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Karen Dalton-Beninato: EXCLUSIVE: BP Gulf of Mexico Oil Spill Response Plans, What They Knew and When They Knew It

June 4, 2010

Thanks to an insider, I obtained a copy of the almost 600 page BP Regional Oil Spill Response Plan for the Gulf of Mexico as of June, 2009. Some material has been redacted including the name of the rig, but if it isn’t Deepwater Horizon then it’s another oil well aimed directly at Plaquemines Parish. These are the three main takeaways from an initial read: 1) In the worst case discharge scenario, an oil leak was expected to come ashore with highest probability in Plaquemines Parish within 30 days ( see map above from the Advance Response Plan ). This makes it clear that BP could have stored adequate boom there before a rig failure like the Deepwater Horizon, and workers could have been mobilized to apply the boom in the 30 days that the response plan predicted oil would hit our wetlands. 2) Spokespersons were advised never to assure the public that an ecosystem would be back to normal after the worst case scenario, which we are now living through. ” No statements shall be made concerning any of the following: promises that property, ecology, or anything else will be restored to normal .” Even in BP CEO Tony Hayward’s new television commercial his assurance is an ambiguous, “We will make this right,” which does not specifically address preserving or restoring America’s Wetlands. 3) Corexit oil dispersant toxicity has not been tested on ecosystems, according to the Oil Spill Response Plan. ” Ecotoxilogical effects: No toxicity studies have been conducted on this product .” Which is contradictory since the question and answer section discusses the choice of a dispersant with: “Have environmental tradeoffs of dispersant use indicated that use should be considered? Note: This is one of the more difficult questions” and “Has the overflight to assure that endangered species are not in the application area been conducted?” Brown pelicans and sea turtles would have been the answer to the latter. When it comes to Corexit, it is allowed in the Green Zone, not in the Red Zone without a waiver, and the Yellow Zone is a maybe. Yellow “includes any waters designated as marine reserves, National Marine Sanctuaries, National or State Wildlife Refugees or proposed or designated critical habitats; the waters are within three miles of a shoreline and/or fall under state jurisdiction; the waters are less than ten meters deep; and the waters are in mangrove or coastal wetland ecosystems or directly over coral reefs which are less than ten meters of water. Coastal wetlands include submerged algal and sea grass beds.” President Barack Obama is in Louisiana today, so these findings bear repeating: BP knew in all probability where a Gulf of Mexico oil leak would go; the company knows it is pouring millions of gallons of chemicals untested for ecotoxicity near endangered wetlands; and BP knew it could not assure us that our environment will ever be back to normal. America deserves an immediate, comprehensive response funded by BP and administered by the government to clean, protect and restore our environment because it will be under chemical assault for months. Even if the coast is never back to normal, we must make sure that it comes back. And if we can’t do it for this generation, then we need to make it happen for the next one. Crosspost, screenshots and link to full document at NewOrleans.com . LINK: http://www.neworleans.com/images/media/BP_Regional_OSRP_Redactedv2.pdf (It’s 29 mg so make sure you have the space to download). UPDATE: One interesting note from a commenter at NewOrleans.com speculates that the map logistics look closer to the Thunder Horse deepwater oilfield run by BP and Exxon. Of that field, Glenn Morton of TheOilDrum.com has said “Thunder Horse hasn’t reached anywhere near its expected potential,” and that “deepwater oil drilling is a tricky process, and not always as easy or predictable as thought.” The massive Thunder Horse rig almost tipped over during Hurricane Dennis. This document was in an MMS Deepwater folder, so whichever the redacted rig, it’s BP’s emergency plan.

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Sotheby’s To Auction Lehman Brothers Art Valued At Over $10 Million

June 4, 2010

NEW YORK — Sotheby’s says some 400 works from the corporate contemporary art collection of the failed investment bank Lehman Brothers will go on sale at auction this fall. Sotheby’s New York announced Friday it will auction the works on Sept. 25, pending bankruptcy court approval. It says the collection is valued at more than $10 million. It includes works by some of the leading contemporary artists, including Damien Hirst, Takashi Murakami and Richard Prince. Sale proceeds will go to pay off creditors of Lehman Brothers Holdings Inc. Lehman filed for bankruptcy in September 2008, helping spark one of the worst financial crisis since the Great Depression. It was the largest bankruptcy filing in U.S. history. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below. NEW YORK (AP) – Sotheby’s says some 400 works from the corporate contemporary art collection of the failed investment bank Lehman Brothers will go on sale at auction this fall. Sotheby’s New York announced Friday it will auction the works on Sept. 25, pending bankruptcy court approval. It says the collection is valued at more than $10 million. It includes works by some of the leading contemporary artists, including Damien Hirst, Takashi Murakami and Richard Prince. Sale proceeds will go to pay off creditors of Lehman Brothers Holdings Inc. Lehman filed for bankruptcy in September 2008, helping spark one of the worst financial crisis since the Great Depression. It was the largest bankruptcy filing in U.S. history.

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Video: U.S. Stocks Drop, Dow Average Ends Worst May Since 1940: Video

May 28, 2010

May 28 (Bloomberg) — Bloomberg’s Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks slid, capping the worst May for the Dow Jones Industrial Average since 1940, while the euro slumped and Treasuries rose as a downgrade of Spain’s debt rating and escalating tensions on the Korean peninsula triggered a flight from riskier assets. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

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Dollar Suffers its Worst Series of Losses in Five Weeks as Risk Aversion Cools

May 22, 2010

Dollar Suffers its Worst Series of Losses in Five Weeks as Risk Aversion Cools

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The debt crisis in Europe leads euro to a 4-year low as markets expect the worst to happen

May 22, 2010

The debt crisis in Europe leads euro to a 4-year low as markets expect the worst to happen

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Dollar Suffers Its Worst Loss in Nine Months but from a 14-Month High

May 20, 2010

Dollar Suffers Its Worst Loss in Nine Months but from a 14-Month High

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DK Matai: 1932: The Unexpected Second Shock

May 6, 2010

They will say, nobody saw it coming. Who could have predicted it… It is worth noting that the 1932 stock market crash is deemed to be the worst in the 20th century and not the one in 1929. By mid-1930, the market was up 30% from the trough of the 1929 crash. However, by the summer of 1932, the Dow reached a low of just 11% of its high in 1929, or a loss of roughly 89%, trading more than 50% below the low it had reached on October 29th, 1929. If one had $1000 on September 3rd 1929, it would have gone down to $108 by July 8th, 1932 — end of the worst crash — or an 89.2% loss. To recover from such a loss, one would have to watch one’s portfolio go up by 825%! The Great Depression 1930s All this happened despite assurances from prominent government and business leaders of-the-time that the worst was behind. Here is a news headline that may sound familiar: . September 1929: “There is no cause to worry. The high tide of prosperity will continue.” – Andrew W Mellon, US Secretary of the Treasury After the stock market crash in October 1929, the Dow Jones Industrial Average (DJIA) partially recovered in November-December 1929 and early 1930. Reassuring headlines such as the following became increasingly common: . May 1, 1930: “I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity!” – US President Hoover . August 29, 1930: “American labour may now look to the future with confidence.” – James J Davis, US Secretary of Labour . October 16, 1930: “Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment.” – Charles M Schwab. On July 8th, 1932 the Dow reached its lowest level of the 20th century and did not return to pre-1929 levels until 23rd November, 1954. The full impact was not felt until the next year. By 1933, the Great Depression was very real and it would take more than 22 years before the market would regain what had been lost. So severe was the impact of the 1929-1932 crash, that by spring of 1933, when President Roosevelt (FDR) took the oath of office, unemployment in the US had risen from 8 to 15 million — roughly 1/3rd of the non-farm workforce — and the GDP had decreased by more than 45% from $103.8 billion to $55.7 billion. Although the depression was worldwide, no other country except Germany reached so high a percentage of unemployment as the US. The poor were hit the hardest. By 1932, New York’s Harlem district had an unemployment rate of 50% and property owned or managed by African Americans fell from 30% to 5% in 1935. Farmers in the Midwest were doubly hit by economic downturns and the Dust Bowl. Schools, with budgets shrinking, shortened both the school day and the school year. The breadth and depth of the crisis made it the Great Depression. FDR, after assuming the presidency, promoted a wide variety of federally funded programs aimed at restoring the American economy, helping relieve the suffering of the unemployed, and reforming the system so that such a severe crisis could never happen again. After the crash in 1932: 1. The Securities and Exchange Commission (SEC) was established; 2. The US Congress passed the Glass-Steagall Act mandating a separation between commercial banks, which take deposits and extend loans, and investment banks, which underwrite, issue, and distribute stocks, bonds and other securities; 3. The Federal Deposit Insurance Corporation (FDIC) was established to insure individual bank accounts for up to $100,000; and 4. Works Projects Administration (WPA), the largest New Deal agency, was set up employing millions to carry out public works projects. However, while FDR’s New Deal did help restore the GDP to its 1929 level and did introduce basic banking and welfare reforms, FDR refused to run up the government deficits that ending the depression required. Only when the federal government imposed rationing, recruited 6 million defence workers (including women and African Americans), drafted 6 million soldiers, and ran massive deficits to fight World War II did the Great Depression finally end. The extent of the economic devastation of the 1930s went far beyond the imagination of anyone in the financial markets or governments across the world.

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Marty Robins: Goldman Hearings: More Meddling and Grandstanding By Congress

April 29, 2010

One wonders about the real purpose for this week’s Congressional hearings about the alleged misdeeds of Goldman Sachs. Taken at their worst, they amount to claims that the firm failed to disclose to buyers (all in the securities business) of mortgage-backed securities issued by it, all material information concerning their origin and character. Whether or not this is true, the national implications – i.e. rationale for Congressional involvement – are doubtful. The same can be said for the SEC civil suit. If anything, this is a private matter between Goldman and its customers, for which customary civil claims under the securities laws would suffice. Securities law experts are divided as to whether disclosure of the involvement of John Paulson – a noted bear regarding the housing market – in the structuring of the securities was legally required. While the author, a corporate attorney having some experience in securities law, would have advised Goldman to disclose such information to avoid this sort of second-guessing, this is beside the point. The point is that if these investors believe that they were defrauded, they can sue or arbitrate under existing law for recission of the transaction (refund) or other damages. Such claims by the sort of indisputably sophisticated investors who are involved here, are commonplace, and the firm is obviously capable of satisfying any judgment which is awarded. This is not a Madoff situation where victims of a fraud have no redress and involvement of the SEC or Congress is needed. The spectacle of Senators and commentators so vehemently denouncing Goldman’s business practices, as though they caused the Great Recession, is unseemly and absurd. Whatever it thinks of the business practices of Goldman or any other private company, Congress should not be involved in private disputes, absent some broad-based implications for Americans in general. That is, whether the practices at issue are causing loss to consumers in general. Despite the superficial attempts in the Senate to tie Goldman and other investment banks to the economic downturn, this is simply not the case. They had little or nothing to do with the ultimate cause, namely the origination of low quality mortgage and other debt which could not be repaid. Once such debt had been incurred, losses were inevitable and the only question was how such losses would be allocated. Whether they were to be borne by Goldman, John Paulson, Goldman investors or someone else, had nothing to do with macroeconomic consequences. These investors have the resources, incentives and knowledge to fend for themselves. This is also not a case where proposed legal reforms are at issue. All agree that existing securities law bars material misstatements and omissions of material facts. The issues in this case are strictly factual – i.e. was the information about the manner in which the securities were structured genuinely material to the investors. As Goldman points out, such materiality must be judged by reference to all of the circumstances which existed at the time of the transaction, including its role as a market-maker, which inherently means that a transaction requires parties to have opposite views about the valuation of the securities. These hearings and the SEC action are nothing more than a naked political ploy to rally support for the Administration’s so-called “financial reform” efforts by demonizing Wall Street and big business. This is not a case of Congress and the SEC looking out for the “little guy” who can not look out for himself. It is simply a cynical effort to cause the unsophisticated public to look for bogeymen to blame for all of our economic dislocation. Even assuming the worst about Goldman’s business practices vis a vis its clients, they are not the cause of our problems. They are strictly a private matter. We would be much better served if rather than take sides in private disputes, Congress and the SEC would look in the proverbial mirror and consider their own actions in cases such as extreme, unwarranted encouragement of homeownership through Fannie and Freddie (and their campaign contributions) and the Community Reinvestment Act and ignoring express warnings about Madoff and Stanford. The author is a (small) securityholder in Goldman Sachs.

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Goldman Sachs Chief Blankfein Says Bank Didn’t Bet Against Its Customers

April 26, 2010

By Christine Harper April 26 (Bloomberg) — Lloyd Blankfein , Goldman Sachs Group Inc. ’s chairman and chief executive officer, will tell a Senate committee tomorrow that the firm didn’t wager against clients and didn’t make a big bet against the housing market. “We didn’t have a massive short against the housing market and we certainly did not bet against our clients,” Blankfein, 55, will tell the Permanent Subcommittee on Investigations , according to a prepared text of his remarks. Blankfein and six other current and former Goldman Sachs executives will testify in front of the panel about their practices in the mortgage-securities market leading up to the worst financial crisis since the Great Depression. The firm faces a fraud lawsuit from the Securities and Exchange Commission that accuses it of failing to inform investors about the role played by a hedge fund, Paulson & Co., in the deal. “As you know, ten days ago, the SEC announced a civil action against Goldman Sachs in connection with a specific transaction,” Blankfein will say, according to the text of his remarks. “It was one of the worst days in my professional life, as I know it was for every person at our firm.” Blankfein will say that New York-based Goldman Sachs has been a “client-centered firm for 140 years and if our clients believe that we don’t deserve their trust, we cannot survive.” ‘Complicated Transaction’ While the firm says it disagrees with the SEC’s complaint, “I also recognize how such a complicated transaction may look to many people,” Blankfein said in his remarks. “We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky.” Blankfein will also say that the firm favors more transparency for the public and regulators and is supporting the creation of clearinghouses for eligible derivatives. He also said the firm recognizes that many in the U.S. are skeptical about investment banks. “What we and other banks, rating agencies and regulators failed to do was sound the alarm that there was too much lending and too much leverage in the system — that credit had become too cheap,” Blankfein will say, according to the remarks. To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

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Video: Rolling Stone’s Taibbi Discusses SEC’s Goldman Suit: Video

April 16, 2010

April 16 (Bloomberg) — Matt Taibbi, a contributing editor at Rolling Stone magazine, talks with Bloomberg’s Carol Massar about the U.S. Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (This is an excerpt of the full interview. Source: Bloomberg)

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Video: McCormick Says Goldman Suit `Political Win’ for Obama: Video

April 16, 2010

April 16 (Bloomberg) — Matthew McCormick, a portfolio manager at Bahl & Gaynor Inc., talks with Bloomberg’s Carol Massar about the U.S. Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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Video: Portales Partners’ Peabody Discusses SEC, Goldman Sachs: Video

April 16, 2010

April 16 (Bloomberg) — Charles Peabody, a partner and analyst at Portales Partners LLC, talks with Bloomberg’s Lori Rothman about the Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (This report is an excerpt of the full interview. Source: Bloomberg)

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Video: Pitt Says SEC `Doubly Prudent’ Before Suing Goldman: Video

April 16, 2010

April 16 (Bloomberg) — Harvey Pitt, former U.S. Securities and Exchange Commission chairman, talks with Bloomberg’s Mark Crumpton and Lori Rothman about the SEC’s suit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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Video: Bloomberg’s Liu Discusses Buffett’s Bet on Goldman Sachs: Video

April 16, 2010

April 16 (Bloomberg) — Bloomberg’s Betty Liu reports on Warren Buffett’s $5 billion investment in Goldman Sachs Group Inc. The investment was partly a bet on the “integrity” of the Wall Street firm, Berkshire Hathaway Inc. Director Ronald Olson told Bloomberg Television this week. Goldman was sued by U.S. regulators today for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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Video: Goldman Sachs Sued by SEC for Fraud Tied to CDOs: Video

April 16, 2010

April 16 (Bloomberg) — Bloomberg’s Peter Cook reports on the U.S. Securities and Exchange Commission’s move to sue Goldman Sachs Group Inc. for fraud tied to packaging and selling collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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Video: Farzad Says Goldman Knew More Than It Disclosed: Video

April 16, 2010

April 16 (Bloomberg) — Bloomberg BusinessWeek’s Roben Farzad talks with Margaret Brennan about the U.S. Securities and Exchange Commission’s move to sue Goldman Sachs Group Inc. for fraud tied to packaging and selling collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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Video: Burns Discusses SEC Fraud Lawsuit Against Goldman Sachs: Video

April 16, 2010

April 16 (Bloomberg) — Douglas Burns, a former federal prosecutor, talks with Bloomberg’s Lori Rothman and Mark Crumpton about the U.S. Securities and Exchange Commission’s move to sue Goldman Sachs Group Inc. for fraud tied to packaging and selling collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

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JPMorgan Net Rises 55% on Fixed Income, Provision Cut

April 14, 2010

By Dawn Kopecki April 14 (Bloomberg) — JPMorgan Chase & Co. , the second- biggest U.S. bank by assets, beat analysts’ estimates as first- quarter earnings rose 55 percent on record fixed-income trading revenue and a reduction in provisions for credit losses. Net income climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier, the New York-based bank said today in a statement. The per-share earnings compared with the 64-cent average estimate of 21 analysts surveyed by Bloomberg. “It’s an embarrassment of riches in this quarter,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York and owns JPMorgan shares. “These are results that you expect from maybe Goldman in a very good environment for trading,” Holland said in a Bloomberg Television interview. Chief Executive Officer Jamie Dimon , 54, has kept the bank profitable throughout the financial crisis, relying on fee income to counter loan losses in mortgage lending and credit cards. The bank, the No. 1 underwriter of stocks and bonds in the U.S. last year, generated three-quarters of its first- quarter profit from the investment bank. JPMorgan rose to $47.30 in New York trading at 7:43 a.m. from $45.87 at the close on the New York Stock Exchange yesterday. The shares are up 10 percent this year. Fixed Income First-quarter revenue climbed 11 percent to $27.7 billion, beating the highest estimate among analysts in the Bloomberg survey. Fixed-income revenue was $5.46 billion, compared with $4.89 billion a year earlier. The firm said improving fixed-income markets contributed to the revenue gains, as did a $462 million reversal of provisions for credit costs in investment banking, which compared with $1.2 billion in expenses a year earlier. JPMorgan cited lower loan balances, driven by repayments and loan sales. The bank reduced its total provisions for credit losses in all divisions to $7 billion, compared with $8.9 billion in the previous quarter and $10 billion the year before. The investment bank contributed $2.47 billion of JPMorgan’s $3.33 billion in net income, or 74 percent. That compares with 57 percent in the fourth quarter and 75 percent in the first quarter of 2009. “The good news is that the revenue picture was actually quite strong,” said Charles Peabody , an analyst at Portales Partners LLC, in an interview with Tom Keene on Bloomberg Radio. “And in particular, within investment banking, fixed-income trading. That had been an area of concern, so March must have been a blockbuster month.” Citigroup Results JPMorgan is the first of the largest U.S. banks to report earnings. Citigroup Inc. , the third-biggest lender behind JPMorgan and Bank of America Corp., may report earnings of $340 million when it releases results on April 19, the Bloomberg survey shows. Charlotte, North Carolina-based Bank of America may report a profit of $1.1 billion on April 16. “While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends,” Dimon said in the statement. “We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery.” The company previously estimated mortgage losses could run as high as $2.5 billion in any quarter this year. “The key factor for this quarter for banks will be to say reserve builds are largely behind us and the outlook for lower problem loans and loan losses has improved for the second half of the year,” said Anthony Polini , an analyst at Raymond James & Associates. “It’s the outlook that matters.” Home Prices Financial companies have recorded losses and writedowns of $1.77 trillion stemming from the U.S. housing crisis and the worst job market in 26 years, according to data compiled by Bloomberg. The pace of losses has begun to ease in the past two quarters and home prices fell at a slower rate in January, even as the federal government withdraws support from financial markets. Dimon told shareholders in his annual letter last month that the bank, which cut its quarterly dividend to 5 cents from 38 cents in February 2009, would only boost the payout if the U.S. economy shows several months of improvement in the jobless rate and there is a “significant reduction” in charge-offs. Dimon, who took over as CEO in 2005, claimed credit in the letter for helping to stabilize markets during the crisis by purchasing Bear Stearns Cos. and Washington Mutual as they headed toward collapse. ‘No. 1 Priority’ With the worst of the crisis behind the company, Dimon said the board’s “No. 1 priority” this year is finding his replacement. He said many companies have been destroyed by poor succession planning. JPMorgan is rotating senior staff across divisions to ensure there are several internal candidates that could fill the job, he said. “He’s very talented. He’s led his company through a minefield without getting blown up; my hat’s off to him,” said Chris Kotowski , an equity analyst at Oppenheimer & Co. in New York. “But there are lots of other good executives around too, both inside JPMorgan and outside” that can run that company. To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.com .

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JPMorgan Profit Rises 55% on Trading Revenue, Beating Analysts’ Estimates

April 14, 2010

By Dawn Kopecki April 14 (Bloomberg) — JPMorgan Chase & Co. , the second- biggest U.S. bank by assets, beat analysts’ estimates as first- quarter earnings rose 55 percent on record fixed-income trading revenue and a reduction in provisions for credit losses. Net income climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier, the New York-based bank said today in a statement. The per-share earnings compared with the 64-cent average estimate of 21 analysts surveyed by Bloomberg. “It’s an embarrassment of riches in this quarter,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York and owns JPMorgan shares. “These are results that you expect from maybe Goldman in a very good environment for trading,” Holland said in a Bloomberg Television interview. Chief Executive Officer Jamie Dimon , 54, has kept the bank profitable throughout the financial crisis, relying on fee income to counter loan losses in mortgage lending and credit cards. The bank, the No. 1 underwriter of stocks and bonds in the U.S. last year, generated three-quarters of its first- quarter profit from the investment bank. JPMorgan rose to $47.30 in New York trading at 7:43 a.m. from $45.87 at the close on the New York Stock Exchange yesterday. The shares are up 10 percent this year. Fixed Income First-quarter revenue climbed 11 percent to $27.7 billion, beating the highest estimate among analysts in the Bloomberg survey. Fixed-income revenue was $5.46 billion, compared with $4.89 billion a year earlier. The firm said improving fixed-income markets contributed to the revenue gains, as did a $462 million reversal of provisions for credit costs in investment banking, which compared with $1.2 billion in expenses a year earlier. JPMorgan cited lower loan balances, driven by repayments and loan sales. The bank reduced its total provisions for credit losses in all divisions to $7 billion, compared with $8.9 billion in the previous quarter and $10 billion the year before. The investment bank contributed $2.47 billion of JPMorgan’s $3.33 billion in net income, or 74 percent. That compares with 57 percent in the fourth quarter and 75 percent in the first quarter of 2009. “The good news is that the revenue picture was actually quite strong,” said Charles Peabody , an analyst at Portales Partners LLC, in an interview with Tom Keene on Bloomberg Radio. “And in particular, within investment banking, fixed-income trading. That had been an area of concern, so March must have been a blockbuster month.” Citigroup Results JPMorgan is the first of the largest U.S. banks to report earnings. Citigroup Inc. , the third-biggest lender behind JPMorgan and Bank of America Corp., may report earnings of $340 million when it releases results on April 19, the Bloomberg survey shows. Charlotte, North Carolina-based Bank of America may report a profit of $1.1 billion on April 16. “While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends,” Dimon said in the statement. “We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery.” The company previously estimated mortgage losses could run as high as $2.5 billion in any quarter this year. “The key factor for this quarter for banks will be to say reserve builds are largely behind us and the outlook for lower problem loans and loan losses has improved for the second half of the year,” said Anthony Polini , an analyst at Raymond James & Associates. “It’s the outlook that matters.” Home Prices Financial companies have recorded losses and writedowns of $1.77 trillion stemming from the U.S. housing crisis and the worst job market in 26 years, according to data compiled by Bloomberg. The pace of losses has begun to ease in the past two quarters and home prices fell at a slower rate in January, even as the federal government withdraws support from financial markets. Dimon told shareholders in his annual letter last month that the bank, which cut its quarterly dividend to 5 cents from 38 cents in February 2009, would only boost the payout if the U.S. economy shows several months of improvement in the jobless rate and there is a “significant reduction” in charge-offs. Dimon, who took over as CEO in 2005, claimed credit in the letter for helping to stabilize markets during the crisis by purchasing Bear Stearns Cos. and Washington Mutual as they headed toward collapse. ‘No. 1 Priority’ With the worst of the crisis behind the company, Dimon said the board’s “No. 1 priority” this year is finding his replacement. He said many companies have been destroyed by poor succession planning. JPMorgan is rotating senior staff across divisions to ensure there are several internal candidates that could fill the job, he said. “He’s very talented. He’s led his company through a minefield without getting blown up; my hat’s off to him,” said Chris Kotowski , an equity analyst at Oppenheimer & Co. in New York. “But there are lots of other good executives around too, both inside JPMorgan and outside” that can run that company. To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.com .

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Factories in U.S. Drive Recovery as Orders Gain; Building Slump Hurts Jobs

March 31, 2010

By Courtney Schlisserman and Shobhana Chandra March 31 (Bloomberg) — Manufacturers are driving the U.S. economic recovery as the real estate industry struggles to recover from recession, hurting employment, reports today showed. Factory orders rose 0.6 percent in February after surging 2.5 percent, the Commerce Department said in Washington, while businesses responding to a survey by the Institute for Supply Management-Chicago Inc. grew for a sixth straight month in March. Figures from ADP Employer Services showed an unexpected 23,000 drop in company payrolls this month, led by a slump in construction jobs. Texas Instruments Inc. is among companies benefiting as businesses work to stabilize stockpiles and prepare for rising sales in the U.S. and overseas. A sustained rebound in the housing market and increased hiring has yet to materialize to ensure a broadening of the economic expansion. “Businesses are still very, very cautious and the real challenge in the labor markets is not so much that firms are laying off large numbers of workers but that firms are not hiring,” said Ryan Wang , an economist at HSBC Securities USA Inc. in New York. Even so, “manufacturing activity continues to expand.” Stocks fluctuated between gains and losses as rallying commodity companies offset the ADP employment figures. The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,173.68 at 12:52 p.m. in New York. ADP’s initial figures have overstated the Labor Department’s first estimate of private payroll losses by as little as 2,000 in February to as much as 151,000 in November. The March figures reflected a 43,000 slump in construction employment, while factories lost 9,000 positions. Payroll Forecast Economists anticipate the economy created 180,000 jobs in March, according to the median forecast ahead of the Labor Department’s report on April 2. The projected gain is due in part to temporary hiring by the federal government to conduct the 2010 census and because of better weather compared with February. The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 58.8, lower than the median forecast in a Bloomberg survey, from an almost five-year high of 62.6 in February. Figures greater than 50 signal expansion. Economists watch the Chicago index for an early reading on the outlook for manufacturing. The group says its membership includes both manufacturers and service providers, making the gauge a measure of overall growth. Its members have operations across the country as well as abroad. The March figure exceeds the average of 50.5 during the last six months of 2009, when the economy began recovering from the worst recession since the 1930s. Orders, Backlogs The gain in orders placed with U.S. factories reported by the Commerce Department compared with the 0.5 percent rise forecast by economists, according to the median survey estimate. January bookings were revised up by the Commerce Department from a previously reported 1.7 percent increase. Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, rose 2 percent, almost double the 1.1 percent increase the Commerce Department estimated last week. Shipments of those goods, used to calculate gross domestic product, climbed 0.6 percent. Factory inventories rose by the most since August 2008, signaling the economy will get another boost from stockpiling this quarter. Unfilled Demand Unfilled orders grew 0.5 percent last month, the biggest gain since July 2008, led by increasing demand for aircraft and metals. Texas Instruments, the second-largest U.S. chipmaker, projected quarterly profit and sales will be at the high end of its forecast, fueled by rising demand for computers, high- definition TVs and cars. “Growth continues to be broad across end markets,” Vice President Ron Slaymaker said on a March 8 conference call. Manufacturing has been a leader in bringing the U.S. out of the worst recession since the 1930s. The economy expanded at a 5.6 percent annual rate in the fourth quarter, with efforts to stabilize inventories providing the biggest boost to growth. Some companies say the strength in the economy extends beyond inventory replenishment. Applied Materials Inc., the world’s largest producer of chipmaking equipment, yesterday raised its annual sales forecast. Demand will grow more than 60 percent this year, compared with an earlier forecast of 50 percent, the company said at its analyst day meeting in New York. “Business in each of our segments is improving,” George Davis, chief financial officer at Applied Materials, said in a statement. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

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U.S. Stocks Rise as Economic Data, Earnings Offset Sovereign-Debt Concern

March 30, 2010

By Rita Nazareth March 30 (Bloomberg) — U.S. stocks rose as an improved outlook for industrial companies and better-than-estimated data on consumer confidence and home prices overshadowed concern government deficits will derail the economy recovery. 3M Co. rallied 3.5 percent as Morgan Stanley said profit may top estimates after Danaher Corp. boosted its earnings forecast, sending the maker of Craftsman tools shares up 4.6 percent. Home Depot Inc. and Lowe’s Cos. climbed as the S&P/Case-Shiller index of home prices in 20 U.S. cities and the Conference Board’s confidence gauge topped economists’ estimates. The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,173.73 at 3:12 p.m. in New York after falling as much as 0.4 percent. The Dow Jones Industrial Average increased 13.3 points, or 0.1 percent, to 10,909.16. About 11 stocks rose for every 10 that fell on U.S. stock exchanges. “We’re definitely off the bottom,” said Michael Mullaney , who helps manage $9 billion at Fiduciary Trust Co. in Boston. “There’s improvement in confidence and sentiment. People seem to be more comfortable about spending again. We’ll continue to see strength in stocks.” Benchmark indexes fluctuated earlier after Standard & Poor’s cut Iceland’s credit rating and Greece failed to sell half the 12-year bonds it offered, reigniting concern governments around the world struggle to finance growing budget deficits. The 20-city home-price index unexpectedly climbed 0.3 percent and the Conference Board’s sentiment gauge climbed to 52.5 in March from 46.4 in February. The Dow average rose to an 18-month high yesterday after reports showed Americans spent more for a fifth month and European confidence in the economic outlook improved. First-Quarter Rally The S&P 500 has rallied for the last four weeks, heading for a fourth straight quarterly advance, on speculation the economy is recovering from the worst contraction since the Great Depression. The benchmark index for U.S. stocks has climbed 5.3 percent since Dec. 31, its best first-quarter rally since 1998. Traders attributed part of the market’s gains today and yesterday to “window dressing,” in which investors buy shares of the best-performing companies at the end of the quarter to shore up their portfolios. “It’s just the end of the quarter,” said Mark Bronzo , an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “We’ve had a decent quarter so it’s probably a little bit of window dressing. The economic numbers continue to be a little better and today’s numbers were not an exception.” U.S. Treasury Secretary Timothy F. Geithner said U.S. employers soon may start hiring again after weathering the worst recession since the Great Depression. “The economy is getting stronger,” Geithner said yesterday in an interview on CNBC. “We’re probably just on the verge now of what we think will be a sustained period of job creation finally.” To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net .

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No, Bono Is Not “The Worst Investor In America”

March 26, 2010

Is Elevation Partners “the worst run institutional fund of any size in the United States?” That was the assertion of a Wall Street 24/7 post earlier this week, and a bunch of readers have emailed me for reaction. So I decided to take a dive into the media/tech-focused firm’s portfolio, from a financial perspective. What I found was hardly cause for celebration, particularly for a shop whose high-profile partners include Bono, Roger McNamee and Fred Anderson. At the same time, however, calling Elevation “the worst” is to give hyperbole a bad name. The knock on Elevation is that three of its largest investments are major duds: Palm, Move.com and Forbes Digital Media. So let’s look at them one by one: PALM This is the most complicated Elevation investment, in that it actually is four separate investments. They look like this: 2007: $325m Series B convertible preferred shares ($8.50 conversion price) 2008: $51m Series C convertible preferred shares ($3.25 conversion price). This deal was originally $100m, but Palm exercised its right to buy back $49m. It also included 3.6m warrants at a $3.25 strike price. 3/09: $49m of common stock (8.2m shares at $6 per share). This was a rollover of the proceeds from Palm’s buyback of Series C convertible shares. 9/09: $35m of common stock (2.2m shares at $16.25 per share) As you may have heard, Palm is getting battered by the public markets. Its stock was trading above $17 per share last October, but closed yesterday at just $3.70 per share. Lots of reasons for the spiral, including a paucity of available smartphone applications, a disastrous decision to use Sprint as the exclusive carrier for Pre devices and a subsequent addition of Verizon without adequately training Verizon employees on its proprietary operating system. Conventional wisdom is to expect a sale. So let’s imagine that the company was indeed sold, at $3.70 per share. If you value the convertible shares at cost – which Elevation did as of its last quarterly LP report – and convert the warrants, you find that Elevation’s position is valued at just over $416 million. This is compared to a total investment of $460 million. As I said, bad but not disastrous. You can certainly quibble with Elevation holding the convertible shares at cost, Palm’s enterprise value/debt levels are such that Elevation wouldn’t get washed out even were Palm to file Chapter 11. You also can argue that Elevation should never have invested $460 million of a $1.8 billion fund into a single portfolio company (and I wouldn’t disagree), but that’s a “pot committed” discussion for another day. MOVE.com Elevation invested $100 million into Move.com back in 2005, when the company was still known as Homestead HomeStore. This also was convertible preferred stock, at a $4.20 per share conversion price. There also is a 3.5% annual dividend that expires at the end of this year. Move.com appears to have been trading around $4.75 per share when the deal closed, but I assume the deal was struck just a few weeks earlier when it was trading below $3 per share. It closed yesterday at $2.04 per share. Elevation never converted any of the shares (just like with Palm), which means it still carried the investment at cost. And also like with Palm, the Move.com financials indicate that Elevation has plenty of downside protection. Likely upside, of course, remains lacking. FORBES In 2006, Elevation invested around $300 million into the online operations of Forbes Inc. This has, of course, been a disaster. We do not know how far the value of this minority-stake investment has fallen, but let’s conservatively put it at 75 percent. I’ve learned that Elevation has a time-based put on the Forbes investment, but that its time has not yet arrived. So again we have some downside protection, but now it would serve more as salvage than salvation. —————– The most recent fund performance data for Elevation is from the end of Q3 09, and is publicly available via the Washington State Investment Board. At the time, the fund was around 70% committed with a positive IRR of 12.7 percent. I am assuming that this includes the at-cost valuations for the Palm and Move stock, plus a $17.46 per share price for Elevation’s Palm common stock. If my math is correct (and I hope that it is), the Elevation portfolio at the end of Q3 was worth around $1.66 billion (including a decent return from its sale of gaming company BioWare/Pandemic Studios). That would be on cost of around $1.26 billion (thus the positive IRR). Just taking into account the Palm changes, that portfolio value today would still be just a hare over $1.5 billion. This does not, of course, include further decline in Elevation’s Forbes investment, the new investment in Yelp or any other portfolio value changes. Moreover, some LPs might agitate for Elevation to revalue its Palm and Move convertibles, but the vast majority probably won’t. Even if we assume that Elevation is underwater – which some of its investors do indeed believe – it’s hardly “the worst” fund out there. Again, this is not an endorsement, and I’m glad that I didn’t invest (not that I had the option) – particularly given the management fees which are not included in the above math. Moreover, I think Elevation’s ability to raise another fund is very much in question, although its recent hiring of new partners is clear indication that it plans to try (newbie economics is mostly with Fund II). And, yes, Elevation’s fortunes are very much tied to those of Palm. So I’ll keep watching, because a final verdict is not yet in.

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Royal Bank of Scotland Net Loss Beats Estimates; Pay, Bonuses Increase 44%

February 25, 2010

By Andrew MacAskill and Jon Menon Feb. 25 (Bloomberg) — Royal Bank of Scotland Group Plc , Britain’s biggest government-controlled lender, reported a narrower-than-estimated full-year net loss, and increased its pay and bonuses for investment bankers by 44 percent. The loss narrowed to 3.6 billion pounds ($5.5 billion) from 24.3 billion pounds a year earlier, the Edinburgh-based lender said in a statement today. That beat the 6.01 billion-pound estimate of nine analysts surveyed by Bloomberg. RBS’s investment-banking unit swung into profit, and impairments “appear likely to have peaked,” the company said. The stock jumped as much as 8.6 percent. “We have a long and tough job ahead of us but we do believe that the worst is behind us,” Chief Executive Officer Stephen Hester said in a conference call with reporters today. There would be “difficult times ahead,” he said. RBS , which needed 45.5 billion pounds in taxpayer-funded support, is undergoing the most complicated restructuring of any company in history, Hester said last month. The bank’s 2009 loss is slightly more than the cost of Britain’s war in Afghanistan, which cost about 3.5 billion pounds in 2009, according to House of Commons Defence Committee figures last year. The bank will pay about 1.3 billion pounds or 27 percent of revenue, compared with about 900 million pounds for the previous year, said two people briefed on the discussions. Barclays Capital, the investment banking unit of Barclays Plc, paid 38 percent of revenue in remuneration, while Goldman Sachs Group Inc. paid 36 percent. Assets Decline RBS’s loss was reduced by a one-time 2.15 billion-pound gain from a reduction in the pension plan over the third and fourth quarters. The bank, which is 84 percent owned by the U.K., also benefitted from rising profit at its investment banking unit and slowing impairments in the second half. “The numbers are more positive than the bears would have had you believe beforehand,” said Julian Chillingworth , who helps manage $21 billion including RBS stock at Rathbone Brothers Plc. “People are more interested in how quickly Hester can get the stock back to health.” The RBS loan-to-deposit ratio declined to 135 percent, compared with 151 percent, indicating the bank is becoming less reliant on wholesale markets for funding. Total assets declined to 1.52 trillion pounds from 2.22 trillion pounds, the bank said. That’s still greater than British 2008 GDP of about 1.44 trillion pounds. Hester has pledged to cut the balance sheet. RBS rose 7.2 percent to 38.72 pence at 10:25 a.m. in London for a market value of 21.9 billion pounds. Likely 2010 Loss Hester told reporters the bank is likely to make a loss in 2010 and return to profit in 2011. Attracting and retaining staff because of restrictions on bonuses is the biggest business problem that the bank faces, he said. “The road to recovery will be long and difficult, there is no sign of a resumption of the dividend, and the stock overhang of the government stake will remain a millstone around its neck for some time to come,” said Richard Hunter , Head of UK Equities at Hargreaves Lansdown Stockbrokers. The investment bank had done better than rivals, while the retail and commercial units “had their worst year” because of the recession, Hester told reporters. RBS has cut almost 20,000 jobs since Hester was appointed CEO in November 2008, replacing Fred Goodwin . Operating profit at RBS’s investment bank was 6.35 billion pounds compared with a loss of 1.27 billion pounds last year, the bank said. For the fourth quarter, operating profit rose to 1 billion pounds, compared with a 2.8 billion-pound loss in the year-earlier period. Impairments Rise ‘Sharply’ Operating profit at its U.K. consumer banking unit fell 68 percent to 229 million pounds. Profit fell 37 percent at its British corporate lending division to 1.1 billion pounds. The bank took a 335 million pound charge for bodily injury claims and weather claims at its insurance division, where profit fell 90 percent to 58 million pounds. Impairments on bad debt rose “sharply” to 13.9 billion pounds, almost matching the median estimate of 14.17 billion pounds of four analysts surveyed by Bloomberg. Hester, 49, will waive his right to a bonus of 1.6 million pounds amid public anger over such payments after taxpayers bailed out the banking system. The bank said its CEO had “significantly outperformed” his 2009 targets and that he would be rewarded “fairly, appropriately and at market levels.” Executives at Barclays Plc and Lloyds Banking Group Plc are also forgoing bonuses. RBS has fallen 37 percent in London trading since the end of August to yesterday, making it the worst-performer in the five-member FTSE 350 Banks Index , which has fallen 2.8 percent. Barclays, Britain’s second-largest bank, more than doubled second-half profit to 7.5 billion pounds when it reported results. Lloyds Banking Group Plc, Britain’s biggest mortgage lender, reports tomorrow and HSBC Holdings Plc on March 1. To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net

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Alan Greenspan Calls Financial Crisis "By Far" The Worst In History

February 23, 2010

Former Federal Reserve Chairman Alan Greenspan said the financial crisis was “by far” the worst in history and called the recovery from the global recession “extremely unbalanced.” The world economy has undergone “by far the greatest financial crisis globally ever,” Greenspan said today in a speech to the Credit Union National Association’s Governmental Affairs Conference in Washington.

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Schwarzenegger Says Economy Shows `Signs of a Comeback’, Recovery `Slow’

February 21, 2010

By Alison Vekshin Feb. 21 (Bloomberg) — California Governor Arnold Schwarzenegger said the economy shows “signs of a comeback.” “I believe that the worst is over,” the Republican governor said on ABC’s “This Week” program. “But it’s very clear that the comeback is not going to be as quick as we’ve seen in the past.” To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net

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Emerging-Market Stock Funds Post Biggest Outflows in 19 Months on Greece

February 12, 2010

By Bloomberg News Feb. 12 (Bloomberg) — Investors pulled the most money from emerging-market equity funds in 19 months as Greece’s debt crisis escalated and the Federal Reserve laid the groundwork for exiting its record credit expansion. Outflows from emerging-market equity funds reached $2.9 billion in the week to Feb. 10, the highest since the period ended July 9, 2008, according to Cambridge, Massachusetts-based research firm EPFR Global in an e-mailed release. “Investors fretted that Greece’s sovereign debt woes could drive up yields, and hence credit costs, worldwide,” EPFR said. “Further talk by U.S. Federal Reserve officials about an ‘exit strategy’ also weighed on sentiment.” European leaders yesterday ordered Greece to get the bloc’s highest budget deficit under control and promised “determined” action to staunch the worst crisis in the euro currency’s 11- year history. The MSCI Emerging Markets Index has declined 6.5 percent this year amid concern that Greece, Spain and Portugal may struggle to repay lenders as their budget gaps widen. That compares with the 4.9 percent drop in the MSCI World Index, which tracks developed markets. The developing-nation gauge surged a record 75 percent last year, more than triple the 23 percent gain by the Standard & Poor’s 500 Index. Brazil, Russia, India and China led gains among the major global markets in 2009. Less Profitable While emerging-market stocks outpaced advanced-nation equities by about 10 percentage points a year during the past decade, returns since 1975 show they were a less-profitable investment, according to a report by by Elroy Dimson , Paul Marsh and Mike Staunton of London Business School. Emerging-market stocks will probably only outperform advanced markets by about 1.5 percent a year over the “long run,” the authors wrote. Federal Reserve Chairman Ben S. Bernanke said in congressional testimony Feb. 10 that a potential increase in the Fed’s discount rate would be part of the “normalization” of lending “before long” and wouldn’t signal a change in the outlook for monetary policy. U.S. policy makers are trying to determine when to tighten credit with unemployment at 9.7 percent and the world’s largest economy forecast to grow at the fastest pace since 2005. High-yield bond funds posted outflows of more than $1 billion for their worst week since early in the third quarter of 2008, EPFR said. Japanese equity funds had net inflows for a seventh week, the longest since July 2008. Asia ex-Japan Equity funds had their worst week since August amid concerns over a possible trade spat after the U.S. proposed to sell arms to Taiwan, EFPR said. China halted planned military exchanges with the U.S. and said it will punish companies involved in a Pentagon plan to sell weapons worth $6.4 billion to Taiwan. To contact the Bloomberg News staff on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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Airlines May Take Three Years to Recover From Losses in Global Recession

January 31, 2010

By Chan Sue Ling and Liza Lin Jan. 31 (Bloomberg) — The global airline industry will take at least three years to recover after the worst recession in six decades hurt travel demand, said Giovanni Bisignani , chief executive of the International Air Transport Association . The airline industry globally lost $50 billion in the past 10 years, with $11 billion in 2009 alone. Revenues declined by $80 billion last year, Bisignani said. “These numbers are really shocking,” Bisignani said in an interview in Singapore today. “We’ve had a terrible 10 years. It would take at least three years to recover the level of growth we have lost.” Airlines worldwide suffered the worst drop in passenger demand since World War II last year, IATA said on Jan. 27. The global travel slump has pushed carriers including Singapore Airlines Ltd. and British Airways Plc into losses and forced Japan Airlines Corp. to file for bankruptcy. Traffic, a measure of passengers flown multiplied by the distance travelled, dropped 3.5 percent last year, with declines exceeding 5 percent in Europe, North America and the Asia- Pacific region, said IATA, which represents 230 carriers. The economic slump and credit crisis have cost carriers 2 ½ years of growth in passenger markets and 3 ½ years in freight, so that 2010 will be “another spartan year” of cost controls and capacity caps, Bisignani had said earlier. British Airways, Europe’s third-biggest carrier, expects a “bigger loss” in the 12 months ending March 31 than it had in fiscal 2009, Chairman Martin Broughton said on Jan. 25. Singapore Air, the world’s second-largest carrier by market value, may have its first annual loss as a publicly traded company, the carrier said in July. Bankruptcy Japan Air this month became Asia’s first major flag carrier to seek bankruptcy protection after four government bailouts failed to revive the region’s most indebted carrier. More airlines will go bankrupt, Bisignani said today. About 34 carriers have gone out of business since 2008, according to IATA. Passenger yield, or the average price a traveler pays to fly one kilometer, will remain “flat” this year and increase only next year, Bisignani said. Globally, airlines will probably post losses totaling $5.6 billion this year, the trade group had estimated. That’s about half of last year’s estimated $11 billion deficit. While the industry’s worst loss to date was almost $13 billion in 2001 following the Sept. 11 terror attacks, an $80 billion revenue decline last year was “vastly bigger” than anything previously experienced, according to IATA Chief Economist Brian Pearce . To contact the reporters on this story: Chan Sue Ling in Singapore slchan@bloomberg.net ; Liza Lin in Singapore at llin15@bloomberg.net

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Japan’s Production Rises, Unemployment Falls as BOJ Highlights Yen Concern

January 28, 2010

By Aki Ito and Keiko Ujikane Jan. 29 (Bloomberg) — Japan’s industrial production rose and unemployment fell in December, signaling a continued recovery, while central bankers considered the threat to the economy from exchange rates, reports showed today. Factory output increased 2.2 percent from the previous month, less than economists had projected, Trade Ministry figures showed today in Tokyo. The unemployment rate dropped to 5.1 percent from 5.2 percent, according to a separate release. While the gains in production and jobs may reduce the danger of a return to recession, declines in consumer prices and an appreciating yen are forcing policy makers to remain open to further stimulus. Bank of Japan officials highlighted concern that the yen’s rise to a 14-year high would undermine business sentiment, minutes of their meetings last month showed today. “This confirms that the worst is over,” said Masamichi Adachi , senior economist at JPMorgan Chase & Co. in Tokyo. “But these are very, very small improvements, and the jobs recovery ahead is going to be extremely slow, too.” Bond futures rose, and headed for a three-week advance, as the evidence of continued deflation underpinned demand for the relative safety of government debt. Yields on benchmark 10-year bonds fell to 1.305 percent, matching the lowest level since Jan. 4, at Japan Bond Trading Co. The yen rose 0.3 percent to 89.66 per dollar. A separate government report today showed household spending rose 2.1 percent in December from a year before, more than forecast and capping a fifth straight advance. The figures contrasted with data earlier this week showing retail sales tumbled 0.3 percent from a year ago. More Work The economy added 130,000 jobs in December, the biggest increase in four months. People found more work in medical, welfare and education sectors, while there were fewer jobs and manufacturing and retail industries, according to unadjusted figures in the report. “Unemployment has improved a little bit but I don’t think we can be optimistic at all because the number is still more than 5 percent,” Prime Minister Yukio Hatoyama told reporters today in Tokyo. “The situation remains where many people want to work but cannot find a job.” Japan’s Diet yesterday approved a 7.2 trillion yen ($80 billion) economic package aimed at bolstering the recovery from the nation’s worst postwar recession. “At least the worst is over,” said Yoshiki Shinke , senior economist at Dai-Ichi Life Research Institute in Tokyo. “But I’m concerned unemployment is going to stay stuck at this high level for some time.” Cutting Staff Some companies are still slashing jobs to rein in costs. Promise Co. , Japan’s second-largest consumer lender, said yesterday it will cut 1,600 staff, or a third of its workforce, by the end of March 2011. The Tokyo-based company’s net income slumped 23 percent in the six months ended Sept. 30. Japan Airlines Corp. , which filed for bankruptcy this month, will slash about 15,700 jobs by the end of March 2013. The job-to-applicant ratio rose for a fourth month to 0.46, meaning there are 46 positions for every 100 candidates, the Labor Ministry said today. The same report showed there were 87 newly advertised jobs in December for every 100 people who started looking for work that month, the most since January. Economists regard the gauge as a leading indicator of employment. Exports rose for the first time in 15 months in December, fueling production gains and may also be encouraging companies to increase overtime or hiring. Toyota Motor Corp. and Sumitomo Pipe & Tube Co. are among companies increasing production to meet growing demand in China. Toyota, Nissan Motor Co. and Honda Motor Co. increased global production in December as automobile demand surged in China and U.S. sales recovered. Output at Toyota rose 33 percent from a year earlier, while Honda increased production 3.4 percent and Nissan’s surged 54 percent. The manufacturers plan to increase production 1.3 percent this month and 0.3 percent in February, the government said today. To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net ; Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Aliansce IPO Raises Less Than Planned in Sign Bovespa Rout Damping Demand

January 28, 2010

By Paulo Winterstein and Fabiola Moura Jan. 28 (Bloomberg) — Aliansce Shopping Centers SA is raising less money in its initial public offering than the company planned, adding to signs that the worst Brazil stock market drop in three months is damping demand for new shares. Aliansce and stakeholders may raise 673 million reais ($362 million), 20 percent less than the 845 million reais for the initial sale that the company estimated two weeks ago. The shopping mall owner’s initial offering is the first in Latin America’s biggest equity market this year. Metalfrio Solutions SA , the nation’s biggest maker of commercial refrigerators, canceled its planned share sale and M. Dias Branco SA , the biggest maker of cookies and pasta, postponed an offering in the past week as the Bovespa index fell 8 percent since Jan. 6, the worst slump since October. “This was a small offer with a more restricted pool of investors, but the poor market put some pressure on the stock,” said Eduardo Roche , who helps manage about $400 million at Banco Modal SA in Rio de Janeiro and didn’t buy Aliansce shares. “This could be a sign that investors may demand a bigger discount until the market becomes a bit more solid.” Aliansce is selling shares for 9 reais each, below the expected range of 10 to 13 reais, according to a filing posted on the securities regulator’s Web site. Aliansce is selling 50 million shares and stakeholders will offer as many as 24.8 million, including a possible supplementary offer. Aliansce shares are scheduled to begin trading tomorrow. Biggest Advance Brazilian companies raised more than 23.8 billion reais in six initial offerings last year, according to the Web site of exchange owner BM&FBovespa SA. Brazilian stocks had their biggest annual advance in six years in 2009, with the Bovespa surging 83 percent, as record-low interest rates and government stimulus plans helped Latin America’s largest economy pull out of a recession faster than most nations. The Bovespa has dropped from a 19-month high in the past three weeks as steps by China to curb growth in the world’s fastest-expanding major economy spurred concern that demand for Brazilian exports will weaken. The Bovespa fell in each of the past five trading sessions, matching the longest stretch of declines since October 2008. M. Dias asked to suspend its sale for 60 days, citing “current market conditions,” according to a Jan. 21 filing. Multiplus SA , the frequent-flyer unit of the country’s biggest airline, is expected to sell shares next week. The Multiplus initial offering may not suffer as much because it is a larger sale, expected to raise as much as 1.3 billion reais, Roche said. To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net ; Fabiola Moura at fdemoura@bloomberg.net

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France’s Top Fund Manager Lalevee Bets on Growth, Emerging Markets in 2010

January 22, 2010

By Adria Cimino Jan. 22 (Bloomberg) — Sebastien Lalevee , manager of France’s two best-performing domestic equity funds in 2009, says he will continue his success this year by investing in faster- growing companies and those that get sales in emerging markets. The Financiere Arbevel Pluvalca France fund returned 66 percent last year, beating the benchmark SBF 120 Index’s 24 percent advance and all comparable funds, according to data compiled by Bloomberg. The Pluvalca France Small Caps fund, also managed by Lalevee, jumped 63 percent. Lalevee, 38, benefited in 2009 from companies most tied to economic growth, including Paris-based chemical company Rhodia SA and Bull SA, France’s largest computer maker. For this year, the Pluvalca France fund, which can invest as much as 25 percent of assets outside France, has been buying shares of Copenhagen- based brewer Carlsberg A/S to profit from its expansion in emerging markets and Neubiberg, Germany-based Infineon Technologies AG, Europe’s second-largest semiconductor maker. “In periods of economic instability, such as today, we favor growth shares,” Lalevee, who left his analyst position at Citigroup Inc. in 2008, said in an interview. “Last year, it was about industry picking. Today it’s about choosing high- quality growth stocks in each industry.” Lalevee bought fund-management company Arbevel in February 2009 with Jean-Baptiste Delabare , the former head of European research at Citigroup, and started running the 22 million-euro ($31 million) Pluvalca France fund in March. Missed the Worst The timing meant they missed the worst two months of the year for European shares. The Dow Jones Stoxx 600 Index slid 13 percent over the first two months of 2009, before rallying 61 percent from a 12-year low on March 9 through year end. “I arrived at the right time, with the right idea,” said Lalevee, whose company oversees a total of 60 million euros. “If I had arrived two months earlier, I would have invested the same way and would have had two months of underperformance behind me.” Shares of Rhodia, Bull, Paris-based property developer Nexity SA and computer-services company Groupe Steria SCA all more than doubled in 2009 as the Stoxx 600 rebounded from the previous year’s record decline. The gauge surged 28 percent last year, the biggest jump in a decade, boosted by record-low interest rates in the U.S. and Europe and about $12 trillion of commitments from governments worldwide to revive credit markets. This year, the Pluvalca France fund added to holdings of Paris-based Audika SA , Europe’s second-largest hearing-aid distributor, and at the end of last year bought shares in Ecully, France-based Groupe SEB SA, the world’s biggest maker of countertop kitchen appliances. ‘Surprise Positively’ “I’m looking for companies that have the potential to surprise positively with their earnings per share growth,” Lalevee said. Lalevee’s returns came without the aid of a single bank, the second-best performing industry in Europe in 2009 after basic-resources shares, and he is still avoiding the stocks. European banks plunged 49 percent after the collapse of Lehman Brothers Holdings Inc. in September 2008 through year end, before rallying 47 percent in 2009. “Off balance sheet, it’s a black box,” Lalevee said. “If there was a rug, there would be a lot still under there.” He said valuations for banks won’t return to the levels prior to the credit crisis as it’s now “a different world.” While Lalevee says he’s confident for 2010, he has a “Plan B” portfolio of stocks that he will buy if the current earnings reporting season disappoints. The backup list includes companies that pay higher dividends, pharmaceutical shares and telecommunication stocks. “We can’t have 50 Alcoas ,” he said, referring to the U.S. aluminum producer that kicked off the fourth-quarter earnings season on Jan. 11 with profit that trailed analyst estimates. “There’s a real risk to earnings, that expectations are too high. If the trend isn’t satisfactory, we’ll be more cautious.” To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net .

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Forecasters See Return to Stability, Not a Resurgence for Retail Real Estate in 2010

January 20, 2010

Based on the flurry of reports from a wide range of industry observers, there appears to be growing consensus that the worst may be over for the U.S. economy and that, with consumer spending returning to positive, a retail real estate recovery is in…

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Pending Home Sales in U.S. Probably Declined for First Time in 10 Months

January 5, 2010

By Bob Willis Jan. 5 (Bloomberg) — The number of contracts to buy previously owned U.S. homes probably fell in November for the first time in 10 months as Americans waited for a tax credit to be extended, economists said before a report today. The index of signed purchase agreements, or pending home sales, dropped 2 percent after October’s 3.7 percent increase, according to the median estimate in a Bloomberg News survey of 35 economists before today’s release from the National Association of Realtors. Factory orders rose for a third straight month in November, a separate report from the Commerce Department may show. The incentive for first-time homebuyers, originally scheduled to expire at the end of the month and subsequently extended through April and broadened, is stabilizing sales. The credit and cheaper properties are helping sustain the recovery in housing that’s emerged from the worst slump since the 1930s. “Buyers wouldn’t have expected to close in time to take advantage of the credit,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “Sales will improve again as we move through the first part of the year, as buyers take advantage of the tax credit and improved affordability. The underlying trend is one of improvement.” The National Association of Realtors is due to report the figures at 10 a.m. in Washington today. Estimates range from a drop of 12 percent to a 3.9 percent increase. The Commerce Department report at the same time may show orders placed with U.S. factories rose 0.5 percent in November after a 0.6 percent rise, according to the median estimate of 58 economists surveyed by Bloomberg. Leading Indicator Pending home sales are considered a leading indicator because they track contract signings. The Realtors’ existing- home sales report tallies closings, which typically occur a month or two later. The Realtors group started publishing the index in March 2005, and data go back to January 2001. Transactions had to close by Nov. 30 for buyers to qualify for the tax credit, which explains why resales continued to rise through November. The extension allows closings to occur by the end of June as long as contracts are signed by the end of April. Sales of existing homes in November rose 7.4 percent to a 6.54 million annual rate, the highest level in almost three years, the National Association of Realtors said on Dec. 22. Foreclosures accounted for 33 percent of all sales, the group said. President Barack Obama on Nov. 6 extended the $8,000 first- time buyer credit and expanded it to include current homeowners in a bid to boost demand. Still, the measure may have pulled sales forward and could result in fewer purchases in coming months. Home Prices The recession has helped make homes more affordable. The S&P/Case-Shiller index of average home prices in 20 U.S. cities was down 29 percent in October from its peak in July 2006. The measure fell 7.3 percent from October 2008. Federal Reserve officials are doing their part to sustain the housing rebound by pledging to keep their benchmark interest rate near zero for an “extended period,” according to their latest policy statement. Even so, mortgage rates have begun rising. The average rate on a 30-year fixed home loans rose to 5.14 percent for the week ended Dec. 31, the fourth consecutive gain after reaching a record low of 4.71 percent in the week ended Dec. 3, according to mortgage finance company Freddie Mac. Builders are still struggling even as many forecast a rebound this year. Hovnanian Enterprises Inc ., New Jersey’s largest homebuilder, said Dec. 16 its fourth-quarter loss narrowed as more buyers signed purchase contracts. ‘Year of Transition’ “2010 will be a year of transition for us,” Chief Executive Officer Ara Hovnanian said on a conference call. “We have started down a path that we believe will eventually return us to profitability.” Stocks of homebuilders surged last year as the economy recovered from the worst recession in seven decades. The Standard & Poor’s Homebuilder Supercomposite Index gained 66 percent from March 9 through the end of 2009. The S&P 500 Index rose 65 percent since reaching a 12-year low that day. An absence of job gains remains a hurdle for housing. The economy has lost 7.2 million jobs since the recession began in December 2007. The unemployment rate may exceed 10 percent through the first half of 2010, a Bloomberg survey showed. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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Video: Dubai Opens World’s Largest Tower Amid Property Slump: Video

January 3, 2010

Jan. 4 (Bloomberg) — Dubai’s Sheikh Mohammed bin Rashid Al Maktoum will open the world’s tallest tower, today, the Burj Dubai, today. In the five years it’s taken to build the $1.1 billion tower, the sheikdom’s debt-fueled property market has gone from the world’s best performing to the worst, forcing officials to renegotiate loans and seek bailouts from neighboring Abu Dhabi. Bloomberg’s Rishaad Salamat reports. (Source: Bloomberg)

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The Lost Decade: Zero Net Job Creation From 2000-2009

January 2, 2010

For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different. The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.

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Citigroup, Marshall & Ilsley Among Worst Performers in S&P 500 for 2009

December 31, 2009

By Dakin Campbell and Linda Shen Dec. 31 (Bloomberg) — Citigroup Inc. and Marshall & Ilsley Corp. were among the worst performing stocks in the Standard & Poor’s 500 Index this year, dragged down by defaults on commercial and residential property loans that may extend declines into 2010. Marshall & Ilsley tumbled 60 percent through yesterday, the index’s biggest drop, according to data compiled by Bloomberg. Huntington Bancshares Inc. fell 52 percent, Citigroup dropped 51 percent and Zions Bancorporation declined 48 percent. Banks accounted for seven of the 10 worst performers in the S&P index. “The problem is primarily capital, dilution and credit,” said Gary Townsend , president of Hill-Townsend Capital LLC in Chevy Chase, Maryland. “There are still questions that remain with respect to the solvency of many banks, and those undoubtedly are the ones in which investors have the greatest concerns.” U.S. banks are struggling to stem losses on commercial real estate loans as the worst recession in 60 years makes it difficult for business owners to pay off debts. Regulators have closed 140 lenders this year, the most since 1992, and analysts predict 1,000 banks may fail in the next few years. Marshall & Ilsley, Wisconsin’s biggest bank, is buckling under housing and construction loan defaults in Florida and Arizona, among states with high foreclosure rates this year. The lender has reported four straight quarterly losses, and said it set aside as much as $578.7 million to cover bad loans in the third quarter. The company’s shares rose 7 cents to $5.50 at 2:05 p.m. in New York trading. Commercial Real Estate “The worst of Arizona and Florida problems are now behind them,” Tony Davis , an analyst with Stifel Nicolaus & Co., said in a Dec. 30 interview. “Having taken $160 million in charge- offs in their correspondent banking division, the heavy lifting in that portfolio probably has also been completed.” At Salt Lake City-based Zions, about $1.1 billion, or 59 percent, of $1.8 billion in total non-accrual loans in the third quarter were in commercial real estate, the lender said in October. “We feel a whole lot more comfortable heading into 2010 than we did heading into 2009,” Zions spokesman James Abbott said in an interview Dec. 30. Zions Chief Executive Officer Harris Simmons bought $2 million in shares in the past four months, Abbott said. Huntington Bancshares of Columbus, Ohio, cut its portfolio of troubled commercial real estate loans to a “manageable number,” Stephen Steinour , chief executive officer of the Columbus, Ohio-based bank, said Nov. 18. The company’s shares dropped 4 cents to $3.64 at 2:05 p.m. Huntington Capital Huntington has raised $1.6 billion in capital and “addressed our credit quality issue aggressively,” spokeswoman Maureen Brown said in an e-mail. “Our efforts have produced three consecutive quarters of improved pretax, pre-provision income giving us confidence that we are positioning the company for better performance once this credit cycle ends.” A call to Marshall & Ilsley spokeswoman Sara Schmitz wasn’t returned. “Regional banks have an above average amount of risk to commercial real estate, and that’s clearly where the markets have some concerns,” Oppenheimer & Co. analyst Terry McEvoy said in a Dec. 30 interview. Citigroup’s TARP Citigroup, which had a $27.7 billion loss for 2008, this month joined Wells Fargo & Co. and Bank of America Corp. in raising cash to escape limits tied to “extraordinary financial assistance” from the government. The bank sold $17 billion in shares at $3.15 each, less than the $3.25 the U.S. paid to acquire a one-third stake in September, prompting the Treasury to delay selling its shares for at least 90 days. Citigroup ended a loss-sharing agreement with the government. Citigroup spokeswoman Danielle Romero-Apsilos , declined to comment. Banks sold preferred shares to the government and common shares to investors to cover commercial and residential real estate losses and ensure capital levels exceeded regulatory thresholds. “At the end of the day these banks were undercapitalized and it was the dilutive effect of stock issuance that weighed on the equity prices the most,” said William Fitzpatrick , an analyst at Racine, Wisconsin-based Optique Capital Management, which oversees about $900 million. U.S. Preferred Shares Marshall & Ilsley, which accepted $1.72 billion from the U.S. Troubled Asset Relief Program last year, doubled the number of shares outstanding this year, McEvoy said. Citigroup’s outstanding shares doubled in July and again in September as $58 billion of preferred shares held by the U.S. were converted into common stock. Bank stocks slumped as the S&P 500 rose 24.7 percent for the year. The index climbed more than 66 percent from an almost 13-year low on March 9, when Berkshire Hathaway Inc. ’s Warren Buffett said the economy had “fallen off a cliff.” Among the winners: XL Capital Ltd., the Bermuda-based insurer and reinsurer that posted an almost 400 percent gain as it returned to profitability. Other U.S. banks benefited by gaining access to government support through TARP. The KBW Bank Index of 24 national and regional lenders climbed 130 percent since touching a low on March 6. Dallas-based Comerica Inc. climbed about 51 percent this year, and New York-based JPMorgan Chase & Co. rose 32 percent — the two best performers in the index. “You saw a divergent performance in 2009 and I tend to think that’s what we’ll get in 2010 as well,” Fitzpatrick said. “It’s just a matter of how bad credit gets and whether unemployment stabilizes.” Performance returns include companies tracked by the S&P 500 at the end of the year. Among 29 firms removed in 2009 was CIT Group Inc., the commercial lender whose stock was wiped out when the firm went bankrupt, and MBIA Inc., the mortgage insurer removed two weeks before the end of the year. To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net ; Linda Shen in New York at lshen21@bloomberg.net

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S&P 500's worst performers suffered from CRE loan exposure

December 31, 2009

Commercial and residential real estate mortgages played a big part in depressing the share prices of the worst-performing public companies on the Standard & Poor's 500 index in 2009. As of Wednesday, Marshall

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S&P 500's worst performers suffered from CRE loan exposure

December 31, 2009

Commercial and residential real estate mortgages played a big part in depressing the share prices of the worst-performing public companies on the Standard & Poor's 500 index in 2009. As of Wednesday, Marshall

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2009: Worst Year Ever? (Finance and Commerce)

December 28, 2009

For most commercial real estate professionals, this year can’t end soon enough. There’s general agreement that 2009 was the toughest year in the business in recent memory. But was 2009 the worst year ever for commercial real estate?

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U.S. Holiday Retail Sales Rise 3.6%, Rebounding From Worst Year Since 1970

December 28, 2009

By Cotten Timberlake and Linda Sandler (Corrects ICSC holiday forecast in ninth paragraph.) Dec. 28 (Bloomberg) — U.S. retail sales rose an estimated 3.6 percent this holiday season as online gift-buying, last- minute spending and an extra shopping day spurred a recovery from last year, the worst in four decades. A jump in purchases the week before Christmas helped year- over-year electronics sales increase 5.9 percent from Nov. 1 to Dec. 24, MasterCard Advisors’ SpendingPulse said in a statement. Jewelry and luxury sales also gained, the research firm said. The increase may signal that revenue at retailers will beat trade groups’ forecasts for the two-month period ending Jan. 2. Shoppers resumed purchasing this season as consumer confidence rebounded from a record low in February. “We saw a nice little surge toward the end of the season,” with the pace picking up Dec. 22, 23 and 24, said Michael McNamara , a vice president for research and analysis at SpendingPulse, in a Bloomberg Television interview today. “Last year, we were in critical condition, this year, in stable.” Retailers also recorded an extra day of sales because there were 28 days between Thanksgiving and Christmas this year compared with 27 last year. Excluding the extra day would temper the increase “anywhere from 2 percent to 4 percent,” SpendingPulse said. Wal-Mart Stores Inc. , the world’s largest retailer, gained 13 cents to $53.73 at 11:46 a.m. in New York Stock Exchange composite trading. Macy’s Inc. , the second-largest U.S. department store company, jumped 42 cents, or 2.4 percent, to $17.99. The 30-member Standard & Poor’s 500 retail index rose 0.5 percent to 419.71. ‘Improving Faster’ “Consumer sentiment for higher-income folks has been improving faster as of late,” David Schick , an analyst with Stifel Nicolaus & Co., said in a telephone interview today. “That is driving some of the better spending coupled with the fact that we are comparing with a dramatic drop-off in the more discretionary categories last year.” The SpendingPulse estimate for Nov. 1 to Dec. 24 excludes automotive and gasoline sales, the Purchase, New York-based researcher said in an e-mail yesterday. SpendingPulse measures retail sales across all payment forms, including cash and checks. The firm didn’t disclose dollar spending totals. Holiday Forecasts SpendingPulse doesn’t forecast holiday sales. The Washington-based National Retail Federation has predicted a 1 percent decline, to $437.6 billion. The International Council of Shopping Centers, another trade group, anticipates a 1 percent increase in sales at stores open at least a year. The ICSC forecast a 2 percent gain in sales for December only. The NRF’s measure is based on U.S. Commerce Department retail sales data, excluding auto dealers, gas stations and restaurants. The NRF releases holiday results after the Commerce Department announces its December data on Jan. 14. The ICSC will report the retail chains’ latest weekly results tomorrow. Retailers will report December sales — the period ending Jan. 2 — on Jan. 7. Last year holiday sales fell 3.4 percent, according to the NRF. The 2008 season was the worst since New York-based ICSC started recording sales four decades ago. This season, online sales jumped 18 percent from Nov. 27 to Dec. 24, according to SpendingPulse. “People were more comfortable doing last-minute shopping online, especially with the bad weather,” Kamalesh Rao , director of economic research for SpendingPulse, said in a telephone interview yesterday. A snowstorm on the East Coast the weekend before Christmas closed some malls early on Dec. 19 and kept shoppers at home. Jewelry sales rose 5.6 percent for November and December, while luxury retail excluding jewelry gained 0.8 percent, SpendingPulse said. “Holiday 2009 can be described in one word, ‘Adequate,’” Marshal Cohen , the chief retail industry analyst at Port Washington, New York-based NPD Group Inc., said today. To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net ; Cotten Timberlake in Washington at ctimberlake@bloomberg.net

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Holiday Retail Sales in U.S. Climbed an Estimated 3.6%, SpendingPulse Says

December 28, 2009

By Cotten Timberlake and Linda Sandler Dec. 28 (Bloomberg) — U.S. retail sales rose an estimated 3.6 percent this holiday season as online gift-buying, last- minute spending and an extra shopping day spurred a recovery from last year, the worst in four decades. A jump in purchases the week before Christmas helped year- over-year electronics sales increase 5.9 percent from Nov. 1 to Dec. 24, MasterCard Advisors’ SpendingPulse said in a statement. Jewelry and luxury sales also gained, the research firm said. The increase may signal that revenue at retailers will beat trade groups’ forecasts for the two-month period ending Jan. 2. Shoppers resumed purchasing this season as consumer confidence rebounded from a record low in February. “We saw a nice little surge toward the end of the season,” with the pace picking up Dec. 22, 23 and 24, said Michael McNamara , a vice president for research and analysis at SpendingPulse, in a Bloomberg Television interview today. “Last year, we were in critical condition, this year, in stable.” Retailers also recorded an extra day of sales because there were 28 days between Thanksgiving and Christmas this year compared with 27 last year. Excluding the extra day would temper the increase “anywhere from 2 percent to 4 percent,” SpendingPulse said. Wal-Mart Stores Inc. , the world’s largest retailer, gained 13 cents to $53.73 at 11:46 a.m. in New York Stock Exchange composite trading. Macy’s Inc. , the second-largest U.S. department store company, jumped 42 cents, or 2.4 percent, to $17.99. The 30-member Standard & Poor’s 500 retail index rose 0.5 percent to 419.71. ‘Improving Faster’ “Consumer sentiment for higher-income folks has been improving faster as of late,” David Schick , an analyst with Stifel Nicolaus & Co., said in a telephone interview today. “That is driving some of the better spending coupled with the fact that we are comparing with a dramatic drop-off in the more discretionary categories last year.” The SpendingPulse estimate for Nov. 1 to Dec. 24 excludes automotive and gasoline sales, the Purchase, New York-based researcher said in an e-mail yesterday. SpendingPulse measures retail sales across all payment forms, including cash and checks. The firm didn’t disclose dollar spending totals. Holiday Forecasts SpendingPulse doesn’t forecast holiday sales. The Washington-based National Retail Federation has predicted a 1 percent decline, to $437.6 billion. The International Council of Shopping Centers, another trade group, anticipates a 2 percent increase in sales at stores open at least a year. The NRF’s measure is based on U.S. Commerce Department retail sales data, excluding auto dealers, gas stations and restaurants. The NRF releases holiday results after the Commerce Department announces its December data on Jan. 14. The ICSC will report the retail chains’ latest weekly results tomorrow. Retailers will report December sales — the period ending Jan. 2 — on Jan. 7. Last year holiday sales fell 3.4 percent, according to the NRF. The 2008 season was the worst since New York-based ICSC started recording sales four decades ago. This season, online sales jumped 18 percent from Nov. 27 to Dec. 24, according to SpendingPulse. “People were more comfortable doing last-minute shopping online, especially with the bad weather,” Kamalesh Rao , director of economic research for SpendingPulse, said in a telephone interview yesterday. A snowstorm on the East Coast the weekend before Christmas closed some malls early on Dec. 19 and kept shoppers at home. Jewelry sales rose 5.6 percent for November and December, while luxury retail excluding jewelry gained 0.8 percent, SpendingPulse said. “Holiday 2009 can be described in one word, ‘Adequate,’” Marshal Cohen , the chief retail industry analyst at Port Washington, New York-based NPD Group Inc., said today. To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net ; Cotten Timberlake in Washington at ctimberlake@bloomberg.net

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2009: The year that wasn’t a disaster (The Record and Herald News)

December 27, 2009

The outlook was grim, but our worst fears were not realized: The economy did not collapse during the year that wasn’t Armageddon.

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Krugman: 'Reasonably High Chance' Economy Will Contract Next Year …

December 27, 2009

Distressed Commercial Real Estate – Google Blog Search : News Search Results for Distressed Commercial Real Estate : The outlook was grim, but our worst fears were not realized: The economy did not collapse during the year that wasn’t …

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Video: Boockvar Says High Home Inventories May Stall Recovery: Video

December 23, 2009

Dec. 23 (Bloomberg) — Peter Boockvar, an equity strategist at Miller Tabak & Co., talks with Bloomberg’s Carol Massar about the outlook for the U.S. housing market. Purchases of new homes in the U.S. unexpectedly fell last month, indicating a recovery from the worst housing slump since the Great Depression will be slow to develop. (Source: Bloomberg)

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U.K. Airports, Railways Disrupted by Winter Storms, Stranding Travelers

December 22, 2009

By Morwenna Coniam Dec. 22 (Bloomberg) — U.K. travel was severely disrupted as snow and ice led to gridlocked roads, delayed flights and reduced train services. Eurostar Group Ltd., operator of high-speed trains through the Channel Tunnel, resumed a limited service today after its vehicles stopped working in snowy weather, causing four days of cancellations. Air passengers were warned of possible flight disruptions. EasyJet Plc and Ryanair Holdings Plc canceled flights from London Luton Airport as well as departures from Italy and Germany, where some airports also shut down. Gatwick and London City airports opened today after closing last night. Heathrow airport is running a “good service,” it said on its Web site . “The majority of our flights are operating today, but there have been some short-haul cancellations this morning due to the knock-on effect of the weather disruption yesterday,” said British Airways Plc. The carrier canceled many flights from Heathrow yesterday. Snow and low temperatures swept across continental Europe over the last four days and have been blamed for 80 deaths, including 42 people, mostly homeless, who died in Poland last weekend, the British Broadcasting Corp. reported. Frankfurt Airport opened today after closing yesterday evening. The Italian government sent 800 soldiers to help dig out Milan after heavy snows blocked highways and disrupted air and rail travel, Corriere della Sera reported today. ‘Worst Day’ The U.K.’s Automobile Association Ltd. said yesterday was “easily the worst day” it has had in 10 years, with almost 22,000 jobs for the vehicle-rescue service. Special teams have been deployed to the worst-affected areas to help people stuck in remote places, and members out on the roads are being made a priority, AA head of public affairs, Paul Watters, said in a telephone interview. Southeastern trains said it would follow its Saturday timetable on mainline, metro and high-speed routes, according to a statement on the operator’s Web site . The U.K.’s Met Office forecaster issued severe weather warnings for icy roads today in southern, eastern and western England and for heavy snow in Scotland. More snow is expected tomorrow in Scotland and northern England, it said. Northwestern Europe may be colder than average in the three months through March, boosting demand for energy to heat homes and offices, forecaster WSI Corp. said today in an e-mailed statement. The next quarter “will be an extension of what we’re having right now” in the region, Todd Crawford , the company’s chief meteorologist, said yesterday from WSI’s office in Andover, Massachusetts. January will be 1 to 2 degrees Celsius colder than usual in northwestern Europe, he said. The recent colder weather in Europe has been caused by a combination of factors including the current El Nino event and cold mid-latitude North Atlantic sea surface temperatures, Crawford said. To contact the reporter on this story: Morwenna Coniam in London at mconiam@bloomberg.net .

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Factory Output in U.S. Expands More Than Estimated; Wholesale Prices Jump

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’ll continue to see growth in manufacturing output, given strong exports and that consumers are spending,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York, who forecast a production gain of 0.9 percent. “You’re seeing a decent amount of breadth in terms of the increases.” Stock futures were lower after the report and separate releases that showed higher producer prices and slower growth at New York-area factories. The contract on the Standard & Poor’s 500 Index was down 0.4 percent to 1,104 at 9:24 a.m. in New York. A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. New York Manufacturing Factories in the New York region expanded less than anticipated this month, figures from the Fed Bank of New York also showed. The bank’s general economic gauge, known as the Empire State Index , fell to a five-month low of 2.6 from 23.5 in November. Readings greater than zero signal expansion. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Warmer Weather Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding Auto Production Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Global Growth Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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Industrial Production in U.S. Rose 0.8% in November, Most in Three Months

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’re seeing rising production to meet consumer demand and increased business spending,” said John Herrmann , chief economist at Herrmann Forecasting in Summit, New Jersey. “Businesses are beginning to incrementally increase their inventories, and that means ramping up production.” A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. Manufacturing Up 1.1% The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Automobile Sales Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. ‘Business Has Strengthened’ “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Meeting Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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U.S. Industrial Output Rises Most in Three Months as Recovery Gains Speed

December 15, 2009

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’re seeing rising production to meet consumer demand and increased business spending,” said John Herrmann , chief economist at Herrmann Forecasting in Summit, New Jersey. “Businesses are beginning to incrementally increase their inventories, and that means ramping up production.” A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. Manufacturing Up 1.1% The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Automobile Sales Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. ‘Business Has Strengthened’ “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Meeting Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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LoftyVistas » Blog Archive » Commercial Real Estate Recovery …

December 13, 2009

At a time when the worst for commercial real estate seems to be over and recovery appears visible, DTZ undertook a study to examine how this recovery will come about and analyse what this means for the future. …

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ECB Plans Measures to Revive Market for Asset-Backed Bonds, Papademos Says

December 12, 2009

By Simon Kennedy and Esteban Duarte Dec. 12 (Bloomberg) — The European Central Bank plans to take steps to help revive the asset-backed bond market, Vice President Lucas Papademos said. “The ECB will be taking some initiatives to help catalyze the re-launching of securitization on a sound basis in the context of its collateral framework policy related to the implementation of monetary policy,” Papademos said at a conference in Berlin today, without giving details. Europe’s market for bonds backed by real estate, consumer debt and corporate loans totals more than $3 trillion. It was dormant for more than a year until September, when Volkswagen AG and Lloyds Banking Group Plc sold investors 1.7 billion euros ($2.5 billion) of the securities. “Steps can be taken to re-launch securitization, but to re-launch it on a sound basis so as to facilitate the provision of credit to the economy and the better distribution of risk among market participants,” Papademos said. The ECB can influence the asset-backed bond market because it accepts the securities as collateral for loans to banks. It said on Nov. 20 that from March, newly issued asset-backed securities it is presented as collateral must be graded AAA/Aaa from two ratings companies instead of just one. Papademos said “to restore confidence” in the market it was important to improve the transparency and standards of securities. Toxic Asset Rules The central bank has looked into rules to force banks to give investors details of each loan packaged into the bonds, to limit the inclusion of toxic assets that contributed to the worst credit crisis for decades. Papademos also said greater regulation of banks can help rather than hamper economies. “Better regulation and improved macroprudential oversight will not hinder” financial innovation and efficiency, he said. “They will support economies’ long-run growth performance.” Tougher oversight of banks is positive for markets because it limits the likelihood of financial turmoil even if banks are forced to hold more capital, Papademos said, citing recent research. The “crisis provides very convincing evidence that regulatory reform and macroprudential oversight will support sustainable growth,” he said. Regulation Overhaul The European Commission in September proposed a systemic- risk board as part of an overhaul of regulation following the worst financial crisis since the Great Depression. Part of that proposal includes creating regulatory bodies for the banking, securities and insurance industries. EU finance ministers this month approved forming the three regulators, overcoming objections from the U.K. Papademos, whose eight-year term ends May 31, said regulators must make sure they have the relevant data and tools to spot and counter system-wide risks. To contact the reporters on this story: Simon Kennedy in Berlin at Skennedy4@bloomberg.net Esteban Duarte in Madrid at eduarterubia@bloomberg.net ;

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ECB Plans Measures to Revive Market for Asset-Backed Bonds, Papademos Says

December 12, 2009

By Simon Kennedy and Esteban Duarte Dec. 12 (Bloomberg) — The European Central Bank plans to take steps to help revive the asset-backed bond market, Vice President Lucas Papademos said. “The ECB will be taking some initiatives to help catalyze the re-launching of securitization on a sound basis in the context of its collateral framework policy related to the implementation of monetary policy,” Papademos said at a conference in Berlin today, without giving details. Europe’s market for bonds backed by real estate, consumer debt and corporate loans totals more than $3 trillion. It was dormant for more than a year until September, when Volkswagen AG and Lloyds Banking Group Plc sold investors 1.7 billion euros ($2.5 billion) of the securities. “Steps can be taken to re-launch securitization, but to re-launch it on a sound basis so as to facilitate the provision of credit to the economy and the better distribution of risk among market participants,” Papademos said. The ECB can influence the asset-backed bond market because it accepts the securities as collateral for loans to banks. It said on Nov. 20 that from March, newly issued asset-backed securities it is presented as collateral must be graded AAA/Aaa from two ratings companies instead of just one. Papademos said “to restore confidence” in the market it was important to improve the transparency and standards of securities. Toxic Asset Rules The central bank has looked into rules to force banks to give investors details of each loan packaged into the bonds, to limit the inclusion of toxic assets that contributed to the worst credit crisis for decades. Papademos also said greater regulation of banks can help rather than hamper economies. “Better regulation and improved macroprudential oversight will not hinder” financial innovation and efficiency, he said. “They will support economies’ long-run growth performance.” Tougher oversight of banks is positive for markets because it limits the likelihood of financial turmoil even if banks are forced to hold more capital, Papademos said, citing recent research. The “crisis provides very convincing evidence that regulatory reform and macroprudential oversight will support sustainable growth,” he said. Regulation Overhaul The European Commission in September proposed a systemic- risk board as part of an overhaul of regulation following the worst financial crisis since the Great Depression. Part of that proposal includes creating regulatory bodies for the banking, securities and insurance industries. EU finance ministers this month approved forming the three regulators, overcoming objections from the U.K. Papademos, whose eight-year term ends May 31, said regulators must make sure they have the relevant data and tools to spot and counter system-wide risks. To contact the reporters on this story: Simon Kennedy in Berlin at Skennedy4@bloomberg.net Esteban Duarte in Madrid at eduarterubia@bloomberg.net ;

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