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China’s Wen Rebuffs Calls for Yuan to Appreciate, Is Worried About Dollar

by on March 14, 2010

By Bloomberg News March 14 (Bloomberg) — Chinese Premier Wen Jiabao rebuffed calls for the yuan to appreciate and sought assurances that the U.S. will protect the value of China’s dollar assets. “I don’t think the yuan is undervalued,” Wen said at a press conference in Beijing marking the end of China’s annual parliamentary meetings. Dollar volatility is a “big” concern and “I’m still worried” about China’s U.S. currency holdings, he said. Wen urged America to “take concrete steps to reassure investors” about the safety of dollar assets, repeating concerns that he expressed a year ago, sparked by a growing U.S. fiscal deficit . Treasury Department figures show China’s holdings of Treasury securities dropped for a second month in December to $894.8 billion. Nobel Prize-winning economist Paul Krugman said March 12 that global economic growth would be about 1.5 percentage points higher if China stopped restraining the value of its currency and running trade surpluses. The Chinese premier said that pressure for currency gains can amount to trade protectionism, adding that “I’m a strong supporter of free trade.” Wen also reiterated that the nation will keep the yuan “basically stable” and maintain a moderately loose monetary policy and a proactive fiscal stance to consolidate its economic recovery, adding that it’s “essential” that the timing of any change is appropriate. Echo of Zhou Wen’s view echoed comments from central bank Governor Zhou Xiaochuan on March 6 that while anti-crisis policies, including the yuan’s peg to the dollar, will end “sooner or later,” China must be cautious on when. “A stable renminbi exchange rate in the midst of the global financial crisis has played an important role in the global economic recovery,” Wen said, using another word for the yuan. “We oppose countries pointing fingers at each other and even forcing a country to appreciate its currency, because that won’t help renminbi exchange-rate reform,” Wen said. Twelve-month non-deliverable yuan forwards climbed 0.3 percent to 6.6290 per dollar last week, according to data compiled by Bloomberg. The gain was the most in two months. The yuan’s spot rate rose 21 percent between July 2005 and July 2008, before the government halted its advance to protect exporters. The central bank may allow a gain of 3.4 percent to 6.6 yuan per dollar by the end of this year, according to the median estimate in a Bloomberg News survey of 25 analysts. ‘Protectionism’ Concern The yuan didn’t fall during the worst of the global crisis, between July 2008 and February 2009, Wen said, adding that the currency’s real effective exchange rate rose 14.5 percent. He didn’t specify against which currencies. Wen highlighted strains in China’s relationship with the U.S. after President Barack Obama ’s meeting with the Dalai Lama and American arms sales to Taiwan, saying that the U.S was responsible for the tension. The premier also said that he saw “protectionism” when countries forced gains in others’ currencies while depreciating their own to boost exports. In contrast, Krugman said China’s currency policy has a “depressing effect” on economic growth in the U.S., Europe and Japan, as measured by gross domestic product. If China’s currency, the yuan, were not undervalued, it would have a “significant” impact on the global recovery, he said in a March 12 speech in Washington. “If we could get some change in China’s currency policy, it would help the world,” Krugman said. Wen reiterated pledges to continue to reform China’s exchange-rate mechanism. — Michael Forsythe , Eugene Tang , Li Yanping . Editors: Paul Panckhurst , John Liu To contact the reporter on this story: Michael Forsythe in Washington at mforsythe@bloomberg.net

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China’s Wen Rebuffs Calls for Yuan to Appreciate, Is Worried About Dollar

Brett King: TV, Advertising, and Newspapers are dead – deal with it…

by on March 12, 2010

You know what – change is a funny thing. For me, I can’t wait untill I can watch all my movies and TV shows on demand instantly whenever I want without having to worry about which channel it’s on, or which device I’m going to use to watch it – just click and watch. I can’t wait till I can read my latest thriller I bought on my iPad while sitting at 35,000 feet depending (I’ll still read the hard cover at the coffee shop though!). I can’t wait till I can walk on to my next flight without needing a physical boarding pass, and I can’t wait till I do my first payment by swiping my phone instead of my credit card (in fact I already have really). For me technology adoption is not only a way of life, but it’s just plain cool. I want to use my cell phone as a boarding pass It is apparent, however, that some others amongst us, don’t really like all these new fangled internet thingys and are a little challenged by change. I was in one of my regular bank strategy sessions the other week when I challenged the concept of free-to-air TV. In BANK 2.0 I predict that free-to-air TV can not really survive beyond about 5-7 years, because with TVC Ad revenue plummeting, beyond the state financing TV stations there is simply no viable business model that can sustain free-to-air. Why I raised this issue was, with only 18% of TVCs even having partial ROI these days, that marketing teams had to start thinking about moving away from traditional broadcast advertising as quickly as possible to point-of-impact . It was at this point I was challenged by a member of the audience who shouted out “you’ll never get me paying for sports on TV!”. In fact, and this might seem just a little bizarre to those of you who live in other countries, recently a lobby group has come up with a campaign to ensure just that in Australia – it’s a website and massive TV/Print Ad campaign running in Australia at the moment called www.keepsportfree.com.au . I’m sorry – that’s just … ridiculous – think new mediums people!! No matter how hard you lobby, no matter how hard we want things to stay the same, there is an inevitability about the way technology adoption changes consumer behavior, and hence the way it changes business, consumption and transactions. The most coveted skill in business today should be the ability to accurately read these trends and help your organization adapt accordingly. I know I’ve discussed it before, but the launch of electronic stock trading by Charles Schwab is a great example. Looking back even Merrill Lynch probably realize that this was a positive game changer. The reality is it really had to go this way eventually, regardless of who took the helm. The fact that we can use advisory sites, online research, and analytics tools to give us real-time information even better than what most (not all) brokers could gives us, says what it’s all about – where does the value lie? Not in a human interaction – but in the ability to execute the trade itself. Branches of banks face the same conundrum today. For media content like TV shows, music, news it is likewise inevitable. Why should I wait until 8/9 central to watch that favorite series that I love, why can’t I just schedule it for download as it’s released online and then just watch next time I have a spare 40 minutes? Why would I physically walk into a music store to buy a CD – after all how can I get the tracks onto my iPod that way? Carry a newspaper on the train to read? Come on… These are all outmoded interactions; interactions that have no place in my life in the 21st Century. You see these changes are inevitable. When Napster launched the recording industry went after the start-up and other similar businesses with the focus of a velociraptor, and for a time they thought they had succeeded. In 2008, however, 95% of songs were downloaded illegally , why? Mainly, because the recording industry failed to provide legal means to access this content online – they were too slow to adapt. When iTunes did provide a legal channel for the same – they made gazillions . In addition, artists actually can make more money in the digital age , while record companies provide minimal value in the value chain of the new world. This is why I am choosing to embrace change. I don’t want to keep my free-to-air TV, my physical newspaper and my gas guzzling SUV – I am ready for change, and I recognize it is inevitable. If I am prepared for change, then I’ll undoubtedly capture those customers that are likewise ready for change, and they are the majority today. I can adapt or see my value chipped away until my business is worthless. You want to join me?

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Brett King: TV, Advertising, and Newspapers are dead – deal with it…

BAE to Take $829 Million Charge After Losing U.S. Army Armored-Truck Order

February 15, 2010

By Sabine Pirone Feb. 15 (Bloomberg) — BAE Systems Plc will write down the value of its Armor Holdings unit, the biggest maker of protection for Humvee troop transports, after losing a U.S. Army contract to build armored trucks. The 592 million-pound ($829 million) charge cuts the value of the U.S. acquisition that BAE made in July 2007, according to a release today. BAE had said that losing the order would “pose a significant threat” to operations in Sealy, Texas, where the truck is built. BAE and Navistar International Corp. protested the decision last year to hand the contract to Oshkosh Corp., saying the army didn’t fully weigh the risks in that proposal for the Family of Medium Tactical Vehicles. The five-year contract is for as many as 12,415 trucks, 10,926 trailers and other equipment and has an estimated value of as much as $3.02 billion. BAE already took a charge of 256 million pounds related to the purchase of Armor Holdings in July. BAE fell 0.3 pence, or 0.1 percent, to 341.4 pence at 1:12 a.m. in London, giving the company a market value of 12.1 billion pounds. To contact the reporter on this story: Sabine Pirone in London at spirone@bloomberg.net

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Commercial Real Estate Collapse Bigger than Subprime Implosion …

February 13, 2010

The enormous $3.5 trillion market in commercial real estate (CRE) has deep and profound problems. At the peak CRE was estimated to be valued at $6.5 trillion. Today the value is closer to $3.5 trillion or closer to the loan amount …

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Midas Fund’s Winmill Turns Gold’s Rise into 83% Return With Bets on Miners

February 11, 2010

By MaryAnn Busso Feb. 11 (Bloomberg) — Gold had a good year in 2009. Tom Winmill ’s Midas Fund had an even better one. The $125 million fund, which invests in companies that mine or process metals or other commodities, rose 83 percent last year. That return beat 95 percent of the fund’s peers, according to data compiled by Bloomberg. This year, the fund dropped 7.6 percent through Feb. 10. Its average annual return was a decline of 4.8 percent over three years and a gain of 13.5 percent for five years. Winmill, 50, says his training as a lawyer helps him sift through engineering reports on mining deposits, Bloomberg Markets reports in its March 2010 issue. “That’s much more important than putting on your hiking boots and walking around the mine,” he says. Among the items high on Winmill’s checklist when picking stocks: a miner’s ability to start production on time and on budget and to preserve the value of its shares. “I like to see a mining company that pays a dividend, occasionally does a stock buyback — instead of constant stock issuance — and doesn’t make dilutive acquisitions in order to extend their empire,” Winmill says. Those three things, combined with a good project, are key, he says. $1,500 Forecast As of January, Winmill had the majority of the fund’s assets in stocks of gold-mining companies. Returns on miners’ shares tend to amplify the returns on gold because of the companies’ operating leverage, Winmill says. That gave the fund a boost from a bullish market as investors sought to protect the value of their holdings. “The devaluation of the dollar and the bursting of the bond bubble are going to hurt a lot of investors,” Winmill says. “And inflation is going to hurt a lot of savers.” In January, Winmill predicted gold prices will average $1,200 an ounce (31 grams) during the first quarter and increase to $1,500 by the end of the year. Gold rose 24 percent last year. This year, it dropped 2 percent to trade at $1,072 an ounce on Feb. 10. Among the miners that meet Winmill’s investment test is Northern Dynasty Minerals Ltd. The Vancouver-based company is developing Alaska’s Pebble gold and copper project in partnership with Anglo American Plc. Shares of Northern Dynasty, which is 20 percent owned by Rio Tinto Group, rose 124 percent in 2009. This year, the stock rose 3 percent to trade at $8.52 on Feb. 10. “They’ve got experienced, well-capitalized partners who really know how to get the ore out of the ground,” Winmill says. Gold and Silver Midas also owns shares of Jaguar Mining Inc. The Concord, New Hampshire-based company is bringing older gold mines in Brazil back into production. Winmill says Jaguar’s output might reach 600,000 ounces in about five years, up from 115,000 ounces in 2008. He says the company is likely to be acquired. Jaguar’s shares jumped 114 percent in 2009. This year, they fell 14 percent to trade at $9.60 on Feb. 10. Midas’s holdings also include Silvercorp Metals Inc. and Fresnillo Plc . Shares of Vancouver-based Silvercorp, which has been buying high-grade mines in China, rose 210 percent last year. Stock of Mexico City-based Fresnillo, which operates silver mines in Mexico, was up 244 percent in 2009. Winmill says he looks at gold through four filters: U.S. fiscal policy, U.S. monetary policy, market supply and demand, and geopolitical events. Preserving Value Growing U.S. budget deficits will reduce the dollar’s purchasing power, he says. From 2001 through 2009, U.S. money supply almost doubled to $8.5 trillion. During the next decade, U.S. gross domestic product of about $14 trillion is likely to grow an average of only 1 to 2 percent a year, Winmill says. “We’ll double the supply of dollars and have about the same amount of wealth, so the dollar will have about half the purchasing power that it has today,” he says. Given that assumption, gold will be a way to preserve value, he says. As the deficit expands, the U.S. Federal Reserve will have less ability to control inflation, Winmill says. He forecasts a 3 percent inflation rate by the end of this year and as much as 5 percent in 2012. The U.S. consumer price index rose 2.7 percent in December from a year earlier. The Fed is holding its target for the federal funds rate at zero to 0.25 percent to stimulate manufacturing and exports , and that’s driving the dollar down, Winmill says. “It’s great for the price of gold,” he says. “As the dollar goes down, it’s going to take more dollars to buy the same ounce of gold.” Supply and Demand The supply-and-demand outlook is mildly bullish: Scrap supply is up, jewelry demand is down, central banks have been buyers of gold and mined supply is trending lower, Winmill says. The least-important filter for analyzing gold is geopolitical events such as impending wars, he says, since prices usually reflect the worst expectations. For a short-term strategy, it’s better to buy gold when things calm down and sell when there’s maximum pessimism, he says. Winmill, who grew up in Locust, New Jersey, graduated from Yale University in 1981 and earned a law degree from the University of Washington four years later. After working as a lawyer in Seattle, he joined Bull & Bear Group Inc. in 1988. The New York-based investment management firm, which was headed by his father at the time, changed its name to Winmill & Co. in 1999. The firm bought the Midas Fund in 1995. After gold dropped to a low, the firm terminated its agreement with the fund’s subadviser in 1999, leaving Winmill to help reorganize the fund’s investments. He took over as portfolio manager of the fund in 2002. ‘Terrific Spot’ In 2008, Winmill and his wife moved from New York to Walpole, New Hampshire, to be closer to their two sons, who were going to school in the state. Winmill says he’s taken to rural life. He splits wood and taps the maple trees on his land. Last spring, he boiled the sap to make maple syrup. “We got about 2- 1/2 gallons,” he says. The steam from the process also peeled some wallpaper in his 1866 house, he says with a laugh. The Midas Fund isn’t only about gold, Winmill says. “I’m not a gold bug,” he says. “I’m a capital-appreciation bug.” To find returns for investors, the fund has the flexibility to invest in platinum, copper and other commodities, he says. At the moment, it doesn’t have to. “Right now, I think gold is in a terrific spot,” he says. To contact the reporter on this story: MaryAnn Busso in New York at mbusso@bloomberg.net ;

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Bob Dowling: Rethinking Toyota

February 9, 2010

Toyota’s pummeling is long overdue. With some 8 million cars on recall, repair costs exceeding $2 billion and the Prius suffering brake problems, the easy days for its legendary arrogant American dealers are at least temporarily over. How arrogant? “Do you wish to order one” was the response I got when I asked to test a Prius at the Westport Ct. dealer in 2007. “I’d like to drive one first.” “That would be a month from now at 9.30 am. If you’re late you’ll miss the opportunity.” I bought a Subaru. This December. I went to Gettel Toyota in Sarasota, Fl about buying a Prius. Chris Crews, the young salesman got out a model after a 80 minute wait, then was sharply elbowed aside by his boss Sean as soon as I asked about an on the road price. “I’m going to put you in a Prius today,” said Sean. “You won’t be able to say no.” To get a price, you have to agree to buy. I walked out. Two sales managers followed me to my car. “Ninety percent of customers don’t return,” said Tom. “We have to pressure you.” Or thought they did. On Thursday I drove a Prius I bought privately to the John Pierson Toyota dealership in Stuart, Fl the day after the Prius brake problem was announced. The place was jammed with seniors eating free Subway sandwiches and wondering about their Priuses, Corollas and Camrys. The south lot was jammed with new Toyota’s waiting for the accelerator repair part to arrive. With little to sell, salesmen had hours to banter. Then suddenly out of the blue came a fresh idea. Remember the customer! “I’d like to see the company take a big chunk of the marketing, budget and give the money to our loyal customers,” said Kevin Peterson, a service manager. “Offer them say 10% of the value of their car. That would probably cover any resale loss and be offset by millions of dollars in goodwill and free PR. We don’t have to be at the Superbowl to sell cars. We have a massive marketing budget. This is time to show our customers we’re on their side.” According to valuations announced today Feb 8 by Edmonds.com a number of Toyota models have in fact lost 10% of their value since the recall. Ideas like this seldom make it up the ranks in larger corporations but the simplicity of the thing makes it revolutionary. How many businesses want to really take care of loyal customers? You can count them on one hand — Apple, Best Buy, Mercedes, BMW, Lexus, Honda, people who chose to or need to run the business on reputation and service. Most of the rest of sales is aimed at transaction marketing pioneered by Wall Street banks in the 1970s. Hook ‘em in — cram the teaser deposit rate, the cheap car, the iffy cable service, the unreliable flat screen or the hidden fee mutual fund down their throat. Then screw ‘em when they complain. And make sure they can’t complain to you. If you’ve wound up in a call center in India or the Philippines where the robotic help, through no fault of their own, has no way to make a decision, you know the drill. Bad offshore service was a key reason for the downfall of Dell, Circuit City and dozens of other companies who blew off once loyal customers. Toyota floated above the pack because the reputation of its vehicles for value and reliability and — with the Prius — hybrid innovation made buyers put up with its arrogant American dealers. Now that those days are over, Toyota needs a big rethink. Its Japanese dealers could never bash customers like they do in America because Toyota Japan lives off repeat buyers, same as the every 2 year trade in U.S car makers enjoyed in the 1950s? That kind of loyalty won’t come back and doesn’t need to for any carmaker, Detroit or foreign. But for Toyota, the choice it’s facing is to come up rebuilding plan that sticks or slide into the pack with everyone else. In the Stuart dealer’s showroom hangs a huge red banner that says 80% of Toyotas that are 20 years old are still on the road. Maybe those owners are a good place to start…

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Wells Fargo Hedges Misbehave at Just Right Time: Jonathan Weil

January 28, 2010

Commentary by Jonathan Weil Jan. 28 (Bloomberg) — A strange thing happened last quarter at Wells Fargo & Co. A bunch of derivatives that were supposed to act as hedges on other assets seemed to go berserk. The good news for Wells shareholders is that the oddly behaving derivatives boosted the bank’s fourth-quarter earnings. There’s more to the story, though. The windfall might be a sign that Wells executives aren’t so great at judging some of the company’s risks, meaning there may be more risk than they think. The combined gains on the derivatives — which Wells calls “economic hedges” — and the assets they purportedly were hedging accounted for almost half of Wells’s $4 billion of pretax profit last quarter. That’s a lot of low-quality earnings. About $1.1 billion came from writing up the value of mortgage-servicing rights through changes to inputs in the mathematical models Wells uses to estimate their worth. Another $830 million came from gains on the derivatives that supposedly were hedging this portion of the servicing rights’ value. That’s right: The hedges and hedged items both went up. This scenario should have been as likely as both sides of a see- saw rising at the same time. Nothing quite like this had happened before at Wells, at least not to this magnitude. Indeed, while Wells may refer to the derivatives as hedges, they don’t qualify for hedge accounting under the Financial Accounting Standards Board’s rules, which is why Wells has to use the weasel word “economic” in the label. Airy Assets Mortgage-servicing rights are intangible assets that consist of rights to receive fees from third parties in exchange for doing things like collecting and forwarding monthly payments from homeowners. Unlike other intangibles, such as goodwill or trademarks, companies have the option under the accounting rules of marking them at their fair market values on a quarterly basis, and then running the changes in value through their earnings. Wells’s latest balance sheet showed $16 billion of mortgage-servicing rights that the company was carrying at fair value as of Dec. 31. The tricky part is that such assets are notoriously difficult to value. In accounting parlance, the gains on the mortgage-servicing rights were of the Level 3 variety. In layman’s terms, that means they can be pretty much whatever management wants them to be. Under the FASB’s rules , Level 1 means the value for a given asset comes from quoted prices in actively traded markets, known as mark-to-market. Level 2, or mark-to-model, means the value is measured using “observable inputs,” such as recent transaction prices for similar items where market quotes aren’t available. Make Believe Then there’s Level 3. This means a company measures the fair value of an asset using one or more “unobservable inputs,” or, as I call it, mark-to-make-believe. Companies can’t actually see the changes in value. Yet they get to book them through earnings anyway, based on management’s own subjective assumptions. The last time I took a close look at this subject for a column on Wells was in August 2007, after the company reported quarterly earnings that got a huge boost from Level 3 gains on its servicing rights. Back then Wells had reported a $2 billion gain, or more than half its pretax profits, from changes to inputs in its servicing rights’ valuation models. However, the company said I would be wrong to make comparisons between the size of its Level 3 gains and its overall profits. Up and Down Its argument: Doing so would ignore the effect that rising interest rates at the time had on the values of both the servicing rights (which went up) and the corresponding derivatives Wells said it was using as economic hedges (which went down). The derivatives, which generally fall into the Level 1 and Level 2 camps, had declined by about $2.2 billion. I wrote the column anyway, expressing skepticism that these derivatives were hedges in any real sense. It turns out I probably wasn’t skeptical enough. Wells’s spin on the latest results is that its hedges worked. On the company’s Jan. 20 earnings call, Wells’s chief financial officer, Howard Atkins , explained the gains by saying “hedging results in the mortgage business were strong” and “could remain relatively high as long as short-term rates remain low and the hedge performs effectively.” He added that Wells manages its mortgage business “very holistically” and that “actual hedge results in any quarter of course will reflect how much of the servicing asset we hedge and the effectiveness of the particular instruments we use to hedge.” Not Telling Similarly, in its earnings release, Wells said the $1.9 billion of gains largely reflected “the continuation of strong carry income and effective hedge performance.” What’s carry income? Actually, it doesn’t really matter, because Wells declined to disclose how much it was. And “effective” hedge performance? Give me a break. Remember, the gains on the derivatives were almost as large as the gains on the items they were supposed to be hedging. For all we know, there could come a time when Wells’s derivatives misbehave at the same time the market values of the mortgage-servicing rights plunge. That would mean a double hit to earnings, rather than a windfall. Oh, but what are the odds of that happening, since Wells seems to have it all figured out? Meantime, one step in the right direction would be for Wells to stop calling these things hedges, economic or otherwise. This bank’s derivatives seem to have a mind of their own. ( Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Jonathan Weil in New York at

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China Shouldn’t Rescue Greece by Buying Debt, Ex-Central Bank Adviser Says

January 27, 2010

By Bloomberg News Jan. 28 (Bloomberg) — China shouldn’t buy a “large chunk” of Greek government debt to help rescue the nation because the securities are more risky than U.S. Treasuries, said Yu Yongding , a former adviser to the Chinese central bank. Greece has a lower debt rating than the U.S. and its statistics have been “sharply” criticized by the European Commission, said Yu, currently a member of the Chinese Academy of Social Sciences, a government-backed research body. The Greek Finance Ministry yesterday “categorically“ denied a report in the Financial Times that it is wooing China to buy as much as 25 billion euros ($35 billion) of its bonds. “It is unreasonable for an economist to support a diversification away from an unsafe asset class to a much more unsafe asset class,” Yu said in an e-mailed response to questions. “Let European governments and the European Central Bank rescue Greece.” China wants to improve management of its $2.4 trillion foreign-currency reserves by both seeking safety and increasing the value of its holdings, the State Administration of Foreign Exchange said on Jan. 6 after its annual work meeting. Chinese investors cut their holdings of U.S. Treasuries by $9.3 billion in November to $789.6 billion in November, Treasury Department data show. Yu’s views have received official backing before. In February, he called for China to seek guarantees that its investments in Treasuries won’t be eroded by “reckless policies.” A month later, Premier Wen Jiabao did just that during an annual session of parliament. Yu was picked by the China Daily to grill U.S. Treasury Secretary Timothy Geithner in Beijing in June about risks that the record U.S. fiscal deficit would undermine the value of its debt. Greek Fund Raising Greece is seeking to raise funds from global investors to reduce a budget deficit of almost 13 percent of gross domestic product, the biggest shortfall in the European Union. The government sold 8 billion euros of five-year bonds with a coupon of 6.1 percent this week. The Greek Finance Ministry said yesterday it plans to reduce the deficit to 3 percent of GDP by 2012. Finance Minister George Papaconstantinou said on Jan. 20 that the government is considering bond issues in Asia and the U.S. and may market debt to Greek retail investors. The country is rated A2 by Moody’s, the fifth-lowest investment-grade, and two steps lower at BBB+ by S&P. The U.S. has the highest rating from Moody’s and S&P. An official in SAFE’s press department who asked not to be named yesterday said he hadn’t heard about the plan for China to buy Greek debt and declined to comment. “Even if pricing is attractive, one key problem for Greek government bonds is the lack of credibility,” Yu said. “We trust U.S. statistics on debt and deficits. The numbers are not pretty but we have a pretty good idea, so we would know what we are buying. In contrast, Greece’s statistics have been sharply criticized by the European Commission.” — Belinda Cao , Natalie Weeks . Editors: Sandy Hendry , James Regan To contact the Bloomberg news staff on this story: Belinda Cao in Beijing at lcao4@bloomberg.net

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SURVEY SAYS: Foreign Investors Still Bullish On U.S Property

January 19, 2010

More than half of foreign investors now say the U.S. provides the best opportunity globally for growing the value of commercial real estate investments, according to the annual survey conducted among the members of the Association of Foreign Investors…

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Jeff Madrick: To Bankers and Regulators: Why the Risky Business?

January 13, 2010

The Angelides Commission should focus on why the financial institutions represented took excessive risk. The questions should be designed to enable Americans to understand how this occurred. Here is what we should know. To the bankers and regulators: Many of your commercial and investment banks had their own mortgage-originating subsidiaries — their own Countrywides and New Centurys, in other words. Citigroup, for example, was almost as active as Countrywide in writing subprime mortgages through its subsidiaries. Merrill bought a big originator as late as 2007. Did you and your executives know that your mortgage origination subsidiaries were writing adjustable rate mortgages that depended on an ever rising housing market to be sustainable? Many home owners had to refinance at the higher equity in order to fund the reset rate on the ARM. Did you simply believe that home prices would rise indefinitely, even given the unprecedentedly rapid rise in the early 2000s? Did you realize your subsidiaries were engaging in predatory lending by writing mortgages for those who could not afford future payments or denying them refinancing options? If your company’s subsidiaries did not originate such subprime mortgages, did you know that your mortgage trading desk and hedge funds were buying or packaging them as parts of mortgage-backed securities? Did you know that by securitizing these mortgages, you were encouraging predatory lending? Defaults on these mortgages started rising in 2006. Did you understand the defaults would inevitably reduce the value of the mortgage-backed assets you had on your books or were selling to clients like pension funds? When did you come to understand that? If you or a responsible executive did not understand this, do you think it was a violation of your legal obligation to shareholders? Did you understand that your collateralized debt obligations were often largely backed by subprime mortgages? Did you keep selling them to investment clients anyway? In the second half of 2007, there was basically a run on SIVs and bank conduits that invested in mortgage-baked securities. The asset-backed commercial paper market essentially revolted. Did you begin to reduce your exposure? If you did not, do you think it was a violation of your legal obligation to shareholders? Did you keep selling mortgage backed securities to clients? If you did, do you think it was a violation of your legal obligation to clients? Do you believe trading houses like your own have an inherent advantage in making money because of access to information about trading flows? Do you believe trading houses like your own can bluff and persuade traders at other firms to take positions and then sell against them? Has this ever happened to your knowledge? Does it happen regularly? Should traders be paid enormous bonuses if that is how they make their money? Did anyone warn you about the excessive risks of mortgage backed securities or leverage in your firm? When did they do so? Was his or her advice heeded? Once banks and investment firms went public in the 1980s and 1990s, traders and bank executives were not longer liable for losses? In fact, bonuses were paid out paper profits-markets to market. It was a system of heads I win, tails you lose. Didn’t this encourage excessive risk-taking? Should this be reformed? How? For regulators at the Fed and the New York Fed, why was it not clear in early 2007 that high defaults in subprime mortgages would affect the entire credit system? There were publications, even by Fitch, the rating services, suggesting the close link between subprime mortgages and the value of mortgage backed securities (MBS) and collateralized debt obligations (CDOs). For regulators, were you ever disturbed that private credit ratings agencies rated MBSs and CDOs without access to the loan files-to the actual mortgages that comprised the securities? For regulators, were you ever aware that there was so little public information about the composition of CDOs or the market value of credit default swaps? When did you start to seek more information about them? Do you think it would help to standardize both CDOs and CDSs and have them listed or traded through a clearing house? Why should we trust the Fed to be vigilant in the future, when conditions change unpredictably? Why did it fail to be vigilant in the past? This post originally appeared on New Deal 2.0

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Video: Boockvar Says Stocks Will Be `Dictated’ by Bonds in 2010: Video

December 30, 2009

Dec. 30 (Bloomberg) — Peter Boockvar, an equity strategist at Miller Tabak & Co., talks with Bloomberg’s Lori Rothman about the outlook for the U.S. stock and bond markets in 2010. Boockvar also discusses the value of the dollar and gold prices. (Source: Bloomberg)

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Commercial Real Estate Prices Fall To Lowest Level In 7 Years

December 28, 2009

‘The number one issue facing commercial real estate right now is the value declines that we’ve seen since prices peaked,’ Matthew Anderson, a partner at Foresight Analytics in Oakland, California. Also worrying is that an estimated $1.4 …

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Are flood of commercial real estate loan defaults coming …

December 24, 2009

Optimism about a national economic recovery, fueled by rising stock prices and an improved residential real estate market, is tempered by the widespread belief that a raft of commercial real estate loan defaults is just around the corner. … While many residential properties that fell into foreclosure were deeply underwater (meaning their loans were much larger than the value of the property), fewer distressed commercial properties have such a large imbalance. …

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Apple CEO Steve Jobs Takes $1 Salary In 2009

December 23, 2009

SEATTLE — Apple Inc. Chief Executive Steve Jobs was paid his customary $1 annual salary in 2009, but Apple’s strength through a rough economic climate returned the value of his personal holdings in the company to pre-meltdown levels. Jobs does not get a bonus or reimbursement for perks many other CEOs accept, such as personal security, according to a regulatory filing made Wednesday. Apple said it reimbursed Jobs $4,000 for company travel on his $90 million Gulfstream V jet, which he received as a bonus in 1999. That’s far less than the $871,000 Apple reimbursed Jobs in 2008. The CEO took nearly six months off in 2009 for medical leave, during which time he received a liver transplant. He returned to work at the company’s Cupertino, Calif., headquarters part-time at the end of June. Jobs, 54, holds 5.5 million shares of Apple’s stock. He has not sold any shares since he rejoined the company in 1997, nor has he been awarded any new equity since 2003. In 2008, the value of Jobs’ stake in the company he founded was cut in half as investors worried Apple’s pricey gadgets might not fare well through the U.S. recession. But shares of the maker of iPods, iPhones and Mac computers gained about 42 percent during the 2009 fiscal year that ended in September, and at the close of trading Wednesday, when Apple’s stock reached $202.10, Jobs’ holdings were worth about $1.1 billion. Jobs is also the largest individual shareholder of The Walt Disney Co. His 7.4 percent stake is currently worth about $4.5 billion. At an annual meeting scheduled for Feb. 25, Apple shareholders will for the first time have a chance to cast an advisory vote on the company’s executive compensation plans. Shareholders have submitted two other proposals to be voted on at the meeting. One calls for a detailed environmental sustainability report, and the other for a board committee devoted to that issue, according to a Securities and Exchange Commission filing Wednesday.

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Apple CEO Steve Jobs Takes $1 Salary In 2009

December 23, 2009

SEATTLE — Apple Inc. Chief Executive Steve Jobs was paid his customary $1 annual salary in 2009, but Apple’s strength through a rough economic climate returned the value of his personal holdings in the company to pre-meltdown levels. Jobs does not get a bonus or reimbursement for perks many other CEOs accept, such as personal security, according to a regulatory filing made Wednesday. Apple said it reimbursed Jobs $4,000 for company travel on his $90 million Gulfstream V jet, which he received as a bonus in 1999. That’s far less than the $871,000 Apple reimbursed Jobs in 2008. The CEO took nearly six months off in 2009 for medical leave, during which time he received a liver transplant. He returned to work at the company’s Cupertino, Calif., headquarters part-time at the end of June. Jobs, 54, holds 5.5 million shares of Apple’s stock. He has not sold any shares since he rejoined the company in 1997, nor has he been awarded any new equity since 2003. In 2008, the value of Jobs’ stake in the company he founded was cut in half as investors worried Apple’s pricey gadgets might not fare well through the U.S. recession. But shares of the maker of iPods, iPhones and Mac computers gained about 42 percent during the 2009 fiscal year that ended in September, and at the close of trading Wednesday, when Apple’s stock reached $202.10, Jobs’ holdings were worth about $1.1 billion. Jobs is also the largest individual shareholder of The Walt Disney Co. His 7.4 percent stake is currently worth about $4.5 billion. At an annual meeting scheduled for Feb. 25, Apple shareholders will for the first time have a chance to cast an advisory vote on the company’s executive compensation plans. Shareholders have submitted two other proposals to be voted on at the meeting. One calls for a detailed environmental sustainability report, and the other for a board committee devoted to that issue, according to a Securities and Exchange Commission filing Wednesday.

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Chris Glorioso: The Wall Street "Trader Tax": Is Congress Targeting the Wrong Trades?

December 22, 2009

The title is neither subtle nor catchy, but it has bank lobbyists quivering. The “Let Wall Street Pay for the Restoration of Main Street Act of 2009.” Otherwise known as H.R. 4191, it is a bill you’ll hear more about in 2010. The idea is to tax the speculative trading that accounts for an increasing, and some say alarming, share of Wall Street profits. We’re talking about the rapid-fire, high volume, high leverage trades hedge funds use to create massive gains from minuscule asset price fluctuations. The tax would claim a quarter percent (.25%) of every large stock purchase and 2 tenths of a percent (.02%) of every large derivatives purchase. Economists are currently engaged in wonk-warfare over the trader tax. Some calling the bill sound policy because it could generate $150 billion dollars for job creation and deficit reduction. Others declare the transaction tax is a sure fire recovery killer. That’s an important debate to have, but if we assume some sort of securities transaction tax is fair (on the grounds US taxpayers deserve recompense for bailing out the banks), the tax should be apportioned so as to accomplish two goals: raise maximum revenue and de-incentivize systemically risky investment bets. The current bill fails on both accounts. The trader tax reserves its biggest bite for stock trades, though traditional stocks were not the investment instruments that spawned the Great Recession. Derivatives, especially credit default swaps, were the lethal multipliers that turned a real estate bubble into a crippling credit freeze. One can debate whether a trader tax is wise or unwise on the whole, but it seems spurious to suggest the bulk of the tax burden should fall on traditional equities like stocks. If the two goals of a transaction tax are curbing systemic risk and generating revenue, the tax incidence should fall more heavily on derivatives – not blue chips. Derivatives are inherently riskier and taxing them has far more potential to create revenue. Not convinced? Consider the global value of stocks versus derivatives. The value of all the world’s stocks traded on all the global exchanges is estimated to be about $58 trillion. The value of all the derivatives contracts traded over-the-counter is estimated to be about $605 trillion. Put another way, derivatives trading accounts for a pool of possible tax revenue that is more than 10 times the size of pool of stock trades. In the wake the decade-ending market collapse, some have begun calling derivatives nothing more than gambling. Indeed credit default swaps, interest rate contracts, and currency swaps look a lot like bets, since they are essentially complex wagers not legitimately backed by collateral. The banks, of course, claim derivatives are skillfully crafted contracts essential to hedging risk and making the US market the world’s most liquid. Whether or not derivatives are a glorified form of gambling is a debate I’ll save for another day. It’s like arguing over whether poker is a game of skill or a game of chance. Surely it has elements of both. The critical point here is that derivatives are certainly more like gambling than investments in stock. The added risk is compounded by the fact that “too-big-to-fail” banks have sunk prodigious portions of their assets into these contracts. The IRS taxes Las Vegas gambling winnings at a rate somewhere near 25%. The trader tax sponsored by Rep. Peter DeFazio, D-Oregon and Sen. Tom Harkin, D-Iowa would seek a tiny, tiny fraction of that. Before the tax emerges from committee, policy makers should recalibrate the percentages, increasing the burden on large derivatives and reducing the burden on stock trades – perhaps even exempting stocks altogether. Even with these changes, the securities transaction tax faces serious hurdles. Though House Speaker Nancy Pelosi backs the bill, President Obama has yet to endorse it. For the trader tax to be successful, it will not only need White House approval, the administration will have to convince European and Asian nations to enact their own transaction taxes. Otherwise, Wall Street will simply avoid the tax by moving taxable trades offshore. Authors of H.R. 4191 have tried to protect middle class investors from the tax on trades by exempting all transactions less than $100,000 and shielding all mutual funds and 401K retirement plans. Still the financial services lobby claims the costs to big investment firms will inevitably be passed down to retail investors. The potential of a trickle-down tax burden is a concern. However, history provides convincing evidence that concern should not be inflated. To cope with the Great Depression in 1932, Congress enacted a trader tax worth more than 0.4% of every stock transaction. That is far higher than the tax being suggested by today’s lawmakers. The Depression-era tax remained in place until 1966, and during its life the value of the NYSE increased more than 800%. In the 17 years following the repeal of the trader tax, the value of the NYSE actually decreased by about 10%. This is not to say the tax was the cause of prosperity, nor the cause of decline. It is simply an illustration that market cycles may not be significantly affected by taxing trades. On the other hand, there is near consensus that even a small tax on trades will discourage massive speculative investments in things like credit derivatives. Considering we now use phrases like “toxic assets” to describe those derivatives, that might not be such a bad thing. Chris Glorioso is a television journalist in New York City who covers economics and politics for WPIX-TV.

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The Commercial Real Estate Lawyer's Job: A Survival Guide | Small …

December 20, 2009

Relates ArticlesThe Commercial Real Estate Lawyer’s Job: A Survival GuideThe Commercial Real Estate Lawyer’s Job: A Survival GuideReal Estate Closing Deskbook, 2nd Edition: A Lawyer’s Reference Guide and State-by-State SummaryThe Value …

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NYSE Volume Jumps to Record 3.15 Billion Shares on Options, S&P 500 Change

December 19, 2009

By Jeff Kearns and Elizabeth Stanton Dec. 19 (Bloomberg) — New York Stock Exchange trading surged to a record 3.15 billion shares as derivatives expiration and changes to the Standard & Poor’s 500 Index lifted volume to more than double this year’s average. Yesterday was the last day of trading for December futures and options on U.S. indexes and stocks. The expiration, a quarterly event known as “quadruple witching,” boosts volume because investors and dealers must buy and sell stocks and derivatives to move positions into future months and make corresponding trades to hedge, or cancel out, their risk of loss. Visa Inc. was among five companies that joined the S&P 500 yesterday, forcing funds that track the index to buy shares. U.S. trading has slowed as the S&P 500 rebounded from a 12- year low in March, with average monthly volume falling 36 percent. Fewer than 7.87 billion shares changed hands each day on U.S. exchanges during November, the lowest month average since August 2008, Bloomberg data show. Analysts including Mary Ann Bartels at Bank of America Corp. say the slowdown in volume was a bearish sign following the S&P 500’s 63 percent surge. “There’s been a lot of inactivity on the part of mutual fund investor and that’s translated into low volume,” said David Goerz , who oversees $17.5 billion as chief investment officer at Highmark Capital Management in San Francisco. “What they’re waiting for is some evidence that the economy is recovering, and that evidence is clear at this point.” Lehman’s Collapse Trading at the NYSE, the world’s biggest stock exchange, beat the previous record of almost 3 billion shares on Sept. 19, 2008, a quadruple witching day at the end of the week when New York-based Lehman Brothers Holdings Inc. filed for the biggest- ever bankruptcy. NYSE volume this year has averaged 1.39 billion shares a day. Visa, Mead Johnson Nutrition Co., Ross Stores Inc., Cliffs Natural Resources Inc. and SAIC Inc. joined the S&P 500 yesterday. MBIA Corp., Ciena Corp., Dynegy Inc., KB Home Inc. and Convergys Corp. were removed. The S&P 500 changes require investors that mimic the index to trade 1.02 percent of the value of their portfolios, compared with 0.3 percent to 0.4 percent in a normal rebalancing, said Charles Behette , a director in portfolio trading at New York- based Investment Technology Group Inc. The value of shares being added to the index exceeds the value of shares being removed by about $6 billion, Behette said. The discrepancy may prompt selling of companies whose index weights aren’t changing and limit gains in those whose weights are increasing, he said. Futures are agreements to buy or sell a specific amount of a commodity or security at a specific price and time. Options give the right though not the obligation to buy or sell a security at a set price and date. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility , or stock swings, will increase or decrease. To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net .

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Harry Moroz: Banking on Disaster

December 11, 2009

Goldman Sachs’s announcement that it will pay 2009 bonuses for its top executives in stock should be met with a collective yawn . But not because these executives were already set to be compensated mostly in stock or even because the outsized profits the firm will make this year are creations of the federal government. Goldman’s move is no more than a delay tactic: the foaming populists, they know, won’t be able to keep up their anti-banker fervor for much longer, particularly once the economy begins humming again. The same is true of Great Britain’s 50 percent tax on bonuses. As Felix Salmon and others have pointed out, the initial flurry of panicked e-mails from bankers requesting relocation to New York City to avoid the tax will cease once cooler minds remind them that next year things will be different. There will be no energy for such an extraordinary tax next year, especially with the likely arrival of David Cameron at 10 Downing Street. Next year, the next five years, and beyond are what really matter. The financial reform bill that the House passed today is meant to prevent a financial crisis from gripping the country again and, failing this, to ensure that taxpayer dollars are not used to save a tanking financial firm. The bill largely accomplishes this with a Financial Services Oversight Council to monitor financial stability and newly created dissolution authority to wind down troubled firms whose failure would infect the larger financial sector and economy. Though the legislation does quite comically mandate that taxpayer dollars be used in extreme situations only if regulators are “99 percent” certain that taxpayers will be repaid. Quite a legal standard. What is particularly worrisome, however, is that the financial reform bill codifies into law a financial system that will always be on the brink of destruction. Monitors of financial firms and activities for stability and the risks they pose are certainly welcome. But the lesson of the financial crisis is that we should be asking what social benefits the financial sector can and should provide and how we can help it provide those benefits. Instead of regulators poking around for financial instruments that will lead the country to the brink of disaster, why not empower them to consider the value that the instrument adds to the economy and society at large? This, I suspect, would begin to neuter the financial sector of its overgrown profits and influence. In fact, the financial reform legislation initially included such a provision. As originally designed, the Consumer Financial Protection Agency, which will regulate financial products and services available to and used by consumers, was to prescribe standards for “vanilla” products to create a sort of gold standard for things like credit cards and mortgages. In this way, the CFPA would consider the value of the product for the consumer, not simply the likelihood that a certain type of mortgage would bring financial ruin. The Consumer Financial Protection Agency is a great accomplishment for consumer advocates. But the financial reform bill has not done enough to make the financial sector work for the real economy and for ordinary Americans. We continue to bet only on staving off disaster.

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Silicon Valley's Leader in Commercial Real Estate Operations …

November 28, 2009

Orchard Commercial has worked with investors, brokers, and developers to maximize the value of commercial real estate investments in Silicon Valley. For over 35 years, With regional expertise, distinct understanding, team of property …

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Commercial Real Estate Crisis: Was It Created By The Bailout?

November 16, 2009

In a pattern familiar from the housing crisis, the value of commercial real estate has been plunging while the volume of distressed commercial real-estate loans is rapidly rising. The problems in commercial real estate could slam financial institutions, especially smaller regional and community banks, with billions of dollars in new losses. That, in turn, could snuff out whatever chances we have of a sustained economic recovery.

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Mortgage (56)

November 13, 2009

keep overall rates low, but one signal suggests shift for homeowners. Nov 4 2009 | Topics: Personal Finance, Real Estate, Housing, Spending, Federal Reserve Deal of the Day 6 Signs Your Home Will Increase in Value The housing market shows signs of a

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Mortgage (55)

November 13, 2009

keep overall rates low, but one signal suggests shift for homeowners. Nov 4 2009 | Topics: Personal Finance, Real Estate, Housing, Spending, Federal Reserve Deal of the Day 6 Signs Your Home Will Increase in Value The housing market shows signs of a

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Video: Wells Fargo’s Bennenbroek Says U.S. Dollar `Undervalued’: Video

November 12, 2009

Nov. 12 (Bloomberg) — Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks with Bloomberg’s Lori Rothman and Mark Crumpton about the value of the U.S. dollar.¶¶¶ Bennenbroek also discusses the outlook for the global currency market and monetary policy of the major central banks. (Source: Bloomberg)

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Fannie Mae May Write Down $5.2 Billion in Tax Credits as U.S. Rejects Deal

November 9, 2009

By Dawn Kopecki (Corrects to indicate Treasury’s position on sale in first paragraph.) Nov. 9 (Bloomberg) — Fannie Mae is evaluating whether it will have to write down the value of its low-income housing tax credits after the U.S. Treasury Department rejected a plan to sell them, the mortgage-finance company said today. A proposal by Fannie Mae to sell $2.6 billion of the credits would cost taxpayers more than the company would gain from the sale, according to a letter Treasury sent to the Washington-based company on Nov. 6. Treasury was weighing whether to let Goldman Sachs Group Inc. buy credits, which could be used to lower the firm’s tax bill. “We are evaluating whether Treasury’s decision changes our prior determination that we continue to have the intent and ability to sell or otherwise transfer” the credits, the company said in a filing today with the Securities and Exchange Commission. “While our conservator has directed us to continue to explore options to sell or transfer these investments for value consistent with our mission, we believe this will be difficult given current constraints and market conditions.” If its $5.2 billion in credits can’t be sold, the company may have to write down their value to zero, Fannie Mae said in the statement. Fannie Mae operates under government conservatorship. To contact the reporter on this story: Dawn Kopecki in Washington at kopecki@bloomberg.net

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Value Line Chief Replaced as `Most Trusted Name’ Settles $43 Million Claim

November 4, 2009

By Joshua Gallu Nov. 4 (Bloomberg) — Value Line Inc ., billed as “the most trusted name in investment research,” replaced its leader and agreed to pay $43 million to settle U.S. claims the firm fabricated trades to generate fees from mutual funds it managed. Chief Executive Officer Jean Buttner , 74, stepped down and will pay a $1 million fine, the Securities and Exchange Commission said today in a lawsuit. The agency sued Chief Compliance Officer David Henigson , 52, saying he implemented the scheme. Henigson will pay $250,000 and resign. Value Line, Buttner and Henigson didn’t admit or deny the claims, the agency said. The individuals are barred from the industry or serving as a company officer, the SEC said. “Value Line misappropriated millions of dollars from the mutual funds they managed by artificially allocating fund trades and then charging the funds for phantom brokerage services,” Robert Khuzami , head of the SEC’s enforcement division, said in a statement. “Such blatant wrongdoing will not be tolerated.” The firm, described on its Web site as “synonymous with trust, reliability and objectivity,” reaped more than $24 million from 1986 to 2004 in bogus brokerage fees on trades funneled through its affiliated broker, Value Line Securities Inc., which didn’t perform bona fide services on the trades, the SEC said today on its Web site announcing the settlement. “The asset-management business has not grown as the fund industry has grown,” said Geoff Bobroff , a mutual-fund consultant. “It’s possible that they may now need to sell the funds because of the reputational question.” Acting CEO Howard Brecher , chief legal officer for New York-based Value Line, was named to the additional post of acting chairman and chief executive officer, the 78-year-old company said today in a regulatory filing. Buttner lives in Westport, Connecticut, and Henigson is a resident of Riverside, Connecticut. Buttner, who the SEC said took over as Value Line CEO in 1988, allegedly directed a “commission recapture program” that was created by her predecessor, in which the company sent trades to outside brokers in exchange for a lower commission rate. Instead of passing the discount to the funds, the firm kept the rebate, falsely telling shareholders and the funds’ independent directors that Value Line Securities served the best interests of its customers, the SEC said. “During this period the affiliated brokerage revenue comprised less than 1 1/2 percent of Value Line Inc.’s total revenue,” the company said in a statement. “Value Line management ended the affiliated brokerage practice in 2004.” Settlement The company agreed to pay $24 million in disgorgement, $9.5 million in interest and a $10 million penalty, the SEC said. The settlement is almost twice as much as the company earned in each of the past two years. Value Line revenue fell 17 percent to $69.2 million in the fiscal year that ended April 30. William McBride, a spokesman for Value Line at Kreab Gavin Anderson in New York, and Rick Prins, a lawyer representing Buttner, declined to comment. A phone call after work hours to Seth Taube , Henigson’s lawyer, wasn’t returned. The company said in a Sept. 11 filing that it had set aside $48 million to settle the SEC’s allegations. Buttner, who was chairman and president of Value Line Securities until February, effectively controls about 87 percent of outstanding voting stock of Value Line Inc., the SEC said. She took over in 1987 when her father, company founder Arnold Bernhard, died and left her in charge. In 1986, Morningstar launched a newsletter of charts and analysis, taking on Value Line’s leadership position and gaining a foothold in investment research. In 1994, Buttner told Newsweek she was “shocked” that Morningstar had copied Value Line’s business model. To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net .

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Moody's “sceptical” of property market recovery – Property Week

November 3, 2009

“We however remain sceptical of this recovery and anticipate further value declines until 2010 in all EMEA CMBS markets,” said Christian Aufsatz, a Moody’s senior vice president and co-author of the report. The performance deterioration in … The rate at which defaulted loans were transferred into special servicing also increased, as fewer events of default are expected to be cured with many sponsors unable or unwilling to support their loan. Over the coming quarters, …

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The Secrets To Goldman Sachs’ Success: Contrary Bets, Predatory Lending, Government Connections, Offshore Tax Havens

October 31, 2009

WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

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Video: Bennenbroek Says Dollar Weakness Related to Liquidity: Video

October 29, 2009

Oct. 29 (Bloomberg) — Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks with Bloomberg’s Julie Hyman and Mark Crumpton about the value of the U.S. dollar. Bennenbroek also discusses the outlook for the U.S. economy. (Source: Bloomberg)

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Video: Bennenbroek Says Dollar Weakness Related to Liquidity: Video

October 29, 2009

Oct. 29 (Bloomberg) — Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks with Bloomberg’s Julie Hyman and Mark Crumpton about the value of the U.S. dollar. Bennenbroek also discusses the outlook for the U.S. economy. (Source: Bloomberg)

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Video: In-Depth Look – Investing Like Buffett

October 26, 2009

Searching For Value – Beating Out Buffett (Bloomberg News)

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John Meriwether, Former Long-Term Capital Management Manager, Starting New Hedge Fund

October 23, 2009

John Meriwether, the hedge fund manager and arbitrageur behind Long-Term Capital Management, is in the process of setting up a new hedge fund — his third. The move comes barely three months after Mr Meriwether decided to close his second fund manager, JWM Partners, which was wound down after clients saw the value of their investments fall by more than 44 per cent over the course of the financial crisis.

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Wells Fargo, JPMorgan Benefit From Hedging on Mortgage-Servicing Rights

October 22, 2009

By Michael J. Moore Oct. 22 (Bloomberg) — Wells Fargo & Co. earned almost a third of its pretax quarterly profit by hedging mortgage- servicing rights, producing gains similar to those that have helped some of the biggest U.S. banks offset weaker consumer- lending businesses. Wells Fargo’s hedges outperformed writedowns it took on the so-called MSRs by $1.5 billion and JPMorgan Chase & Co. came out ahead by $435 million. The two banks, as well as Bank of America Corp. and Citigroup Inc. , wrote down MSRs by at least $5 billion in the third quarter as mortgage rates fell by about 0.26 percentage point. “The earnings level is unsustainable,” Rochdale Securities analyst Richard Bove said yesterday, and cited mortgage servicing as he cut his rating on Wells Fargo to “sell” from “neutral.” Shares of San Francisco-based Wells Fargo dropped 5 percent in New York trading to $28.90, with most of the decline coming after Bove’s report. Banks’ mortgage units are using gains on mark-to-market adjustments and hedging derivatives to drive earnings as lenders record losses on consumer loans during the worst recession since World War II. Net gains on MSRs and hedges also added $1 billion to Wells Fargo’s earnings in the second quarter and to JPMorgan’s in the first. The value of the rights depends largely on the expected life of the mortgage, which ends when a borrower pays off the loan, refinances or defaults. When rates drop and more borrowers refinance, MSR values decline. Banks typically hedge the movements using interest-rate swaps and other derivatives. Writedowns Wells Fargo wrote down the value of its MSRs by $2.1 billion in the quarter, the result, it said, of model inputs and assumptions. The hedges it used to offset the movement of the servicing rights rose by $3.6 billion, resulting in a pretax gain of $1.5 billion. Wells Fargo reported pretax net income of $4.67 million and a record $3.24 billion third-quarter after- tax profit. The net gain was “largely due to hedge-carry income reflecting the current low short-term interest rate environment, which is expected to continue into the fourth quarter,” Wells Fargo said in a statement announcing its earnings. JPMorgan reported a $1.1 billion writedown of servicing rights, while it earned $1.53 billion on hedges. That helped the New York-based bank’s earnings rise to $3.59 billion from $527 million a year earlier. ‘Inundated’ With Swings “You are inundated with these swings with the accounting provisions,” Anthony Polini , an analyst at Raymond James Financial Inc., said in an interview. “From a quality of earnings standpoint, you would rather see the growth in net interest income but this is how we bridge the gap. That’s why they are called hedges.” Bank of America, which posted a $1 billion quarterly loss , wrote down MSRs by $1.83 billion. The Charlotte, North Carolina- based bank didn’t disclose the performance of its hedges. A $1.2 billion decline in mortgage-banking income was driven in part by “weaker MSR hedge performance,” the company said. The carrying value of Citigroup’s rights fell by $542 million in the quarter. The bank, based in New York, didn’t report how much of the decline stemmed from changes in its valuation models or from the impact of customer payments. Citigroup, which reported a $101 million profit, also didn’t disclose its hedge performance. 56 Percent of Market The four banks control 56 percent of the market for the contracts, according to Inside Mortgage Finance , a Bethesda, Maryland-based newsletter that has covered the industry since 1984. Servicers collect payments from borrowers and pass them on to mortgage lenders or investors, less fees. They also keep records, manage escrow accounts and contact delinquent debtors. Under U.S. accounting rules in place since 1995, banks should report the value of mortgage-servicing rights on a fair- market basis, or roughly what they would fetch in a sale. A bank must record a loss whenever it sells MSRs for a price below where they’re marked on the books . Because there’s no active trading in the contracts, there are no reliable prices to gauge whether banks are valuing the rights accurately, analysts said. Bank of America held the largest amount of MSRs as of Sept. 30, with $17.5 billion. JPMorgan had $13.6 billion, while Wells Fargo owned $14.5 billion and Citigroup $6.2 billion. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

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BlackRock Profit Jumps 46% on Increase in Bond-Fund Sales, Tax-Change Gain

October 20, 2009

By Sree Vidya Bhaktavatsalam Oct. 20 (Bloomberg) — BlackRock Inc. , the biggest publicly traded U.S. asset manager, said third-quarter net income rose 46 percent as fund sales and the value of the company’s investments benefited from the rally in financial markets. Earnings climbed to $317 million, or $2.27 a share, from $217 million, or $1.59, a year earlier, the New York-based company said today in a statement. A change in New York City tax law added 33 cents a share to net income. Excluding that gain and other items, profit of $2.10 a share topped the $1.90 per- share estimate of 10 analysts surveyed by Bloomberg. BlackRock’s assets rose 4 percent to $1.43 trillion during the quarter as investors deposited $11.9 billion into equity funds and $3.5 billion into bond funds. Chief Executive Officer Laurence Fink said “improving investor sentiment” drove results during the quarter, as did an increase in the value of distressed credit, mortgage and private-equity holdings. “It has been a solid quarter,” Jeffrey Hopson , an analyst with Stifel Nicolaus & Co. in St. Louis, said in an interview before the results were announced. “Fixed income has had a fair amount of flows, so BlackRock is a beneficiary.” Hopson expected BlackRock to earn $1.86 a share, excluding one-time items. He rates the shares “buy.” BlackRock’s nonoperating income, which includes investments in its own funds, was $61 million in the quarter, compared with a loss of $120 million a year earlier. BlackRock agreed in June to buy Barclays Global Investors, a transaction valued at $13.5 billion that will make the company the world’s biggest money manager. Fink said the deal will close as scheduled on Dec. 1 Securities Unit BlackRock will add more passive and index funds with its purchase of London-based Barclays Plc’s investment unit, the first attempt by a top-ranked fund manager to unite two opposing investment philosophies. Expenses to integrate the unit may range from $300 million to $500 million through the middle of next year, BlackRock executives have said. The firm’s BlackRock Solutions unit provided advice to financial institutions and the U.S. government in the past year on how to value troubled securities, such as debt formerly held by American International Group Inc. and Bear Stearns Cos. As the global credit crisis has abated, growth at that unit may start to slow, Hopson said. Results were announced before the start of regular U.S. trading. BlackRock rose $4.88, or 2.2 percent, to $230.43 yesterday in New York Stock Exchange composite trading. It has gained 72 percent this year, compared with the 28 percent gain by Standard & Poor’s index of asset managers and custody banks. To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net .

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Viper Networks, Inc. (VPER) Announces Telecommunications Agreement in Bahrain

October 20, 2009

TROY, MI–(Marketwire – October 20, 2009) – Viper Networks, Inc. ( PINKSHEETS : VPER ) announces that it has entered into an Agreement with a leading telecommunications operator in the Kingdom of Bahrain , for sales, distribution and other value-added services, as part of the Company’s continuing expansion with leading telecom operators throughout Asia, the Middle East, Australia and other continents, for its recently awarded India telecom license.

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Dean Baker: Does Citigroup Need China?

October 19, 2009

Most of the economists and pundits who could not see an $8 trillion housing bubble are telling us that the United States desperately needs for the Chinese government to keep buying its debt. This crew of failed analysts argues that without the support of the Chinese government, interest rates in the United States will rise, choking off the recovery. In reality, the decision by China to stop buying U.S. government debt may not harm the economy’s recovery, but it could be devastating to the recovery efforts at Citigroup and other basket case banks. The basic logic is simple. China’s central bank has been buying up huge amounts of dollar-based assets for the last decade. Their purchases include short and long-term government debt, mortgage backed securities and to a lesser extent private assets. The Chinese central bank’s purchases have two effects. First, they help to keep interest rates low. This supports economic growth by keeping down the interest rate on mortgages, car loans and other borrowing that boosts demand. The other effect of China’s purchase of dollar-based assets is that it keeps down the value of its currency against the dollar. This is the famed currency “manipulation,” that draws frequent complaints from politicians. Of course, it is not exactly manipulation. China has an explicit policy of keeping down the value of its currency against the dollar. It is not buying up hundreds of billions of dollars of U.S. assets in the dark of night. It does it in broad daylight in order to keep its currency at the targeted rate. Suppose China stopped buying up U.S. government debt. Interest rates in the U.S. would rise, which would have some negative impact on growth. Of course, the Fed could try to offset this rise in rates by simply buying more debt itself. It has already been buying debt and it could simply buy enough to replace the lost demand from China. This would leave interest rates largely unchanged. Suppose that the Fed doesn’t intervene and lets interest rates rise. This will have some negative impact on growth, but there will also be a very positive side from China’s decision to stop buying dollars. The dollar would fall in value against China’s currency. This would make Chinese goods more expensive in the United States, leading U.S. consumers to purchases fewer imports from China and more domestically produced goods. A lower-valued dollar would also make our exports cheaper in China. That would allow us to export more to China. The net effect would be an improvement in our trade balance, bringing back some of the 5.5 million jobs that we’ve lost in manufacturing over the last decade. In fact, since nearly all economists agree that the current trade deficit can’t persist for long, China would be helping the country bring about a necessary adjustment if it stopped buying up dollars. Even the rise in interest rates would have a positive effect since it would allow for the completion of the deflation of the housing bubble, with house prices finally settling back to their trend levels. This drop in house prices will be a painful adjustment, but there is no way to avoid it. Bubbles cannot be sustained indefinitely and we are better off allowing the housing market to return to normal so we can get back to a path of sustainable growth. While decision of the Chinese to stop buying dollars might be good for the economy, it is likely to be disastrous for Citigroup and the rest of the basket case banks. If interest rates rose, then the value of the government bonds they hold would plummet. If the interest rate on 10-year Treasury bonds goes from the current 3.5 percent to a still low 4.5 percent, then the banks will have lost 8 percent on their holdings. At a 5.5 percent interest rate, a rate that would still be far below the average for the 90s, the loss would be 15 percent. Citi and the other basket cases could not endure these losses in their current financial state. This could be why we see shrill pronouncements from the likes of the Washington Post editors, and other “experts” who couldn’t see an $8 trillion housing bubble, that we need the Chinese government to keep buying up our debt. We absolutely do not need the Chinese government to keep buying U.S. debt and would almost certainly be better off if it stopped tomorrow. Citigroup and the other big banks do need the Chinese government to keep the money flowing if they are to have a chance of getting back on their feet. And, we know where the sympathies of the Washington Post’s editors and other “experts” lie.

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Lehman Says Negotiators Knew Barclays Got $5 Billion Discount on Purchase

October 17, 2009

By Christopher Scinta Oct. 17 (Bloomberg) — Lehman Brothers Holdings Inc. executives who negotiated the sale of the bank’s North American brokerage business to Barclays Plc knew they were giving the U.K.-based bank a $5 billion discount, Lehman said in court. Executives including Ian Lowitt , Paolo Tonucci and Bart McDade knew that Barclays was getting securities valued at about $50 billion for $45 billion in cash, according to a September motion unsealed Oct. 15 in U.S. Bankruptcy Court in New York in which Lehman asked for the return of some assets. Some executives negotiating the deal knew they would receive offers to work at Barclays after the sale, Lehman said, citing e-mails and deposition testimony. The salaries offered were blacked out. “I was aware that the — that Barclays was going to purchase a substantial block of assets for less than the amount that we had on our books to reflect a sort of bid offer that reflected both the size of the purchase, as well as inherent volatility in the market, which was significant that week,” Lowitt, Lehman’s chief financial officer at the time, testified, according to the documents. A Barclays Capital spokeswoman, Kerrie-Ann Cohen , and Kimberly Macleod , a Lehman spokeswoman, declined to comment. Lowitt declined to comment through a spokesman. Tonucci, then Lehman’s global treasurer, didn’t respond to messages seeking comment. McDade, then the bank’s president, couldn’t be reached. Lehman’s assets were under the control of the bankruptcy court when Barclays paid $1.54 billion for them in a sale that closed Sept. 22. Facts Held Back “Material components” of the deal were kept from U.S. Bankruptcy Judge James Peck , who approved the sale, Lehman said, giving Barclays an “immediate and enormous windfall profit” that may have exceeded $8.2 billion when liabilities Barclays assumed are taken into account. Lehman filed the largest bankruptcy in U.S. history on Sept. 15, 2008, with assets of $639 billion. The collapsed bank asked to revise the deal and be allowed to pursue claims for breach of contract, breach of fiduciary duty and unauthorized transfer of assets. The request is supported by Lehman’s unsecured creditors and James Giddens , the trustee liquidating Lehman’s brokerage on behalf of the U.S. Securities Investor Protection Corp. The fight between Barclays and Lehman’s creditors over the value of assets transferred is set to last well into next year. Peck said Oct. 15 he wanted to hear live testimony rather than rely completely on depositions. He advised parties to discuss May trial dates. Regulators’ Support Government regulators supported the speedy sale to Barclays at the time in an effort to calm global securities markets. Some Lehman creditors fought it, saying the deal was moving too quickly and London-based Barclays was underpaying. Lehman and Barclays held talks about an acquisition by the U.K. bank in the days before Lehman’s bankruptcy, without agreeing on a deal. Within hours of the court filing, Barclays approached Lehman and negotiated an agreement “very quickly” as the value of Lehman’s assets tumbled, according to court papers. During a hearing on the deal before Peck, negotiators changed some terms without disclosing them to the court, according to Lehman’s filing by attorneys at Jones Day . Lehman asked in May for permission to investigate whether Barclays got too good a deal after the U.K. bank’s financial results for 2008 showed a gain of 2.26 billion pounds ($3.72 billion) from the acquisition of Lehman’s North American operations. The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). — With assistance from Linda Sandler and Josh Fineman in New York. Editors: David E. Rovella , Charles Carter To contact the reporter on this story: Christopher Scinta in New York at cscinta@bloomberg.net .

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Nathan Lewis: What $1000+ Gold Means To You

September 23, 2009

The dollar price of gold is above $1000 and new all-time highs are likely. Maybe it will go quite a bit higher. OK, so what? Does this mean that wedding bands get more expensive or something? Most people probably look at gold as some minor metal — not even in the class of major metals, like copper, aluminum or iron. Maybe you could group it with vanadium, molybdenum and rhodium. It might be good for a little gamble, but it is hardly an investment. If you look more closely at gold, you discover that there is hardly any compelling investment thesis at all. Molybdenum, for example, is used in steel alloys. Maybe places like India and China will use a lot of steel alloy to build all kinds of things. Since it is not so easy to open a new moly mine, there could be a supply/demand imbalance, driving up the price of moly. There is never a supply/demand imbalance for gold. About 85% of all the gold ever mined in all of history still exists, as jewelry and stockpiles of bullion. Certainly no shortage of supply. Demand for gold — for genuine industrial purposes, such as electronics — amounts to about 2% of world production per year, and 0.04% of the existing supply, (I consider use in dentistry to be jewelry-like.) Not much demand there either. In fact, it appears that gold is among the most useless things on the planet. If something is “going up,” but there is no fundamental reason for its rise, then it appears to be a “bubble.” People are just buying it because … it’s going up. Like tulip bulbs or something. Supposedly, there is a “superstition” that drives people to buy gold during times of economic difficulty. Tulip Bulbs of Doom? These are the typical litany of excuses offered by people who don’t own gold . These are not the reasons people buy gold. They are, rather, a catalog of confusion from people who don’t understand why other people would own gold. If you talk to people who actually buy gold — a lot of it — they will tell a completely different story. Their reasons can be summed up in the words of J.P. Morgan many years ago: “Gold is money. That’s it.” All right, “gold is money.” What does that mean? The principal characteristic of ideal money is that it is stable in value . Gold is the closest available approximation of this ideal. In other words, gold is money because it is stable in value. All serious gold investors will tell you some variation of this basic observation. This “moneyness” of gold is recognized throughout the world. You could jump out of an airplane and parachute into any major or minor city in the world — from New York to Djibouti, Brazzaville to Chiang Mai — and you would probably land within walking distance of someone who will buy your gold near the world market price. Thus, gold is the supranational money of mankind , because it is stable in value . One reason it is stable in value is that it has no significant industrial use — and thus no supply/demand issues that could cause a change in value. Thus, gold’s apparent “uselessness” is a necessary condition for it to be useful as money. You can think of gold as a currency — just like the dollar, euro or yen. However, unlike those floating, government-manipulated fiat currencies, gold is stable in value. From this you can understand why all major nations used a gold standard system, for basically the entire history of western capitalism, until 1971. The “dollar price of gold” is the exchange rate between dollars and gold. The “euro price of gold” is the exchange rate between euros and gold. When it takes more dollars to buy gold, it doesn’t mean that gold is “going up.” Gold is stable in value. It means that the dollar is going down in value . If you have dollar commitments, such as bank accounts, loans, bonds, employment contracts, pensions, etc. — or assets denominated in dollars such as equities or property — and the value of the dollar is going down, that means that the real values of all those assets are also going down. Melting away like ice cream on a hot summer’s day. When the value of a currency declines, usually all real asset values decline alongside. So, if you just stay even — avoid losing value — that’s pretty good. While the value of gold remains stable, its purchasing power can rise because the value of everything else is falling. If it takes more and more dollars to buy an ounce of gold, you shouldn’t be surprised if it takes more and more dollars to buy all kinds of things. This is generally known as “inflation.” However, this process is quite slow, and it can take many years — even decades — for prices to fully reflect the decline in currency value. Also, the process can be masked by other processes which might induce falling prices, such as recession and debt liquidation. Thus, although the dollar declines in value, the decline in purchasing power of the dollar is not immediately evident. This is why people stick with their dollars for years, as they lose 80% or 90% of their value, before they catch on to what’s going on. It’s possible that the dollar will lose quite a lot of value over the next 4-7 years. This would be evident in a “rising gold price.” At $10,000 per oz. of gold, the dollar would be worth only 10% of its value today. It would take ten times as many dollars to buy an ounce of gold. That is about the point at which I think most mainstream people will finally wake up to what’s going on. Unfortunately for them, by that point, they’re already dead. It’s too late. Now do you understand why people own gold?

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Many Funds Fall to below Face Value as Stock Market Dive

September 2, 2009

Many Funds Fall to below Face Value as Stock Market Dive

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Africa Israel Investments Slumps in Tel Aviv on Plans to Restructure Debt

August 30, 2009

By David Wainer and Alisa Odenheimer Aug. 30 (Bloomberg) — Africa Israel Investments Ltd. , the real-estate company owned by diamond mogul Lev Leviev , said today it will start talks with its bondholders to restructure its debt. The Yehud, Israel-based company is “increasing its preparedness against the risks” that may continue to arise from the global recession, Africa Israel said in an e-mailed statement. The company has been selling property to meet its debt obligation and has paid off 3.3 billion shekels ($864 million) in loans since Jan. 2008, it said. “The company’s assets are not yielding enough to pay back their debt so they’re now facing up to the facts,” said Moti Berliner , an analyst at Meitav Investment House Ltd. in Tel Aviv. “They will be able to reorganize their debt because it is in the interest of the bondholders to see the company survive but there will be a higher cost.” Africa Israel also said its second-quarter loss widened to 1.32 billion shekels from 91 million shekels a year ago. The loss was due mainly to a drop in the value of property under construction and an increase in financing costs, it said. The company’s shares plummeted 91 percent last year as a decline in global property prices drove the value of its assets down, prompting concern it may be forced to default. Since the start of the year the company has focused on selling assets, including a stake in New York’s historic Clock Tower, and buying back bonds to increase liquidity. Africa Israel fell as much as 30.4 percent today, the most in nine months, and was down 26.1 percent to 51.10 shekels as of 10:21 a.m. in Tel Aviv trading. The yield on the company’s notes due 2014 jumped by 7.1 percentage points to 28.6 percent, pushing the price of the 4.8 percent securities down by 11.8 shekels to 44.27. To contact the reporter on this story: David Wainer in Tel Aviv at dwainer1@bloomberg.net

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Dubai Shares Drop on Real Estate Company Results, Led by Union Properties

August 16, 2009

By Vivian Salama Aug. 16 (Bloomberg) — United Arab Emirates and Qatari shares retreated as oil prices declined, Union Properties PJSC reported a loss and profit at Industries Qatar slid. The Dubai Financial Market General Index declined 2.2 percent while Abu Dhabi’s index and Qatar’s DSM 20 Index lost 0.5 percent. “People have been looking at earnings here even more than oil and other indicators,” said Rabih Sultani, hedge fund manager at Duet Mena Ltd. “The biggest weakness we’ve seen in Dubai is real estate, and that goes for Qatar too, so those companies are having the biggest drag on the market right now.” Union Properties, the Dubai-based developer, fell the most in six months after reporting a loss. Industries Qatar, the region’s second-largest petrochemical company, fell to a two- week low after posting a first-half profit that declined 43 percent. Crude fell 4.3 percent on Aug. 14, finishing the week at $67.51 a barrel. Crude prices, which have fallen 54 percent since their July 2008 high of $147.27 a barrel, have heightened the blow of the credit crunch on the region’s real estate and finance industries. Property prices in Dubai have slumped and the finance industry faced a slowdown. The six countries that make up the Gulf Cooperation Council collectively supply 20 percent of the world’s oil. Union Properties declined the most since Feb. 22, dropping 9.6 percent to 1.04 dirhams. The developer reported a second- quarter loss after writing down the value of its properties. The loss was 228 million dirhams ($62 million) after a profit of 317.7 million dirhams a year earlier. Union Properties wrote down 304 million dirhams on the value of its properties, it said on Aug. 13. Lower Demand Industries Qatar lost as much as 4.6 percent and last traded down 3.1 percent at 106.7 riyals, the lowest level since Aug. 2. The largest publicly traded company in the Gulf country said profit declined as the global recession cut demand for petrochemicals and steel. Saudi Arabia’s Tadawul All Share Index added 0.2 percent to 5,830.39 at 1:29 p.m. in the kingdom. Oman’s MSM30 Index gained 0.1 percent, while the Kuwait Stock Exchange advanced 0.3 percent. Bahrain’s measure fell by 0.4 percent. To contact the reporter on this story: Vivian Salama in Dubai vsalama@bloomberg.net

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Economic Update – Zillow: Residential Price Slide Slows

August 12, 2009

Another day, another report about the continuing decline in residential real estate prices — but at least one tinged with the kind of optimism that comes when things aren’t getting as bad as fast as before. According to the real estate web site Zillow.com, which tracks home sales prices and tries its Zillow best to estimate how much homes not on the market would fetch, the value of U.S. homes fell 12.1 percent in 2Q09 compared with 2Q08, just before the panic set in.

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Fred Whelan and Gladys Stone: Too Many Goals? How to Get Started!

August 7, 2009

Carolyn, a woman who attended one of our seminars had a problem – she had so many goals she didn’t know where to start. She felt good that she had lots of interests, but also felt like a bit of a slacker because she couldn’t get started. Carolyn didn’t know it, but her problem was not unique. Prior to working with us, many of our coaching clients had difficulty prioritizing multiple goals. We developed a strategy to address competing priorities in our book, GOAL! and helped Carolyn think through hers. On her list of goals, none of them were time sensitive and none of them were dependant on accomplishing other goals. However, there was a subset of her goals that were mutually exclusive, so she did have to make a decision among those. The other goals were not mutually exclusive and theoretically, she could have picked any one out of a hat and just started. She hadn’t started on anything so far because she was unsure on how to proceed. Carolyn’s goals were: Starting a business (mutually exclusive options) finishing her degree, writing a book and volunteering her time. Here’s how we helped Carolyn get going: For Goals That Are Not Dependant on Other Goals – If there’s no sequence to your goals (i.e., none depend on the completion of other goals) then look at other factors. For example, is one an event driven goal? Those goals are tied to some specific future date, like losing weight to attend a college reunion or planning for retirement. If that’s the case then the date is going to drive when you should start these. If it’s not an event driven goal then you need to determine which goal is more advantageous versus the other. Figure Out Which Goal Has the Advantage – If there are goals that have a common objective, (“I’ve identified two businesses which I can start that will both net me $100k”), figure out which one of those has an advantage over the other. Which one will require less time and energy? Which is less risky? Which one requires less capital? Or, which one will give you more joy? Figuring out the advantages will help you decide which one to go after. If Both Goals Are Equal? If they are both equal in every aspect and you can’t figure out which one you should do, just arbitrarily pick one and start on that one. If they’re not mutually exclusive, when you reach one goal then start on the other. It’s important to take action because people will often end up doing nothing because they can’t decide between two good goals. A Grid for Multiple Goals – Again, if all your goals seem equal and you can’t figure out which one to start first, you may want to make a grid. We can hear you analytical types saying “yes!”. Vertically down the page list the various goals you have in mind. These could be things like finishing up your college degree, writing a book and volunteering your time. Across the top of the page, list horizontally the key factors in your decision process, like: time, financial investment, enjoyment doing, satisfaction on completion, ability to involve your spouse, etc. You choose the criteria. Now you have created a grid. Give each of these a value from 1-10, 10 being the highest value to you (the shorter the time the higher the value, the lower the cost the higher the value). When you have filled in all the spaces on the grid, add the totals across for each goal and see which goal has the highest total. This will lead you towards the top goal(s). This puts you in a better position to choose which goal to tackle first. What If You Can’t Identify a Goal? We always tell people to start with what they like doing. Sometimes people will say they’re not sure. If this is the case, start with what interests you and see if that leads you to something you like. For example, if you’re trying to select a career goal, start out with what you like doing or at least are interested in and figure out what careers would satisfy that. If you can’t figure it out on your own, hire a career coach and he or she can help you identify the careers that will leverage your strengths and be most fulfilling. If your goal is to find a fun hobby then again, start with what you’re interest in. A lot of people are interested in photography. Take a course or spend time photographing things and see where that leads. Someone we know had an interest in photography and noticed that all of her pictures tended to be of plants. That led to a garden hobby. Goals can be incredibly fulfilling and amazingly frustrating if you don’t know where to begin. Lots of goals require lots of time, so get started now. The sooner you start the more fulfilling your life will be. Carolyn started business “A” and is volunteering her time on the weekends. She’s never been busier and never been happier, “Once I got started, everything fell into place.” Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Fred Whelan and Gladys Stone: Too Many Goals? How to Get Started!

August 7, 2009

Carolyn, a woman who attended one of our seminars had a problem – she had so many goals she didn’t know where to start. She felt good that she had lots of interests, but also felt like a bit of a slacker because she couldn’t get started. Carolyn didn’t know it, but her problem was not unique. Prior to working with us, many of our coaching clients had difficulty prioritizing multiple goals. We developed a strategy to address competing priorities in our book, GOAL! and helped Carolyn think through hers. On her list of goals, none of them were time sensitive and none of them were dependant on accomplishing other goals. However, there was a subset of her goals that were mutually exclusive, so she did have to make a decision among those. The other goals were not mutually exclusive and theoretically, she could have picked any one out of a hat and just started. She hadn’t started on anything so far because she was unsure on how to proceed. Carolyn’s goals were: Starting a business (mutually exclusive options) finishing her degree, writing a book and volunteering her time. Here’s how we helped Carolyn get going: For Goals That Are Not Dependant on Other Goals – If there’s no sequence to your goals (i.e., none depend on the completion of other goals) then look at other factors. For example, is one an event driven goal? Those goals are tied to some specific future date, like losing weight to attend a college reunion or planning for retirement. If that’s the case then the date is going to drive when you should start these. If it’s not an event driven goal then you need to determine which goal is more advantageous versus the other. Figure Out Which Goal Has the Advantage – If there are goals that have a common objective, (“I’ve identified two businesses which I can start that will both net me $100k”), figure out which one of those has an advantage over the other. Which one will require less time and energy? Which is less risky? Which one requires less capital? Or, which one will give you more joy? Figuring out the advantages will help you decide which one to go after. If Both Goals Are Equal? If they are both equal in every aspect and you can’t figure out which one you should do, just arbitrarily pick one and start on that one. If they’re not mutually exclusive, when you reach one goal then start on the other. It’s important to take action because people will often end up doing nothing because they can’t decide between two good goals. A Grid for Multiple Goals – Again, if all your goals seem equal and you can’t figure out which one to start first, you may want to make a grid. We can hear you analytical types saying “yes!”. Vertically down the page list the various goals you have in mind. These could be things like finishing up your college degree, writing a book and volunteering your time. Across the top of the page, list horizontally the key factors in your decision process, like: time, financial investment, enjoyment doing, satisfaction on completion, ability to involve your spouse, etc. You choose the criteria. Now you have created a grid. Give each of these a value from 1-10, 10 being the highest value to you (the shorter the time the higher the value, the lower the cost the higher the value). When you have filled in all the spaces on the grid, add the totals across for each goal and see which goal has the highest total. This will lead you towards the top goal(s). This puts you in a better position to choose which goal to tackle first. What If You Can’t Identify a Goal? We always tell people to start with what they like doing. Sometimes people will say they’re not sure. If this is the case, start with what interests you and see if that leads you to something you like. For example, if you’re trying to select a career goal, start out with what you like doing or at least are interested in and figure out what careers would satisfy that. If you can’t figure it out on your own, hire a career coach and he or she can help you identify the careers that will leverage your strengths and be most fulfilling. If your goal is to find a fun hobby then again, start with what you’re interest in. A lot of people are interested in photography. Take a course or spend time photographing things and see where that leads. Someone we know had an interest in photography and noticed that all of her pictures tended to be of plants. That led to a garden hobby. Goals can be incredibly fulfilling and amazingly frustrating if you don’t know where to begin. Lots of goals require lots of time, so get started now. The sooner you start the more fulfilling your life will be. Carolyn started business “A” and is volunteering her time on the weekends. She’s never been busier and never been happier, “Once I got started, everything fell into place.” Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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SPONSORED EVENT: Asset Allocation Forum in Alternatives 2009

August 2, 2009

investors and managers in setting terms. The forum will showcase current sector opportunities, including, Emerging Markets, Energy/Commodities, Credit/Distressed Debt, Value/Equity strategies, Niche Strategies, and Macro/Event driven strategies, as well

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Geithner Assures a `Concerned’ China the U.S. Will Shrink Record Deficit

July 27, 2009

By Rob Delaney and Rebecca Christie July 27 (Bloomberg) — The Obama administration’s economic leaders assured Chinese counterparts they will rein in a record budget deficit as China underscored its concern about preserving the value of its holdings of Treasuries. “China has a huge amount of investment in the U.S.” and “we are concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said in a press briefing at the end of the first of two days of talks in Washington. Treasury Secretary Timothy Geithner said in opening remarks that the U.S.

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CIT Loses to Rosenthal, Sterling as Factoring Customers Seek New Funding

July 23, 2009

By David Mildenberg July 23 (Bloomberg) — Rosenthal & Rosenthal , the largest privately held U.S. factoring company, and Sterling Bancorp may pick up clients after CIT Group Inc

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Rapidly Falling Prices Changing Dynamics of Office Leasing, Ownership

July 23, 2009

The second quarter of 2009 saw leasing and sales conditions across the U.S.

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