cut, three people with knowledge of the matter said in May. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net Gavin Finch in London at gfinch@bloomberg.net ; Ambereen Choudhury in London at achoudhury@bloomberg.net

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Lysacek Wins Figure Skating Gold to Extend U.S. Olympic Lead

February 19, 2010

By Erik Matuszewski Feb. 19 (Bloomberg) — Evan Lysacek became the first American to win the Olympic men’s figure skating title since 1988, helping the U.S. extend its lead atop the medals standings at the Vancouver Winter Games. Lysacek, 24, moved past defending champion Evgeni Plushenko of Russia in the free skate portion of the competition. He’s the first U.S. male skater to win gold since Brian Boitano 22 years ago in Calgary. Lysacek’s victory pushed the U.S. total to 18 medals through six days of Olympic competition, seven medals more than Germany. The U.S. team also has a Winter Games-best six golds, two more than Germany and three better than Norway and Canada. “I saw that American flag go up and I couldn’t believe it was for me,” said Lysacek, the 2009 world champion. Day 6 in Vancouver started with Maria Riesch of Germany winning the women’s super-combined, where Lindsey Vonn of the U.S. had the lead from the downhill portion and crashed after hooking her ski on a gate during the slalom. Julia Mancuso of the U.S. collected her second silver medal in as many events. Canada picked up its third gold medal as Christine Nesbitt won the women’s 1,000-meter speedskating. The hosts also saw their men’s hockey team pull out a shootout win over Switzerland in a preliminary round game at Canada Hockey Place. Sidney Crosby scored the only goal of the shootout after the teams played through regulation and overtime tied 2-2. ‘Great Lesson’ “We expected this but we also expected to be better ourselves,” said Canada coach Mike Babcock , whose team is aiming for the gold medal. “It’s a great lesson for our team in how hard it’s going to be.” Torah Bright won Australia’s first gold medal of the Vancouver Winter Games, beating defending champion Hannah Teter of the U.S. in the women’s snowboard halfpipe. It’s Australia’s fourth gold in a Winter Olympics. Teter took the silver medal and teammate Kelly Clark the bronze. Norway matched Canada with three gold medals by capturing both of yesterday’s biathlon events. Tora Berger won the women’s 15-kilometer individual race and Emil Hegle Svendsen was the men’s 20-kilometer individual champion. Lysacek scored a career-high 257.67 points to prevent Plushenko from joining Dick Button of the U.S. as the only two- time Olympic men’s figure skating gold medalists. Plushenko, a three-time world champion, took the silver medal with 256.36 points. Free Skate Lysacek was second to Plushenko after the short program and beat him on the 4 1/2-minute free skate. Russian men had won the five previous Olympic titles. “I’ve been waiting for a clean free skate all season,” Lysacek said. “I tried not to get too excited after each jump. I wanted to pump my fist every time.” Vonn, who two days ago became the first American woman to win Olympic gold in the downhill, led Riesch by .33 of a second after the downhill portion of the combined. She still held the lead by seven-hundredths of a second on the slalom course when she hooked a gate with her right ski. Vonn was spun around as her ski popped off, knocking her out of the competition. The American has been bothered by a deep bruise in her right shin and said after the super-combined that the injury was “killing” her. “I was disappointed but I went down fighting,” Vonn, who is scheduled to ski in three more Olympic events, told reporters. “I knew that Maria and Julia had good runs so I had to give it everything I had. In slalom, anything goes.” Alpine Men The men return today to the Alpine skiing venue in Whistler, British Columbia, for the Super-G. It’s a single-run event that combines the speed of downhill with the more precise turns of giant slalom. Switzerland’s Didier Cuche is the Super-G world champion and likely will be challenged by Norway’s Aksel Lund Svindal , the reigning World Cup Super-G and overall champion, and Austria’s Michael Walchhofer , who leads the current Super-G World Cup standings. The only other medal events scheduled for today are the men’s and women’s skeleton titles, and the cross country skiing women’s 15-kilometer pursuit. To contact the reporter on this story: Erik Matuszewski in Vancouver, at matuszewski@bloomberg.net and

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White, Vonn, Davis Win Olympic Gold in Record-Tying U.S. Haul

February 18, 2010

By Erik Matuszewski and Michael Buteau Feb. 18 (Bloomberg) — Shaun White , Lindsey Vonn and Shani Davis won gold medals to lead a record-tying haul that put the U.S. team back atop the standings at the Vancouver Winter Olympics. White, 23, defended his snowboarding halfpipe title from Turin in 2006 by recording the two best scores of yesterday’s competition at Cypress Mountain outside Vancouver. “It’s history, man,” White said at a news conference. Vonn, the World Cup downhill skiing champion the past two seasons and winner of all but one of six races in the event this campaign, became the first American woman to win Olympic skiing’s ultimate speed race, finishing in 1 minute, 44.19 seconds at the course in Whistler, British Columbia. The U.S. claimed six medals yesterday, including a second straight gold from Davis in men’s 1,000-meter speedskating. Only once before had the U.S. won three gold medals in the same day during a Winter Olympics, eight years ago in Salt Lake City. “It’s amazing, simply amazing,” Davis said during a news conference. “I’m happy to be a part of that honor.” Through five days of competition, the U.S. has 14 medals, four better than Germany and twice that of France. The five gold medals for the American team are also the most in Vancouver, two more than Germany, Switzerland and South Korea. Gold Medals Two gold medals were awarded yesterday in cross-country skiing sprint events, with Marit Bjoergen of Norway winning the women’s competition and Nikita Kriukov of Russia taking the men’s title. It was the first gold medal of these Games for each country. World-record holder Meng Wang , 24, of China took the gold medal in the women’s 500-meter short-track speedskating event, while Austria’s Andreas and Wolfgang Linger won gold in the men’s luge doubles. White scored well enough on his first run to wrap up the gold medal before his final trip down the halfpipe at Cypress Mountain. For good measure, he ended the competition by setting an Olympic record with 48.4 points and landing his latest trick, called a Double McTwist 1260. “I don’t think I’ve been this nervous at a competition before,” White told reporters afterwards. “It’s the Olympics and there’s so much (pressure) on me to do well. I’m glad I had the goods to deliver.” Peetu Piiroinen of Finland took the silver medal and said afterwards, “I think it’s impossible to beat Shaun White.” Scott Lago picked up another medal for the U.S. with a bronze. Vonn’s Downhill Win Vonn started the day with her win in the downhill, where she finished more than a second faster than every competitor except U.S. teammate Julia Mancuso , who took the silver. “I dreamed about what this would feel like but it is much better in real life,” the 25-year-old Vonn told reporters. “I got what I came here for — a gold medal.” Vonn, who skied through the pain of a deep shin bruise, is scheduled to race again today in the women’s super-combined. The event features one downhill run and one slalom run. Hannah Teter and Gretchen Bleiler will seek to add more medals today for the U.S. in the women’s snowboard halfpipe. Teter won the Olympic gold medal four years ago and Bleiler took the silver. Gold medals also will be awarded today in biathlon, with the women’s 15-kilometer individual and men’s 20-kilometer individual, and in women’s 1,000-meter speedskating. The men’s figure skating title will be decided with the free skate program. Defending Olympic champion Evgeni Plushenko of Russia leads after the short program, followed by Evan Lysacek of the U.S. and Daisuke Takahaski of Japan. “I thought that with each Olympics it would be easier to compete, but in fact it is different,” said Plushenko, who also won a silver in 2002. “I get more nervous.” To contact the reporters on this story: Erik Matuszewski in Vancouver, at matuszewski@bloomberg.net and Michael Buteau in Vancouver at mbuteau@bloomberg.net

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U.S. Tops Olympic Standings; Canada Is Denied Gold at Home

February 14, 2010

By Erik Matuszewski and Christopher Donville Feb. 14 (Bloomberg) — Freestyle skier Hannah Kearney denied Canada its first Olympic gold medal on home soil and vaulted the U.S. atop the medal standings after the first day of competition at the Winter Games in Vancouver. Kearney beat Canada’s defending Olympic champion Jennifer Heil , 26, on the final run of the women’s moguls competition to win the last of yesterday’s five gold medals. “I heard the roar of the crowd when Jenn got her score, so I knew I had to go for it,” said Kearney, 23, who was the favorite at the 2006 Games in Turin and failed to qualify for the finals. “I feel for her but I wanted that medal as well.” Canada failed to win a gold medal the previous two times it hosted the Olympics — the 1976 Summer Games in Montreal and the 1988 Winter Games in Calgary. The U.S. tops the Olympic standings with four medals, while South Korea with two is the only other country with multiple medals. Apolo Anton Ohno took the silver medal behind South Korea’s Jung-Su Lee in the men’s 1,500-meter short track speedskating, tying Bonnie Blair for the most medals by an American athlete in the Winter Olympics. Dutch speedskater Sven Kramer set an Olympic record in winning the men’s 5,000 meters, while Anastazia Kuzmina gave Slovakia its first Winter gold by beating out Germany’s Magdalena Neuner in the women’s 7.5-kilometer biathlon sprint. First Medal Swiss ski jumper Simon Ammann won the Games’ first gold medal in the men’s normal hill event as competition began a day after Nodar Kumaritashvili, a luger from the country of Georgia, was killed in a high-speed crash on a training run. Five more medals are scheduled to be decided today, when Norwegian biathlete Ole Einar Bjoerndalen seeks his 10th career Olympic medal as he competes in the men’s 10-kilometer sprint. Norwegian cross-country skier Bjorn Daehlie holds the Winter Games-record of 12 medals. The men’s luge title will be decided at Whistler’s sliding center. Though an investigation found no track deficiencies, organizers shortened the course by 175 meters (577 feet) to reduce speeds and offer “emotional” support to competitors after Kumaritashvili’s death. Gold medals are also scheduled to be awarded in women’s 3,000-meter speedskating, men’s freestyle skiing moguls and men’s Nordic combined, where brothers Jan and Tommy Schmid will compete for different countries. Born to Swiss parents in Norway, Tommy represents Switzerland while Jan switched his allegiance to Norway after competing for the Swiss in 2006. Race Postponed The women’s super-combined scheduled for today was postponed until Feb. 18 because of poor weather at the Whistler Creekside Alpine Skiing venue. The delay was welcomed by two- time World Cup champion Lindsey Vonn of the U.S., who is trying to recover from a deep bruise in her right shin. “I’m lucking out pretty heavily because of all the cancellations,” said Vonn, who is scheduled for a downhill training run today. “Normally I would be disappointed, but for my shin I think this is the best possible scenario.” The men’s downhill that had been scheduled for yesterday was pushed back to tomorrow, as unseasonably warm temperatures have produced more rain than snow near Vancouver. Outside the Olympic venues, about 200 demonstrators clashed with police in downtown Vancouver as they marched to protest against the Winter Games, resulting in several arrests, local police said. Protesters smashed windows and spray painted vehicles, Vancouver’s police department said in an e-mailed statement today. There were no confirmed injuries, police said. Heil’s Silver In yesterday’s final event, Heil took the lead in the women’s moguls with a score of 25.69 on the next-to-last run as Kearney waited at the top of the hill. Kearney then raced down the moguls course, executing a back flip and a 360-degree spin, to take the gold medal with 26.63 points. American Shannon Bahrke claimed the bronze. Heil said she wasn’t disappointed with second place. “I did what I wanted to do and I’m really proud,” Heil told reporters. “I felt like I was standing on the shoulders of so many Canadians. I felt like I had their wings on my back.” South Korea missed a 1-2-3 finish in short-track speed skating as Ho-Suk Lee and Si-Bak Sung collided and crashed on the last turn of the 1,500m to give Ohno the silver. American J.R. Celski took the bronze. “The whole race there was a lot of contact, bumping, grabbing. It was a crazy race,” Ohno said during a news conference. “Typically in short track, there’s not supposed to be any contact, or very little. But it was an aggressive race. It was a fast race, and it turned out very well (for me).” To contact the reporters on this story: Erik Matuszewski in Vancouver, at matuszewski@bloomberg.net Christopher Donville in Vancouver at cjdonville@bloomberg.net .

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Launches Marc Lasrys Avenue Capital said to be launching distressed debt fund, Thailands SAV Management offers new BVI-domiciled hedge fund, Munsun launches maiden China hedge fund, with advice from law firm Kaye Scholer

February 12, 2010

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U.S. Government Shuts a Fourth Day After Record Snow as Airports Recover

February 11, 2010

By Brian K. Sullivan Feb. 11 (Bloomberg) — The U.S. government will close for a fourth day while a blizzard moves out over the Atlantic Ocean after setting snowfall records from Washington to Philadelphia and triggering power outages and havoc for commuters. Schools along much of the Washington to Boston corridor as well as federal agencies in the nation’s capital will remain shut for another “snow day” after the second of two back-to- back storms crippled air, rail and road traffic. The U.S. National Weather Service lifted its blizzard warning for New York before dawn. Schools in New York City will re-open today after the Department of Sanitation deployed 1,600 snowplows and 2,100 workers to clear major roads. Clear skies and temperatures just above freezing are forecast to start the melting process along the eastern seaboard, where an average of 12 inches (30 centimeters) fell from New York to Baltimore, said Andy Ulrich , a meteorologist with AccuWeather.com in State College, Pennsylvania. “The sun will be out fully and there won’t be a cloud in the sky,” Ulrich said in a telephone interview. “The sun is getting stronger as we approach spring so there will be some melting.” Grounded Flights, Outages The storm yesterday caused the cancellation of 5,700 flights across the U.S. and at least 1,100 more today. It also caused power outages from North Carolina to Pennsylvania and New Jersey for at least 178,000 customers, according to utilities. UBS AG , Switzerland’s largest bank, sent home an estimated 3,000 workers in New York, New Jersey and Connecticut amid the blizzard, advising them to take public transport if possible. New Jersey Transit was set to resume normal services for commuters today while Long Island Rail Road said it was preparing for regular rush-hour services after blizzard conditions created chaos and delays for commuters. Exelon Corp. ’s Peco utility said today that about 106,000 customers remain without service in southeastern Pennsylvania after the second storm of the week dumped almost two feet of snow on the region. Delaware and Maryland were also hit hard, with 27,000 Delmarva Power customers without power by nightfall yesterday, said Bridget Shelton , a spokeswoman for the company, a subsidiary of Pepco Holdings Inc. It may take several days to restore power to all of them, she said. “This is clearly a multiday event,” Shelton said in a telephone interview. “The weather and the roads are contributing to an extended restoration effort.” Natural gas futures fluctuated as heating oil climbed on higher demand and crude oil rose for a fourth day in New York. Crude for March delivery gained as much as 76 cents, or 1 percent, to $75.28 a barrel on the New York Mercantile Exchange. Airlines Scramble Delta Air Lines Inc. , the world’s largest carrier, expects operations in Washington and Philadelphia to be almost entirely halted through midday. At least 460 more Delta flights are canceled for today, said Trebor Banstetter , a spokesman for the Atlanta-based company. At Washington’s Dulles International Airport, the snow was 26 inches deep, according to the National Weather Service, with 11 inches on the ground at Kennedy International Airport. AMR Corp. ’s American Airlines scrapped 180 flights today, said Tim Wagner , a company spokesman. US Airways Group halted 478 as well, said Valerie Wunder , a spokeswoman. Cost to Taxpayers In Pennsylvania, closed interstate highways were expected to reopen by dawn even with the setting of annual snowfall records, Governor Edward G. Rendell said. Two tractor-trailer trucks that jackknifed on I-78 yesterday left 170 vehicles stuck in the snow, said Robert French , Pennsylvania Emergency Management Agency director. The federal government announced the closing of agencies in the Washington area for a fourth consecutive day. Washington received 10 inches of snow yesterday, pushing the seasonal total to 54.9 inches, surpassing the mark set in 1898-99. The record snowfall that brought the U.S. capital to a standstill is costing taxpayers about $100 million each day the federal government is shut in productivity loss and other costs, the Office of Personnel Management said. Snow Records In Baltimore, 11.9 inches fell through the evening rush- hour, setting a new annual tally of 72.3 inches. That surpassed the 62.5 inches that fell in 1995-96, according to the National Weather Service in Sterling, Virginia. A winter weather advisory for hazardous travel as a mix of rain and sleet turns to snow was issued until midnight today for the Dallas area by the National Weather Service. Snow in some areas north of Interstate 20 could reach four inches, it said. The U.S. southern states of Louisiana, Mississippi and Alabama may get a sampling of what the Northeast has endured when a storm bearing snow moves through there, Ulrich said. The National Weather Service in New Orleans issued a winter storm watch for sleet that could turn to snow for tonight through tomorrow afternoon. The watch was expanded to include all areas south of the Louisiana-Mississippi border to the Interstate 10/Interstate 12 corridor. Ulrich said it is too early to forecast accurate totals for those states, which seldom see snow, though the weather service said amounts could reach as much as six inches. To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net .

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Credit Suisse `Confident’ for 2010 After Fourth Straight Quarterly Profit

February 11, 2010

By Elena Logutenkova Feb. 11 (Bloomberg) — Credit Suisse Group AG , Switzerland’s biggest bank by market value, had a “strong start” to the year, after reporting a fourth straight quarterly profit in the final three months of 2009. “We are confident about our prospects for 2010,” Chief Executive Officer Brady Dougan said in a statement today. “We have had a strong start to the quarter with strong client activity. Our transaction pipelines and net new asset inflows are the best we have seen since the crisis.” Credit Suisse rose as much as 3.1 percent in Swiss trading after reporting record trading revenue in 2009, benefiting from the low interest rates that also lifted earnings at Goldman Sachs Group Inc. and Deutsche Bank AG . Revenue from trading bonds and stocks fell in the fourth quarter from the third, hurt by lower client activity, the bank said. Net income amounted to 793 million Swiss francs ($746 million) in the fourth quarter, compared with a loss of 6.02 billion francs a year earlier and the 1.28 billion-franc median estimate of 14 analysts surveyed by Bloomberg. Credit Suisse rose 1.19 francs, or 2.6 percent, to 47.30 francs by 9:23 a.m. The shares are down 4 percent this year, compared with a decline of 7.8 percent in the 52-company Bloomberg Europe Banks and Financial Services Index . Earnings in the fourth quarter were hurt by a $536 million charge to settle claims the bank helped process payments that let Iran and other nations avoid government sanctions and gain access to U.S. financial markets. Adding Assets Credit Suisse’s private banking division added 6.4 billion francs in net new assets in the fourth quarter, even as wealthy clients at Swiss competitor UBS AG withdrew 45.2 billion francs. Credit Suisse aims to attract 175 billion francs to 225 billion francs of net new assets by the end of 2012, after adding 160 billion francs over the three-and-a-half years ended in June. “Developments in private banking reassure, even if the investment bank’s results were weaker than peers in the fourth quarter,” said Morgan Stanley analyst Huw van Steenis . The wealth management division’s pretax profit amounted to 857 million francs, while asset management earnings rebounded to 159 million francs from a 656 million-franc loss a year earlier. Investment Bank Pretax profit at the investment bank was 1.03 billion francs, cushioned by lower personnel expenses as the bank released some of the money it had accrued for compensation in the previous quarters. Analysts had estimated earnings of 1.25 billion francs. Total trading revenue dropped 55 percent in the fourth quarter from the third to 1.92 billion francs. “We got the indications out of U.S. companies that investment banking numbers were very weak,” said Florian Esterer , who helps manage about $58 billion at Swisscanto Asset Management in Zurich, in a Bloomberg TV interview. Credit Suisse earnings “came much worse than even we had been expecting.” Credit Suisse aims for “sustainable” and less volatile earnings at the investment bank and has a “constructive” medium-term outlook for revenue at the division, Chief Financial Officer Renato Fassbind told investors last month, according to his presentation slides. Credit Suisse said it decided to defer 40 percent of about 6.85 billion francs in bonuses for 2009 into future years, with members of the executive board receiving only deferred awards. The total bonus pool is down 21 percent from the level of 2007. UBS , the biggest Swiss wealth manager, reported this week that the pace of withdrawals by rich clients from its private bank increased in the fourth quarter to 45.2 billion francs from 26.6 billion francs in the previous three months. UBS, the European bank with the biggest losses from the credit crisis, earned 1.21 billion francs in the fourth quarter, its first profit since the third quarter of 2008, helped by lower costs tied to the company’s debt and a tax credit. CEO Oswald Gruebel said in a statement that the return to profitability “will increase clients’ confidence in UBS.” To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Credit Suisse `Confident’ for 2010 After Fourth Straight Quarterly Profit

February 11, 2010

By Elena Logutenkova Feb. 11 (Bloomberg) — Credit Suisse Group AG , Switzerland’s biggest bank by market value, had a “strong start” to the year, after reporting a fourth straight quarterly profit in the final three months of 2009. “We are confident about our prospects for 2010,” Chief Executive Officer Brady Dougan said in a statement today. “We have had a strong start to the quarter with strong client activity. Our transaction pipelines and net new asset inflows are the best we have seen since the crisis.” Credit Suisse rose as much as 3.1 percent in Swiss trading after reporting record trading revenue in 2009, benefiting from the low interest rates that also lifted earnings at Goldman Sachs Group Inc. and Deutsche Bank AG . Revenue from trading bonds and stocks fell in the fourth quarter from the third, hurt by lower client activity, the bank said. Net income amounted to 793 million Swiss francs ($746 million) in the fourth quarter, compared with a loss of 6.02 billion francs a year earlier and the 1.28 billion-franc median estimate of 14 analysts surveyed by Bloomberg. Credit Suisse rose 1.19 francs, or 2.6 percent, to 47.30 francs by 9:23 a.m. The shares are down 4 percent this year, compared with a decline of 7.8 percent in the 52-company Bloomberg Europe Banks and Financial Services Index . Earnings in the fourth quarter were hurt by a $536 million charge to settle claims the bank helped process payments that let Iran and other nations avoid government sanctions and gain access to U.S. financial markets. Adding Assets Credit Suisse’s private banking division added 6.4 billion francs in net new assets in the fourth quarter, even as wealthy clients at Swiss competitor UBS AG withdrew 45.2 billion francs. Credit Suisse aims to attract 175 billion francs to 225 billion francs of net new assets by the end of 2012, after adding 160 billion francs over the three-and-a-half years ended in June. “Developments in private banking reassure, even if the investment bank’s results were weaker than peers in the fourth quarter,” said Morgan Stanley analyst Huw van Steenis . The wealth management division’s pretax profit amounted to 857 million francs, while asset management earnings rebounded to 159 million francs from a 656 million-franc loss a year earlier. Investment Bank Pretax profit at the investment bank was 1.03 billion francs, cushioned by lower personnel expenses as the bank released some of the money it had accrued for compensation in the previous quarters. Analysts had estimated earnings of 1.25 billion francs. Total trading revenue dropped 55 percent in the fourth quarter from the third to 1.92 billion francs. “We got the indications out of U.S. companies that investment banking numbers were very weak,” said Florian Esterer , who helps manage about $58 billion at Swisscanto Asset Management in Zurich, in a Bloomberg TV interview. Credit Suisse earnings “came much worse than even we had been expecting.” Credit Suisse aims for “sustainable” and less volatile earnings at the investment bank and has a “constructive” medium-term outlook for revenue at the division, Chief Financial Officer Renato Fassbind told investors last month, according to his presentation slides. Credit Suisse said it decided to defer 40 percent of about 6.85 billion francs in bonuses for 2009 into future years, with members of the executive board receiving only deferred awards. The total bonus pool is down 21 percent from the level of 2007. UBS , the biggest Swiss wealth manager, reported this week that the pace of withdrawals by rich clients from its private bank increased in the fourth quarter to 45.2 billion francs from 26.6 billion francs in the previous three months. UBS, the European bank with the biggest losses from the credit crisis, earned 1.21 billion francs in the fourth quarter, its first profit since the third quarter of 2008, helped by lower costs tied to the company’s debt and a tax credit. CEO Oswald Gruebel said in a statement that the return to profitability “will increase clients’ confidence in UBS.” To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Stocks Rise on Waning Chinese Inflation, Greek Aid Talks; Commodities Gain

February 11, 2010

By David Merritt Feb. 11 (Bloomberg) — Stocks rose and the yield premium on Greek government debt shrank to the lowest level in a month as inflation concern waned in China and European leaders met to discuss aid for Greece. Copper climbed. The MSCI World Index of 23 developed nations’ stocks rose 0.5 percent at 10:32 a.m. in London, its third day of gains. Emerging-market stocks posted the biggest three-day rally in a month. Futures on the Standard & Poor’s 500 Index added 0.4 percent. Copper advanced as much as 3.8 percent in London, the most since November. The premium investors demand to hold Greek 10-year bonds instead of benchmark German debt narrowed to the least since Jan. 13. “If investors believe that Germany is ready to step up to the plate, then the market may well be prepared to continue to fund Greece,” Gary Jenkins , a strategist at Evolution Securities in London, wrote in a research note. “If Greece is being left to solve its own problems, then watching the market reaction will be fascinating, and possibly frightening.” European Union leaders meeting in Brussels may take steps to help Greece tackle the region’s biggest budget deficit and defuse a crisis that prompted investors to shun high-yielding securities around the world. China’s consumer prices rose less than forecast in January, bolstering speculation the central bank will delay raising interest rates to cool the world’s fastest-growing economy. Rio, Total Europe’s Dow Jones Stoxx 600 Index rose 0.6 percent as basic-resources stocks rallied. Rio Tinto Group, the world’s third-largest mining company, increased 3.9 percent in London after earnings beat estimates. Total SA, Europe’s third-biggest oil company, added 2.4 percent in Paris as profit topped forecasts. Credit Suisse Group AG , Switzerland’s biggest bank by market value, rose 2.8 percent in Zurich after saying it had “strong start” to the year. Greece’s ASE Index climbed 1.2 percent, posting its biggest three-day rally in more than two months. The gauge has lost almost a third of its value since peaking in October. Greece is struggling to curb a budget shortfall that reached an estimated 12.7 percent of gross domestic product last year, with workers striking this week to protest against austerity measures shutting schools, hospitals and airports. Greek two-year yields fell 41 basis points to 5.08 percent, after dropping 79 basis points yesterday and 32 points on Feb. 9. Ten-year yields dropped 22 basis points to 5.79 percent. Credit-default swaps on Greece fell 12.5 basis points to 343.5 basis points, the lowest level since Jan. 26, according to CMA DataVision prices. Portuguese 10-year yields lost 6 basis points to 4.47 percent. Asian Rally The MSCI Asia Pacific Excluding Japan Index added 1.8 percent. Baoshan Iron & Steel Co., China’s biggest steelmaker, climbed 5.7 percent in Shanghai. Commonwealth Bank of Australia gained 2.3 percent in Sydney after the country’s employers added three times as many jobs last month as economists forecast. Markets in Japan and Taiwan were closed today. The gain in U.S. futures indicated the S&P 500 may rebound after yesterday’s 0.2 percent loss. A report due at 8:30 a.m. in Washington may show initial jobless claims fell to 465,000 last week from 480,000 in the previous seven days, according to the median estimate of 47 economists surveyed by Bloomberg. More than 300 companies in the S&P 500 have reported fourth-quarter earnings since Jan. 11, with about 76 percent beating analysts’ estimates, according to data compiled by Bloomberg. Marriott International Inc, PepsiCo Inc. and Viacom Inc. are among companies announcing results today. China, Metals The MSCI Emerging Markets Index rose for a third day, climbing 1 percent. The Hang Seng China Enterprises Index of Hong Kong-traded shares climbed 2.1 percent for the biggest rally among world equity indexes. Copper rose as high as $6,784.75 a metric ton on the London Metal Exchange, leading an advance in industrial metals. Gold rose 0.7 percent to $1,079.11 an ounce and crude oil added 0.4 percent to $74.79 a barrel in New York trading. The Australian dollar led gains in so-called commodity currencies, rising to a one-week high against the Japanese yen. The Aussie gained 1.6 percent against the yen and strengthened 1.5 percent compared with the dollar. New Zealand’s dollar appreciated 1.1 percent versus the yen and rallied 1 percent versus the U.S. currency. The South African rand gained 0.9 percent against the dollar and rose 0.9 percent versus the yen. Treasuries were little changed before a $16 billion sale of 30-year securities, the third this week, for a total amount of $81 billion. They slid yesterday after Federal Reserve Chairman Ben S. Bernanke said policy makers may raise the discount raise “before long,” a first step to a withdrawal of stimulus measures. To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net .

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Stocks in U.S. Fluctuate as Gain in Financials Offsets Bernanke’s Remarks

February 10, 2010

By Rita Nazareth Feb. 10 (Bloomberg) — U.S. stocks fluctuated as Legg Mason Inc. and Stifel Financial Corp. led a rally in financial shares, offsetting Federal Reserve Chairman Ben S. Bernanke ’s plan to raise the discount rate for loans to banks “before long.” Legg Mason rallied 5.6 percent after reporting it had $679 billion in assets under management for January, while Stifel Financial jumped 7.8 percent on earnings that topped analyst estimates. Sprint Nextel Corp. slid 9.1 percent as the third- largest U.S. wireless carrier reported sales that trailed analyst estimates, while Dean Foods Co. slumped 14 percent after the nation’s biggest dairy processor forecast profit below projections. “Finally, the U.S. is taking Greece off the cover page,” said Joseph Saluzzi , co-head of equity trading at Chatham, New Jersey-based Themis Trading LLC. “The Fed’s announcement certainly did not help the market. Nobody expects them to be raising rates like they normally do. So they’re trying something creative. These are different times now.” The Standard & Poor’s 500 Index fell 0.1 percent to 1,069.58 at 12:52 p.m. in New York. The Dow Jones Industrial Average lost 5.75 points, or 0.1 percent, to 10,052.89. About 4.3 billion shares changed hands on all U.S. exchanges, 4.3 percent fewer than at the same time a week ago as trading slowed amid a snow storm in the U.S. Northeast. U.S. benchmark indexes fluctuated at the start of trading as investors weighed the prospects of a possible financial bailout of Greece by fellow European Union country Germany. Greece Concern Equity-index futures erased an early advance before the open of New York exchanges as a German official said no decision has been made on a Greek rescue. Stocks rallied yesterday, sending the Dow Jones Industrial Average back above 10,000, as prospects for a Greek bailout eased concern that deteriorating government finances will derail the global economic recovery. The Dow increased 1.5 percent yesterday, the biggest gain since Nov. 9. An official said German Finance Minister Wolfgang Schaeuble told lawmakers that options for helping Greece extended beyond loan guarantees. The lawmaker, who attended a briefing at the Parliament in Berlin today, spoke on condition of anonymity because the discussions were confidential. So far, 327 companies in the S&P 500 have reported fourth- quarter earnings since Jan. 11, and about 76 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. Confidence in the world economy dropped in February on concern worsening government finances in some European nations will threaten the global recovery, according to a Bloomberg survey of users on six continents. Confidence Slumps The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh straight month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances. Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. Gauges of raw-materials and energy fell at least 1.2 percent, for the two biggest declines in the S&P 500 among 10 industries today. Newmont, the world’s second-largest gold producer by sales, dropped 2.9 percent to $44.48. Chevron, the second-biggest U.S. energy company, lost 1.2 percent to $70.44. Sprint Tumbles Sprint Nextel dropped 9.1 percent to $3.32. The third- largest U.S. wireless carrier reported fourth-quarter sales that missed analysts’ estimates after losing contract customers to rivals. Sales dropped 6.7 percent to $7.87 billion, while analysts in a Bloomberg survey had projected $8.04 billion on average. Dean Foods lost 14 percent to $15.14. The biggest U.S. dairy processor forecast 2010 profit excluding some items of $1.64 a share at most. On average, the analysts surveyed by Bloomberg estimated earnings of $1.70. Micron Technology Inc. declined 9.1 percent to $8.25. The biggest U.S. producer of computer memory agreed to buy flash- chip maker Numonyx Holdings BV of Switzerland for about $1.27 billion to help it compete better with Samsung Electronics Co. Wyndham Worldwide Corp. had the biggest gain in the S&P 500, climbing 4.9 percent to $22.26. The franchiser of Days Inn hotels and Super 8 motels reported a fourth-quarter profit and said it will triple its dividend. Dell Inc. rose 1.6 percent to $13.77. Bank of America Corp. raised its recommendation on the world’s third-largest maker of personal computers to “buy” from “neutral,” citing the stock’s underperformance relative to the market since November. Baidu, Adobe Baidu Inc. soared 8.5 percent to $472.14. The operator of China’s biggest Internet search engine forecast first-quarter sales that topped analysts’ estimates after rival Google Inc. said it may exit the country. Adobe Systems Inc. , the largest maker of graphic-design software, advanced 1.5 percent to $32.79 after Credit Suisse Group AG raised its recommendation on the stock to “outperform” from “neutral.” The shares will “trend higher over the next few months given the pending release of the next version of Creative Suite in April,” the brokerage wrote in a report. Jefferies & Co. also recommended clients buy the shares. To contact the reporter on this story: Rita Nazareth at rnazareth@bloomberg.net .

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Stocks in U.S. Fluctuate as Gain in Financials Offsets Bernanke’s Remarks

February 10, 2010

By Rita Nazareth Feb. 10 (Bloomberg) — U.S. stocks fluctuated as Legg Mason Inc. and Stifel Financial Corp. led a rally in financial shares, offsetting Federal Reserve Chairman Ben S. Bernanke ’s plan to raise the discount rate for loans to banks “before long.” Legg Mason rallied 5.6 percent after reporting it had $679 billion in assets under management for January, while Stifel Financial jumped 7.8 percent on earnings that topped analyst estimates. Sprint Nextel Corp. slid 9.1 percent as the third- largest U.S. wireless carrier reported sales that trailed analyst estimates, while Dean Foods Co. slumped 14 percent after the nation’s biggest dairy processor forecast profit below projections. “Finally, the U.S. is taking Greece off the cover page,” said Joseph Saluzzi , co-head of equity trading at Chatham, New Jersey-based Themis Trading LLC. “The Fed’s announcement certainly did not help the market. Nobody expects them to be raising rates like they normally do. So they’re trying something creative. These are different times now.” The Standard & Poor’s 500 Index fell 0.1 percent to 1,069.58 at 12:52 p.m. in New York. The Dow Jones Industrial Average lost 5.75 points, or 0.1 percent, to 10,052.89. About 4.3 billion shares changed hands on all U.S. exchanges, 4.3 percent fewer than at the same time a week ago as trading slowed amid a snow storm in the U.S. Northeast. U.S. benchmark indexes fluctuated at the start of trading as investors weighed the prospects of a possible financial bailout of Greece by fellow European Union country Germany. Greece Concern Equity-index futures erased an early advance before the open of New York exchanges as a German official said no decision has been made on a Greek rescue. Stocks rallied yesterday, sending the Dow Jones Industrial Average back above 10,000, as prospects for a Greek bailout eased concern that deteriorating government finances will derail the global economic recovery. The Dow increased 1.5 percent yesterday, the biggest gain since Nov. 9. An official said German Finance Minister Wolfgang Schaeuble told lawmakers that options for helping Greece extended beyond loan guarantees. The lawmaker, who attended a briefing at the Parliament in Berlin today, spoke on condition of anonymity because the discussions were confidential. So far, 327 companies in the S&P 500 have reported fourth- quarter earnings since Jan. 11, and about 76 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. Confidence in the world economy dropped in February on concern worsening government finances in some European nations will threaten the global recovery, according to a Bloomberg survey of users on six continents. Confidence Slumps The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh straight month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances. Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. Gauges of raw-materials and energy fell at least 1.2 percent, for the two biggest declines in the S&P 500 among 10 industries today. Newmont, the world’s second-largest gold producer by sales, dropped 2.9 percent to $44.48. Chevron, the second-biggest U.S. energy company, lost 1.2 percent to $70.44. Sprint Tumbles Sprint Nextel dropped 9.1 percent to $3.32. The third- largest U.S. wireless carrier reported fourth-quarter sales that missed analysts’ estimates after losing contract customers to rivals. Sales dropped 6.7 percent to $7.87 billion, while analysts in a Bloomberg survey had projected $8.04 billion on average. Dean Foods lost 14 percent to $15.14. The biggest U.S. dairy processor forecast 2010 profit excluding some items of $1.64 a share at most. On average, the analysts surveyed by Bloomberg estimated earnings of $1.70. Micron Technology Inc. declined 9.1 percent to $8.25. The biggest U.S. producer of computer memory agreed to buy flash- chip maker Numonyx Holdings BV of Switzerland for about $1.27 billion to help it compete better with Samsung Electronics Co. Wyndham Worldwide Corp. had the biggest gain in the S&P 500, climbing 4.9 percent to $22.26. The franchiser of Days Inn hotels and Super 8 motels reported a fourth-quarter profit and said it will triple its dividend. Dell Inc. rose 1.6 percent to $13.77. Bank of America Corp. raised its recommendation on the world’s third-largest maker of personal computers to “buy” from “neutral,” citing the stock’s underperformance relative to the market since November. Baidu, Adobe Baidu Inc. soared 8.5 percent to $472.14. The operator of China’s biggest Internet search engine forecast first-quarter sales that topped analysts’ estimates after rival Google Inc. said it may exit the country. Adobe Systems Inc. , the largest maker of graphic-design software, advanced 1.5 percent to $32.79 after Credit Suisse Group AG raised its recommendation on the stock to “outperform” from “neutral.” The shares will “trend higher over the next few months given the pending release of the next version of Creative Suite in April,” the brokerage wrote in a report. Jefferies & Co. also recommended clients buy the shares. To contact the reporter on this story: Rita Nazareth at rnazareth@bloomberg.net .

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Calculating Death Risk Makes Swedish Insurance Actuary a Gold-Medal Curler

February 9, 2010

By Doug Alexander and Niklas Magnusson Feb. 9 (Bloomberg) — Olympic curler Anette Norberg says weighing the risk of death and disease for Folksam Group gives her an advantage that may result in her second gold medal at the Winter Games this month. “Curling is a bit like chess on ice,” said Norberg, the captain of Sweden’s four-member women’s curling team and an actuary with Folksam, which insures half the people in her country. “It is about logical, strategic thinking, which you learn through this kind of work.” Norberg, 43, is one of at least three financial-services professionals competing for a podium spot at the Winter Games in Vancouver. She’ll be joined by Swiss freestyle skier Thomas Lambert, who works at Raiffeisen Switzerland, and blind Canadian skier Chris Williamson, a Royal Bank of Canada teller competing in the Paralympic Games. Financial services workers are a rarity among the 2,700 athletes scheduled to compete during the 17-day event in Vancouver and Whistler starting Feb. 12. Another 600 athletes will compete in the Paralympic Games in March. Norberg is the only member of her team who worked while training for the 21st Winter Olympics. The mother of two, who also assesses financial risk at her Stockholm-based firm, wouldn’t have it any other way. “I like my job and I have a hard time letting go of it,” she said. “I need the mix of curling and work.” Disease Risk Norberg normally works full-time as department head of Folksam’s Aktuarie Liv unit, though since October she’s been taking two afternoons off each week to train. Actuaries calculate the risk of disease and death among different age groups, using statistical data to determine how much clients should pay for life insurance. The Swede, who lives just east of Stockholm in Saltsjoe-Boo, practices curling four to five times a week, and does physical training three times weekly. In curling , teams slide 19.1-kilogram (42.1-pound) rocks down a 42-meter (138-foot) ice sheet, similar to shuffleboard. Curlers guide the rocks by brushing the ice with brooms. Norberg started curling because her parents played in the Swedish coastal town of Haernoesand, a 430-kilometer (267-mile) drive north of Stockholm. Norberg said she enjoyed mathematics at school and studied the topic at Uppsala University near Stockholm. She fell into the insurance industry “much by chance” because it let her work with people and numbers. On the ice, Norberg led the Swedish team to gold at the Olympics in Turin, Italy, in 2006, beating Switzerland in the final. More Competition “Competition has increased a lot in the past four years, so it’ll be much harder this time,” Norberg said. “Our big challenge is to get to the finals — there are 10 good teams and you have to be among the top four to get there.” Swiss freestyle skier Lambert is also making a return to the Winter Olympics, aiming to improve on his 14th-place finish in aerials at Turin. His sport involves skiing down a ramp, launching into the air, performing a series of acrobatic moves, and making a graceful landing. His big move for the Games is a jump called the “Rudy Randy Full,” a triple somersault with five twists. “If I do it really nice and land it properly and nicely, I can get a lot of points,” Lambert, 25, said. “This jump can make a difference.” Olympic Sponsorship Lambert has practiced the trick since last summer while working at Raiffeisenbank Thalwil , a branch of the St. Gallen, Switzerland-based cooperative bank. He joined the bank in May 2008 after getting a bachelor’s degree from the University of Zurich with majors in economics and finance. “It’s hard to earn enough money to do sports such as freestyle skiing in Switzerland,” he said. Lambert also has a two-year sponsorship from his employer, which helps pay the bills when he skis full-time between November and April. For the rest of the year, Lambert works part-time at the bank, assisting the branch manager with forecasts, developing mortgage products and marketing. “There’s a few challenges because I work about 25 hours a week on average and I also try to train for 20 to 25 hours a week,” Lambert said. He initially found it hard separating the job from sport. Hours after finishing work, he’d sometimes be standing on top of a practice ramp at a training facility while mentally drafting e-mails to bank clients. “I had to learn to forget my work for the moment and concentrate on aerials,” said Lambert , who lives in Mettmenstetten near Zurich. Broken Jaw Lambert, who broke his jaw landing his first jump during his last trip to the Olympics, is aiming for a top-eight finish in Vancouver. “Everything better is bonus,” he said. “When you’re in the finals, anything can happen.” Canada’s Williamson , a downhill skier who’s been blind since he was six, is aiming for podium finishes in five events at the Paralympics . “I’ve got pretty high expectations,” said Williamson, who has no sight in his right eye and 6 percent in his left due to an eye disease. “I want to win five medals, and I’d prefer them to be gold.” This marks his third trip to the Paralympics. The Markham, Ontario, athlete won gold in the slalom in Salt Lake City in 2002, and four years later won silver and bronze in Turin. He’s confident after coming off a season where he earned his 50th World Cup win of his career. Ski Guide Williamson skis with a guide, relying on radios to communicate as they race down a course at speeds as fast as 120 kilometers an hour (75 miles an hour). When he’s not competing, he works for Royal Bank , Canada’s largest lender and an Olympic sponsor. He’s been with the Toronto-based bank for almost six years. “Royal Bank helps a lot with just being able to give me time to do my sport and time with my family,” the 37-year-old married father of two said. “But it’s a juggling act; you’ve got to prioritize.” To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net ; Niklas Magnusson in Stockholm at +46- nmagnusson1@bloomberg.net

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Euro `January Effect’ May Signal Further Weakness, MIG Says: Chart of Day

February 8, 2010

By Anna Rascouet Feb. 8 (Bloomberg) — The euro may have already peaked against the dollar this year and be heading for further declines for the balance of 2010, according to MIG Bank SA. The CHART OF THE DAY shows that in seven of the 11 years since the euro’s start in 1999, the currency reached its highest or its lowest annual levels against the dollar in January. In 2002, the euro reached its low on Feb. 1. The high for this year was attained on Jan. 13, when the 16-nation currency climbed to $1.4579, before dropping as much as 6.8 percent to a 2010 low of $1.3586 at the end of last week. “It’s interesting how few people realize the propensity for euro-dollar to post either the year’s high or the year’s low at the start of January,” Paul Day , chief market analyst at MIG Bank in Neuchatel, Switzerland, said in an interview. “Historical precedent may indeed suggest that the 2010 high for euro-dollar has already been made. It’s interesting how consistently this January effect has performed.” The euro fell 0.3 percent to $1.3678 on Feb. 5. The currency has dropped 4.5 percent this year. The median of 40 forecasts compiled by Bloomberg is for the euro to rise to $1.42 by year-end. (To save a copy of the chart, click here.) To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net

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Euro `January Effect’ May Signal Further Weakness, MIG Says: Chart of Day

February 8, 2010

By Anna Rascouet Feb. 8 (Bloomberg) — The euro may have already peaked against the dollar this year and be heading for further declines for the balance of 2010, according to MIG Bank SA. The CHART OF THE DAY shows that in seven of the 11 years since the euro’s start in 1999, the currency reached its highest or its lowest annual levels against the dollar in January. In 2002, the euro reached its low on Feb. 1. The high for this year was attained on Jan. 13, when the 16-nation currency climbed to $1.4579, before dropping as much as 6.8 percent to a 2010 low of $1.3586 at the end of last week. “It’s interesting how few people realize the propensity for euro-dollar to post either the year’s high or the year’s low at the start of January,” Paul Day , chief market analyst at MIG Bank in Neuchatel, Switzerland, said in an interview. “Historical precedent may indeed suggest that the 2010 high for euro-dollar has already been made. It’s interesting how consistently this January effect has performed.” The euro fell 0.3 percent to $1.3678 on Feb. 5. The currency has dropped 4.5 percent this year. The median of 40 forecasts compiled by Bloomberg is for the euro to rise to $1.42 by year-end. (To save a copy of the chart, click here.) To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net

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Unemployment in Switzerland at 4.5%

February 8, 2010

Unemployment in Switzerland at 4.5%

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Norb Vonnegut: New Import: "Too Big To Fail"

February 5, 2010

“Deckchairs. Titanic” UBS is reorganizing its troubled US wealth management operations–turning three division into two. Zzzzzzz. I know this story packs enough punch to put Sominex out of business. But stay with me, because the UBS problems extend to the core of global financial reform. An unnamed research analyst described the reorganization as follows: “Deckchairs. Titanic.” And those two words got my attention. Given a trade dispute between the US and Switzerland–the Swiss won’t rat out 4,450 tax cheats–UBS could lose its banking charter in the United States. The Swiss are concerned. Rightfully so. Hans-Rudolf Merz, the President of Switzerland, speculated UBS could fail without US banking privileges. He estimated the cost of collapse at $250 billion. That’s a huge number for the Swiss, over half their 2008 GDP of $488 billion. Personally, I doubt failure is in the cards. The stakes are so large, our two countries will find a diplomatic solution. A theoretical collapse would hurt the Swiss more, as measured by GDP. Ours is $14.2 trillion. But UBS is a huge bank with a spaghetti tangle of financial relationships. A collapse would roil global capital markets. It would make Lehman’s failure look like a rounding error. Back to “Deckchairs. Titanic.” Measured by assets, UBS is the sixth largest bank in the world as of November 2009. The others, in order, are: The Royal Bank of Scotland Deutsche Bank Barclays PLC BNP Paribas SA Credit Acgricole SA It’s not until the number seven slot that we find a US bank: JP Morgan Chase. What’s this mean? I believe the Congressional rush to limit the size of US financial institutions is myopic. That we should be negotiating international standards, because US financial health is inextricably linked to international financial health. And last I looked, overseas banks don’t take orders from Congress. That Chris Dodd’s frustration with the pace of domestic reform is a joke. We can’t solve the issues of derivatives and leverage and short-sighted financiers until we talk to the rest of the world, right? Norb Vonnegut

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UBS Chief Lawyer Schmid Leaves Swiss Bank for Law Firm Founded by Banker

February 5, 2010

By Joseph Heaven Feb. 5 (Bloomberg) — Bernhard Schmid , the head of UBS AG ’s legal department, left Switzerland’s biggest bank by assets to become a partner at a Zurich law firm founded by a former banker. Schmid joined Kuoni Attorneys at Law on Feb. 1 to help the company increase its work advising banks, founding partner Wolfram Kuoni said by telephone yesterday. Schmid, who is Swiss, was one of three lawyers to share former General Counsel Peter Kurer ’s workload when Kurer became chairman of the bank in 2008. UBS paid a $780 million fine and disclosed the names of 255 account holders in February 2009 to avoid criminal prosecution in the U.S. on a charge that it helped thousands of wealthy Americans evade taxes. The bank hired Markus Diethelm from Swiss Reinsurance Co. to replace Kurer as general counsel in 2008. Schmid is “wonderful for a firm like mine to tap into the banking market. He has an outstanding track-record,” Kuoni said in a telephone interview yesterday, adding that he wants to expand the practice’s work advising banks “one tier below” UBS and Credit Suisse Group AG , Switzerland’s biggest bank by market value. A spokeswoman for UBS declined to comment. Schmid, 54, joined Union Bank of Switzerland in 1984 and worked in Zurich, New York and London before it became part of UBS in 1998. He worked on the bank’s mergers and acquisitions and litigation. He also represented the bank on the Zurich stock exchange’s regulatory board. Litigation, Regulation “I wasn’t exposed to wealth management in the U.S. at all,” Schmid said in a telephone interview yesterday. For the last eight years, his work included the Zurich-based bank’s litigation, regulation and shareholder meetings, he said. UBS hid as much as $17.9 billion for 19,000 Americans who didn’t declare assets to the Internal Revenue Service, according to a report in 2008 by the Senate Permanent Subcommittee on Investigations. Switzerland-based bankers who weren’t licensed to conduct business or solicit clients in the U.S. frequently did so to woo Americans interested in secret Swiss accounts and trusts or shell companies in tax havens such as the British Virgin Islands, the report said. UBS admitted in February 2009 that it helped wealthy Americans evade taxes. Kuoni’s lawyers earn about 75 percent of revenue from Swiss companies and the remainder advising banks, entrepreneurs and companies in countries that used to be part of the Soviet Union, Wolfram Kuoni said. Kuoni, a former investment banker, left UBS to start his law firm in 2005. The law firm’s third partner, Daniel Lampert, worked for Credit Suisse from 2000 until last year. To contact the reporter on this story: Joseph Heaven in Zurich at jheaven1@bloomberg.net

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Initial Jobless Claims in U.S. Unexpectedly Climbed to 480,000 Last Week

February 4, 2010

By Timothy R. Homan and Bob Willis Feb. 4 (Bloomberg) — More Americans unexpectedly filed first-time claims for unemployment insurance last week, indicating companies lack confidence the economic recovery will be sustained. Initial jobless applications increased to 480,000 in the week ended Jan. 30, the most in seven weeks, from 472,000 the prior week, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance was little changed and those receiving extended benefits increased. An unemployment rate that’s projected to average 10 percent this year will likely weigh on consumer spending, preventing the biggest part of the economy from accelerating. Without additional gains in sales, companies will be forced to keep cutting costs, limiting staff in order to boost profits. “The pace of improvement has slowed significantly in the last two months,” said Anna Piretti, a senior economist at BNP Paribas in New York. “This points to downside risk for consumption and the rest of the economy.” Stock-index futures extended losses and Treasury yields fell after the report. The contract on the Standard & Poor’s 500 Index dropped 0.9 percent to 1,086.5 at 8:55 a.m. in New York. The yield on the 10-year Treasury note declined to 3.66 percent from 3.71 percent late yesterday. Initial jobless claims were forecast to decline to 455,000 from a previously reported 470,000 the week before, according to the median estimate of 46 economists surveyed by Bloomberg News. Estimates ranged from 420,000 to 480,000. More Productivity Worker productivity kept surging in the fourth quarter as companies squeezed more out of remaining staff to boost earnings, another report from the Labor Department also showed. A measure of employee output per hour rose at a 6.2 percent annual rate, capping a 2.9 percent gain for all of 2009 that was the biggest one-year increase since 2003. Labor costs dropped at a 4.4 percent pace last quarter and fell 0.9 percent for all of 2009, the biggest drop in seven years. The four-week moving average of claims increased to 468,750 from 457,000 the prior week. Continuing claims were little changed at 4.6 million in the week ended Jan. 23. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments increased by about 242,000 to 5.86 million in the week ended Jan. 16. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Jan. 23, today’s report showed. Payroll Forecast The figures raise concern the improvement in the labor market has stalled heading into tomorrow’s monthly employment report. The U.S. may have created 15,000 jobs in January, according to the median forecast of economists surveyed. It would mark the second payroll increase in the past three months. The unemployment rate probably held at 10 percent in January for a third straight month, close to the 26-year high of 10.1 percent reached in October, the economists forecast. A private report yesterday showed companies in the U.S. cut an estimated 22,000 jobs in January. The drop was the smallest in two years and followed a revised 61,000 decrease the prior month, according to data from ADP Employer Services. More Dismissals Macy’s Inc., the second-biggest U.S. department-store chain, is eliminating 1,500 store-level positions effective March 6, two people familiar with the decision said last week. The Cincinnati-based retailer is firing department managers and merchandising team managers, said the people, who declined to be identified because the cuts haven’t been made public. Some stores are losing operations managers, and the remainder will be shared across multiple stores, the people said. In addition, full-time stock positions were cut, they said. Other companies are adding to payrolls. General Electric Co. is hiring workers in energy, health care and rail transportation in part because global economic-stimulus policies have created demand, two executives said last week. GE is bidding to supply new passenger locomotives for Amtrak, and in November announced a joint venture in China that would make high-speed rail locomotives that may add 200 U.S. jobs. “We will create jobs in the United States that could not have been created any other way,” John Rice, chief executive officer of GE Technology Infrastructure, said in an interview with Bloomberg Television from Davos, Switzerland, last week. The loss of 7.2 million jobs since the recession began has been the worst in the post-World War II era. To contact the reporters on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net ; Bob Willis at bwillis@bloomberg.net

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Deutsche Bank Posts Fourth Straight Quarterly Profit on Rebound in Trading

February 4, 2010

By Aaron Kirchfeld and Jann Bettinga Feb. 4 (Bloomberg) — Deutsche Bank AG , Germany’s biggest bank, posted its fourth straight quarterly profit on a rebound in trading, cementing a turnaround after reporting a record loss a year earlier. The Frankfurt-based bank had net income of 1.3 billion euros ($1.8 billion) in the fourth quarter after a loss of 4.8 billion euros in the year-earlier period, it said in a DGAP statement today. Earnings surpassed the 650 million-euro median estimate of analysts surveyed by Bloomberg. Deutsche Bank, like New York-based Goldman Sachs Group Inc. and JPMorgan Chase & Co., recorded a rebound in profit last year after emerging from the worst financial crisis since the Great Depression. Revenue from trading declined in the fourth quarter as business slowed before year-end and competition increased, shrinking margins. “Deutsche Bank is a relative winner of the crisis within the investment-banking world,” said Andrew Lynch , who helps manage about $2 billion at Schroder Investment Management in London, including Deutsche Bank shares. He spoke before the earnings were published. Deutsche Bank has gained 122 percent to 45.82 euros in Frankfurt trading over the last 12 months, compared with a 57 percent gain in the 52-company Bloomberg Europe Banks and Financial Services Index . Fourth-quarter net income reflected a tax benefit of 554 million euros, the company said. Acquisitions JPMorgan more than doubled earnings in 2009 to $11.7 billion, while profit at Goldman rose by more than five times to $13.4 billion. Deutsche Bank earned 5 billion euros in 2009. Deutsche Bank Chief Executive Officer Josef Ackermann , 61, is trying to reduce the company’s dependence on investment banking, which accounts for more than two-thirds of group profit , by making acquisitions. He agreed in October to buy Sal. Oppenheim Group, Germany’s biggest independent private bank, and ABN Amro Holding NV’s commercial-banking operations in the Netherlands. The bank also purchased a stake in German retail lender Deutsche Postbank AG and has an option to increase the holding. “The business model is still tilted toward investment banking, but you can’t turn a super tanker around on a dime,” said Lynch. Obama Impact Deutsche Bank said in December that pretax profit may reach a record 10 billion euros in 2011 as it boosts earnings at the corporate and investment bank, helped by market share gains, and expands in Asia. Pretax earnings at the investment bank may rise 50 percent from the level in 2007 to 6.3 billion euros in the same period, the company forecast. U.S. President Barack Obama last month surprised bankers by throwing his support behind a plan from former Federal Reserve Chairman Paul Volcker that would impose new rules on bank size and bar banks from owning or sponsoring hedge funds and private- equity funds, as well as engaging in so-called proprietary trading that’s not related to clients. Ackermann said last week at the World Economic Forum in Davos, Switzerland that Obama’s proposed financial industry regulations would have a “marginal impact” on Deutsche Bank because the German company has exited “the bulk” of activities targeted in the proposal. He also voiced opposition to breaking up large banks. “Deutsche Bank has done well in its peer group, but the problem is that the whole industry is under a lot of pressure from regulators,” said Schroder’s Lynch. “There’s an existential risk to the business model.” To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net ; Jann Bettinga in Frankfurt at jbettinga@bloomberg.net .

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Swiss Minister Merz to Meet With Germany’s Schaeuble on Tax-Evasion Claims

February 3, 2010

By Patrick Donahue and Klaus Wille Feb. 3 (Bloomberg) — Swiss Finance Minister Hans-Rudolf Merz said he plans to meet his German counterpart in the coming days to resolve a dispute over claims of tax evasion, as both sides played down a spat that threatens to harm relations. “It has to be possible to solve this problem and get it out of the way,” Merz told reporters in the Swiss capital Bern today. Switzerland won’t retaliate, and will instead press ahead with talks aimed at concluding a revised tax agreement with Germany by the end of March, he said. Merz was speaking after a meeting of Switzerland’s Federal Council, or Cabinet, which “expressed its astonishment” at the German government over its willingness to obtain stolen data on German clients of a Swiss bank. While the Council “rejects this type of data acquisition,” it is “prepared to continue to seek talks with Germany,” according to an e-mailed statement. Members of the German government earlier struck a similarly conciliatory tone. Foreign Minister Guido Westerwelle called on Germany and Switzerland to “moderate” the debate about tax evasion, telling reporters in Berlin that the neighboring countries are not “opponents.” Relations between Germany and Switzerland were thrown into disarray this week after Chancellor Angela Merkel said she would support buying stolen data on secret Swiss accounts as a way to crack down on tax crime. Tax authorities were offered a CD containing details on some 1,500 secret accounts that could yield as much as 200 million euros ($280 million) in lost tax revenue, according to the newspaper Handelsblatt. Voluntary Declaration German Finance Minister Wolfgang Schaeuble said that the government has already decided “in principle” to purchase stolen information on undeclared funds in Swiss accounts. In an interview with the Augsburger Allgemeine newspaper published today, he urged taxpayers with money in secret Swiss bank accounts to declare themselves voluntarily to tax authorities. Tax evaders who offer a declaration would only have to pay back taxes, potentially avoiding a fine or prison sentence. “I can only counsel those who think they’ve evaded paying taxes in the past to make use of the offer in our fiscal code and make a voluntary declaration,” Schaeuble was cited as saying in the interview. His comments were confirmed by Finance Ministry spokesman Oliver Heyder-Rentsch . Merz reiterated today that Switzerland will offer no legal help on tax matters involving stolen information. Merkel’s support for obtaining the account data has won public backing while meeting with resistance in her own Christian Democratic Union. Michael Fuchs , the CDU’s deputy leader in parliament, said Germany should work with the Swiss as the U.S. did to obtain disclosure of data on UBS AG accounts held by American citizens. “To me that’s a cleaner, more legally honest way of going about it,” Fuchs said yesterday in a phone interview. Germany’s current approach “certainly won’t contribute to a greater understanding between us.” To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net .

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Chip Conley: What Business Leaders Can Learn From Bhutan

February 2, 2010

Having spent the past 32 years in the Silicon Valley/Bay Area region, I guess I’ve grown accustomed to start-ups wreaking havoc in mature industries. Hewlett-Packard, Apple, Google, Facebook — they all were launched within a 15-mile radius of my alma mater, Stanford University, and they went on to revolutionize not just their industry, but they changed our relationship with technology and, frankly, in Facebook’s case, our relationships with each other. So, it’s no surprise that I’m fascinated with a little, almost-mythical country in the Himalayas that is revolutionizing how world leaders are looking at the definition of success. Like The Mouse That Roared (a popular book and film from the late 1950s about an imaginary, bucolic country situated between France and Switzerland that becomes the admiration of modern society when it declares war on the United States), Bhutan is getting the kind of attention an off-off-Broadway play gets when you know it’s destined to be a hit. In 1972, the 17-year old King of Bhutan asked the blasphemous question, “Why are we so focused on Gross Domestic Product? Why aren’t we more concerned with Gross National Happiness?” For nearly 40 years now, Bhutan has been reinventing itself based upon the premise that the ultimate public good a leader can provide his or her people isn’t material possessions, but instead it’s happiness or well-being. This “beginner’s mind” idea has found fertile ground in the 21st Century as more than 40 countries are now studying their own GNH (Gross National Happiness). Nicolas Sarkozy recently announced what some are calling a “joie de vivre index” in France based upon an 18-month study of two Nobel economists who recommended that the largest countries of the world end their obsession with GDP and consider some new intangible metrics. In essence, they’re suggested that GDP — which focuses exclusively on tangible production and consumption — no longer should be our sole definition of global success especially at a time when 64% of the world’s GDP now comes from the intangible service industry. In other words, GDP measures outputs which might have made sense in a more mechanized, industrial era. But, given the knowledge era we now live in, measuring those inputs that influence the output is a more holistic method of evaluating whether we’re creating sustainable success. This may seem abstract, but it’s extremely relevant to business leaders who have come to realize that a myopic focus purely on the bottom line can have the same effect as driving a car at full speed all the time without doing occasional maintenance and refueling. Here are three important lessons for business leaders to learn from Bhutan: (1) Leaders don’t create happiness for people. The Prime Minister of Bhutan told me his goal is “to create the conditions in which happiness can flourish.” Abraham Maslow once suggested business leaders “can set up the conditions so that peak experiences are more likely, or one can perversely set up the conditions so that they are less likely.” Great leaders create healthy habitats. From those healthy habitats sprout the outputs we’re looking for whether it is happy citizens or a profitable business. Silicon Valley has an eco-system that is primed for innovation, but as many regions of the world have learned, you can’t easily replicate the intangibles that create such a cultural habitat. So, first brainstorm with the leaders in your company about what cultural “conditions” would help your company flourish and what kinds of specific things you can do to create that habitat. (2) Leaders value and measure the intangible. The Bhutanese have created a science behind the art of happiness. They measure four (4) pillars, nine (9) key indicators, and 72 various metrics to help them understand whether they are creating fertile conditions for happiness. The Gallup organization has developed 12 questions that help leaders measure employee engagement like “At work, do you have the opportunity to do what you do best every day?” or “Does the mission/purpose of your company make you feel your job is important?” It’s time for leaders to distinguish between what they can easily count (“Are you being paid enough?”) with what employees most value. The intangibles of mission and meaning are powerful fuel for knowledge-driven industries, so find ways to measure these vital inputs. (3) Leaders are willing to deviate from the norm. Most world leaders didn’t take notice when the teenage King of Bhutan asked his impertinent questions about GDP. Those that did notice chuckled and chalked this idea of GNH up to “Buddhist economics.” But, if you’re a small country or a small company, your best strategy to compete with the big boys is to find a niche and own it. In my case when I started my company 23 years ago by purchasing an inner-city motel, I went after rock ‘n roll bands as our core customer, even though conventional hoteliers told me I was crazy to want these party animals. Yet this target customer was perfectly suited to my funky motel and this was an untapped market (bands) that was growing and recession-proof. Similarly, it took 30 years for the world to embrace Bhutan’s approach to GNH, yet this “happiness niche” has turned out to be much larger than the King of Bhutan ever imagined. Find a niche, embrace it wholly even if it’s unconventional, and deliver on your promise better than any of your competitors.

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Swiss Banks Find Achilles Heel of Secrecy Is Workers Selling Stolen Data

February 2, 2010

By Warren Giles Feb. 2 (Bloomberg) — Swiss banks are discovering that the biggest threat to client privacy is their own workers. German Chancellor Angela Merkel said yesterday her government may buy stolen data on Swiss bank accounts as French authorities comb information acquired from an employee of HSBC Holdings Plc’s private bank in Geneva. The cases come two years after Germany paid 5 million euros ($7 million) for details filched from LGT Group in neighboring Liechtenstein. “This is a kind of business war against Switzerland in which practices which were completely illegal have become acceptable,” says Daniel Fischer, founder of Zurich-based Fischer & Partner law firm who specializes in banking law and fraud. “It’s a huge danger for Swiss banks.” The willingness of governments to pay for stolen data is fanning tensions with France and Germany as Switzerland seeks to negotiate treaties implementing its commitment to cooperate with international tax probes. The Swiss government said last month it will draft a law barring officials from assisting foreign countries in cases involving theft of client details. Germany’s use of such data would be “counterproductive” in future negotiations, and the German government shouldn’t be handling stolen goods, the Swiss Bankers Association said in a Jan. 30 statement. The association represents more than 300 banks, including UBS AG and Credit Suisse Group AG . Incentive to Steal “What’s new recently is the price paid by states for lists, which makes it more attractive” for employees to steal, Anne-Marie de Weck , managing partner at Geneva-based private bank Lombard Odier, told reporters last month in Bern. In bank security, “the most important factor is human,” she said. An unidentified individual has offered to sell Germany information on about 1,300 holders of Swiss bank accounts for 2.5 million euros, the Financial Times Deutschland reported yesterday, without saying where it got the information. FTD said the data came from HSBC’s private bank in Geneva, while the German newspaper Handelsblatt reported it was drawn primarily from accounts at UBS and may yield 200 million euros in lost taxes. Frankfurter Allgemeine Zeitung today said the information came from Credit Suisse, without providing the source of the report. UBS isn’t aware of such information, spokesman Christoph Meier said when asked about the Handlesblatt report. A spokesman for HSBC in Geneva declined to comment, and Credit Suisse issued a statement saying it had “no information” that the bank was affected. “We should aim to get hold of this data if it’s relevant,” because Germany needs to crack down on tax violators, Merkel told reporters yesterday in Berlin. Liechtenstein Precedent Germany last year prosecuted tax evaders, including former Deutsche Post AG Chief Executive Officer Klaus Zumwinkel , using the information bought from a former computer consultant at LGT, owned by Liechtenstein’s princely family. Zumwinkel received a two-year suspended sentence and was ordered to pay a 1 million- euro penalty after a Germany court ruled that he had “knowingly” evaded taxes. Tax authorities have increasingly been offered secret bank information since the Liechtenstein case, German Finance Ministry spokesman Michael Offer said yesterday. “I have a hard time imagining that we are living in a world where a government, which is supposed to set an example, can take for granted that stolen data will be the basis for action,” Patrick Odier , chairman of the Swiss Bankers Association, said in a Jan. 29 interview at the World Economic Forum in Davos, Switzerland. “It is a real issue and we have to make sure it doesn’t develop into more cases.” HSBC Agreement The French Finance Ministry said in December that it had data on Swiss bank accounts held by French taxpayers, including names provided by a former HSBC employee. Switzerland suspended treaty negotiations with France in December because of the HSBC case. After talks last week, France agreed to return the original data to Switzerland and not ask for assistance from Swiss authorities based on the stolen information. France will continue to use the data to pursue tax evaders at home. “The agreement won’t change anything for a client of HSBC whose data was stolen,” said Fischer, the Zurich lawyer, who added that details of the accord aren’t clear. “An agreement may, on the face of it, be good for Switzerland but not for Swiss banking clients.” Swiss secrecy laws, which threaten bank employees with as much as five years in jail if they divulge client information, have failed to stop staff from stealing data. ‘Gray Zone’ Switzerland’s argument that foreign governments should abide by established codes of conduct that bar the use of stolen information may also fall short, said Thomas Cottier, a professor of European and international economic law at the University of Bern. “We are entering a gray zone of intelligence and the principles are not as strict as in penal law, where information unlawfully obtained is not admissible,” said Cottier. “The risk is that foreign governments won’t say where they got the information from, leading to less rather than more transparency.” Banking secrecy has been the focus of international attention for the past two years as the U.S., France and Germany target tax evaders to help close widening budget deficits after the worst economic crisis since World War II. Switzerland agreed in March to cooperate with countries investigating tax evasion in order to avoid being placed on a list of uncooperative tax havens. The Swiss government in August said it would give data on as many as 4,450 UBS accounts to the Internal Revenue Service after the country’s biggest bank admitted that it helped clients avoid U.S. taxes. UBS Whistleblower The case hinged on information provided by Bradley Birkenfeld , a former UBS banker who told U.S. authorities how the bank courted wealthy Americans without a license from U.S. regulators and helped them set up accounts to evade taxes. Mirabaud & Cie., one of Geneva’s oldest private banks, says the risk from employees isn’t new. “The human factor is obviously a risk, and we’re always evolving as it’s a continuing concern,” Yves Mirabaud , partner at the 191-year-old bank, said in an interview. “We only put people that we’ve known for many years in the most sensitive positions,” Mirabaud said. “We try to avoid the basics such as leaving people alone in a room for hours where they can have access to sensitive data.” Still, the latest developments are “worrying,” he said. “It’s like Big Brother. Do the state and your neighbor have the right to know everything about you?” To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net .

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Australia Unexpectedly Keeps Key Interest Rate at 3.75%; Currency Plunges

February 1, 2010

By Jacob Greber Feb. 2 (Bloomberg) — Australia’s central bank unexpectedly kept its benchmark interest rate unchanged for the first meeting in four to gauge the strength of an economic recovery, driving the nation’s currency to its lowest level in six weeks. Reserve Bank Governor Glenn Stevens left the overnight cash rate target at 3.75 percent in Sydney. All 20 economists surveyed by Bloomberg News forecast a quarter-point boost. Futures traders estimated a 74 percent chance of an increase. Stevens signaled he may keep borrowing costs unchanged in coming months to gauge the economic impact of previous increases. Business confidence, particularly among retailing companies, fell in December to the lowest level in six months, a report showed today. “This is a big relief and reduces the serious risk of a policy blunder,” said Prasad Patkar , who helps manage about $1.5 billion at Platypus Asset Management in Sydney. “Three consecutive hikes late last year coupled with out-of-cycle increases by commercial banks appeared to have stung. A pause is welcome.” The Australian dollar fell to 88.17 U.S. cents at 2:40 p.m. in Sydney from 89.24 cents just before the decision was released. The two-year government bond yield rose 2 basis points to 4.04 percent. A basis point is 0.01 percentage point. As information about the impact of the bank’s previous increases “is still limited, the board judged it appropriate to hold a steady setting of monetary policy for the time being,” Stevens said in a statement today. World Leader Stevens became the first central banker in the world to raise borrowing costs three times last year after Australia’s economy skirted the global recession, helped by A$20 billion ($18 billion) in cash handouts to consumers from Prime Minister Kevin Rudd and another A$22 billion in spending on roads, railways and schools. By contrast, officials in the U.S., the U.K. and Europe have kept their benchmark lending rates at historic lows. The rate gap has contributed to making the Australian dollar the top performer against its U.S. counterpart since the start of September among the most-traded currencies. There are signs Governor Stevens’s rate increases in October, November and December are restraining the mortgage market. Policy makers didn’t meet in January. Borrowing for home buying fell to a five-year low last month, according to a report yesterday by Australian Finance Group Ltd., which says it accounts for more than 10 percent of the nation’s mortgage market. The group arranged A$1.55 billion of mortgages in January, 19 percent less than a year earlier and the lowest level for any month since 2005. Mortgage Rates Interest rates in the economy have increased by about 1 percentage point more than the cash rate over the past two years, meaning the current levels are consistent with a pre-crisis cash rate of “at least” 4.75 percent, Deputy Governor Ric Battellino said in a speech in December. Battellino said on Dec. 17 monetary policy is “now back in the normal range” after lenders raised business and home-loan rates by more than the central bank increased the overnight cash rate target. Australian & New Zealand Bank Group Ltd. boosted its variable mortgage rate by 35 basis points after Governor Stevens raised the overnight cash rate target by 25 basis points on Dec. 1. Commonwealth Bank of Australia raised its home-loan rate by 37 basis points and Westpac Banking Corp. moved by the largest amount, driving up its mortgage rate by 45 basis points. Westpac’s move means households with a A$300,000 mortgage are being charged an extra A$1,008 a year, instead of the A$576 that would have been imposed had the bank merely passed on the Reserve Bank’s increases. Business Confidence “Interest-rate rises are not good for consumers full stop,” Michael Luscombe , chief executive officer of Australia’s biggest retailer Woolworths Ltd., said in an interview last month. “I think 2010 is going to be a challenging year.” Woolworths posted on Jan. 27 the slowest sales growth in a Christmas quarter since 1993. Consumer spending accounts for more than half of Australia’s economy. Business confidence, particularly among retailing companies, fell in December to the lowest level in six months, a report by National Australia Bank Ltd. showed today. The bank’s sentiment index dropped 11 points to 8. While all the economists surveyed by Bloomberg predicted an increase today, financial markets were less certain. Traders bet there was a 74 percent chance of a move, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 2:04 p.m. Stocks Fall Investors’ concerns that global growth may be weak this year are among reasons stock markets have fallen since the start of 2010. Australia’s benchmark S&P/ASX 200 index has shed more than 5 percent since Dec. 31. Nouriel Roubini, the New York University professor who anticipated the financial crisis, said on Feb. 1 in Davos, Switzerland, that the U.S. growth outlook remains “very dismal,” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Still, economists such as Annette Beacher at TD Securities Ltd. in Singapore say Australia’s economy will rebound faster than most. A quarter-point increase today would have been “easily justified given strong Chinese growth, sticky core inflation, double-digit house-price gains” and falling unemployment, Beacher said ahead of the decision. The economy expanded in the three months through September for a third straight quarter, house prices surged 13.6 percent in 2009, and unemployment fell in December to an eight-month low of 5.5 percent, reports published since the bank’s last meeting in December show. Employers added 135,700 jobs from September through December as companies such as Chevron Corp. expand liquefied natural gas ventures to meet rising demand for energy, particularly in Asia. The economic recovery in China, Australia’s largest trading partner, has been “much quicker to date and prospects appear to be for good growth in 2010,” Stevens said on Dec. 1. China’s economy expanded 10.7 percent last quarter, the fastest pace since 2007. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Australia May Raise Rate to 4% as Employment Surge Stokes Price Pressures

February 1, 2010

By Jacob Greber and Dan Petrie Feb. 2 (Bloomberg) — Australia’s central bank may raise its benchmark interest rate by a quarter percentage point today for a record fourth straight meeting as the nation’s economic expansion fuels a surge in employment. Reserve Bank Governor Glenn Stevens will boost the overnight cash rate target to 4 percent, according to all 20 economists surveyed by Bloomberg. Futures traders estimate a 72 percent chance of an increase in the announcement scheduled for 2:30 p.m. in Sydney. The biggest jobs boom in more than three years, the largest increase in annual house prices since 2007 and reports showing inflation may accelerate in 2010 are increasing pressure on Stevens to continue leading the world in raising borrowing costs. Consumer confidence rose in January by the most in six months, a sign households weren’t deterred by his efforts to date. “The bank is planning to move the cash rate back to a ‘neutral’ target level of 4.5 percent by June at the latest,” said Bill Evans , chief economist at Westpac Banking Corp. in Sydney and a former analyst at the central bank and Treasury. “The economy is rebounding strongly from the downturn and there is less spare capacity than anticipated.” Stevens became the first central banker in the world to raise borrowing costs three times last year after Australia’s economy skirted the global recession, helped by A$20 billion ($18 billion) in cash handouts to consumers from Prime Minister Kevin Rudd and another A$22 billion in spending on roads, railways and schools. Rate Differences By contrast, officials in the U.S., the U.K. and Europe have kept their benchmark lending rates at historic lows this year. The rate gap has contributed to making the Australian dollar the top performer against its U.S. counterpart since the start of September among the most-traded currencies. Australia’s economy expanded in the three months through September for a third straight quarter, house prices surged 13.6 percent in 2009, and unemployment fell in December to an eight- month low of 5.5 percent, reports published since the bank’s last meeting in December show. Employers added 135,700 jobs from September through December as companies such as Chevron Corp. expand liquefied natural gas ventures to meet rising demand for energy, particularly in Asia. The economic recovery in China, Australia’s largest trading partner, has been “much quicker to date and prospects appear to be for good growth in 2010,” Stevens said on Dec. 1. China’s economy expanded 10.7 percent last quarter, the fastest pace since 2007. China Factor A quarter-point rate increase today “will be easily justified given strong Chinese growth, sticky core inflation, double-digit house-price gains” and falling unemployment, said Annette Beacher , an economist at TD Securities Ltd. in Singapore. The central bank’s so-called annual weighted-median gauge of core inflation rose 3.6 percent in the three months through December. The measure has held above the top of the bank’s target range of between 2 percent and 3 percent since the third quarter of 2007. While all the economists surveyed by Bloomberg forecast an increase today, financial markets are less certain. Traders are betting there is a 72 percent chance of a move, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:29 a.m. The chance of an increase stood at 76 percent on Jan. 28. Nouriel Roubini, the New York University professor who anticipated the financial crisis, said on Feb. 1 in Davos, Switzerland, that the U.S. growth outlook remains “very dismal,” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Australia Different While such comments reflect concern that emergency measures to rescue banks and fight the global recession may be withdrawn too soon, they are “not at all appropriate for Australia,” said TD’s Beacher. “What goes down must eventually come up if the emergency has passed,” she said. There are signs Governor Stevens’s rate increases in October, November and December have begun restraining the mortgage market. Borrowing for home-buying fell to a five-year low last month, according to a report yesterday by Australian Finance Group Ltd., which says it accounts for more than 10 percent of the nation’s mortgage market. The group arranged A$1.55 billion of mortgages in January, 19 percent less than a year earlier and the lowest level for any month since 2005. Business confidence, particularly among retailing companies, fell in December to the lowest level in six months, a report by National Australia Bank Ltd. showed today. The bank’s sentiment index dropped 11 points to 8. Pre-Crisis Rate Interest rates in the economy have increased by about 1 percentage point relative to the cash rate over the past two years, meaning the current levels are consistent with a pre- crisis cash rate of “at least” 4.75 percent, Deputy Governor Ric Battellino said in a speech in December. Battellino said on Dec. 17 monetary policy is “now back in the normal range” after lenders raised business and home-loan rates by more than the central bank increased the overnight cash rate target. Australian & New Zealand Bank Group Ltd. boosted its variable mortgage rate by 35 basis points after Governor Stevens raised the overnight cash rate target by 25 basis points on Dec. 1. Commonwealth Bank of Australia raised its home-loan rate by 37 basis points and Westpac Banking Corp. moved by the largest amount, driving up its mortgage rate by 45 basis points. Westpac’s move means households with a A$300,000 mortgage are being charged an extra $1,008 a year, instead of the $576 that would have been imposed had the bank merely passed on the Reserve Bank’s increases. “Interest-rate rises are not good for consumers full stop,” Michael Luscombe , chief executive officer of Australia’s biggest retailer Woolworths Ltd., said in an interview on Jan. 28. “I think 2010 is going to be a challenging year.” To contact the reporters for this story: Jacob Greber in Sydney at jgreber@bloomberg.net ; Daniel Petrie in Sydney at dpetrie5@bloomberg.net

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Recovery in U.S. Accelerating as Corporate Spending Rises Most Since 2006

February 1, 2010

By Michael McKee Feb. 1 (Bloomberg) — Evidence of a self-sustaining U.S. recovery is emerging on the factory floors of Texas Instruments Inc. The second-largest U.S. chipmaker will spend almost $1 billion this year to expand three factories and open a fourth to fill orders. The need to rebuild industrial capacity after the largest decline on record in 2009 is boosting capital spending and may spur hiring. Beneficiaries are led by technology equipment- makers Intel Corp. , Applied Materials Inc. and EMC Corp. , as well as industrial product providers General Electric Co. and Rockwell Automation Inc . Capital spending will increase the total productive capacity of the U.S. economy above its pre-recession level of December 2007, helping gross domestic product grow at a 2.7 percent annual rate in 2010, according to the median forecast of 67 economists in a Jan. 14 Bloomberg News survey. That would be the fastest rate since 2006. “Our business is growing so we have to build out capacity,” Dave Pahl , Texas Instruments’ director of investor relations, said from Dallas. “Our customers are increasing what they’re building, so that’s increasing our revenue.” Business executives say spending will increase further as profits rise — third-quarter earnings increased 10.8 percent, according to Commerce Department figures, the most in more than five years — and demand strengthens. Of U.S. companies followed by Morgan Stanley analysts in New York, 38 percent intend to raise capital spending over the next three months, up from a low of 3 percent in August. ‘Very Powerful Recovery’ “The groundwork has been laid for a very powerful recovery in capital spending,” said Joseph LaVorgna , chief U.S. economist at Deutsche Bank Securities in New York. “It won’t take much of a spark to get companies to start spending and hiring.” GDP rose 5.7 percent in the fourth quarter as factories revived assembly lines and consumers and companies spent more, the Commerce Department reported on Jan. 29. Purchases of equipment and software increased 13.3 percent, the most since the first quarter of 2006. Federal Reserve officials, who left the benchmark lending rate unchanged in a range between zero and 0.25 percent on Jan. 27, noted in their policy statement that “business spending on equipment and software appears to be picking up.” Shares in companies that make those goods are poised to extend their rally, investors say. The Russell 3000 Producer Durables index and the Standard & Poor’s 500 Semiconductor Equipment Index are each up more than 29 percent over the past 12 months, exceeding the 27 percent rise in the Standard & Poor’s 500 index . Cash Flow “People are buying equipment,” said Mario Gabelli , chief executive officer of Gamco Investors Inc. in Rye, New York, which owns Texas Instruments and Rockwell Automation among its $20 billion under management. “As cash flow continues to improve, as companies get more confident, they need more efficient plants,” Gabelli, 67, said in an interview in New York. Morgan Stanley’s January business conditions index survey found that 34 percent of companies plan to increase hiring, up from 8 percent in August. “Rising jobs will provide the gains in income and confidence needed to support consumer spending,” Richard Berner , co-head of global economics at Morgan Stanley in New York, said in a telephone interview. Payrolls rose by 13,000 jobs in January, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of the Labor Department’s Feb. 5 report. That would be the second month of job creation since the recession began in December 2007. Manufacturing payrolls are forecast to have fallen by 23,000, the least since the recession’s onset. Davos Panel The unemployment rate is forecast to have held at 10 percent in January, the economists’ survey showed. White House economic adviser Lawrence Summers suggested during a panel discussion at the World Economic Forum in Davos, Switzerland Jan. 29, that the jobless rate may not fall quickly as companies invest in boosting productivity rather than hiring. Non-farm productivity rose at an 8.1 percent annual rate in the third quarter of 2009, and the median forecast of 47 economists surveyed by Bloomberg News is for output per hour to have risen at a 6 percent rate in the fourth quarter. The average quarterly growth rate of productivity over the past 20 years is 2.4 percent. The median forecast of 54 economists in a Bloomberg News survey released Jan. 14 is that it will take until the end of 2011 for the unemployment rate to fall to 9 percent. 9 Percent? Dean Maki , chief U.S. economist for Barclays Capital Inc. in New York, says the rise in capital spending makes that forecast too pessimistic. He predicted that the nation’s unemployment rate will fall to 9 percent by the end of 2010. “Businesses are starting to spend on goods; that means they’ll also start spending on employment,” Maki said in an interview on Bloomberg Television after the GDP report. “The first quarter as a whole will show substantial job growth.” Business-led job growth would be good news for President Barack Obama . A survey released Jan. 13 by Hamden, Connecticut- based Quinnipiac Polling Institute found 54 percent said they disapproved of the way Obama was handling the economy. The survey of 1,767 registered voters had a margin of error of plus or minus 2.3 percentage points. Tax Breaks In his Jan. 27 State of the Union address, the president proposed extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment. The 50 percent write-off may give a boost to capital expenditures if approved by Congress. “It will help companies to make capital investments, which is what you need in a weak economy,” Monica McGuire , senior policy director of taxation for the National Association of Manufacturers in Washington, said in a telephone interview. Slack remains in the economy. About 68.6 percent of U.S. manufacturing capacity was in use in December, compared with an average of 81 percent since records began in 1948. Technology stocks have been rising for 10 months in anticipation of a capital expenditure rebound, and gains have slowed for many companies, said Craig Berger , a technology analyst at FBR Capital Markets in New York. Texas Instruments shares, which are up 51 percent over the past 12 months, are more expensive on a relative-value basis than 61 percent of the companies in the S&P 500 . ‘So Far, So Fast’ “Investors are willing to bet we’ve got to start spending on capex after cutting back,” Berger said. “But there’s a lot of push and pull in the markets because we’ve come up so far, so fast. Small businesses, generally those with fewer than 500 employees, and with less cash or access to financing, will limit their investments this year, according to the National Federation of Independent Business. A near- record low of 18 percent said they plan to make capital expenditures over the next three to six months, according to the industry group’s January survey. “Capital spending is on the sidelines,” said William Dunkelberg , NFIB chief economist in Philadelphia, in a telephone interview. By contrast, Seagate Technology , the world’s largest maker of hard-disk drives, raised its 2010 sales forecast on Jan. 21 after reporting it sold a record 49.9 million drives in the most recent quarter. While Seagate expected business buyers to resume purchasing, it didn’t predict such a quick rebound, Steve Luczo , the company’s chief executive officer, said in an interview. Real Signals “As we get further and further away from the implosion we all felt at the end of 2008, you have more confidence that the signals you’re seeing are real,” said Luczo, 52, whose company is based in the Cayman Islands and run from Scotts Valley, California. Dallas-based Texas Instruments is hiring 250 workers to open a new chip-manufacturing plant in Richardson, Texas, that will eventually employ 1,000. It’s also expanding three other plants in the state. The company forecast Jan. 25 that first- quarter profit of 44 cents to 52 cents a share would beat analysts’ estimates. Santa Clara, California-based Intel, the world’s largest chipmaker, is also raising capital spending, Chief Financial Officer Stacy Smith , 47, said in a Jan. 15 interview. Intel shares are up 45 percent over the past year, and of the 49 analysts who cover the company, 36 maintain a “buy” rating. This “will be the first year in about five years where we are going to grow the employment in the company and make some critical R&D bets,” Smith said. Chip Equipment Increased capital spending bodes well for companies such as Santa Clara, California-based Applied Materials , which supplies chip-making equipment to Texas Instruments and Intel, chief executive Michael Splinter , 59, said. “During 2008 and 2009 a lot of capacity came off line in the semiconductor industry . That has to be replaced,” he said. “In the next six to nine months I think we’re going to see increased spending on new capacity.” EMC , the world’s biggest maker of storage computers, said on Jan. 26 that sales would be $16 billion this year, exceeding the $15.4 billion average estimate of analysts in a Bloomberg survey and a 14 percent increase from 2009. David Goulden , chief financial officer of Hopkinton, Massachusetts-based EMC, forecasts a 3 percent to 5 percent increase in spending on information technology this year. “We’re seeing interest in investments for growth, new opportunities and integrations, as opposed to what used to be mostly focus on cost-cutting,” he said on a Jan. 26 conference call with analysts. Spending Plans Surveys of corporate spending plans show increasing optimism. The Philadelphia Federal Reserve Bank’s monthly index of manufacturing capital spending plans over the next six months rose to 24.5 in January, the highest since September 2008. Similar indicators produced by the Dallas , Richmond , and New York Federal Reserve banks show the same trend. The New York capital expenditure index rose to 33.33 last month, the highest since May 2007. American industrial capacity — the number of plants and amount of equipment available to produce goods, mine raw materials, and generate power — fell by 1 percent last year, the largest decline on record. “We’re seeing a pretty good bounce back,” Jeffrey Immelt , chief executive of Fairfield, Connecticut-based General Electric, told analysts Jan. 22. “We think equipment orders should be positive for the year.” GE shares have risen 26 percent in the past year. Purchasing Management Smaller suppliers are also seeing the benefits. The National Association of Purchasing Management-Milwaukee reported its capital equipment index was at 60 in January, the highest since August 2008. Milwaukee-based Rockwell Automation , which makes industrial automation and power controls, raised its 2010 forecast after reporting Jan. 27 it made a profit of 54 cents a share in the most recent quarter, topping the 36-cent average analyst estimate. “We believe we’re at the early stage of a recovery,” CEO Keith Nosbusch said in an interview. Companies “de-stocked to the point where any need had to be filled immediately, one to one, as opposed to before where they were able to take it out of their inventory supply chain.” Rockwell Automation shares are up 77 percent over the past 12 months. “That’s a stock we like,” Gabelli said. LaVorgna sees capital expenditures rising 14.3 percent from the fourth quarter of 2010 to the fourth quarter of 2009, largely in the second half of the year, and 10 percent over the same period in 2011. He pointed to the level of new orders in the December ISM factory index, a leading indicator of capital spending, which rose to 64.8, the highest in five years. “Capital spending has already improved despite low capacity use,” LaVorgna said. “You had a massive collapse in capex, and those are almost always followed by massive recoveries.” To contact the reporter on this story: Michael McKee in New York at mmckee@bloomberg.net .

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Roubini Sees `Very Dismal’ U.S. Growth as Summers Rues a `Human Recession’

January 31, 2010

By Simon Kennedy and Erik Schatzker Feb. 1 (Bloomberg) — Nouriel Roubini , the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that that emergency measures to rescue banks and fight the recession may be withdrawn too soon. “The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.” Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010. Roubini, who chairs New York-based Roubini Global Economics LLC, has become famous for his pessimistic projections. In 2007, he correctly predicted a “hard landing” for the world economy. He said last year that the global recession would shrink through 2009, only for growth to resume in the middle of the year. He says now that while the world’s largest economy won’t relapse into recession, U.S. unemployment will rise from the current 10 percent amid “mediocre” growth. ‘Feel Like Recession’ “It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said in the interview. Also speaking in Davos, Summers, director of the White House National Economic Council, said that the statistical recovery won’t mask a “human recession.” The U.S. expansion in the October-December period resulted from manufacturers cranking up assembly lines and companies increasing investment in equipment and software. The rebuilding of stocks contributed 3.4 percentage points to gross domestic product, the most in two decades. The rebound followed the Federal Reserve’s decision to cut its benchmark interest rate to near zero in December 2008 and President Barack Obama’s $787 billion stimulus package. The jobless rate has the central bank promising to keep borrowing costs low and Obama making new proposals to create jobs. ‘Pretty Attractive’ Carlyle Group LP co-founder David Rubinstein countered Roubini’s concerns. He said that even after a rally in global stocks that drove the MSCI World Index up more than 60 percent from March 2009, it’s a “pretty attractive” time to invest. “There are a lot of great opportunities we see in the United States and abroad,” Rubenstein told a Jan. 27 panel. “Sometimes generals fight the last war, economists fight the last recession.” Policy makers may be undermining their effort to spur hiring by attacking banks, Blackstone Group LP Chief Executive Officer Steven Schwarzman said in a Jan. 28 interview in Davos. One in four of chief executive officers worldwide surveyed by PricewaterhouseCoopers LLP for the Davos conference already plans to cut jobs this year. “Financial institutions will feel under siege and they will retreat,” Schwarzman said. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.” ‘Moderate’ Growth Summers, a former U.S. Treasury secretary, predicted growth will continue “at least at a moderate rate.” The median forecast of economists surveyed by Bloomberg News is for the U.S. economy to grow 2.7 percent this quarter. “What is disturbing is the level of unemployment,” said Summers. “One in five men in the U.S. between the ages of 25 and 54 is not working right now,” he told a Jan. 30 panel discussion. Even after a “reasonable” recovery, it will be “one in seven or one in eight.” That compares to the mid-1960s, when 95 percent of men in that age range were working and “suggests quite profound issues that will ultimately impact on politics and decisions that businesses make,” he said. A report scheduled for release by the Labor Department on Feb. 5 may show the U.S. gained jobs in January for the second time in three months. Payrolls probably rose by 13,000 workers last month according to the median forecast of 62 economists surveyed by Bloomberg. The unemployment rate may have held at 10 percent for the third month. ‘Right Direction’ Nobel Prize-winning economist Joseph Stiglitz said Obama’s previous efforts to bolster the economy are only “a step in the right direction.” “I’m a bit worried that again it’s not enough,” Stiglitz said in a Jan. 28 Bloomberg Television interview in Davos. “He has to take a much more active” approach. “It has to be a second round in stimulus, focusing in particular on investment.” International Monetary Fund Managing Director Dominique Strauss-Kahn , who two years ago used the Davos stage to lobby governments to increase spending, said policy makers in the U.S. and elsewhere risk narrowing their options if they withdraw emergency measures too soon and the recovery falters. “If you exit too early then the risks are much bigger,” Strauss-Kahn told the Swiss gathering. If the economy relapses “I don’t know what we could do as most of the things we had in the toolkit have been used.” To contact the reporter on this story: Simon Kennedy in Davos at skennedy4@bloomberg.net Erik Schatzker in Davos at eschatzker@bloomberg.net

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Roubini Sees `Very Dismal’ U.S. Growth as Summers Rues `Human Recession’

January 31, 2010

By Simon Kennedy and Erik Schatzker Feb. 1 (Bloomberg) — Nouriel Roubini , the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that that emergency measures to rescue banks and fight the recession may be withdrawn too soon. “The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.” Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010. Roubini, who chairs New York-based Roubini Global Economics LLC, has become famous for his pessimistic projections. In 2007, he correctly predicted a “hard landing” for the world economy. He said last year that the global recession would shrink through 2009, only for growth to resume in the middle of the year. He says now that while the world’s largest economy won’t relapse into recession, U.S. unemployment will rise from the current 10 percent amid “mediocre” growth. ‘Feel Like Recession’ “It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said in the interview. Also speaking in Davos, Summers, director of the White House National Economic Council, said that the statistical recovery won’t mask a “human recession.” The U.S. expansion in the October-December period resulted from manufacturers cranking up assembly lines and companies increasing investment in equipment and software. The rebuilding of stocks contributed 3.4 percentage points to gross domestic product, the most in two decades. The rebound followed the Federal Reserve’s decision to cut its benchmark interest rate to near zero in December 2008 and President Barack Obama’s $787 billion stimulus package. The jobless rate has the central bank promising to keep borrowing costs low and Obama making new proposals to create jobs. ‘Pretty Attractive’ Carlyle Group LP co-founder David Rubinstein countered Roubini’s concerns. He said that even after a rally in global stocks that drove the MSCI World Index up more than 60 percent from March 2009, it’s a “pretty attractive” time to invest. “There are a lot of great opportunities we see in the United States and abroad,” Rubenstein told a Jan. 27 panel. “Sometimes generals fight the last war, economists fight the last recession.” Policy makers may be undermining their effort to spur hiring by attacking banks, Blackstone Group LP Chief Executive Officer Steven Schwarzman said in a Jan. 28 interview in Davos. One in four of chief executive officers worldwide surveyed by PricewaterhouseCoopers LLP for the Davos conference already plans to cut jobs this year. “Financial institutions will feel under siege and they will retreat,” Schwarzman said. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.” ‘Moderate’ Growth Summers, a former U.S. Treasury secretary, predicted growth will continue “at least at a moderate rate.” The median forecast of economists surveyed by Bloomberg News is for the U.S. economy to grow 2.7 percent this quarter. “What is disturbing is the level of unemployment,” said Summers. “One in five men in the U.S. between the ages of 25 and 54 is not working right now,” he told a Jan. 30 panel discussion. Even after a “reasonable” recovery, it will be “one in seven or one in eight.” That compares to the mid-1960s, when 95 percent of men in that age range were working and “suggests quite profound issues that will ultimately impact on politics and decisions that businesses make,” he said. A report scheduled for release by the Labor Department on Feb. 5 may show the U.S. gained jobs in January for the second time in three months. Payrolls probably rose by 13,000 workers last month according to the median forecast of 62 economists surveyed by Bloomberg. The unemployment rate may have held at 10 percent for the third month. ‘Right Direction’ Nobel Prize-winning economist Joseph Stiglitz said Obama’s previous efforts to bolster the economy are only “a step in the right direction.” “I’m a bit worried that again it’s not enough,” Stiglitz said in a Jan. 28 Bloomberg Television interview in Davos. “He has to take a much more active” approach. “It has to be a second round in stimulus, focusing in particular on investment.” International Monetary Fund Managing Director Dominique Strauss-Kahn , who two years ago used the Davos stage to lobby governments to increase spending, said policy makers in the U.S. and elsewhere risk narrowing their options if they withdraw emergency measures too soon and the recovery falters. “If you exit too early then the risks are much bigger,” Strauss-Kahn told the Swiss gathering. If the economy relapses “I don’t know what we could do as most of the things we had in the toolkit have been used.” To contact the reporter on this story: Simon Kennedy in Davos at skennedy4@bloomberg.net Erik Schatzker in Davos at eschatzker@bloomberg.net

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Payrolls Probably Rose in January Following Pickup in U.S. Economic Growth

January 31, 2010

By Timothy R. Homan Jan. 31 (Bloomberg) — The U.S. may have gained jobs in January for the second time in three months as the world’s largest economy began 2010 on firmer footing, economists said before reports this week. Payrolls probably rose by 13,000 workers this month, according to the median forecast of 50 economists surveyed by Bloomberg News before the Labor Department’s Feb. 5 report. The unemployment rate may have held at 10 percent for the third consecutive month. The fastest pace of economic growth in six years last quarter may give rise to more employment gains as companies restock shelves and invest in new equipment. While the U.S. will probably take years to recover the 7.2 million jobs lost since the recession began at the end of 2007, additional hiring would be welcome news to President Barack Obama , who said job creation will be his top priority in 2010. “It’s still quite feeble job growth,” said Michelle Meyer , an economist at Barclays Capital Inc. in New York, who forecast a 25,000 gain in payrolls. “We do think the trend will be toward greater job creation.” Oracle Corp. and General Electric Co. are among companies looking to hire. Payrolls fell by 85,000 last month after a 4,000 gain in November that was the first increase in almost two years. Economy Expands The U.S. economy expanded in the fourth quarter at a 5.7 percent annual rate, exceeding the median estimate of economists surveyed by Bloomberg News and the best performance since the third quarter of 2003, figures from Commerce Department last week showed. The jobless rate held at 10 percent in December, restrained by a drop in the labor force as the number of discouraged workers climbed, figures from the Labor Department on Jan. 8 showed. The unemployment rate is forecast to average 10 percent this year, according to the median estimate of economists surveyed this month. Obama last week said job creation will be the “number one focus in 2010.” Speaking during his first State of the Union address, he called on Congress to deliver a new jobs bill to his desk. January marks the one-year anniversary of the country’s biggest single-month employment plunge in six decades, showing the economic expansion that began in last year’s third quarter has slowed the pace of job cuts. The U.S. lost 741,000 jobs last January, according to Labor Department figures. More Hiring Oracle, completing the acquisition of Sun Microsystems Inc. last week, will hire 2,000 salespeople, President Charles Phillips said on Jan. 27. He said the hiring of new employees, who will sell Sun’s products directly to Oracle’s biggest customers, will start immediately. General Electric is hiring workers in energy, health care and rail transportation in part because global economic-stimulus policies have created demand, two executives said last week. GE is bidding to supply new passenger locomotives for Amtrak, and in November announced a joint venture in China that would make high-speed rail locomotives that may add 200 U.S. jobs “We will create jobs in the United States that could not have been created any other way,” John Rice , chief executive officer of GE Technology Infrastructure, said in an interview with Bloomberg Television from Davos, Switzerland, last week. Factory Expansion Manufacturing probably expanded in January for a sixth straight month, economists said before a report from the Institute for Supply Management tomorrow. The Tempe, Arizona- based group’s factory index climbed to 55.5 from 54.9 in December, the survey showed. Readings greater than 50 signal expansion. Factories are helping lead the economic recovery, and orders for manufactured goods are forecast to increase in December for a fourth straight month, according to the median estimate of economists surveyed . The 0.5 percent gain projected ahead of a Feb. 4 report from the Commerce Department would follow a 1.1 percent rise in November. Americans probably increased spending in December for a third month as earnings grew, economists said before a report tomorrow from the Commerce Department. Household purchases rose 0.3 percent after climbing 0.5 percent in November, according to the survey median. Incomes gained 0.3 percent following a 0.4 percent increase, the survey showed. Commercial Slump Commercial building projects remain a weak spot for the economy. The Commerce Department tomorrow is expected to report construction spending declined in December for an eighth consecutive month, according to economists surveyed. The projected 0.5 percent drop would follow a 0.6 percent decrease the prior month. The number of contracts to buy previously owned U.S. homes probably rose in December after plummeting 16 percent the previous month, the survey median showed before Feb. 2 figures from the National Association of Realtors. The extension of a government tax credit for homebuyers is likely to boost sales, economists said. The Standard & Poor’s Supercomposite Homebuilder Index has increased 5.4 percent since the beginning of the year, compared with a 3.7 percent decrease for the S&P 500 Index. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Toyota Recall: Company To Issue Fix For Recalled Cars

January 30, 2010

DETROIT — Toyota Motor Corp. plans to start sending parts to dealers in the coming days to fix a sticky gas pedal problem that has tarnished its image and led to the recall of 4.2 million cars and trucks on three continents, according to people briefed on the matter. Toyota plans to reveal details of the fix on Monday morning, according to two dealers who asked not to be identified because the plan had not been announced. One dealer was told by a Toyota executive that the parts could arrive Thursday or Friday. The automaker told the dealers about the plan Saturday after hearing from the National Highway Traffic Safety Administration that it did not object to the fix, the dealers said. A Department of Transportation official, who also requested anonymity because the announcement had not been made, confirmed that the government had no objections. Toyota spokesman Mike Michels said the company received feedback from the government, but he would not say what that was or when it intends to start sending out parts. The company has said it plans to announce the fix next week, but Michels would not give an exact date. Toyota has recalled 4.2 million vehicles worldwide because the gas pedal systems can get stuck. The company said the problem is rare and is caused by condensation that builds up in the gas pedal assembly. Several dealers have said the fix involves slipping a shim into an area where springs push the gas pedal back to its resting position after a driver has eased off the gas, but Toyota has not commented on the repair. Dealers have been in the difficult position of having no parts to fix the cars ever since the recall was announced on Jan. 21. The recall in the U.S. covers 2.3 million vehicles and involves the 2009-10 RAV4 crossover, the 2009-10 Corolla, the 2009-10 Matrix hatchback, the 2005-10 Avalon, the 2007-10 Camry, the 2010 Highlander crossover, the 2007-10 Tundra pickup and the 2008-10 Sequoia SUV. The recall has been expanded to models in Europe and China. Toyota said that not all the models listed in the recall have the faulty gas pedals, which were made by CTS Corp. of Elkhart, Ind. Dealers can tell which models have the CTS pedals. Models made in Japan, and some models built in the U.S., have pedal systems made by another parts supplier, Denso Corp., which function well. “They’ve got a fix and it’s been approved by NHTSA,” said one of the dealers who was happy that parts would be coming soon. Toyota announced late Friday that it would begin shipping new gas pedal systems to dealers as well. Legally Toyota did not need NHTSA’s approval for the fix, but the company submitted the plan to the government agency on Thursday, and it would be unlikely to proceed without the government’s blessing. Michels said the timetable for when dealers will be able to start fixing cars has not been finalized. It still has to train service technicians, send letters to owners of the recalled vehicles and ship out the parts. “It does take a little time,” he said. “That is a lengthy process.” Earl Stewart, owner of a Toyota dealership in North Palm Beach, Fla., said Saturday he had not been notified of the fix by Toyota. But he’s happy to be able to tell customers that he’ll soon be getting parts, ending a frustrating week with little information to give them. “There’s light at the end of the tunnel if that’s the thing to get this thing behind us,” he said. “That’s wonderful news for everybody.” Stewart said he would put his service department on duty 24 hours a day if necessary and if he gets enough parts to fix all the cars for his customers. Toyota has said it is working as quickly as possible to come up with repairs for the cars. A spokesman said Friday that details will be released sometime next week about how it intends to solve the problem. On Friday, Toyota CEO Akio Toyoda made his first public comments about the recall. At the World Economic Forum in Davos, Switzerland, he told Japanese broadcaster NHK: “I am very sorry that we are making our customers feel concerned.” “People can feel safe driving in the current situation,” he added. “Please trust that we are responding so it will be even safer.” Toyota told employees in an e-mail it is buying full-page ads Sunday in 20 major newspapers to reassure customers. Meanwhile, Consumer Reports, an influential publication for car buyers, on Friday suspended its “recommended” status for the eight recalled Toyota models. Toyota also has decided to halt production and stop selling the models covered by the recall until they can be repaired. The pedal recall is separate from another recall involving floor mats that can bend and push down accelerators. The two recalls combined affect more than 7 million vehicles worldwide. ___ Thomas reported from Washington.

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Zhu Says China to Keep `Accommodative’ Monetary, Fiscal Policies in Place

January 30, 2010

By Simon Kennedy and Rob Delaney Jan. 30 (Bloomberg) — People’s Bank of China Deputy Governor Zhu Min signaled officials have no immediate plans to change their currency or monetary policies. “We’ll continue with current accommodative fiscal and monetary policy,” said Zhu in Davos, Switzerland, where he is attending the annual meeting of the World Economic Forum. Asked about the exchange rate, he said a “stable” yuan has helped China during the financial crisis. China grew fasters than economists anticipated in the fourth quarter, and the inflation rate accelerated to a 13- month high of 1.9 percent in December. The speed of those expansions is putting officials under pressure to consider tightening policy or allowing the yuan to gain. Zhu said inflation expectations and overcapacity pose challenges for the government, which is continuing efforts to rebalance the economy toward domestic consumption and away from export-led growth. This is a process that “will take time,” he said. China wants to ensure the “growth path is stable all the year along,” Zhu said. The Chinese economy expanded 10.7 percent during the last quarter of 2009 from a year earlier, the fastest pace since 2007, buoyed by new loans. The International Monetary Fund forecasts China’s growth will accelerate this year to 10 percent from 8.7 percent in 2009. Davos Demands Billionaire investor George Soros and U.S. Representative Barney Frank were among Davos delegates that urged China this week to allow its currency to strengthen. The world’s fastest- growing major economy has controlled the yuan since July 2008 after it strengthened 21 percent against the dollar over the previous three years. Zhu said stability is important for China’s economy and that a “stable exchange rate” during a crisis “is good for China and good for world.” He argued any change would only play a “small part” in rebalancing the world economy although China is willing to work with other nations in withdrawing emergency stimulus. “You change exchange rates, you don’t necessarily change the trade balance,” he said. The government will need to rein in overcapacity in steel, cement, shipbuilding and other industries to account for a drop in exports to the U.S. and other traditional customers, the central banker said, adding that the government aims to keep economic growth between 8 percent and 9 percent this year. Controlling inflation expectations will be “very important” in 2010 and money and loan growth is “very strong,” he said. Chinese regulators began restricting new loans after a surge in bank lending since Jan. 1 and an unprecedented credit growth of 9.59 trillion yuan ($1.4 trillion) in 2009 fanned concerns of a property bubble. To contact the reporter on this story: Simon Kennedy in Davos at skennedy4@bloomberg.net ; Rob Delaney in Davos at robdelaney@bloomberg.net

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Euro Posts Biggest Monthly Decline in Year on Turmoil Over Greece’s Debt

January 30, 2010

By Inyoung Hwang and Ben Levisohn Jan. 30 (Bloomberg) — The euro recorded its biggest monthly drop in a year against the yen and fell versus the dollar as concern Greece won’t be able to meet its debt obligations spurred a retreat from riskier assets. The 16-nation currency declined in January as the cost of insuring Greece’s debt reached a record. The dollar rallied against the euro before next week’s U.S. payrolls report as Kansas City Federal Reserve President Thomas Hoenig dissented on how long the target lending should be held at virtually zero. A report showed the nation’s economy grew in the fourth quarter at the fastest pace since 2003. “Greece will erode confidence in the euro’s viability for a while,” said Jessica Hoversen , a foreign-exchange and fixed- income analyst at the futures broker MF Global Ltd. in Chicago. “On top of being a safe haven, there are fundamental reasons that underpinned the dollar. The economic situation in the U.S. looked better.” The euro fell 6.1 percent to 125.13 yen yesterday, from 133.20 on Dec. 31, in its biggest monthly drop since depreciating 9.1 percent in January 2009. It touched 124.82 yesterday, the lowest level since April 28. The euro dropped 3.2 percent to $1.3863, from $1.4321, and reached $1.3862, the lowest level since July 9. The yen appreciated 3.1 percent to 90.27 versus the dollar, from 93.02. Greece’s Debt Credit-default swaps insuring Greece’s debt reached a record high of 422.5 basis points on Jan. 28, CMA DataVision prices show. Swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent. A basis point is equal to $1,000 a year on a contract protecting $10 million of debt. Germany and France denied a report on Jan. 28 in the newspaper Le Monde that EU members are examining ways to provide assistance. Greece’s Prime Minister George Papandreou said in an interview yesterday that he has no knowledge of any European Union bailout talks and promised deeper budget cuts if needed. The European Commission expects to give an assessment of Greece’s budget plan on Feb. 3, the commission said in a statement on its Web site yesterday. Portugal needs deeper deficit cuts than included in its 2010 budget to avoid a credit downgrade, Moody’s Investors Service said on Jan. 28. “If fears of contagion become widespread, risk-averse investors could start to gun for even the larger or stronger euro-zone economies and their debt,” Geoffrey Yu , a currency strategist in London at UBS AG, wrote in a note to clients. Franc Pares Gain The franc pared its monthly gain versus the euro to 0.8 percent yesterday on speculation Switzerland’s central bank intervened in currency markets to curb its strength and support the nation’s economy. The Swiss currency traded at 1.4705 versus the euro yesterday, compared with 1.4836 on Dec. 31. It touched 1.4636, the strongest level since March 10, two days before the central bank intervened last year. Swiss National Bank President Philipp Hildebrand , in Davos, Switzerland, for the annual meeting of the World Economic Forum, declined to comment yesterday. Central banks intervene by buying or selling currencies to influence exchange rates. The dollar strengthened as the Commerce Department reported yesterday that gross domestic product increased at a 5.7 percent annual pace from October through December, the fastest in six years. The median forecast of 84 economists in a Bloomberg News survey was for a 4.7 percent advance. ‘Good News’ “Any time the numbers beat expectations that significantly, it’s good news,” said John Norris , senior market strategist at Brewer Investment Group in Chicago. “The dollar was strong already, and it’s continued the trend.” The Fed reiterated on Jan. 27 at the conclusion of its two- day policy meeting its intention to cease buying mortgage-backed securities in March and repeated that interest rates will stay low for an “extended period.” Hoenig dissented, saying “financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.” U.S. employers added 13,000 jobs this month after unexpectedly eliminating 85,000 positions in December, according to the median estimate of 62 economists in a Bloomberg News survey. The Labor Department’s payrolls report is due Feb. 5. Sterling fell 1.1 percent to $1.5986 this month before the Bank of England’s meeting on Feb. 4. Policy makers will hold the target lending rate at a record low 0.5 percent, according to all 61 economists in a Bloomberg survey. The yen rose this month against all of its 16 most-traded counterparts tracked by Bloomberg, fanning concern its strength will dent exports for companies such as Toyota Motor Corp. Bank of Japan Governor Masaaki Shirakawa said at a business conference in Tokyo yesterday that Japan’s policy makers are “prepared to act swiftly and decisively should concerns that financial market stability might be hampered re-emerge.” To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net

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Summers Says Dollar to Play Key Role in Financial System for a `Long Time’

January 29, 2010

By Mike Dorning Jan. 29 (Bloomberg) — White House economic adviser Lawrence Summers said the dollar will play a central role in the international financial system for “a long time to come.” Summers, speaking at the World Economic Forum in Davos, Switzerland, said the U.S. must pursue economic policies that will support the “fundamentals” of the currency, including reducing budget deficits. President Barack Obama announced in his State of the Union speech Jan. 27 that he would freeze domestic discretionary spending over three years and appoint a bipartisan commission to recommend ways to reduce the deficit. Summers, 56, director of the White House’s National Economic Council, also defended Obama’s plan to impose new rules on bank size and risk, saying they would not interfere with financial institutions’ ability to serve customers. “The policy is a constraint on purely proprietary trading. It is not a constraint on doing business with customers,” Summers said. “It does not by definition therefore interfere with their ability to serve their customers.” Obama announced last week that he would seek to bar banks from owning or sponsoring hedge funds and private equity funds, as well as engaging in so-called proprietary trading that’s not related to clients. Bank stocks in the U.S. and elsewhere fell after Obama made public his support for the idea, which has been championed for more than a year by his adviser Paul Volcker , a former Federal Reserve Board chairman. Summers said the new proposal was not a significant break from the approach the administration has previously pursued in overhauling financial regulation. “This is not some new thunderbolt,” he said. To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net .

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Bill, Melinda Gates Pledge $10 Billion to Develop Vaccines for the Poor

January 29, 2010

By Phil Serafino and Yuriy Humber Jan. 29 (Bloomberg) — Bill and Melinda Gates said their foundation will commit $10 billion over the next decade to help develop vaccines for the world’s poorest countries, a project that may save the lives of 8.7 million children. The initiative aims to vaccinate 90 percent of children in developing nations, including new immunizations for pneumonia and severe diarrhea, the foundation said in a statement today. The funding is in addition to $4.5 billion that the charity already pledged to vaccine research and delivery. Governments and the private sector need to contribute more money as well, Gates said. “Here is where you can take a donation and really map it, see it saving lives,” Bill Gates , the co-founder and former chief executive officer of Microsoft Corp., said at a news conference in Davos, Switzerland, the site of the World Economic Forum this week. Gates’s Seattle-based charity, the world’s biggest, has made health care for the poor the focus of its work in an effort to tackle infectious diseases like AIDS, malaria and tuberculosis. The foundation has helped fund GlaxoSmithKline Plc ’s research into a malaria vaccine and has contributed to Sanofi-Aventis SA’s work on a shot for dengue fever. The foundation used a model developed at the Johns Hopkins Bloomberg School of Public Health to project the impact of vaccines on childhood deaths over the next decade. Vaccinations By vaccinating 90 percent of the population in developing countries, the deaths of about 7.6 million children under the age of 5 could be prevented in the next decade, according to the Gates foundation. An additional 1.1 million lives would be saved by the introduction of a malaria vaccine beginning in 2014, the foundation said. The United Nations will pay an average of about $2.94 a shot this year for a vaccine against five deadly childhood diseases, officials said in November. Four companies make the five-in-one shots — Crucell NV , Glaxo, Panacea Biotec Ltd and Sanofi’s Shantha Biotechnics. The shots are given to children in their first year of life to protect against Haemophilus influenzae type B, hepatitis B , tetanus, diphtheria, and pertussis. Glaxo wants to file for regulatory approval by early 2012 for its malaria vaccine, Chief Executive Officer Andrew Witty said last week. The foundation has spent $200 million developing the shot, while the company has invested $300 million, Alexandra Harrison, a Glaxo spokeswoman, said in an interview. ‘Transformative’ The Gates announcement “is transformative for research into diseases of the developing world,” Jean Stephenne , the head of Glaxo’s biologicals unit, said in an e-mailed statement today. “After clean water, vaccines are the most effective public- health intervention that can be offered in these countries.” The foundation is part of the GAVI Alliance , a health partnership from the private and public sectors that was formed 10 years ago at the World Economic Forum to reduce the price of vaccines for people in poor nations. “Investments in global immunization have yielded an extraordinary return,” Julian Lob-Levyt , the alliance’s chief executive officer, said in the statement. The alliance has saved 5 million lives by increasing access to vaccines, he said. “The potential to make bigger strides in the coming decade is even more exciting.” The Bloomberg School of Public Health, located in Baltimore, is named for New York Mayor Michael Bloomberg , founder and majority owner of Bloomberg News parent Bloomberg LP. Other charities have teamed up with vaccine manufacturers to develop immunizations for diseases that mostly strike the poor. Merck & Co. and The Wellcome Trust in September formed a not-for- profit venture in India that aims to create new immunizations and make existing vaccines more effective in the developing world. To contact the reporter on this story: Yuriy Humber in Davos at yhumber@bloomberg.net ; Phil Serafino in Paris at pserafino@bloomberg.net

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

January 29, 2010

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

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

January 29, 2010

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

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Video: Neiderauer Sees `Minimal’ Impact From Prop-Trading Ban: Video

January 29, 2010

Jan. 29 (Bloomberg) — Duncan Niederauer, chief executive officer of NYSE Euronext, talks with Bloomberg’s Erik Schatzker about the outlook for proprietary trading. Niederauer said U.S. President Barack Obama’s plan to restrict proprietary trading at banks would have little impact on the exchange’s business. They speak at the World Economic Forum in Davos, Switzerland. (Source: Bloomberg)

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Video: Jordan’s Queen Rania Discusses Aid for Education: Video

January 29, 2010

Jan. 29 (Bloomberg) — Jordan’s Queen Rania talks with Bloomberg’s Margaret Brennan about the importance of maintaining aid for education in developing countries. Rania speaks at the World Economic Forum in Davos, Switzerland. (This is an excerpt of the full interview. Source: Bloomberg)

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Video: Scaramucci Sees `Global Policy Fatigue’ From Governments: Video

January 29, 2010

Jan. 29 (Bloomberg) — Anthony Scaramucci, managing partner at SkyBridge Capital, talks with Bloomberg’s Margaret Brennan about the outlook for banking regulation. They speak from the World Economic Forum in Davos, Switzerland. (Source: Bloomberg)

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