Merdith Whitney just down graded GS. She must be working for them!
haha, the bar has been set lower and expectations are now in check
probably. Interesting JNJ is down. Oil is up, our longer term forecast
for oil is so far playing out. big names are all up for energy.

-Alex 10/13/09

Interesting for her to downgrade GS. She always has a hidden agenda if you ask me. She just started her own shop a couple of months ago.

The “Bear Angel” Strikes Again: Meredith Whitney Downgrades GS




by Free Mind on October 13, 2009 at 8:15 am · 1 Comment
Tags: Banks, CRE, GS, Meredith Whitney










Last July, Meredith Whitney, whom many
had come to consider as a “bear angel” ever since she recognized first
that Citigroup would cut its dividend in 2007, had trumpeted the doom
of the last pack of bears that were resisting to the bullish onslaught.
She had then made GS her only “buy” based on some light considerations
on the money booked by selling corporate and government debt.

Will she be today the “Angel of Apocalypse” for the bullish crowds? She actually downgraded GS from “buy” to “neutral”, just as other analysts were making (a tad bit lately) GS their “buy”. The sanction was immediate: GS slided 3 $ lower.

I had heavily put Meredith under fire
for her July “buy”, and I can again reaffirm that such switches in
ratings have little to do with “real” analysis. If Meredith Whitney is
basing herself on fundamentals, the situation has hardly changed
between July and October. If anything, the economy has gotten better
looking at the stats. However, losses in CRE are continuing to be an
issue for most (if not all) banks and hence the analysts’ expectations
that the profit would “triple” seem a bit unrealistic (unless of
course, trading has been more profitable than usual). But these
elements were already visible back in July to any analyst.

I talked then of “fallen angels”, but
today, Meredith would excell as a partner of the “devil” GS in her
uncanny ability to pull off such reversals.

Goldman Sachs Group Inc., the biggest
U.S. securities firm before converting to a bank last year, was cut to
“neutral” by Meredith Whitney, as the analyst dropped her only “buy”
recommendation.

Whitney, who correctly predicted in
2007 that Citigroup Inc. would cut its dividend, didn’t update her
price estimate on the shares in a summary note distributed to investors
today. Further details on the downgrade weren’t immediately available.

The New York-based analyst upgraded
Goldman Sachs to “buy” on July 13, since when the stock has risen 34
percent, compared with a 29 percent increase for the Standard &
Poor’s 500 Investment Banking & Brokerage Index. The founder of
Meredith Whitney Advisory Group LLC said on Sept. 10 that Goldman Sachs
“still has a lot of gas in its tank.”

Goldman Sachs shares dropped 0.9 percent to $188.46 in German trading as of 10 a.m. in Frankfurt.

Goldman Sachs, which is due to report
third-quarter results on Oct. 15, may say it earned $4.46 a share in
the period, according to the report. The New York-based bank posted
record earnings in the second quarter.

Goldman Sachs’s profit probably almost
tripled to $2.3 billion, according to the average estimate of analysts
surveyed by Bloomberg. Revenue from trading has surged to a record as
competitors including Morgan Stanley scaled back their riskiest bets.

Goldman Sachs has climbed 125 percent
this year on the New York Stock Exchange, the largest increase among
the biggest U.S. banks. The bank repaid $10 billion to the U.S.
Treasury in June.

Goldman Sachs on Oct. 7 was rated “buy”
in new coverage at Deutsche Bank AG, which said the firm may boost
market share in investment banking and trading. A day earlier, the bank
was upgraded to “outperform” from “underperform” by CLSA analyst Mike
Mayo, who also said it may be a “long-term market-share winner.”

MEREDITH WHITNEY

Meredith Whitney is the CEO of Meredith Whitney Advisory Group, LLC, a
macro and strategy-driven investment research firm. Well followed for
her core research, Ms. Whitney and her team also focus on a broad
section of financials including large, small, and mid-size banks,
brokers, independent commercial and consumer finance companies.

• NYSE down 19 (0.3%) to 7,031.87.
  
• DJIA down 14.7 (0.2%) to 9,871.
  
• S&P 500 down 3.01 (0.3%) to 1,073.
  
• Nasdaq up 0.08 (0.04%) to 2,140.
  

GLOBAL SENTIMENT

• Hang Seng up 0.79%
  
• Nikkei up 0.60%
  
• FTSE down 1.08%
  

UPSIDE MOVERS

(+) VNDA inks pact with Novartis.

(+) NVAX gets NIH grant.

(+) DARA amends material transfer pact with American Stem Cell.

(+) INTC gains ahead of evening earnings.

(+) PSUN gets analyst upgrade.

(+) VASC continues evening gain that followed FDA clearance for hemostasis valve.

(+) AIG selling Taiwan insurance unit.

(+) CPBY inks new contracts.

(+) CGEN secures development pact with Bayer Schering on Compugen discovered oncology target and splice varia.

DOWNSIDE MOVERS

(-) GS downgraded by Meredith Whitney.

(-) BAC down as judge allows shareholder suit to proceed.

(-) CIT says CEO leaving.

(-) JNJ beats with earnings and raises guidance but sales disappoint.

MARKET DIRECTION

Stock
averages end narrowly mixed, snapping the S&P 500's six-session win
streak. Consolidation is expected. The Dow touched a high of 9,931
yesterday, falling just short of the 10,000 mark, a level not seen in a
year and a key psychological level that some strategists are expecting
to trigger at least a modest correction. It was the third straight day
of gains for the blue-chip index. The Standard & Poor's 500 index,
which had risen over the past six sessions, also finished at its
highest level in a year. The gains have been driven in large part
upbeat expectations for earnings reports.

The weaker dollar
offered some lift for commodity stocks. The greenback's losses have
been softened somewhat by a drop in stocks.

Intel Corp (INTC),
the world's largest chip maker and a bellwether for the technology
sector as well as business demand, is set to report earnings after the
bell; it gained modestly ahead of earnings. Cisco Systems (CSCO) provided some lift after it said it would acquire wireless-networking technology company Starent Networks.

Financial
shares remain mostly lower at mid-day, after analyst Meredith Whitney
dropped Goldman Sachs to "neutral" from "buy." Large banks, such as
JPMorgan Chase & Co. (JPM) reports on Wednesday. Goldman Sachs and Citigroup Inc. (C) report results on Thursday, while Bank of America Corp. (BAC) is scheduled to issue its report on Friday.

Managed-care
health stocks extend declines late Tuesday after the Senate Finance
Committee voted to pass a bill introduced by panel chairman Max Baucus
that would create health cooperatives to extend coverage to more
Americans.

Big day tomorrow guys! Im expecting a positive reaction from markets from a sentiment persepctive. GS will definitely be an interesting story. Already some big names have been having good earnings....

I found this article on seekingalpha.com this morning. It points out
the benefits and repercussions for Rajaratnam going to trial. Moody's
analysts suck.

==========================================================================================
If the insider trading case against Galleon Management
co-founder Raj Rajaratnam ever gets to trial, expect a vigorous defense
strategy built around the difference between information that’s
considered insightful “market color” versus top secret, market-moving,
trading tips. The hedge fund manager’s lawyer will probably
argue that the handful of trades that prosecutors say were the result
of illegal tips were cherry-picked from the tens of thousands of
clearly legitimate trades Galleon’s funds made over the last three
years. And the lawyers can note that the questionable
transactions often were part of a complex trading strategy that can
look more incriminating when taken in isolation. Rajaratnam’s
defense team may contend a tip about a company’s upcoming earnings
report is nothing more than helpful insight, especially if the
executive passing on the information fails to provide specific details
like figures for revenues and net profits. To buttress this
point, the lawyers will no doubt point to things like yesterday’s
article in The New York Times, which notes that Galleon lost $30
million on the allegedly illegal trades. But the problem for
Rajaratnam is that by the time this case comes to trial a year or two
from now, the charges against him could be even more serious. There’s a
good chance that new allegations of insider trading could be lodged
against Rajaratnam as other potential co-conspirators come forward in
the coming weeks to cut deals with federal prosecutors. The
criminal complaint against Rajaratnam and his co-defendants is just the
opening salvo — even though the investigation began two years ago. One
white-collar defense lawyer called the complaint a “warning shot” to
other traders not yet identified who may have benefited from the same
trading tips Galleon got. Lawyers say a number of hedge fund
traders not named in the criminal complaint are already “lawyering up,”
largely out of fear they may be the next ones to fall within the
gun-sights of federal prosecutors. There’s an expectation among
lawyers and those in hedge funds that prosecutors will quickly secure
guilty pleas from several other traders who may have made similar bets
with inside information. None of this, of course, is good news for Rajaratnam and his co-defendants. And
some of the evidence the federal government has unearthed looks pretty
damaging for Rajaratnam. It will be hard for Rajaratnam to explain away
recorded conversations in which he is trying to give advice to others
on how to trade on information without raising suspicions. Especially
troubling is the evidence Rajaratnam, who says he is innocent, directed
his fund to make a big upside bet on Hilton Hotels (HLT) in July 2007 after he is said to have received information from a Moody’s Investors Service (MCO) analyst that Blackstone Group (BX) was on the verge of buying out the hotel chain. Prosecutors
say that the Moody’s analyst was paid $10,000 for his helpful tip. Now
that’s not a lot of money for a trade that generated a $4 million
profit for Galleon, according to prosecutors. But that speaks more to
the poor negotiating skills of the former Moody’s analyst than anything
else. Any time someone is willing to pay cold cash for
confidential market-moving information, it’s a safe bet the person
buying the information knows it’s something they shouldn’t have in the
first place. So bring on the trial. If nothing else it will help
shed light on the often shadowy ways in which hedge fund managers wheel
and deal to get a trading edge.

• ING drops on spin-off, rights issue. Dutch financial services company ING Group (ING)
  said Monday it will raise up to €7.5B ($11.3B) in a share issue, and
  split up its insurance and banking businesses, after reaching a deal to
  repay the government half of its €10B bailout loan ahead of schedule.
  ING has until the end of January to repurchase government-owned shares,
  and will launch the share issue on Nov. 25. "We appreciate the ongoing
  support of the Dutch state," CEO Jan Hommen said, "but fully recognize
  that it is in the best interest of all parties that we get back on our
  own feet as quickly as possible." Shares -8.1% premarket.
  
• Peltz takes a foothold in Legg Mason. Legg Mason (LM)
  will name activist investor Nelson Peltz to its board after he quietly
  accumulated a 4.3% stake; in exchange for the board seat, Peltz's Trian
  will agree to accumulate no more than 9.9% of the company over the next
  two years, and will vote its share in favor of the company's slate of
  nominees during that period. "We welcome Nelson," Legg CEO Mark Fetting
  said in a statement.
  "We look forward to benefiting from his insights and experience as we
  work together to build greater value for our clients and our
  shareholders." Peltz prefers to think of himself as a 'constructivist
  investor,' though he is known to pepper management with 'idea' phone
  calls and emails at late hours and on weekends.
  
• BofA's TARP exit hits snag. Sources say Bank of America's (BAC)
  plans to repay its TARP loans have fallen into question due to a
  dispute over how much more capital it needs to raise in order to exit
  government oversight. Having raised $40B in new equity since May, BofA
  thinks it's ready return the government's $45B investment. But some
  officials say it should be required to raise more than the $40B
  determined by government stress tests, to give it the ability to deal
  with any potential economic relapses. Until it exits government
  assistance, BofA remains bound by pay czar Kenneth Feinberg's
  compensation limitations, which bank executives fear will hamper its
  abilities to recruit talent.
  
• NABE survey offers cheery outlook. U.S. companies expect to hire and invest more over the next six months, according to a survey
  released this morning by the National Association for Business
  Economics, and for the first time in a year more businesses reported a
  rise in capital spending over the previous quarter than a decline. All
  78 panelists said business decisions are being made with expectations
  of positive GDP growth in 2010; of those, 73% see real GDP expanding
  1-3%. The survey "provides new evidence that the U.S. recovery is
  underway," Chicago Fed's William Strauss said. "Improving credit
  conditions might be part of the explanation, with respondents
  indicating that credit remains tight but less so than earlier in the
  year."
  
• Capmark goes under.
  Not unexpectedly, troubled commercial real estate lender Capmark filed
  for bankruptcy protection on Sunday, wiping out the private-equity
  investments of KKR, Goldman Sachs (GS)
  and Five Mile Capital, which bought 75.4% of Capmark for $1.5B in cash
  and more than $7B in debt in 2006; GMAC owns the remainder. Capmark is
  negotiating the terms of the bankruptcy with its creditors, including
  Citigroup (C) and JPMorgan (JPM),
  but they have not yet reached an agreement over a prepackaged
  bankruptcy. U.S. banks hold more than $1T worth of mortgages backed by
  commercial property, on which analysts predict they could suffer losses
  in the neighborhood of $150B. Bad commercial property debts have played
  a pivotal role in the demise of many of the 106 banks that have failed
  so far this year.
  
• FDA OKs BioCryst's swine flu drug. The FDA approved emergency use of BioCryst Pharmaceuticals' (BCRX)
  experimental intravenous antiviral drug peramivir to treat severe cases
  of H1N1. "Based upon the totality of scientific evidence available, it
  is reasonable to believe that peramivir IV may be effective in certain
  patients," it said in a letter.
  The authorization is only for hospitalized patients who are not
  responding to either oral or inhaled antiviral treatments, or for whom
  nonintravenous drug delivery is not feasible.
  
• China: undertones of an exit.
  China's economic growth is likely to speed up this quarter, but the
  government will stay the course with its loose fiscal policy, senior
  officials said today. Still, analysts say the "unmistakable shift" in
  official statements signal Beijing is starting to think about how to
  unwind its pro-growth policies. China set itself a goal of 8% GDP
  growth this year, which officials say it's on track to fulfill.
  
• Lloyds eyes outsourcer CPA Global. Lloyds' (LYG)
  private-equity arm LDC is reportedly in talks to acquire legal
  outsourcing company CPA Global for £400M ($652M). Lloyds is stepping up
  its buyout activity, aiming to become a dominant player in Britain's
  dwindling private-equity deal market.
  
• Blackstone hopes for magic from Merlin. Looking to take advantage of buoyant equity markets, Blackstone (BX) is reportedly preparing to float its theme park operator Merlin Entertainments next year. Citigroup (C), Goldman Sachs (GS), Deutsche Bank (DB), UBS (UBS) and Nomura (NMR)
  are advising on what could be a $3.3B IPO. Merlin - which owns the
  London Eye, Madame Tussauds and the Sea Life centers - is the world's
  number-two park operator, after Disney (DIS).
  
• Madoff crony found dead.
  Jeffrey Picower, alleged to have extracted $7.2B from Madoff's Ponzi
  scheme, was found dead at the bottom of his Palm Beach pool Sunday.
  Madoff trustee Irving Picard alleges Picower and a group of longtime
  Madoff investors knew or should have known of the fraud, because they
  requested and received oversized returns of up to 950% on their
  investments.
  

Earnings: Mon. Before Open

• Corning (GLW): Q3 EPS of $0.42 beats by $0.03. Revenue of $1.48B (-4.9%) vs. $1.42B. (PR)
  
• National-Oilwell Varco (NOV): Q3 EPS of $0.95 beats by $0.16.
  Revenue of $3.09B (-14.5%) vs. $2.9B. "While difficult credit market
  conditions have led to order rates below our expectations so far this
  year, we continue to pursue new rig opportunities aggressively, and
  seek and execute strategic internal growth and acquisition
  opportunities." (PR)
  
• RadioShack (RSH): Q3 EPS of $0.30 misses by $0.01. Revenue of $990M (-3.1%) vs. $961M. (PR)
  

Today's Markets

Overseas markets were mostly higher Monday.

• Asia: Nikkei +0.8% to 10363. Hang Seng +1.7% to 22590. Shanghai +0.1% to 3110. BSE -0.4% to 16740.
  
• Europe at midday: FTSE +0.4% to 5264. CAC +0.6% to 3829. DAX +0.7% to 5781.
  
• Futures at 7:00: Dow +0.3% to 9960. S&P +0.4% to 1081. Nasdaq +0.4%. Dec. crude -0.4% to $80.19. Gold -0.4% to $1,055.40. 30-year Tsy -0.29% to 118-222. 10-year -0.23%. 5-year -0.13%. 2-year -0.03%. Euro +0.2% vs. dollar. Yen +0.4%. Pound +0.2%.
  

Monday's Economic Calendar

• 8:30 Chicago Fed's National Activity Index
  10:30 Dallas Fed's Manufacturing Outlook
  12:00 PM Chicago Fed's Midwest Manufacturing Index
  

Thx for the early morning update batman

U.S. Stocks Retreat, Extending Global Drop, on Economy Concern


By Rita Nazareth

Oct. 28 (Bloomberg) -- U.S. stocks fell, extending a global
slump, as an unexpected decrease in new-home sales added to
concern the seven-month rally in equities outpaced prospects for
economic growth. The dollar rose against most major currencies
and Treasuries gained, while oil and metals fell.
Alcoa Inc., General Electric Co. and Caterpillar Inc.
dropped at least 2.5 percent to lead declines in the Dow Jones
Industrial Average. Lennar Corp. and D.R. Horton Inc. tumbled
more than 5 percent after the Commerce Department said sales of
new homes fell 3.6 percent in September. European and Asian
shares slid as companies from SAP AG to ArcelorMittal and Canon
Inc. reported disappointing earnings.
The Standard & Poor’s 500 Index retreated 1.1 percent to
1,051.61 at 1:37 p.m. in New York. The Dow slipped 48.14 points,
or 0.5 percent, to 9,834.03. The MSCI World Index of 23
developed nations lost 1.6 percent.
“The stock market is due for a correction,” said Hank
Smith, who helps oversee $5.5 billion as chief investment
officer of Haverford Trust Co. in Radnor, Pennsylvania. “Even
though the economy has bottomed out, we’re still getting some
disappointing numbers now and then. On the earnings front, a
good deal of growth came in from cost cutting. Investors are
using all that as an excuse to pull back.”
The S&P 500 has rallied 56 percent from a 12-year low on
March 9 amid growing confidence a U.S. economic recovery will
drive profit growth. The benchmark for U.S. equities has slipped
3.5 percent from this year’s high on Oct. 19 on speculation the
seven-month rally has outpaced the prospects for earnings and
economic growth.
Third-Quarter GDP
Goldman Sachs Group Inc. cut its forecast for third-quarter
U.S. gross domestic product growth to 2.7 percent from 3 percent
in a report, citing shipments and inventories in today’s durable
goods report. The government will report the preliminary figure
tomorrow and the median forecast in a survey of economists is
for growth of 3.2 percent following four straight quarters of
contraction.
Net income has topped analysts’ estimates at 84 percent of
the 236 companies in the S&P 500 index that reported results
since Oct. 7, poised to set a record proportion in Bloomberg
data going back to 1993. Still, earnings have dropped 19 percent
on average. Sales have slumped 5.8 percent and surpassed
estimates at 64 percent of the companies.
“The stock market has gotten ahead of itself and to
sustain those values going forward we’ll need to see real
economic growth,” said Peter Jankovskis, who helps manage more
than $1.5 billion at Oakbrook Investments in Lisle, Illinois.
“The weakness in consumer spending is still the key issue to be
resolved.”
Builders Slump
A gauge of 12 homebuilders in S&P indexes slumped 4.2
percent, led by D.R. Horton Inc. and Lennar Corp. The drop in
new home sales signaled the housing recovery may lose momentum
after a government tax credit expires.
Goodyear Tire & Rubber Co. fell 19 percent to $13.55 and
earlier slumped 28 percent for the biggest decline in 22 years.
The largest U.S. tiremaker forecast an operating loss in North
America this quarter. The outlook came as the company said
third-quarter net income more than doubled to $72 million, or 30
cents a share, from $31 million, or 13 cents, a year earlier.
Sales fell 15 percent to $4.4 billion.
A gauge of auto and components companies fell 4.3 percent
for the biggest decline in the S&P 500 among 24 industries. Ford
Motor Co. lost 4.2 percent to $7.02, while Harley-Davidson Inc.
declined 2.4 percent to $25.70.
Europe, Asia
Shares in Europe and Asia declined after SAP cut its
software sales forecast and Canon posted a seventh straight
quarterly profit drop. Europe’s Dow Jones Stoxx 600 Index slid
1.8 percent, while the MSCI Asia Pacific Index lost 1.3 percent.
Both indexes have soared more than 50 percent since their lows
in March.
Oracle Corp., the world’s second-largest software maker,
fell 2.5 percent to $21.33 following SAP’s report.
Apollo Group Inc. lost 17 percent to $60.51. The Securities
and Exchange Commission is probing the parent of the University
of Phoenix for “revenue recognition,” the Phoenix-based
company said in a statement. The company also expects to pay
about $80.5 million in settlement and legal costs for a lawsuit
related to its recruitment practices, according to the
statement.
Commodity Producers
Gauges of raw-materials and energy producers fell more than
2 percent as a rebounding dollar reduced the appeal of
commodities as an alternative investment.
Oil extended declines after a government report showed an
unexpected increase in supplies of gasoline. Crude fell $1.77,
or 2.2 percent, to $77.83 a barrel. Copper dropped for a third
day.
The Dollar Index, a six-currency gauge of the greenback’s
performance, added 0.3 percent and has gained for five straight
days, its longest rally since July. The measure slipped to a 14-
month low on Oct. 21.
Exxon Mobil Corp., the world’s biggest energy company, fell
0.2 percent to $74.76, while Freeport-McMoRan Copper & Gold
Inc., the world’s largest publicly traded copper producer,
declined 3.8 percent to $74.50.
SanDisk Corp. lost 3.4 percent to $21.93. The world’s
largest maker of flash-memory cards used in digital cameras and
mobile phones was cut to “neutral” from “buy” at Goldman
Sachs Group Inc.
CIT Group Inc., the 101-year-old commercial lender seeking
to avoid collapse, rallied 16 percent to $1.11 after receiving
$4.5 billion in financing by expanding an existing credit
facility.
Phone Shares Gain
Telephone shares had the biggest gain in the S&P 500 among
10 industries, rising 1.9 percent. Qwest Communications
International Inc. added 4.1 percent to $3.59. The local phone
company in 14 states reported third-quarter profit excluding
some items of 9 cents a share, beating the average analyst
estimate of 7 cents. Qwest reduced costs to offset subscriber
losses.
AT&T Inc. and Verizon Communications Inc. had the biggest
gains in the Dow average, rising at least 2.3 percent.
Target Corp. rallied 1.2 percent to $49.02. Citigroup Inc.
raised the second-biggest U.S. discount retailer to “buy” from
“sell.”
Visa Inc. climbed 4.9 percent to $77.49. The world’s
biggest payments network posted results that exceeded most
analysts’ forecasts and said a yearlong skid in consumer
spending has ended.
Central Bank Watch
Norway today became the first European central bank to
raise interest rates since the credit crisis began. The fifth-
biggest oil exporter boosted its key interest rate a quarter
point from a record low and signaled more increases. Governments
and central banks are preparing to remove stimulus measures
after spending a total of $12 trillion, by International
Monetary Fund estimates, to haul economies out of the recession.
“I don’t think the Fed is going to take away the money
supply quite yet,” Vince Farrell Jr., chief investment officer
at Soleil Securities Group in New York, said in a Bloomberg
Radio interview. “The economic signals are still very mixed. It
looks like the recovery is fragile.”
Treasuries remained higher after the U.S. sold a record $41
billion in five-year notes, the third of four government debt
auctions this week totaling $123 billion. The yield on the 10-
year note fell four basis points to 3.411 percent.

Stocks slide as new home sales fall


NEWYORK (AP) -- Signs of a weaker housing market and a gloomier outlook on
the economy gave investors more reasons to dump stocks.
Major market indexes fell Wednesday after the Commerce Department said new home
sales dropped for the first time in five months. Sales dropped 3.6
percent in September to 402,000. Analysts had expected an increase.The
Dow Jones industrial average fell 119 points, or 1.2 percent. The
Nasdaq composite index slid 2.7 percent, while the Russell 2000 index
of smaller companies tumbled 3.5 percent. Many of the stocks in both
indexes are considered more risky and so they suffered some of the
biggest losses.The retreat came as Goldman Sachs Group Inc.
added to investors' unease by reducing its expectation for the nation's
economic output for the July-September period. Goldman Sachs predicts
third-quarter gross domestic product rose at an annual rate of 2.7
percent, weaker than its earlier forecast of 3 percent.The
government's report on third-quarter GDP is due Thursday. Economists
are looking for growth at an annual rate of 3.3 percent after a record
four straight quarters of contraction.The day's slide signaled
that investors were reassessing their hopes for a recovery in the
economy. Demand for safe-havens like Treasurys rose. Stocks of consumer
staples companies like Procter & Gamble Co., which makes Tide
detergent and Gillette razors, edged higher.Analysts said the
market's slide in the past week isn't surprising given the size of the
advance in the last eight months and only mixed economic readings."I'm
not panicked at the moment," said Manny Weintraub, president of Integre
Advisors in New York. "I don't think anyone expected a super robust
recovery."Stocks struggled Tuesday after a disappointing report
on consumer confidence stirred worries about the strength of the coming
holiday shopping period.According to preliminary calculations, the Dow fell 119.48, or 1.2 percent, to 9,762.69.The
broader Standard & Poor's 500 index fell for the fourth straight
day, sliding 20.78, or 2 percent, to 1,042.63. The Nasdaq fell 56.48,
or 2.7 percent, to 2,059.61.

http://www.marketwatch.com/story/us-gdp-rises-35-as-stimulus-kicks-in-2009-10-29?siteid=yahoomy

U.S. GDP rises 3.5% as stimulus kicks in

Gains in consumer spending, inventories, housing drive growth

Related stories

• 
  

By Rex Nutting, MarketWatch





WASHINGTON (MarketWatch) - The U.S. economy expanded at a 3.5% annual
pace in the third quarter, as massive government stimulus helped drag
the economy out of the longest and deepest recession since the 1930s,
the Commerce Department estimated Thursday.
Along with improvements in key monthly figures on output and sales, the
rise in real gross domestic product means the Great Recession is likely
over in a technical sense, even as further job losses occur. A formal
call on the end of the recession isn't expected for months. Read more about recessions.



It was the first increase in real gross domestic product in a year and
it was the strongest growth in two years, the government said. Before
growing in the June-to-September quarter, the U.S. economy had shrunk
for four straight quarters for the first time since the Great
Depression. Read the full government report.



The 3.5% increase matched estimates of economists surveyed by MarketWatch. See Economic Calendar.



In the past year, the economy has contracted 2.3%. The economy shrank
0.7% annualized in the second quarter and 6.4% in the first quarter.
The figures are seasonally adjusted and adjusted for price changes.
Growth was broad-based in the third quarter, with final U.S. sales
rising at a 3% annual pace, the fastest in more than three years.
Third-quarter growth was due to higher consumer spending, a slowdown in
the reduction of inventories, an increase in residential investments,
and robust government spending.
Home building contributed to growth for the first time in nearly four years.



Business investment declined as a small increase in capital spending on
equipment and software was overwhelmed by another large drop in
investments in structures.
Foreign trade subtracted from growth in the quarter. A big jump in exports was offset by an even larger rise in imports.



Most economists don't expect the economy to grow quite as much in
coming quarters, but they aren't forecasting a double-dip recession,
either. Most see growth in the 2% to 3% range. The adjustment in
inventories could add to growth for several more quarters.
The big question confronting policymakers, investors, consumers and
economists is whether the economy will be able stand on its own as the
federal government's stimulus begins to wane.
Consumers are still constrained by the loss of jobs, weak wage growth,
a lack of credit and the overhang of too much debt taken on over the
past 20 years. Business spending is also likely to remain weak, with
companies cautious about getting ahead of consumers. Foreign markets
could be a source of strength if economies in major trading partners
recover and if the dollar continues to weaken.


More details




In current dollar terms, GDP rose 4.3% to an annual rate of $14.3 trillion.



Final sales, which exclude inventories, increased at a 2.5% annual
rate, the most in a year. Final sales within the United States
increased at a 3% annual rate, the first increase since late 2007.

Consumer spending rose at a 3.4% annual rate, the biggest gain in more than two years.



Consumer spending added 2.4 percentage points to GDP.



Spending on durable goods surged 22.3%, the most in eight years. The government's cash for clunkers program boosted auto sales.



Most of the clunker sales came out of inventories, but production of
vehicles rebounded smartly after a sharp pullback earlier in the year.
Motor vehicle production contributed 1.7 percentage points to growth,
nearly half of the total GDP increase.
Consumer spending on nondurable goods rose 2%. Spending on services increased 1.2%.



The savings rate fell to 3.3% from 4.9% as disposable income dropped
3.4%, reversing a 3.8% gain in the second quarter that was due to a
one-time government transfer payment.
Business investments fell at a 2.5% rate after plunging at a record
39.2% annual rate in the first quarter. Investments in structures
dropped 9%, and investments in equipment and software rose 1.1%, the
first increase since the recession began. Business fixed investment
subtracted 0.2 percentage points from growth.
Inventories declined by $134.4 billion after a record $163.1 billion
drop in the second quarter. The change in inventories added 0.9
percentage points to growth.
Investments in housing rose for the first time after 14th consecutive
declines, growing at a 23.4% annual rate, the most in 23 years. Home
building was boosted by a tax credit for first-time buyers, by a severe
contraction in inventories of new homes and by other federal policies
to lower interest rates and increase sales. Residential investments
added 0.5 percentage points to growth.
After collapsing in the first and second quarters, trade recovered.
Exports rose 14.7%, the biggest gain in two years. Imports increased
16.4%, the most in five years. Net exports subtracted 0.5 percentage
points from growth.
Government spending rose at a 2.3% annual pace. Spending by state and
local governments fell 1.1%. Federal spending increased 7.9%, including
an 8.4% increase in the volatile defense spending category. Nondefense
spending rose at a 6.8% annual rate. Direct government spending added
0.5 percentage points to growth.
The price index for domestic purchases (prices paid by U.S. residents)
rose 1.6% annualized in the quarter as energy prices climbed. Consumer
prices increased at a 2.8% annual rate, while core consumer prices
(which exclude food and energy) rose 1.4%.












Rex Nutting is Washington bureau chief of MarketWatch.

The only reason the econmy expanded is due to stimulus. Without Auto sales or production growth (cash for clunkers) GDP was only a mere 1.9%. Additionally housing starts/sales contributed but that is pure stimulus as well due to the $8000 tax credit for first time buyers. Jobless claims were still incredibly high at 530,000. The economy is not healthy.

• Economy surges back to growth.
  Stocks logged their best one-day gain in three months on Thursday after
  the U.S. economy returned to growth in Q3. The government's first estimate of GDP
  showed the economy expanded at an annual rate of 3.5%, the first growth
  quarter in more than a year, and well ahead of Street estimates of 3%,
  sending Treasury prices and the dollar lower as traders exited safe
  havens. As recently as last week economists had called for a 3.3% gain,
  but they pared their estimates in the past couple days after week
  durable goods sales data came up short. "The economy has emerged with
  gusto from the deepest recession since WWII," one economist said. "The
  short-term prospects for the economy remain good."
  
• Private sector must lead the way - Geithner.
  The return to GDP growth is encouraging but the recovery is still
  fragile, Treasury Secretary Timothy Geithner said at a Q&A session
  Thursday evening following yesterday's Q3 GDP announcement.
  "The number today was really encouraging... it was broad and strong and
  it wasn't just cash-for-clunkers and it wasn't just economic
  stimulus... but it's important to remember that it's very early," he
  said. Geithner stressed that a robust recovery would have to be led by
  the private sector, saying the U.S. can't borrow-and-spend its way to
  health.
  
• Repsol strikes again. Repsol (REP),
  long derided as the oil company with no oil, will today announce a
  "fairly sizeable" discovery in the Gulf of Mexico's Shenzi field that
  it says will help reduce U.S. dependence on foreign oil. Today's
  discovery comes on top of big finds
  in Brazil and West Africa, and leaves Repsol with the unexpected
  challenge of developing a sudden surge in oil and gas resources. "We've
  had some success in exploration," CEO Antonio Brufau said.
  
• CIT, Goldman adjust $3B credit line. CIT Group (CIT) reached an agreement with Goldman Sachs (GS)
  to amend a $3B loan facility, ending their dispute over a $1B "make
  whole" payment CIT would have owed Goldman if it files for bankruptcy.
  Goldman will reduce the loan size to $2.13B, wiping out the unused
  portion of the facility, for which CIT will pay Goldman a $285M
  penalty, and post an additional $250M of collateral. The announcement,
  made in an 8-K filing, comes two days after CIT raised an additional $4.5B to bolster its restructuring.
  
• Rio Tinto doubles capex. A confident Rio Tinto (RTP)
  doubled its planned 2010 capital spend to at least $5B after it cut
  debt and saw signs of economic recovery. Rio had planned to cut capex
  to $2.5B - just enough to sustain current mines. "We will continue our
  program of cost reduction and debt repayments, but our renewed strength
  enables us to focus on disciplined capital expenditure on premier
  growth options," CEO Tom Albanese said. Rio, the world's #3 mining
  group, said it had cut its debt by 42% so far this year to $22.3B. (statement)
  
• EDF/Constellation deal at risk.
  State-owned nuclear power operator EDF is facing pressure from the
  French government to abandon its $4.5B deal to buy 49.9% of
  Constellation Energy Group's (CEG)
  nuclear assets and build four reactors with the U.S. company. "For us,
  the priority strategy for EDF is indeed in Europe, notably the U.K. and
  Italy, and everything outside Europe is less essential to EDF's
  expansion," an unnamed government official said.
  
• Credit crunch continues.
  Loan defaults by small and medium-sized U.S. businesses rose in
  September to 0.85% from 0.81% in August, according to risk management
  firm PayNet, but accounts in moderate (30 days plus) and severe (90
  days plus) delinquency decreased to 4.22% (from 4.35%) and 1.4% (from
  1.48%) respectively, the lowest since January. PayNet's Small Business
  Lending Index, which measures the volume of financing, is down 22% from
  a year ago, a sign lenders remain reluctant to extend credit to small
  and medium-sized businesses. "It's hard to imagine a robust recovery
  when you see numbers like this," PayNet founder Bill Phelan said.
  
• BoJ holds steady. The Bank of Japan left its key rate unchanged at 0.1%,
  but said it would discontinue its corporate bond and commercial paper
  purchase program at the end of December, as scheduled - "given that
  issuing conditions in the CP and corporate bond markets have been
  improving markedly, and thus the purpose of the purchases to restore
  market functioning has been achieved." Still, the BoJ stressed that
  this doesn't signal the beginning of its exit strategy, and extended
  its special lending facility to provide three-month funds at 0.1% until
  the end of March. Remarking on the decision to scrap its corporate
  funding support, Japan's PM Yukio Hatoyama remarked that it's hard to be as optimistic as the BoJ. (statement)
  
• House Energy and Commerce Committee OKs consumer agency.
  A second House panel voted Thursday to create a Consumer Financial
  Protection Agency to oversee mortgages, credit cards and other
  financial products, with a full House vote expected in November. The
  House bill falls short of the administration's original proposal,
  exempting auto dealers, credit, mortgage and title insurers and banks
  with less than $10B in assets, among others - exceptions some worry
  will weaken the agency's power.
  
• Sands gets OK for $2-3B IPO. Sources say Las Vegas Sands (LVS)
  has received approval from the Hong Kong stock exchange for a $2-3B IPO
  of its Macau unit. Sands will kick off pre-marketing next week, and
  launch its roadshow on Nov. 9, with a trading debut set for the end of
  November. Goldman Sachs (GS), Citigroup (C) and UBS (UBS) are coordinating. LVS rose 12% Thursday after posting a surprise Q3 profit; shares are up another 12% premarket.
  
• Junk bond rally becomes self-fulfilling.
  Demand for junk bonds hit record highs last week, with investors
  pouring another $207M into junk bond funds, pushing YTD inflows to a
  record $27.8B. Junk bond indexes are up more than 50% YTD, as investors
  become more comfortable with risk. The growing cash flow enables shaky
  companies to head off default - adding more fuel to the rally.
  
• AIG won't sell Japan units. AIG (AIG)
  says it will not sell its two Japanese insurers, AIG Edison Life
  Insurance and AIG Star Life Insurance, reversing its decision from a
  year ago at the height of the crisis. AIG said in a statement it now
  believes it would improve its corporate value to keep the two Japanese
  units, which have a very firm financial base and strong sales network.
  
• Energy IPO runs out of steam.
  Former Enron unit AEI, which operates power and gas distribution lines
  in Latin America, canceled its IPO Thursday hours after it slashed the
  size of the deal by two-thirds in the face of weak demand. The IPO,
  managed by Goldman Sachs (GS), Credit Suisse (CS), Citigroup (C) and JPMorgan (JPM),
  is the first U.S.-listed IPO this year to be withdrawn after an attempt
  to price the offering. AEI faulted market conditions for the
  withdrawal, but analysts say its debt load, risk exposure and expected
  payout to its private-equity owners also raised concerns.
  
• ChiNext soars on debut.
  China's Nasdaq-lookalike ChiNext stock market launched trading Friday
  with strong gains. An initial 28 companies listed, and shares gained
  46-123% from their IPO prices, in line with expectations. The listees
  priced their IPOs at a hefty 56x 2008 earnings.
  

Earnings: Fri. Before Open

• Alcatel-Lucent (ALU):
  Q3 net loss of €182M vs. -€174.4M consensus. Sales of €3.69B (-9.3%)
  vs. €3.88B consensus. Says it has achieved 80% of its goal to reduce
  annual expenses by €750M. Shares -2.9% premarket. (PR)
  
• Ameren (AEE): Q3 EPS of $1.16 beats by $0.13. Revenue of $1.82B (-11.9%) vs. $2.1B. (PR)
  
• Aon (AOC): Q3 EPS of $0.65 misses by $0.01. Revenue of $1.81B (-2.1%) in-line. (PR)
  
• Apartment Investment and Management Company (AIV): Q3 FFO of -$0.35 in-line. Revenue of $319M (-7.3%) vs. $313M. (PR)
  
• CMS Energy (CMS): Q3 EPS of $0.32 misses by $0.02. (PR)
  
• Constellation Energy Group (CEG): Q3 EPS of $1.23 beats by $0.16. Revenue of $4.03B vs. $4.48B. Sees full-year EPS of $3.25-3.45 vs. consensus of $3.10. (PR)
  
• Coventry Health Care (CVH): Q3 EPS of $0.68 beats by $0.14. Revenue of $3.44B (+17.7%) in-line. Shares +2.4% premarket. (PR)
  
• Cummins (CMI): Q3 EPS of $0.56 beats by $0.19.
  Revenue of $2.53B (-31.5%) in-line. “While we saw improvement in some
  markets in the third quarter, we expect the economic climate to remain
  challenging until late 2010 - especially in the U.S. and Europe.” (PR)
  
• Dominion Resources (D): Q3 EPS of $0.99 beats by $0.09. Revenue of $3.65B (-16.4%) vs. $3.94B. Sees Q4 EPS of $0.55-0.65 vs. $0.67. (PR)
  
• Duke Energy (DUK): Q3 EPS of $0.40 beats by $0.02. Revenue of $3.4B (-3.2%) vs. $3.8B. "Industrial sales volumes continued to show signs of stabilization." (PR)
  
• Estee Lauder (EL): FQ1 EPS of $0.85 beats by $0.51. Revenue of $1.83B (-3.7%) in-line. Shares +4.5% premarket. (PR)
  
• ITT Industries (ITT): Q3 EPS of $1.03 beats by $0.13. Revenue of $2.7B (-6.3%) in-line. (PR)
  
• NYSE Euronext (NYX): Q3 EPS of $0.53 beats by $0.07. Revenue of $1.05B (-9.6%) in-line. Announces equity investment in its U.S. futures exchange by Citadel, GETCO, Goldman Sachs (GS), Morgan Stanley (MS) and UBS (UBS), with NYX to remain largest shareholder. (PR I, II)
  
• Penske Auto Group (PAG): Q3 EPS of $0.34 beats by $0.06. Revenue of $2.59B (-12.9%) in-line. Shares (PR)
  
• Progress Energy (PGN): Q3 EPS of $1.22 beats by $0.03. Revenue of $2.82B (+4.7%) in-line. (PR)
  
• Regency Centers (REG): Q3 FFO of $0.69 in-line. (PR)
  
• Sony (SNE):
  FQ2 net loss of ¥26.3B ($287.5M) vs. consensus of -¥40.4B. Revenue of
  ¥1.66T (-20%). Sees full-year net loss of ¥95B, up from a previous
  forecast of -¥120B and -¥98.9B last year. Sees sales -5.6%, unchanged. (PR)
  
• Tim Hortons (THI): Q3 EPS of C$0.34 misses by C$0.12. Revenue of C$564M (+10.7%) vs. C$552M. (PR)
  
• Ultra Petroleum (UPL): Q3 EPS of $0.57 beats by $0.05. Revenue of $155M (-47.8%) vs. $239M. (PR)
  

Earnings: Thur. After Close

• AllianceBernstein (AB): Q3 EPS of $0.67 beats by $0.22. Revenue of $806M (-5%) vs. $737M. AUM down 16% Y/Y to $498B. Shares +3.8% AH. (PR)
  
• Bally Technologies (BYI): FQ1 EPS of $0.53 in-line. Revenue of $197M (-17%) vs. $206M. Shares +0.6% AH. (PR)
  
• BMC Software (BMC): FQ2 EPS of $0.66 beats by $0.08. Revenue of $462M (-1%) vs. $463M. Raises full-year EPS guidance to $2.55-2.65 vs. $2.51. Shares +1.8% AH. (PR)
  
• Callaway Golf Company (ELY): Q3 EPS of -$0.25 misses by $0.01. Revenue of $191M (-11%) in-line. Sees full-year EPS of -$0.30 to -$0.35, vs. -$0.21. (PR)
  
• Cliffs Natural Resources (CLF): Q3 EPS of $0.45 may not compare to estimate of -$0.07. Revenue of $666M (-44%) vs. $535M. Shares +4.5% AH. (PR)
  
• DTE Energy Company (DTE): Q3 EPS of $0.96 misses by $0.03. Revenue of $2B (-16%) vs. $2.1B. Sees full-year EPS of $2.75-3.05 vs. $3.19. Shares -7.7% AH. (PR)
  
• Eldorado Gold (EGO): Q3 EPS of $0.08 beats by $0.01. Revenue of $82M (-20.3%) vs. $85M. Shares +0.7% AH. (PR)
  
• Genworth Financial (GNW): Q3 net income available to common shareholders of $0.04 beats by $0.06. Revenue of $2.4B (+10%) vs. $2.5B. Shares +9.7% AH. (PR)
  
• Hertz Global Holdings (HTZ): Q3 EPS of $0.15 misses by $0.09. Revenue of $2B (-16%) in-line. Raises full-year EPS guidance to $0.21-0.23 from $0.12-0.15, vs. $0.20. Shares +2.9% AH. (PR)
  
• Human Genome Sciences (HGSI): Q3 EPS of -$0.32 misses by $0.01. Revenue of $19M (+61%) vs. $24M. Shares +0.9% AH. (PR)
  
• Ingram Micro (IM): Q3 EPS of $0.25 beats by $0.05. Revenue of $7.4B (-11%) vs. $6.7B. Shares +2.4% AH. (PR)
  
• KLA-Tencor (KLAC): FQ1 EPS of $0.15 beats by $0.13. Revenue of $343M (-36%) vs. $332M. Shares +0.8% AH. (PR)
  
• Las Vegas Sands (LVS): Q3 EPS of $0.03 beats by $0.04. Revenue of $1.1B (+3%) in-line. Shares +8.4% AH. (PR)
  
• Manitowoc (MTW): Q3 EPS of -$0.04 misses by $0.12. Revenue of $882M (-20%) vs. $934M. Shares -7.2% AH. (PR)
  
• Maxim Integrated Products (MXIM): FQ1 EPS of $0.13 beats by $0.01. Revenue of $449M (-12%) vs. $438M. Shares -4% AH. (PR)
  
• McAfee (MFE): Q3 EPS of $0.62 beats by $0.01. Revenue of $485M (+19%) vs. $487M. Shares -5.8% AH. (PR)
  
• MetLife (MET): Q3 EPS of $0.87 in-line. Revenue of $12.4B (-1%) vs. $12.3B. Shares -2.3% AH. (PR)
  
• Mohawk Industries (MHK): Q3 EPS of $0.64 beats by $0.08. Revenue of $1.4B (-22%) in-line. Sees Q4 EPS of $0.28-0.38 vs. $0.45. Shares -5.3% AH. (PR)
  
• PEPCO Holdings (POM): Q3 EPS of $0.44 beats by $0.01. Revenue of $2.5B (-17%) vs. $2.9B. (PR)
  
• PerkinElmer (PKI): Q3 EPS of $0.30 beats by $0.03. Revenue of $437M (-9%) vs. $430M. Sees full-year EPS of $1.23-1.26 vs. $1.22. (PR)
  
• RealNetworks (RNWK): Q3 EPS of $0.00 beats by $0.06. Revenue of $140M (-8%) vs. $141M. (PR)
  
• Regal Entertainment Group (RGC): Q3 EPS of $0.05 misses by $0.02. Revenue of $674M (-11%) vs. $702M. Shares +0.3% AH. (PR)
  
• SBA Communications (SBAC): Q3 EPS of -$0.43 misses by $0.17. Revenue of $139M (+17%) in-line. Sees 2010 sales of $512M-532M vs. $604M. Shares -1.3% AH. (PR)
  
• Southwestern Energy Company (SWN): Q3 EPS of $0.34 in-line. Revenue of $503M (-26%) vs. $387M. Shares +0.2% AH. (PR)
  
• Standard Pacific (SPF): Q3 EPS of -$0.01 beats by $0.06. Revenue of $327M (-18%) vs. $285M. Shares +3.4% AH. (PR)
  
• Varian Medical Systems (VAR): FQ4 EPS of $0.78 beats by $0.04. Revenue of $642M (+8%) vs. $593M. Sees Q4 EPS of $0.52-0.56 vs. $0.60, and full-year EPS of $2.65-2.75 vs. $2.61. Shares -2.3% AH. (PR)
  

Today's Markets

Overseas
markets were mixed Friday, with strong gains in Japan and China, but
some weakness in Europe early on. Futures have moved lower overnight.

• Asia: Nikkei +1.4% to 10035. Hang Seng +2.3% to 21753. Shanghai +1.2% to 2996. BSE -1% to 15896.
  
• Europe at midday: FTSE +0.3% to 5151. CAC -0.3% to 3702. DAX -0.5% to 5561.
  
• Futures at 7:00: Dow -0.3% to 9871. S&P -0.3% at 1058. Nasdaq -0.1%. 30-year Tsy +0.32% to 119-02. 10-year +0.23%. 5-year +0.18%. 2-year +0.05%. Euro flat vs. dollar. Yen +0.6%. Pound -0.1%.
  

Japan Futures, Australia Stocks Fall on U.S. Consumer Spending

Nov. 2 (Bloomberg) -- Japanese stockfutures and Australian
shares dropped as U.S. consumer spending fell and CIT Group Inc.,
a 101-year-old commercial lender, filed for bankruptcy, damping
confidence the global economy is recovering.
U.S.-traded receipts of Sony Corp., Japan’s biggest
exporter of televisions, dropped 5.8 percent from the closing
share price in Tokyo on Oct. 30 after U.S. consumer spending
fell and the yen strengthened. Those of Mitsubishi UFJ Financial
Group Inc., Japan’s largest bank by market value, tumbled 4.2
percent. Mitsubishi Corp., Japan’s largest trading company which
generates more than half its profit from raw materials, declined
5.2 percent after commodity prices tumbled. James Hardie
Industries NV, the biggest seller of home siding in the U.S.,
retreated 3.6 percent in Sydney.
Futures on Japan’s Nikkei 225 Stock Average expiring in
December were offered in the pre-market at 9,950 in Osaka, Japan,
at 8:10 a.m. local time, compared with the close of 9,715 in
Chicago on Oct. 30, and 10,010 in Singapore. Australia’s S&P/ASX
200 Index dropped 2.6 percent as of 10:19 a.m. Sydney. New
Zealand’s NZX 50 Index fell 1.4 percent in Wellington.
“People are starting to have doubts the U.S. recovery will
continue,” said Tomochika Kitaoka, chief strategist in Tokyo at
Mizuho Financial Group Inc. “The CIT bankruptcy will probably
drag down the financial stocks.”
In New York, the Standard & Poor’s 500 Index fell 2.8
percent to 1,039.19 on Oct. 30. Americans cut spending 0.5
percent in September, the first decline in five months,
according to the Commerce Department.
Commodity Prices Drop
New-York based CIT filed for bankruptcy on Nov. 1, with
financing from investor Carl Icahn. The credit crunch dried up
its funding and a U.S. bailout failed.
Stocks in the MSCI Asia Pacific Index are valued at 22
times estimated earnings, compared with 17 times for the S&P 500
and 15 times for Europe’s Dow Jones Stoxx 600.
Crude oil for December delivery tumbled the most in a month,
down 3.6 percent to $77 a barrel, on Oct. 30 in New York. The
London Metals Index, a measure of six metals including copper
and zinc, dropped 2.8 percent.
The yen appreciated to 89.68 compared with 90.95 against
the dollar at the close of stock trading in Tokyo on Oct. 30.
Against the euro, Japan’s currency strengthened to 132.11 from
133.11. The stronger yen reduces income when overseas revenue is
converted into local currency.
ANA, Daiwa Securities
All Nippon Airways Co., Asia’s second-largest carrier by
sales, may fall after forecasting a second-straight annual loss,
citing a decline in international passenger travel. ANA expects
a loss of 28 billion yen ($308 million) in the year ending March,
compared with a previous prediction of a 3 billion yen profit.
Daiwa Securities Group Inc., Japan’s second-largest
brokerage, reported second-quarter profit that missed analysts’
estimates as revenue plunged 20 percent. Net income was 1.99
billion yen for the three months ended Sept. 30, compared with a
loss of 20.5 billion yen a year earlier.
Fujifilm Holdings Corp, the world’s biggest maker of film
used in liquid-crystal-display panels, swung to a first-half
operating loss of 8.6 billion yen from the previous year’s
profit, with a 22 percent fall in sales.
China Merchants Bank Co., China’s fifth-biggest bank by
market value, posted a fourth-straight decline in quarterly
profit as shrinking loan margins outweighed lending growth and
lower provision charges. Third-quarter net income fell to 4.82
billion yuan ($706 million) from 5.75 billion yuan a year
earlier.

May be a good long-term investment. Marriot is getting man-handled at the moment. Maybe Hyatt can gain some market share...

The Motel 6 of IPOs?
HYATT HOTELS IS EXPECTED to go public this week, and value
investors should look at the deal. The asset-rich global hotel owner
and operator has a great balance sheet and is likely to come to market
at a discount to its tangible book value -- a rarity in an initial
public offering.

Hyatt, founded and controlled by
Chicago's Pritzker family, is expected to offer 38 million shares,
priced somewhere between $23 and $26, through underwriters led by
Goldman Sachs. At $24.50, the midpoint of that range, the company would
be valued at $4.1 billion, below its two main publicly traded rivals, Starwood Hotels and Resorts Worldwide
(ticker: HOT) and Marriott International
(MAR). Hyatt's tangible book value is more than $26 a share. The 130
hotels owned by Hyatt, which will trade under the ticker symbol H,
account for most of the book value.


One negative is that all proceeds
will go to the often-feuding Pritzkers, who will retain a 60% stake in
the company following the deal, through ownership of super-voting class
B stock. According to the prospectus, the family had a dispute over
whether to issue two classes of stock, recognizing that this might
depress the price of the publicly held class A shares. A dual-class
structure also discourages takeovers and will let the Pritzkers
maintain control, even if they sell substantial amounts of the class B
stock, which carries 10 votes against one for each class A share.

Like all hotel operators, Hyatt has
been stung by a decline in travel during the recession, and a
consequent sharp drop in revenue and cash flow. The company is expected
to operate at a slight loss this year, and its pretax cash flow could
slip to about $400 million from $687 million last year. There may be
little or no improvement in 2010, according to Green Street Advisors, a
research and consulting firm in Newport Beach, Calif.

Hyatt is valued at a discount to both
Marriott and Starwood. Its enterprise value (equity value less cash)
divided by projected 2009 cash flow stands at 10, versus 12 at Starwood
and 14 at Marriott.

Once an innovator -- it came up with
the atrium-hotel idea in the 1960s -- Hyatt has lost ground to rivals
in the past two decades by failing to develop new lodging concepts and
to expand as rapidly as they have. The Hyatt brand lacks the cachet
that it once had. "While this underperformance provides a potentially
valuable source of unlocked upside potential, it remains to be seen
just how much the culture of this relatively insular company has really
changed," wrote Green Street in a report last week. Most top Hyatt
managers aren't from the family and own no stock.

"One of Hyatt's biggest opportunities
is that it's underrepresented in some major hotel markets," says John
Arabia, a Green Street analyst. For instance, it has just one hotel in
New York City, against 13 for both Starwood and Marriott. Hyatt does,
however, have a good presence in Asia, including China.

With the hotel industry likely to
continue struggling into next year, investors who buy the shares might
have to be patient. But given the company's strong balance sheet,
underexploited brand and potential for growth, value investors might
find it worthwhile to check in at Hyatt.

Wow great find on Hyatt, im really surprised the Pritzker family wants to go public, they must be hurting for cash/hurtin from competition/ or got something up their sleeve. I wonder what region they will be targeting, sounds like to me asia must be in their agenda some how. check out their history... good stuff...

http://en.wikipedia.org/wiki/Hyatt

Earnings and Morning Headlines...Snapman Check out Citi's sale to CVC Capital...Also Disney's theme park in Shanghai looks intriguing ...

• GM U-turn on Opel sparks German road rage. German officials were outraged by GM's surprise decision to keep Opel, its European arm, abandoning a long-expected sale to a Magna- (MGA)
  led group that the German government had agreed to back with €4.5B of
  state aid. GM said improving business conditions and the strategic
  importance of Opel had prompted the move, which came after the EU
  forced GM's board to revisit the deal over concerns Germany had
  influenced its decision. GM expects restructuring Opel to cost about
  €3B; it's unclear whether the German government will help it
  restructure.
  
• Buffett joins Goldman in bid for tax credits. Sources say Berkshire Hathaway (BRK.A) has joined Goldman Sachs (GS) in a bid to buy $3B in tax credits from Fannie Mae (FNM),
  adding a twist to a politically sensitive deal. The credits are
  virtually worthless to Fannie Mae, and require it to take losses each
  quarter as their value declines, while profitable companies could use
  them to offset taxes. The government, which controls Fannie, is thought
  to be reluctant to approve a deal that would allow Goldman to save on
  taxes, given the firm's already tenuous standing with lawmakers and on
  Main Street; taking widely-respected Buffett as a partner could reduce
  the tension.
  
• Berkshire bets big. Warren Buffett says his $100/share bid for Burlington Northern Santa Fe (BNI)
  was his first and only offer, stressing that the deal is "not a bet on
  next month or next year. We're going to own it forever." Berkshire (BRK.A)
  will pay about 60% cash and 40% stock for the railroad, taking on $8B
  in debt and depleting its cash store to about $20B, leaving it almost
  fully-invested according to its standards, which analysts say could
  result in strategic divestments in the future. Berkshire will split its
  so-called Baby Berkshire shares (BRK.B)
  by 50 to enable small Burlington stakeholders to participate in the
  share swap, which will help bring its famously pricey stock within the
  means of retail investors.
  
• Obese healthcare premiums. A Senate probe found U.S. health insurers (AET, CI, CVH, HUM, UNH, WLP)
  are spending considerably less of their premiums on medical care than
  official industry estimates - an average of $0.70/dollar instead of the
  $0.87 cited by industry group AHIP.
  The report also singled out Cigna for mis-categorizing $5B worth of
  clients. "The American people and I are asking a serious question and
  one that deserves a straight answer – why are health insurance costs
  going up each year?" Sen. Jay Rockefeller said. "While health-care
  costs are spiraling upwards, consumers are paying more and getting
  less, and the health insurance industry doesn't want anyone to know
  what they are up to."
  
• Regulators fret Asia bubble.
  The World Bank warned Tuesday that the sudden reappearance of billions
  of dollars in investment capital in East Asia is "raising concerns
  about asset price bubbles," while the IMF cited "a risk" that surging
  Hong Kong asset prices are being driven by a flood of capital "divorced
  from fundamental forces of supply and demand." About $53B has gone into
  emerging-market stock funds this year.
  
• China backs Shanghai Disney. Beijing gave Disney (DIS)
  the go-ahead to build a $4B theme park in Shanghai, allowing the media
  giant to establish a presence in a massive market that has presented
  substantial hurdles to foreign entertainment companies. The park has
  been discussed for close to a decade. Disney already operates a theme park in Hong Kong.
  
• Oracle awaits EU veto. Oracle (ORCL) is expecting a formal objection to its planned $7.4B acquisition of Sun Microsystems (JAVA)
  from the EU Commission within days, sources say. Despite concerns over
  the deal's impact on the database market, Oracle has refused to make
  any concessions to European regulators.
  
• Bain in exclusive talks to buy Citi's Bellsystem. Private-equity group Bain Capital is reportedly in exclusive negotiations with Citigroup (C)
  to buy its Japanese telemarketer Bellsystem24 in a deal that could be
  worth more than $1B. A team of CVC Capital and Blackstone (BX)
  also made an offer in the final round of bidding, which closed last
  Friday. Citigroup put Bellsystem24 up for sale as part of its efforts
  to raise cash; it has already sold its retail broker Nikko Cordial
  Securities and asset management firm Nikko Asset Management in Japan.
  
• Car sales show spark.
  U.S. vehicle sales declined less than 1% in October, the first signs of
  a recovery without the aid of government incentives. The drop made
  October the year's strongest month aside from August, which received a
  lift from the cash-for-clunkers program. The seasonally adjusted annual
  sales rate was 11.2M. "Thinking of where we've come from, it's
  certainly a positive signal," J.D. Power's Jeff Schuster said. GM's
  sales rose 5% - the first gain since Jan. 2008. Ford's (F) grew 3%.
  
• Second IPO nixed. Aviv REIT Inc. (AVI) became the second
  U.S. company in less than a week to pull its IPO after pricing and
  demand failed to meet investors' expectations, dealers said. September
  and October's 18 IPOs have collectively beaten the S&P 500 by just
  0.3% during their first month of trading - the worst showing on record.
  
• Mortgage apps rise.
  Mortgage applications increased 8.2% from a week ago, MBA said, led by
  a 14.5% jump in refinancing. The average rate for 30-year fixed
  mortgages declined to 4.97% from 5.04%.
  
• Oct. Challenger Job-Cut Report: Announced layoffs fell to 55,679 vs. 66,404 in September, the lowest total since March 2008. As recently as October 2008, the number stood at 113K.
  

Earnings: Wed. Before Open

• Agrium (AGU): Q3 EPS of $0.16 in-line. Revenue of $1.84B (-40.8%) vs. $2.07B. (PR)
  
• Automatic Data Processing (ADP): FQ1 EPS of $0.56 beats by $0.06. Revenue of $2.1B (-3.6%) in-line. (PR)
  
• Aqua America (WTR):
  Q3 EPS of $0.25 in-line. Revenue of $181M (+2.1%) vs. $189M. Increases
  quarterly dividend by $0.01 (7.4%) to $0.145. Says results were
  negatively impacted by eighth wettest summer in 137 years. (PR)
  
• Baker Hughes (BHI): Q3 EPS of $0.26 misses by $0.10.
  Revenue of $2.23B (-26%) in-line. Says international results were
  negatively impacted by price discounting. Expects to complete
  acquisition of BJ Services (BJS) in Q1 2010. (PR)
  
• Becton Dickinson (BDX): FQ4 EPS of $1.25 beats by $0.01. Revenue of $1.9B (+5%) in-line. (PR)
  
• Comcast (CMCSA): Q3 EPS of $0.33 beats by $0.08. Revenue of $8.8B (+3%) in-line. Declares quarterly dividend of $0.0675. (PR I, II)
  
• Devon Energy (DVN): Q3 EPS of $1.10 beats by $0.20. Revenue of $2.1B (-64.9%) in-line. O&G production is up 8% YTD. Shares +4.3% premarket. (PR)
  
• Diedrich Coffee (DDRX): FQ1 EPS of $0.07 beats by $0.02. Revenue of $15.8M (+52%) vs. $13.2M. Diedrich is being acquired by Peet's Coffee & Tea (PEET). (PR)
  
• Foster Wheeler (FWLT): Q3 EPS of $0.71 beats by $0.08. Revenue of $1.22B (-29.2%) vs. $1.29B. (PR)
  
• Garmin (GRMN): Q3 EPS of $1.02 beats by $0.03. Revenue of $781M (-10.2%) vs. $704M. Gross margin 52%. Operating margin 30% from 25% last year. (PR)
  
• Huntsman (HUN): Q3 EPS of -$0.24 misses by $0.16.
  Revenue of $2.11B (+13%) vs. $1.95B. Says expansion of Asian ops "has
  allowed us to take advantage of markets less affected by the ongoing
  global recession." Anticipates economic recovery will continue. (PR)
  
• Liz Claiborne (LIZ): Q3 EPS of $0.43 misses by $0.23. Revenue of $770B (-24.1%) vs. $790B. Says it's seeing "significantly improved comparable store sales results" Q4 to date. (PR)
  
• Marsh & McLennan (MMC): Q3 EPS of $0.48 beats by $0.22. Revenue of $2.52B (-10.5%) vs. $2.6B. (PR)
  
• Pulte Homes (PHM): Q3 EPS of -$1.15 misses by $0.46.
  Revenue of $1.09B (-30%) vs. $1.23B. Says results "reflect a
  homebuilding industry that continues its transition toward more stable
  market conditions as lower prices and historically low mortgage rates
  are helping to support homebuyer demand. Challenges remain, however, as
  economic weakness, foreclosures, rising unemployment and recent
  uncertainty over the expiration of the federal tax credit continue to
  influence buyer behavior." (PR)
  
• Quanta Services (PWR): Q3 EPS of $0.32 beats by $0.11. Revenue of $781M (-25.6%) vs. $858M. (PR)
  
• R.R. Donnelley & Sons (RRD): Q3 EPS of $0.54 beats by $0.09. Revenue of $2.5B vs. $2.4B. (PR)
  
• Time Warner (TWX): Q3 EPS of $0.61 beats by $0.08. Revenue of $7.13B (-5.9%) in-line.(PR I, II)
  
• Transocean (RIG): Q3 EPS of $2.65 misses by $0.02. Revenue of $2.82B (-11.6%) in-line. (PR)
  
• TRW Automotive (TRW): Q3 EPS of $0.68 beats by $0.52.
  Revenue of $3.11B (-13.5%) vs. $2.87B. Sees Q4 revenue of $3.2B vs.
  $3B. "The cautious optimism that has emerged for the industry is
  supported by the increasing vehicle production forecasts. Although it
  appears the bottom of the financial crisis has been reached, full
  recovery will be a long and gradual process." (PR)
  
• Tyco Electronics (TEL): Q3 EPS of $0.30 beats by $0.03. Revenue of $2.7B (-24.6%) vs. $2.6B. (PR)
  
• Watson Pharmaceuticals (WPI): Q3 EPS of $0.66 beats by $0.01. Revenue of $662M (+3.3%) vs. $688M. (PR)
  
• XTO Energy (XTO): Q3 EPS of $0.86 beats by $0.02. Revenue of $2.29B (+7.7%) in-line. (PR)
  

Earnings: Tue. After Close

• Anworth Mortgage Asset (ANH): Q3 EPS of $0.27 misses by $0.04. Interest income of $63M (-14%). Shares +2% AH. (PR)
  
• CBL & Associates Properties (CBL): Q3 FFO of $0.50 beats by $0.03. Revenue of $263M (-8%) vs. $255M. Shares -0.8% AH. (PR)
  
• Con-Way (CNW): Q3 EPS of $0.39 misses by $0.20. Revenue of $1.1B (-18%) in-line. Shares +0.1% AH. (PR)
  
• Crown Castle International (CCI): Q3 EPS of -$0.13 misses by $0.09. Revenue of $429M (+12%) vs. $419M. Sees full-year EPS of -$0.58 to -$0.49 vs. -$0.45, on revenue of $1.54B vs. $1.66B. Shares -6.3% AH. (PR)
  
• Digital River (DRIV): Q3 EPS of $0.42 beats by $0.01. Revenue of $99.4M (+3%) vs. $98.3M. Sees Q4 EPS of $0.30-0.34 vs. $0.42. Shares -1.3% AH. (PR)
  
• Discovery (DISCA): Q3 EPS of $0.22 misses by $0.05. Revenue of $854M (+1%) vs. $850M. Shares -0.1% AH. (PR)
  
• Excel Maritime (EXM): Q3 EPS of $0.81 beats by $0.68. Revenue of $174M (-25%) vs. $101M. Shares +6% AH. (PR)
  
• Exco Resources (XCO): Q3 EPS of $0.20 misses by $0.02. Revenue of $131M (-70%) vs. $229M. Shares -0.5% AH. (PR)
  
• Hartford Financial (HIG): Q3 core EPS of $1.56 beats by $0.45.
  Results exclude highly variable realized gains/losses. Raises full-year
  EPS guidance to $0.85-1.05 from $0.00-0.20, vs. $0.50. Shares +4.8% AH. (PR)
  
• Kraft (KFT): Q3 EPS of $0.55 beats by $0.07.
  Revenue of $9.8B (-6%) vs. $10.3B. "Our volume/mix, profit margin and
  cash flow trends are strengthening as we successfully execute our
  growth plan." Shares -2.9% AH. (PR)
  
• Onyx Pharmaceuticals (ONXX): Q3 EPS of $0.35 beats by $0.13. Revenue of $69M (+36%) vs. $65M. Shares -0.7% AH. (PR)
  
• Pioneer Natural Resources Company (PXD): Q3 EPS of -$0.06 misses by $0.13. Revenue of $410M (-32%) vs. $400M. Shares -0.2% AH. (PR)
  
• STEC (STEC): Q3 EPS of $0.50 beats by $0.03. Revenue of $98M (+54%) vs. $97M. Shares -31.9% AH. (PR)
  
• Unum Group (UNM): Q3 EPS of $0.64 in-line. Revenue of $2.52B (+3%) vs. $2.56B. (PR)
  
• Vivus (VVUS): Q3 EPS of -$0.30 beats by $0.01. Revenue of $4.3M (-2%) vs. $5.3M. Shares -3.7% AH. (PR
  
• Yamana Gold (AUY): Q3 EPS of $0.12 misses by $0.01. Revenue of $333M (+50%) vs. $358M. Shares -2% AH. (PR)
  

Today's Markets

Overseas
markets posted solid gains Wednesday after U.S. markets rebounded from
early weakness to finish off Tuesday flat. Futures are higher in
moderate overnight trading.

• Asia: Nikkei +0.4% to 9844. Hang Seng +1.8% to 21615. Shanghai +0.5% to 3129. BSE +3.3% to 15912.
  
• Europe at midday: FTSE +0.8% to 5080. CAC +1.6% to 3643. DAX +1.4% to 5429.
  
• Futures at 7:00: Dow +0.6% to 9780. S&P +0.6% to 1048. Nasdaq +0.3%. Dec. crude +0.5% to $80.04. Gold +0.4% to $1,089.50. 30-year Tsy -0.16% to 118-28. 10-year -0.11%. Euro +0.4% vs. dollar. Yen -0.5%. Pound +0.7%.
  

Dollar Set for weekly Drop

Nov. 6 (Bloomberg) -- The dollar headed for a weekly loss
against the euro before a government report today forecast to
show U.S. employers cut fewer jobs last month, boosting demand
for higher-yielding assets.
Japan’s currency was poised for a weekly decline against
the euro before data economists said will show German factory
orders rose in September for a seventh month. Australia’s
currency climbed against 15 of its 16 major counterparts after
the central bank said the nation’s economy will expand at more
than three times the pace it had forecast in August.
“Positive economic data will likely encourage investors to
buy higher-yielding assets at the expense of the dollar,” said
Toshiya Yamauchi, a Tokyo-based manager in the foreign-exchange
margin trading department at Ueda Harlow Ltd. “The pace of non-
farm job losses seems to be slowing. The yen tends to be sold
along with the dollar when the economic outlook improves.”
The dollar was little changed at $1.4877 per euro at 12:28
p.m. in Tokyo. Yesterday, it touched $1.4917 in New York, the
weakest level since Oct. 27. The dollar has dropped 1.1 percent
this week against the euro.
Japan’s currency was at 134.82 yen per euro from 134.92.
The dollar fetched 90.62 yen from 90.71 yen. On the week, the
greenback has gained 0.6 percent against the yen.
The Labor Department is forecast to report U.S. employers
eliminated 175,000 jobs in October after a reduction of 263,000
in the previous month, according to the median estimate of
economists in a Bloomberg News survey. The report is due today
in Washington.
ECB
The yen headed for a 1.6 percent loss this week against the
euro as Germany’s Economy Ministry is forecast to report factory
orders rose 1 percent in September after gaining 1.4 percent in
August, according to the median estimate of economists in a
Bloomberg News survey. The data are due today in Berlin.
European Central Bank President Jean-Claude Trichet
yesterday indicated unlimited 12-month loans to commercial banks,
one of the ECB’s main policies this year to support Europe’s
economic recovery, won’t be extended after next month’s
operation. The ECB kept its benchmark rate at 1 percent.
“Although his remarks were not particularly hawkish, this
presented a positive surprise for the markets, which did not
have strong prior expectations that the ECB President would in
fact explicitly discuss prospects for an exit strategy and aided
sentiment toward the euro,” Emmanuel Ng, an economist in
Singapore at Oversea-Chinese Banking Corp., wrote in a research
note today.
U.S. Data
Declines in the yen were tempered as economists surveyed by
Bloomberg News forecast the U.S. unemployment rate rose to 9.9
percent last month from 9.8 percent in September. The report is
due today in Washington.
“Investors are hesitant to take risks before the jobless
data,” said Takashi Miyachi, vice president of foreign exchange
sales at Mizuho Corporate Bank Ltd. in Tokyo. “If the rate hits
10 percent, that would be a big impact, damping the economic
outlook.”
The Australian dollar climbed after the Reserve Bank of
Australia today said the nation’s gross domestic product will
expand 1.75 percent this year and 3.25 percent in 2010. In
August, the bank forecast increases of 0.5 percent and 2.25
percent, respectively.
“Growth in business investment and exports is expected to
be strong, underpinned by the ongoing expansion of the resources
sector,” the central bank said. “The outlook for Australia’s
terms of trade has also improved, with some increase now
expected over the next year or two.”
Bank of England
The Australian dollar rose to 91.24 U.S. cents from 91.02
cents. It advanced to 82.72 yen from 82.57 yen.
Benchmark interest rates are 3.5 percent in Australia,
compared with as low as zero in the U.S. and 0.1 percent in
Japan. That makes the South Pacific nation’s assets attractive
to investors seeking higher returns.
The pound headed for a second weekly advance against the
dollar on speculation a U.K. report will show producer prices
rose for a fourth month in October, backing the case for the
Bank of England to refrain from lowering interest rates.
The central bank yesterday left its key rate at 0.5 percent
and raised the amount of bonds it will buy to 200 billion pounds
($332 billion). That was less than the median forecast of 225
billion pounds in a Bloomberg News survey of economists.
There are “a number of indicators of spending and
confidence” that “suggest that a pickup in economic activity
may soon be evident,” the BOE’s Monetary Policy Committee said
in a statement. “The committee believes that the prospect is
for a slow recovery in the level of economic activity.”
‘More Upbeat’
The price of goods at U.K. factory gates rose 0.2 percent
in October after a 0.5 percent increase in September, a separate
Bloomberg survey showed before the Office for National
Statistics releases the data at in London today.
“The BOE is sounding a little more upbeat on economic
prospects and has increased its quantitative easing program by
less than expected,” said Mike Jones, a currency strategist at
Bank of New Zealand Ltd. in Wellington. “As a result, the pound
is finding strength.”
The pound traded at $1.6589 from $1.6583 in New York
yesterday, when it climbed to $1.6636, the highest level since
Oct. 23. It’s gained 0.8 percent on the week.

The Eurozone still has a the best chance of recovering the fastest. Backed by strong industrial output and sounder financial institutions than those of the U.S. and U.K.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoFnCfu.tMNU&pos=6


Goldman Sachs Said to Manage Sale of Commercial Debt (Update2)




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A A A






By Sarah Mulholland







Nov. 9 (Bloomberg) -- Goldman Sachs Group Inc. is
underwriting $400 million of bonds backed by an Ohio real estate
company’s shopping centers in the first sale to tap a U.S.
program to unlock lending in the commercial mortgage market.
The bond is backed by 28 properties owned by Developers
Diversified Realty Corp., according to people familiar with the
transaction who declined to be identified because terms are
private. The offering comes a month after Goldman Sachs made a
loan to the Beachwood, Ohio-based company in part to repay debt
on the properties and others.
The Federal Reserve opened its Term Asset Backed Securities
Loan Facility in June to newly issued commercial mortgage-backed
securities to stimulate lending and avert a wave of foreclosures
as borrowers fail to refinance. There have been no new sales of
the debt since June 2008, according to data compiled by
Bloomberg.
“It would be good for the market psyche to actually see a
new deal done,” said Kent Born, senior managing director at PPM
America Inc., an investment manager in Chicago. “But as a
practical matter it’s not going to get us back to the type of
deals that were the bread and butter of the market merely two
years ago.”
Investors can take out loans from the Fed’s TALF to
purchase the top-rated securities from Developers Diversified.
The TALF was started in March to revive the market for debt
backed by consumer and small-business loans.
Fortress Sale
The Developers Diversified sale comes as Bank of America
Corp. puts together a $650 million offering for Fortress
Investment Group LLC, backed by office and industrial properties
in Florida, according to a person familiar with the transaction.
The issue may be sold outside the Fed program, the person said.
Both the Developers Diversified and Fortress offerings are
different from the commercial-mortgage backed securities sold
during the boom in that they’re from single borrowers.
Securities sold as the market peaked in 2007 bundled loans from
as many as 300 borrowers, according to data compiled by
Bloomberg.
The process of pooling debt from so many borrowers can take
several months, and banks are hesitant to write new loans and
hold them on their books, said Christopher Hoeffel, a managing
director real estate investor Investcorp International Inc. in
New York.
JPMorgan’s Plans
As credit markets have stabilized and financial
institutions make bets the worst has passed, signs are emerging
that some banks are willing to take on the risk. During the past
two weeks, JPMorgan Chase & Co. began quoting loans to
commercial borrowers with the intent of pooling them to be sold
as bonds, though no loans have been closed yet, according to a
person familiar with the program.
“This is a very positive sign for the market,” Hoeffel
said. “While it’s only a toe in the water, banks are actually
taking the execution risk of a securitized exit.”
New underwriting standards are stringent, and the proceeds
available to borrowers will not be enough to pay off existing
debt for many property owners, Hoeffel said.
“There will need to be additional capital from outside the
banks, in the form of equity, preferred equity or mezzanine
debt, in order to make deals work,” Hoeffel said in an e-mail.
Banks wary of holding loans during the time it takes to
build a pipeline have limited assets to dedicate to new
commercial real estate loans, Hoeffel added.
The government has made reviving the commercial-mortgage
bond market a priority as plunging property values and a
pullback in lending threaten to derail an economic recovery.
U.S. commercial real estate prices are down 40.6 percent from
the October 2007 peaks, according to Moody’s Investors Service.
Sales of commercial mortgage-backed debt slumped to $12.2
billion last year from a record $237 billion in 2007, according
to JPMorgan Chase & Co.
To contact the reporter on this story:
Sarah Mulholland in New York at
smulholland3@bloomberg.net




Last Updated: November 9, 2009 11:57 EST

http://www.ft.com/cms/s/2/2756418c-cf82-11de-b876-00144feabdc0.html

Wow, talk about unique and innovative... though Im not to sure if you can turnover "emtional assets" for a quick profit (aka 5 years close ended fund?), this guy must be thinking mass inflation....



---------

Investment boutique launches ‘emotional asset fund’

By Denise Law
Published: November 12 2009 16:30 | Last updated: November 12 2009 16:30

function floatContent(){var paraNum = "3"
paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}Books, coins and stamps are often viewed as collectables that belong in a cupboard or on a shelf, stored away for good. But
Bernard Duffy, the managing director of Emotional Assets Management
& Research (EAMR) makes these assets work as an investment.EDITOR’S CHOICE

Get creative - Jun-25


David Stevenson: Wine, stamps and maps - Nov-03


Majestic Wine loses out as sober corporations call time on champagne - Nov-11


Peter Gago: Full-body bubbles best at 35,000ft - Nov-07




He
believes that collectables or “emotional assets,” can serve as an
alternative investment vehicle in a time of economic uncertainty. “When
wealthy individuals become concerned over the possibility of inflation,
they rotate into more tangible assets,” Mr Duffy said.The
investment advisory boutique launched its first fund yesterday, giving
investors the opportunity to include collectables as part of a more
diversified portfolio.The launch of the Emotional Assets Fund comes at a time when investors continue to explore low-risk, alternative asset classes. As
a five-year, closed-ended scheme, it will invest 60 per cent of its
gross assets in funds invested in emotional assets such as photography,
art, diamonds and violins. Another 40 per cent will go into direct
emotional asset holdings like vintage watches, rare manuscripts and
ceramics. The minimum investment in the fund is £100,000, with a target growth rate of 15 per cent per year.
In the wake of the recent recession, investors have shifted en masse into fixed income, including corporate bonds and cash.
But Mr Duffy believes that surging gold prices also indicate a loss of
confidence in paper assets. The price of gold is currently hovering
above $1,000. He also expects the Bank of England’s
quantitative easing program to kick in sometime next year, causing
inflation to rise, and making 2010 a good year for tangible and vintage
investments. The historical performance of emotional assets
also point to a possible rise the price of collectables. Mr Duffy said
wealthy investors tend to put money into art as a hedge against
inflationary fears. He expects the same pattern to occur in the next
few years.Although tangible assets tend to be highly correlated
with inflation, they also tend to be negatively correlated with
deflation, making collectables even more attractive.However, as
with any investment, there are several drawbacks. “We don’t suggest
putting all of your money into emotional assets either,” said Dr Rachel
Campbell, risk consultant at EAMR.“Investors should put a small
percentage into emotional assets, along with stocks and bonds for a
diversified portfolio that minimizes risk.”The dealer market has also raised concern over whether emotional assets, particularly art pieces, are properly appraised. “Because
of the dealer market, there is a problem of transparency, because the
dealer could purposely ask for a higher price,” Mr Duffy said.However,
he added that the fund is managed by experts who know every piece of
work available in the market and constantly track prices at auctions.“Investors must remember to invest in what other people collect, not in what other people invest in,” Mr Duffy said. Dr
James Hyman, art and photography adviser for EAMR, said the problem of
transparency can be fixed with auctions, if the seller knows when to
buy.“The judgment may be to buy now, because the seller knows where to sell it or someone who wants to buy.”Price
rises will also depend on the number of bidders. Investors have
traditionally held onto their pieces when the market is slow. But for Mr Duffy, the emotional asset market remains an area of opportunity going forward. “Most
fund managers over-promise and under-deliver. With emotional assets,
there are no synthetic assets or fancy structures. The next phase of
growth will be driven by real money going into tangible assets.”


Copyright
The Financial Times Limited 2009. You may share using our article
tools. Please don't cut articles from FT.com and redistribute by email
or post to the web.

Earnings season is quickly drawing to a close as the Thanksgiving/Christmas holiday season starts to take more of the market's focus in the upcoming weeks. However, there are several names due with quarterly results next week that will catch healthy action in both the extended-hours and regular sessions. On Monday, home improvement retailer Lowe's (LOW) is due with its results, followed on Tuesday by its competitor Home Depot (HD). Also on Tuesday, Autodesk (ADSK), Saks (SKS), Salesforce.com (CRM), Target (TGT), and TJX Companaies (TJX) are slated to report numbers. BJ's Wholesale Club (BJ), Hot Topic (HOTT), TheLimited (LTD) and NetApp (NTAP) will offer their results on Wednesday. On Thursday, Dick's Sporting Goods (DKS), GameStop (GME), Gap Inc. (GPS), Intuit (INTU), The Children's Place (PLCE) and Sears Holdings (SHLD) are slated to post financials.

It's a busy week on the economic calendar as well, with retail sales, empire manufacturing and business inventories due on Monday. Industrial production and PPI are slated for release Tuesday, and housing starts, CPI and crude inventories are due on Wednesday. On Thursday, we'll see initial claims data, leading indicators and the Philadelphia Fed.

I hope this doesn't affect your position too much on the downside.






Merck Cholesterol Woes May Rise on Loss to Abbott (Update1)

By Shannon Pettypiec








Nov. 16 (Bloomberg) -- A finding that Merck & Co.’s
cholesterol pills Vytorin and Zetia didn’t reopen clogged
arteries as well as Abbott Laboratories’ Niaspan has set off a
medical debate on heart treatment strategies.
In a clinical trial reported yesterday, researchers found a
decrease in the thickness of artery walls in patients given
Niaspan, while those on Zetia had no change. Artery thickness is
believed to be a predictor of risk in heart attack and stroke
because it restricts blood flow, the researchers said.
The results released at the annual American Heart
Association meeting in Orlando, Florida, may raise doctor
awareness of the role of good cholesterol, or HDL, in heart
health. It could also pump up sales for Abbott’s drug, a form of
niacin, or Vitamin B, that increases HDL, and mean less revenue
for Merck’s Zetia and Vytorin, which combines Zetia with the
statin simvastatin to lower bad cholesterol, or LDL.
“There will be an up-tick in the use of niacin because of
this,” said Steven Nissen, chief of cardiology at the Cleveland
Clinic in Ohio, in an interview yesterday. “It was quite a
compelling result. Yes, it is a small study; yes, it isn’t a
substitute for a large definitive outcomes trial. But I do think
it will get attention, and I do think it will inform us about
the choices we have about what therapies we should administer.”
Revenue Drop
Revenue for Zetia and Vytorin could fall 20 percent, or
$800 million, with a negative finding, said Seamus Fernandez, a
Leerink Swann & Co. analyst in a note to investors last week.
Sales for the two drugs have dropped 14 percent this year to
about $3 billion.
Merck, located in Whitehouse Station, New Jersey, rose
$1.10, or 3.3 percent, to $34.20 in New York Stock Exchange
composite trading at 9:42 a.m., and was up 8.9 percent for the
year before today. Abbott, of Abbott Park, Illinois, gained 46
cents to $53.41. Before today, it was unchanged for the year.
Roger Blumenthal, a professor of cardiology at Johns
Hopkins University in Baltimore, said the study shouldn’t be
used by doctors to decide treatment.
In an editorial released by the New England Journal of
Medicine, Blumenthal described artery thickness as a secondary
measurement for heart risks that may not give the same result as
a study gauging the total number of heart attacks and strokes
from use of the drugs. Further, the benefits of Niaspan may also
be exaggerated because the study was ended early, he said.
The study wasn’t “large or long enough to draw broad
conclusions’,’ said Ken Frazier, Merck’s president of global
human health, in an interview yesterday “If people stop
lowering LDL there are going to be deaths, that is a fact.”
Four Months Sooner
Allen Taylor, the study author and a cardiologist at
Washington Hospital Center in the District of Columbia, said he
ended the trial about four months sooner than expected when it
became clear that Niaspan had significantly outperformed Zetia.
It wouldn’t have been in the patients’ best interest to
keep the trial going, Taylor said in a telephone interview. The
study was able to reach a conclusion with fewer patients and
over a shorter time period than first thought because the
technology being used was more precise than expected, he said.
The negative result is the third in two years for Zetia and
Vytorin.
The first trial, dubbed Enhance, found Vytorin didn’t help
artery health more than Merck’s Zocor, sold generically as
simvastatin for 77 percent less. Data presented in July 2008, in
a trial called SEAS, found more patients taking Vytorin
developed cancer than those on a placebo, a finding later
contradicted in another study.
Merck Study
There are no studies that have shown that Zetia reduces the
risk of heart attacks and stroke. Merck is currently working on
one such study involving 18,000 patients. The results won’t be
available until 2012, a decade after the drug came on the
market.
In the Abbott-funded study reported yesterday, called
Arbiter-6 Halts, researchers measured the thickness of the neck
artery leading to the brain in 208 patients, using an ultra-
sound. They were given simvastatin along with either Niaspan, a
modified form of vitamin B also known as niacin, or Zetia over
14 months.
The study only looked at patients who had already lowered
their LDL cholesterol to the recommended level of 100 milligrams
per deciliter of blood or less using a statin.
“We’re answering a simple question that clinicians need to
know the answer to in order to take better care of their
patients,” said Taylor, the study author. “The trial results
are ultra-clear, Niaspan worked better than Zetia and, through
that hopefully, patients are going to benefit.”
Heart Attacks, Strokes
Even with statins, which recorded $34 billion in worldwide
sales last year, patients are having heart attacks and strokes,
so doctors continue to seek additional treatments, said Richard
Karas, a professor of medicine at Tufts University medical
school in Boston, in a telephone interview.
Previous studies suggest that HDL-raising drugs could
double the benefit of lowering bad cholesterol, he said.
Heart disease, the build up of fatty plaque in the
arteries, killed 445,687 people in 2005 and is the leading cause
of death in the U.S., according to the American Heart
Association.
With the introduction of statins and procedures to reopen
arteries, the death rate from heart disease declined 34.3
percent between 2005 and 1995 in the U.S., though 1.26 million
Americans will have a heart attack this year, according to the
heart association.
Digestive Track
One approach to cutting the number of heart attacks has been
trying to lower the LDL as much as possible by increasing the
dosage of a statin, or using Zetia, which is designed to work in
the digestive tract by stopping the absorption of cholesterol
from food.
Niaspan, by contrast, works by raising levels of high-
density lipoprotein, or HDL cholesterol, believed to protect
against heart attacks by collecting excess artery-clogging LDL
cholesterol in the blood and taking it to the liver where it can
be disposed.
HDL may also provide a protective benefit to the heart and
blood vessels through its antioxidants, anti-inflammatory and
anti-clotting effects, according to the Mayo Clinic.
Using Niaspan, with $786 million in sales last year, to
raise HDL has been limited because the drug can cause facial
flushing. Merck is testing a form of niacin in combination with
an experimental drug laropiprant and will seek U.S. regulatory
approval for the medicine as early as 2010.
“If Niaspan is superior to Zetia in the study, we expect
the data to provide the Niaspan franchise with a shot in the arm
especially if there are significantly fewer events in the
Niaspan group,” said Larry Biegelsen, an analyst with Wells
Fargo Advisors LLC in New York, in a note to investors on Oct.
26, before the study’s finding were reported.
Safety Differences
The Arbiter study released today wasn’t large or long enough
to detect a significant difference in the rates of heart attacks
and strokes, said Taylor, the study author.
Though the research found that 5 percent of patients taking
Zetia had a heart attack or stroke compared with 1 percent on
Niaspan, that finding is not definitive because of the limited
size of the study, Taylor said.
Patients taking Niaspan were more likely to drop out of the
study because of side effects, the study showed. About a third
of Niaspan patients said they experienced facial flushing.
Zetia and Vytorin have been shown to lower levels of LDL
cholesterol better than statins alone and doctors should focus
on getting their patients’ LDL cholesterol to the levels
recommended by the American Heart Association, said Merck’s head
of research Peter Kim said in an interview.
“Lowering LDL is an extremely well validated step toward
improving cardiovascular health,” Kim said. “Numerous studies
have shown, if you lower LDL you decrease cardiovascular risk
and save lives.”

John

Paulson High on Citi, Down on Goldman

John Paulson disclosed he bought up stock in Citigroup and sold his Goldman Sachs Group stake

in a regulatory filing.


Paulson & Co. made a 300 million share purchase of Citi, a bloated financial service company

that the federal government bailed out in 2008.


The New York hedge fund also dumped its two million share stake in Goldman Sachs, the filing

showed.


Paulson, who made a fortune with his bet against subprime mortgage, is betting on corporate

welfare. He bought up stock in beleaguered Bank of America, the Charlotte, N.C., company that

has taken $50 billion in bailout money. Paulson has talked up distressed strategy as a

viable plan in the wake of the global financial crisis.


In divesting himself of Goldman Sachs, meanwhile, Paulson is taking a similar line to his

September selloff of JPMorgan Chase. Paulson cut his seven million share stake in JPMorgan to

two million.


Citi is trading at $4 a share, down from its peak price of $57. Paulson & Co. has

about $30 billion under management.

Friday Round up from U.S. markets. Late but informative if anyone missed the action

==================================================================================================================

Weaker-than-expected results from Dell (DELL) pushed the tech sector lower Friday, which in turn sent the broad market skidding into the red. Disappointing results from builder D.R. Horton (DHI) also weighed on sentiment, adding to worries the real estate market will continue to hamper a recovery in the U.S. economy. European Central Bank President Jean-Claude Trichet spooked the markets as well today after saying the the bank could soon begin unwinding stimulus measures that were installed during the peak of the financial crisis. The U.S. greenback spiked higher against the euro on the report, and commodities such as oil turned lower as a result.

Next week will see trade in the U.S. shortened by the Thanksgiving day holiday on Thursday. Markets will be closed Thursday and equities will trade for just a half-day on Friday.

There will still be plenty of news-drivers for traders to play in the days leading up to Thanksgiving. On Monday, Hewlett-Packard (HPQ), Brocade Communications (BRCD), LDK Solar (LDK) and Tyson Foods (TSN) will issue quarterly results. On Tuesday, American Eagle Outfitters (AEO), Barnes & Noble (BKS), Blue Coat Systems (BCSI), Borders Group (BGP), Coldwater Creek (CWTR), Heinz (HNZ), J Crew Group (JCG) and Medtronic (MDT) are slated to post financials. Wednesday will see the release of quarterly reports from Deere & Co. (DE) and Tiffany & Co. (TIF).

On the economic front, existing home sales data are due on Monday, and GDP, the Case Shiller 20 City Index, consumer confidence, and the FHFA Home Price Index are set for release on Tuesday. On Wednesday, personal income/spending, initial claims, durable orders, Michigan sentiment, new home sales, and crude inventories data will be distributed.

Dell reported Thursday night Q3 earnings of $0.17 per share, including $0.06 per share in items, down from $0.37 per share a year ago. Revs were $12.89 bln, down from $15.1 bln in the year ago quarter. The Street view was earnings of $0.28 per share on sales of $13.1 bln.

For Q4, Dell expects seasonal demand improvement in its Consumer business, while demand in Public is typically lower during the quarter. The company expects fouth quarter revenue to improve over the third quarter.

ADC Telecom (ADCT) was also an active decliner after the company reported late Thursday Q4 adjusted EPS of $0.06 vs $0.17 a year earlier, but ahead of the Thomson Reuters mean analyst estimate for $0.04. Revenue of $183.9 million compared to a Street estimate for $170 million.

The company guided for a GAAP loss of $0.15 to $0.05, which includes non-cash
amortization expense of $0.05 per share and excludes potential non-cash
charges or restructuring that the company cannot estimate at this time. The
ex-items Street view was for $0.11.

D.R. Horton tumbled lower after the company reported a loss of $231.9 million, or 73 cents per share, compared with a loss of $799.9 million, or $2.53 per share, a year earlier. Inventory writedowns and other expenses totaled $192.6 million pretax, versus $1.1 billion in 2008. Analysts surveyed by Thomson Reuters called a loss of 30 cents per share, ex items. Revenue fell 42% to $1.01 billion from $1.75 billion; analysts were looking for $1.11 billion.

Scandal...



Executives Face High Stakes in Inquiry on Airbus Trades



By NICOLA CLARK

Published: November 22, 2009

One of highest-profile insider-trading inquiries in
Europe in recent years will enter its final phase Monday as more than a
dozen current and former executives of the aerospace group EADS and its Airbus subsidiary testify before a French regulator that is weighing more than €12 million in fines.

The weeklong hearing of the sanctions committee of the French Financial
Markets Authority follows a two-and-a-half-year investigation into
allegations that top managers of the two companies were aware of
manufacturing problems with the Airbus A380 superjumbo jet when they
sold shares in European Aeronautics Defense & Space in March 2006,
three months before the troubles became public and the company’s shares
tumbled.The stakes in the EADS case — which dates back to 2006 —
are high for both the regulator and the accused, lawyers and analysts
said. Popular resentment of corporate leaders is still running high
here in the wake of last year’s financial market meltdown, putting
pressure on the French authority to demonstrate that it has the teeth
to enforce fair trading. Meanwhile, EADS and its main industrial
shareholders — the French media group Lagardère and the German car
maker Daimler — are eager to put the headlines about the affair behind them. “There
are very few instances today in France where people are actually
convicted of insider trading,” said Frédérik-Karel Canoy, a lawyer
representing the individual French shareholders of EADS. Since insider
trading became a crime in the 1970s, he said, “the regulator has rarely
fulfilled its role as defender of small investors.”A
confidential report in July by the regulator’s lead investigator in the
case charged Noël Forgeard, a former EADS co-chief executive, and six
other individuals with profiting illegally from privileged information
and accused EADS itself of failing to properly inform investors about
the delays in the A380 program, according to people who have read the
report. The same report exonerated 10 other executives whom the
regulator had formally accused of insider dealings in 2008 — including
the current Airbus chief executive, Thomas O. Enders. Lagardère and
Daimler were also cleared of any violation.Following the report
in July, the regulator’s sanctions committee has sought to determine
what the accused executives would have known about the troubled A380
project when they sold their stock in early March 2006, three months
before the problems with that aircraft program became public on June
13. The shares plunged 26 percent the next day. The authority’s
investigator has recommended that Mr. Forgeard, who was ousted in July
2006, pay the most severe penalty, €5.45 million, or $8.1 million,
after he reaped profits of more than €3.5 million from exercising his
EADS share options. Mr. Forgeard has consistently maintained
his innocence. In October, his lawyers asked the regulator to review
new evidence that they said proved that he had moved to sell his shares
well before a meeting of EADS and Airbus executives on March 1, 2006,
when the regulator said the A380’s production problems were first
discussed. The evidence includes a series of documents that
were seized during police raids of Mr. Forgeard’s office in December
2006, said a person who had read the documents but was not authorized
to discuss them. Among them is a letter dated Feb. 12, 2006, written by
Mr. Forgeard informing his bank, Edmond de Rothschild, of his intention
to sell a portion of his EADS shares and of his plans to give some of
the proceeds to his children. The letter also indicated that Mr.
Forgeard had sought approval of the sale from the EADS chief financial
officer and head of compliance, Hans Peter Ring.A spokesman for Mr. Forgeard declined to comment. Telephone calls to his lawyer were not returned.According
to a person who has seen the regulator’s July report, the investigator
has also recommended a fine of €3.6 million for John Leahy, the chief
commercial aircraft salesman at Airbus; €1.1 million for Jean-Paul Gut,
a former EADS chief operating officer and board member; €710,000 for
Andreas Sperl, a former financial director at Airbus; €360,000 for
Alain Flourens, a manager in charge of the main Airbus engineering
centers; €310,000 for Olivier Andriès, a former Airbus vice president;
and €90,000 for Erik Pillet, a former Airbus director of human
resources.EADS itself faces a fine of €700,000 for failing to
release information fast enough about the delays in A380 deliveries.
Those delays eventually stretched to more than two years, resulting in
over €5 billion in losses for the company. The regulator’s
sanctions committee is expected to take up to three weeks to deliberate
after this week’s hearings, making a final decision likely before
Christmas. Any defendant who is found guilty can bring his case to the
Paris court of appeals, a process that would take at least another
year, legal experts said. Defendants often do succeed in having the regulator’s rulings overturned in French courts. “It
happens — and it’s not that rare,” said Stéphane Bonifassi, a lawyer in
Paris who specializes in financial crimes. In highly publicized cases
like the EADS affair, however, many judges have bent to political
pressure to uphold the regulator’s findings, he said.In fact,
even when the regulator has failed to find sufficient evidence of
insider trading, the French courts have been known to convict. Such was
the case with the American financier George Soros,
who was fined €2.2 million in 2002 by a French court that found he had
illegally profited from privileged information about a 1988 takeover
bid for the bank Société Générale.
A 1989 inquiry by the Commission des Opérations de la Bourse — a
predecessor of the Financial Markets Authority — found no evidence of
insider trading according to the rules in place at the time. Mr. Soros
failed to have the verdict overturned by the French supreme court and
in 2006 filed an appeal to the European Court of Human Rights in Strasbourg. That case is still pending.Several executives in the EADS case are also subjects of a separate criminal court inquiry. Legal
experts said the French markets authority appeared to be getting more
aggressive about pursuing insider-trading cases in recent years, though
the financial penalties applied were usually far lower than the maximum
allowed, or 10 times any profits made from the illegal dealings.“We
are seeing more cases prosecuted and the sanctions are getting
harsher,” Mr. Bonifassi said. “But compared to what can be handed down
in the U.S., the fines are still not very high. If all you do is make
them give back the profit, that’s nothing.”

Financials to the rescue


Nov. 30 (Bloomberg) -- U.S. stocks rose, extending a monthly gain for the Standard & Poor’s 500 Index, as concern eased over a possible default by Dubai World. Oil rallied as a British yacht crew was seized by Iran, while aluminum and zinc led industrial metals higher. Treasuries were little changed.

The S&P 500 added 0.4 percent to 1,095.63 at 4:10 p.m. in New York, as Wells Fargo & Co. and JPMorgan Chase & Co. led financial shares to the steepest advance among 10 groups. Equities extended gains in the final hour as Dubai World said it is in “constructive” initial talks with banks to restructure about $26 billion in debt. The Dollar Index, which gauges the U.S. currency against six major trading partners, lost 0.3 percent and crude oil climbed 1.6 percent.

“People are relieved that the Dubai situation seems to be getting better,” said Charles Bobrinskoy, vice chairman of Ariel Investments, which manages $5 billion. “What looked last week like there might be a $60 or $80 billion meltdown for European banks at this point looks like it’s not going to be a big deal.”

Equities in developing nations rallied as the Chinese government said it will maintain stimulus policies next year and India’s 7.9 percent growth in gross domestic product beat forecasts. The MSCI Emerging Markets Index jumped 1.2 percent, the most in a week.

The S&P 500, the benchmark gauge of U.S. equities, extended its November rally to 5.7 percent as it rebounded from the first monthly decline since the index reached a 12-year low in March. S&P 500 financial shares added 2.7 percent today after the group plunged by the same amount on Nov. 27. The Dow Jones Industrial Average climbed 34.92 points, or 0.3 percent, 10,344.84 and extended its monthly gain to 6.5 percent

U.A.E. Backs Banks

The U.A.E.’s central bank said it “stands behind” Dubai’s local and foreign lenders after the request by government- controlled Dubai World for a standstill agreement with creditors threw doubt on $59 billion of liabilities.

Gains in U.S. equities were limited by concern that holiday sales will disappoint investors. Target Corp. slid 2.4 percent and Macy’s Inc. lost 3.9 percent.

The National Retail Federation said the average shopper spent $343.31 in stores and online over the Thanksgiving holiday weekend, less than the $372.57 spent during the same period last year. The group is sticking to a forecast for a 1 percent drop in spending this holiday season.

“The Black Friday weekend wasn’t that great to justify where these stocks are trading,” said Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $62 billion. “Where’s the money going to come from with the consumer? There aren’t plentiful jobs out there.”

Europe Tumbles

Europe’s Dow Jones Stoxx 600 fell 1.4 percent, trimming the benchmark’s monthly gain to less than 1 percent. Bank of Ireland Plc slid 5.3 percent in Dublin after saying it may report a loss of 3.4 billion euros ($5.1 billion) on loans it sells to the country’s so-called bad bank.

Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc lost at least 4.5 percent to lead the U.K.’s FTSE 100 Index to a 1.1 percent retreat. British banks have the most to lose among international lenders from the debt crisis in the U.A.E., with a combined $49.5 billion of loans outstanding, according to a report from Royal Bank of Scotland Group that cites Bank for International Settlements data in June.

Abu Dhabi’s ADX General Index sank 8.3 percent, the most since Bloomberg began compiling the data in 2001. The Dubai Financial Market General Index tumbled 7.3 percent, the most in a year, on the first trading day since the government said Nov. 25 that Dubai World may delay debt payments. Markets were closed through Nov. 29 for the Eid Al Adha holiday.

Default Swaps

Dubai’s debt risk, after jumping the most last week since January, is still below the level signaling a potential failure as investors expect the emirate will be rescued by oil-rich neighbor Abu Dhabi. The cost to protect against Dubai reneging on obligations doubled last week. The amount investors demand to insure $10 million of Dubai debt fell to $589,000 per year today from $647,000, less than the price of $1 million, or 1,000 basis points, associated with borrowers considered distressed.

The Shanghai Composite Index rose 3.2 percent for the biggest gain among indexes in major emerging markets. India’s Bombay Stock Exchange Sensitive Index added 1.8 percent as the growth in GDP last quarter was the fastest pace in 1 1/2 years.

The dollar declined against 10 of 16 major currencies as waning concern that Dubai World may default fanned demand for higher-yielding assets. The U.S. currency fell 1.1 percent compared with the South Korean won and Australian dollar. It slipped 0.1 percent versus the yen and 0.2 percent against the euro.

Treasuries Little Changed



Treasuries were little changed, with the 10-year note’s yield increasing less than one basis points to 3.19 percent. Ten-year yields touched the lowest since Oct. 2 last week as Dubai World sought to delay loan payments. The U.S. will announce Thursday the how much it will sell in 3- and 10-year notes and 30-year bonds next week.

The extra yield investors demand to own emerging-market dollar bonds instead of U.S. Treasuries increased four basis points, or 0.04 percentage point, to 3.29 percentage points, according to JPMorgan Chase & Co. The so-called spread swelled 14 basis points on Nov. 27.

Crude oil for January delivery increased $1.23, or 1.6 percent, to settle at $77.28 a barrel in New York. Futures are up 73 percent this year. Oil advanced as much as 2.6 percent after the U.K. government said the British yacht was stopped by Iranian naval vessels and the crew is being held in Iran.

Oil also advanced after the Institute for Supply Management-Chicago Inc. said its business barometer increased to 56.1 in November, the highest level since August 2008 and above the 53 median estimate of economists in a survey.

The announcement last week that Dubai World was struggling with $59 billion in liabilities hit stock markets around the world, reducing global market value by 2.5 percent to $48.1 trillion last week. Dubai’s Department of Finance today said the emirate’s government hadn’t guaranteed Dubai World’s debt

Morning updates courtesy of seekingalpha.com. Lots of bailouts, debt restructuring, stimulus, and layoffs...

• Dubai World in debt restructuring talks.
  Dubai World broke six days of silence by saying late Monday it is in
  "constructive" talks with lenders to begin restructuring $26B in debt,
  and that the rest of its liabilities are on "a stable financial
  footing." The disclosure, which was less than half the $59B that the
  government of Dubai said it would freeze last week, sparked a
  final-hour rally in U.S. stocks. Dubai World also hired well-known
  dealmaker Ken Moelis to advise on the debt restructuring; Moelis noted
  there had been confusion between debt for Dubai World and debt issued
  by Dubai itself, and emphasized the firm was "doing private
  transactions with private money." In its statement (.pdf), Dubai World promised "a policy of regular communication" going forward.
  
• GE/Vivendi deal clears path to NBC sale. GE (GE) and Vivendi (VIVDY.PK)
  have forged a tentative $5.8B deal for Vivendi's 20% stake in NBC
  Universal, clearing the key obstacle to GE selling a 51% stake in NBCU
  to Comcast (CMCSA)
  at a valuation of about $30B. Sources say the pair plan to announce a
  tentative deal - that will allow GE to offload a net loser, and give
  Comcast more control over the programs coming across its network - on
  Thursday.
  
• AIG pares debt with equity swaps. AIG (AIG) said Tuesday
  it closed two transactions that reduce its debt with the NY Fed by $25B
  using two debt-for-equity swaps. The NY Fed will receive preferred
  shares with a liquidation preference worth $16B in American Life
  Insurance (Alico) and $9B in American International Assurance (AIA),
  which will be placed in special purpose vehicles (SPV). The SPVs will
  help prepare the two subsidiaries for an IPO or third-party sale, AIG
  said. In a separate statement,
  AIG said it was moving forward with the separation of Alico. The
  liquidation preference is an undisclosed percentage of the estimated
  fair market value of the units; AIG would benefit should their market
  valuation exceed $25B. AIG also said that as of Tuesday, its
  outstanding principal balance under the NY Fed credit facility was
  about $17B, and the total amount available under the facility had been
  reduced to $35B from $60B.
  
• Nokia joins AT&T in suing LCD makers. Nokia (NOK) sued Samsung, LG Displays (LPL), AU Optronics (AUO) and other LCD makers accusing them of price fixing, a suit that mirrors claims made by AT&T (T)
  last month. The conspiracy "artificially inflated the price of liquid
  crystal displays ultimately incorporated into LCD products purchased by
  Nokia, causing Nokia to pay higher prices," the complaint said.
  
• Government turns up the heat on home lenders.
  The Treasury and HUD unveiled their Mortgage Modification Conversion
  Drive Monday, hoping to increase pressure on mortgage lenders to
  permanently reduce monthly payments for troubled homeowners. In a statement,
  the administration said 375K of the current 650K trial modifications
  are slated to convert to permanent modifications by year-end. The
  Treasury has complained that banks and mortgage lenders have been slow
  to process modifications, and hopes the new initiative will turn up the
  pressure by forcing mandatory reporting of progress and denials, and
  sanctions for non-compliant services.
  
• Fed furthers triparty reverse repo test. The New York Fed said Monday
  it is expanding its test of triparty reverse repurchases to include
  small real-value transactions. In a reverse repo, the Fed pledges
  mortgage-backed securities and Treasurys it bought as collateral for
  short-term loans, thereby draining cash from the financial system.
  Reverse repos are normally the domain of the 18 primary dealers;
  triparty repos expand the facility to the $2.5T money-market mutual
  fund business. The Fed emphasized the move remains an exercise in
  operational preparedness, and "does not represent any change in the
  stance of monetary policy," adding that, "no inference should be drawn
  about the timing of any change in the stance of monetary policy in the
  future."
  
• SEC settlement challenged.
  The SEC will come under judicial fire Tuesday after a District Court
  judge reopened a civil case following complaints SEC staff had evidence
  of inside trading before settling out of court. U.S. District Judge
  Harold Baer Jr. ordered lawyers for the SEC and accused trader Khaled
  Mohammed Sharif Al Sayed Al Hashemi to provide "more information
  relating to the settlement and the facts underlying this case" to
  "determine whether a final judgment on consent is appropriate." Hashemi
  agreed to pay a total of $875K, including allegedly improper gains he
  made on shares of Nova Chemicals Corp. plus a penalty.
  
• Euro area joblessness remains elevated. Euro area unemployment was unchanged at 9.8% in October, Eurostat said
  (.pdf) Tuesday, but companies continued to cut jobs even as the area
  emerged from the deepest recession since WWII. Eurostat revised
  September unemployment to 9.8% from a previous 9.7%. 134,000 people
  lost their jobs, leaving 15.6M unemployed in the 16-country region. The
  rise is likely to have continued in November; a survey of manufacturing companies (.pdf) released this morning found they continued to reduce payrolls.
  
• Japan offers more liquidity.
  The Bank of Japan agreed at a hastily-assembled meeting Tuesday to pump
  another ¥10T ($116B) into the economy using 0.1%, three-month funds -
  an attempt to address growing concern that deflation and a surging yen
  could derail Japan's fragile economic recovery. The new facility should
  "further enhance easy monetary conditions" and is designed to
  "encourage a further decline in longer term interest rates," the BOJ
  said in a statement (.pdf). Analysts called the move "better than nothing," but said it was "relatively weak" compared to market expectations.
  
• Irish banks buy into bailout. The Bank of Ireland (IRE) and Allied Irish Banks (AIB)
  said Monday they will start transferring about €40B in risky loans to
  Ireland's government, signaling their intent to take part in a bailout
  - and warning that if they don't, full nationalization could be the
  result. Shares of the pair were off about 3.5% Monday.
  
• IBM buys Guardium. IBM (IBM) confirmed it acquired privately-held database security startup Guardium,
  to be integrated into its information management division. Guardium's
  product lets companies give customers and partners access to their
  corporate applications, while ensuring that the databases used by those
  applications remain shielded. Financial terms were not disclosed, but
  the price was thought to be about $225M.
  

Earnings: Tues. Before Open

• Staples (SPLS): Q3 EPS of $0.39 beats by $0.01.
  Revenue of $6.5B (-6%) in-line. "With North American Retail growing
  again, improving trends in our Catalog businesses, solid profitability
  in our European office products portfolio, and record free cash flow,
  we're increasingly optimistic about the future." (PR)
  

Earnings: Mon. After Close

• Guess (GES): Q3 EPS of $0.69 beats by $0.18.
  Revenue of $523M (-1%) vs. $483M. Sees Q4 EPS of $0.77-0.80 vs. $0.69,
  on revenue of $585M-605M vs. $564M. Sees full-year EPS of $2.45-2.48
  vs. $2.19. Shares +7.4% AH. (PR)
  
• OmniVision Technologies (OVTI): FQ2 EPS of $0.27 beats by $0.11. Revenue of $183M (+12%) vs. $164M. Sees FQ3 revenues of $145M-160M vs. $169M. Shares -6.2% AH. (PR)
  

Today's Markets

Asia
markets posted gains Tuesday and Europe stocks were broadly higher as
Dubai World fears receded. Futures indicate a strong open for U.S.
stocks.

• Asia: Nikkei +2.4% to 9572.2. Hang Seng +1.3% to 22113. Shanghai +1.3% to 3235. BSE +1.6% to 17198.
  
• Europe at midday: FTSE +1.6% to 5274. CAC +2% to 3754. DAX +2% to 5737.
  
• Futures: Dow +0.8% to 10411. S&P +0.8% to 1104. Nasdaq +0.95%. Jan. crude +1.4% to $78.35. Feb. gold +1.1% to $1,195.70. Mar. 30-year Tsy -0.46% to 122-05. 10-year -0.18%. Euro +0.4% vs. dollar. Yen -0.5%. Pound +0.7%.
  

Tuesday's Economic Calendar

• 12:05 BoJ Meeting
  7:45 ICSC Retail Store Sales
  8:55 Redbook Chain Store Sales
  10:00 Pending Home Sales
  10:00 Construction Spending
  10:00 ISM Manufacturing Index
  10:00 Results of $25B, 42-Day TAF Auction
  12:00 PM Nov. Auto sales
  12:20 PM Fed's Plosser: Economic outlook
  5:00 PM ABC Consumer Confidence Index
  
• Notable premarket earnings: SPLS
  
• Notable post-market earnings: GAME, SNDA
  

http://dealbook.blogs.nytimes.com/2009/12/09/house-votes-to-raise-taxes-on-fund-managers/

There goes my bloody future income over the next year.............


---------------




House Votes to Raise Fund Managers’ Taxes




December 9, 2009, 6:52 pm






The House voted Wednesday to raise taxes on investment fund
managers’ income in order to pay for maintaining a variety of tax
breaks for businesses.
The bill, approved by a 241-to-181 vote, would treat compensation
received by executives at private equity firms, hedge funds and venture
capital firms as ordinary income and tax it at a 35 percent rate.
Currently, these executives pay a long-term capital gains rate of 15
percent on what is known as “carried interest,” the share of their
firms’ profits that they receive.
The bill also calls for imposing stiff penalties on foreign banks
that help rich Americans hide assets offshore, Reuters reports.
The legislation would extend for one year a number of tax breaks
that were set to expire on Dec. 31. It included help for retailers by
trimming the tax depreciation period for remodeled stores and extension
of a research tax credit for business.
Many Republicans voted against the Democrat-led bill to protest its
inclusion of higher taxes on carried interest at investment firms,
arguing that it would discourage investment.
“It is nothing short of a new tax on the various investments needed
to start the new business and create economic growth,” said
Representative Dave Camp of Michigan, the top Republican on the
tax-writing House Ways and Means Committee, according to Reuters.
But Representative Sander Levin of Michigan, the Democrat who
sponsored the provision, said it would equalize the tax treatment of
pay earned by managers of billion-dollar investment funds with that of
workers in other service industries.
“When people invest their own money, they should pay capital gains
tax on the profits,” Mr. Levin said, according to Reuters. When they
perform services like every one else who performs services, should they
not pay ordinary income tax?”
President Barack Obama backs the proposal, which would raise $23 billion over a decade.
The private equity industry has vigorously defended the preferential tax treatment for managers’ share of profits.
“Carried interest is appropriately taxed as a long-term capital gain
because it represents the profit that an investment partnership earns
by buying a capital asset” and “and eventually selling it for more than
the purchase price,” Douglas Lowenstein, president of the Private
Equity Council, told Bloomberg News.
The increased tax on fund managers’ pay faces opposition from some Democrats in the Senate, which could stall the measure.
The House package would also pay for business tax breaks by
requiring reporting by foreign banks and by rich Americans holding
assets offshore. That provision would raise about $8 billion over a
decade.
The federal government has been cracking down on offshore tax evasion, with notable success in its case against UBS. The Swiss bank agreed to pay $780 million to the United States and turn over thousands of client names.
A key feature of the House bill would add a 30 percent withholding
tax on foreign banks that fail to report information on American
clients to tax authorities.
“There is a big push right now for transparency to avoid the
UBS-type situation,” Joseph Calianno, a partner at the accounting firm Grant Thornton, told Reuters.

Interesting...I read the same article in the FT this morning and it said this would only apply to PE. However, this won't be that big an issue for us considering we will have a large majority of our own money invested.

From the a.m.

• Another record year for foreclosures.
  U.S. foreclosure filings will hit 3.9M in 2009, surpassing 2008's
  record total of 3.2M. But the short-term picture is somewhat brighter,
  with November filings down 8% to 307K, the fourth straight month of
  contraction after peaking in July. RealtyTrac:
  "Loan modifications and other foreclosure prevention efforts, along
  with the recently extended and expanded homebuyer tax credit, are
  keeping a lid on the most visible symptoms of the nation's ailing
  housing market - foreclosures and home value depreciation. This is
  providing a welcome respite for the real estate industry, but a full
  recovery will only come when unemployment recedes to normal, healthy
  levels and when availability of credit reaches a more rational balance
  between the extremes of the past few years."
  
• Citi looks to repay TARP with $20B share sale. Sources say Citigroup (C)
  plans to raise up to $20B in a share offering that could be announced
  as soon as today to pay back its TARP loans. On Wednesday, rival Bank
  of America (BAC) said it wrapped up
  a previously announced plan to repay the $45B it received in government
  aid. Analyst Dick Bove said the move "doesn't do much for
  shareholders," and questioned the logic of such a large dilution.
  
• Barclays denies Lehman hanky panky. In court papers filed this week, Barclays (BCS)
  fought back against claims by Lehman Brothers that it picked up the
  firm's U.S. brokerage on the cheap, saying creditors had been made
  "fully aware" of how the deal was structured, and that there were no
  secret negotiations to transfer money to Lehman executives who aided
  the deal. Given the speed with which the deal was done and volatility
  of the credit markets, it would have been hard to know the exact values
  of the assets sold, Barclays said, adding it never intended for the
  deal to be "flat."
  
• China steels itself in trade spat. The world's largest steel consumer escalated its trade feud with the U.S., saying today
  it will impose provisional duties on some U.S. and Russian imports
  after investigations showed the pair dumped U.S. subsidized steel on
  the Chinese market. The dumping and subsidies have caused substantial
  damage to the domestic industry, China said. Starting tomorrow,
  flat-rolled electrical steel products from steelmakers including AK
  Steel (AKS) will be hit with duties of up to 25%.
  
• Mavens knock Nook. David Pogue and Walt Mossberg panned Barnes & Noble's (BKS)
  Nook e-book reader, with the former calling it "slower than an
  anesthetized slug in winter." Pogue also notes that the Nook's
  much-touted distinctions are fraught with footnotes: the color screen
  is just a thin strip used for navigation; book lending isn't available
  on many books, and you can only lend a book once, ever; and over half
  of Nook's million-plus titles are pre-1923 books that Kindle (AMZN)
  doesn't even bother counting. Mossberg called the Nook annoying, and
  said Kindle's navigation system "runs circles around the Nook's."
  Shares of BKS fell 2.7% Wednesday.
  
• Swiss bank tiptoes toward exit. The Swiss National Bank discontinued its program
  to buy corporate bonds, joining other countries in starting to withdraw
  emergency measures. While the Swiss economy returned to growth in the
  third quarter, the SNB is in no rush to the exit door, saying that a "swift correction in monetary policy would be precipitate" as deflation risks remain. (ETF: EWL)
  
• Treasury extends TARP. As expected,
  Treasury Secretary Timothy Geithner notified Congress that the
  government will keep TARP in place until next October to help regional
  lenders, small businesses, troubled homeowners and in case of a double
  dip. "History suggests that exiting prematurely from policies designed
  to contain a financial crisis can significantly prolong an economic
  downturn," he wrote in a letter
  to Congress. By default, unused TARP money goes to reduce the deficit,
  which is exactly what Republican lawmakers want, but Congress has the
  ability to reduce TARP's size and is likely to do so, using the excess
  to fund President Obama's new jobs initiative.
  
• Robin Hood economy? Two-thirds of Americans want the government to spend more money on job creation and tax the rich to pay the bill, according to a new poll by Bloomberg. The findings are in tune with the job-creation initiatives President Obama announced this week,
  and proposals from some Democratic lawmakers to raise taxes on the
  wealthy. While the public sees both unemployment and the deficit as a
  threat, anxiety over unemployment is higher: 8/10 respondents call
  unemployment a high risk to the economy, while 7/10 say the same about
  the deficit.
  
• SEC casts widening net. Pfizer's (PFE) takeover of Wyeth, and Merck's (MRK)
  acquisition of Schering-Plough are two of at least nine transactions
  under investigation by the SEC for insider-trading violations, sources
  say. The SEC is also looking at Abbott Laboratories' (ABT) acquisition of medical-equipment-maker Advanced Medical Optics and Eli Lilly's (LLY)
  acquisition of ImClone Systems. The SEC is trying to understand how
  people swap information; people who have seen subpoenas say hedge-fund
  managers are being asked to hand over appointment books and
  business-contact lists, in addition to phone and email records.
  
• Tiger Inc. in jeopardy. Sources say Gillette (PG)
  may renegotiate its corporate sponsorship of Tiger Woods, even as his
  workaholic agent Mark Steinberg scrambles to save Tiger's
  billion-dollar brand. On Tuesday, Gatorade (PEP)
  dropped the golfer, despite intense lobbying from Steinberg. Contrary
  to reports that the break was strictly about poor sales, a company
  insider says Gatorade seized on the recent scandal to announce the
  break from a deal that had already gone bad. Nike (NKE) is said to be backing Tiger, but his deal with Accenture (ACN) is also thought to be on shaky ground.
  

Earnings: Thur. Before Open

• Ciena (CIEN): FQ4 EPS of -$0.12 misses by $0.05.
  Revenue of $176M (-1.9%) vs. $168M. "While cautious customer spending
  seems likely to continue as we enter 2010, our Q4 order flow gives us
  confidence in our ability to deliver sequential revenue growth in Q1
  2010. We currently expect a sequential increase in Q1 revenue of up to
  5%." (PR)
  
• Costco (COST): FQ1 EPS of $0.60 in-line. Revenue of $17.3B (+5.5%) in-line. Comparable sales +3% - U.S. +1%, international +13%. (PR)
  
• Gildan Activewear (GIL): FQ4 EPS of $0.42 beats by $0.09. Revenue of $302M (-7.1%) in-line. (PR)
  
• Smithfield Foods (SFD): FQ2 EPS of -$0.26 beats by $0.13. Revenue of $2.69B (-14.5%) in-line. (PR)
  

Earnings: Wed. After Close

• Lululemon Athletica (LULU): Q3 EPS of $0.20 beats by $0.01. Revenue of $113M (+30%) vs. $111M. Sees Q4 revenue of $140M-145M vs. $134M. Shares +1.5% AH. (PR)
  
• Pall (PLL): FQ1 EPS of $0.40 in-line. Revenue of $547M (-5%) vs. $569M. Sees full-year EPS of $2.02-2.19 vs. $1.93. Shares +8% AH. (PR)
  

Today's Markets

Overseas markets were mixed in a relatively bland Thursday session. Futures have overcome overnight weakness.

• Asia: Nikkei -1.4% to 9863. Hang Seng -0.2% to 21700. Shanghai +0.5% to 3254. BSE +0.4% to 17189.
  
• Europe at midday: FTSE +0.5% to 5231. CAC -0.7% to 3757. DAX +0.7% to 5689.
  
• Futures: Dow -0.3% to 10360. S&P 0.4% to 1100. Nasdaq +0.3%.
  30-year Tsy -0.29% to 118-30. 10-year -0.25%. 5-year -0.16%. 2-year -0.08%.
  Crude +0.6% to $71.10. Gold +0.4% to $1,125.
  Euro +0.1% vs. dollar. Yen -0.1%. Pound +0.3%.
  

Thursday's Economic Calendar

• 8:30 Initial Jobless Claims
  8:30 Trade Balance
  8:30 Chicago Fed: Mortgage Foreclosure Policy
  10:00 Quarterly Services Report
  10:00 Geithner Testifies on TARP
  10:30 EIA Natural Gas Inventory
  1:00 PM Results of $13B, 30-Year Bond Auction
  2:00 PM Treasury Budget
  4:30 PM Money Supply
  4:30 PM Fed Balance Sheet
  
• Notable pre-market earnings: CIEN, COST, DG, GIL, SFD
  
• Notable post-market earnings: NSM
  

Huge day in the world of finance, Dubai won't default (bailout), Citi repays Tarp, XOM buys XTO in all stock acquisition, and huge econ data for the rest of the week...

closing updates from seekingalpha.com:





4:18 PM, Dec 14, 2009 --

• DJIA up 29.85 (0.29%) to 10,501.
  
• S&P 500 up 7.70 (0.7%)to 1,114.
  
• Nasdaq up 21.8 (1%) to 2,212.
  

GLOBAL SENTIMENT

• Hang Seng up 0.84%
  
• Nikkei down 0.02%
  
• FTSE up 1.02%
  

UPSIDE MOVERS

(+) XTO sold to XOM in stock deal. XOM down 1.8%.

(+) JAVA gains as report says EU regulators expected to give positive review of Oracle (ORCL)-Sun deal.

(+) SNSS continues run after positive study data issued last week.

(+) CYCC continues run after positive study data issued last week.

(+) CLDX jumps on positive breast cancer study results.

(+) SIGA holds conference call on smallpox antiviral RFP.

(+) V added to S&P 500.

(+) TER gets analyst upgrade.

(+) HNSN settles litigation with LUNA and gets stake in LUNA.

DOWNSIDE MOVERS

(-) XOM buying XTO in $41 billion stock deal.

(-) C details TARP payback, including issuance.

(-) CIEN replaced in S&P 500 index.

MARKET DIRECTION

Broad
stock averages end with modest gains, remaining in the upper end of the
day's range though off the highs hit inside the final hour of trading.
The tech-heavy Nasdaq leads, ending up nearly 1% and just off the day
high. The Dow's modest gain was enough to push the blue-chip index
above 10,500 for the first time since 2008. Crude fell for a ninth
session.

Stocks gained after a huge cloud was removed from
global debt markets by a surprise $10 billion bailout of Dubai World by
the government of Abu Dhabi.

The Arab emirate's move eased
fears that real estate development venture Dubai World would default on
its debt. It was facing a Monday deadline to repay loans.

Exxon Mobil (XOM) also provided a lift for the market by announcing that it will acquire XTO Energy (XTO) in an all-stock transaction valued at $31 billion. The deal is part of Exxon's move to acquire valuable natural gas fields.

Meanwhile, Citi (C)
said it will pay back $20 billion in bailout money it received as part
of the government's Troubled Asset Relief Program, also known as TARP.
The announcement pushed down its stock near 6%. Financial stocks were
mixed as President Obama met over the noon hour with top executives of
some of the nation's biggest lenders.

Obama asked bank executives to support his efforts to tighten financial industry regulation.

In the tech space: Google (GOOG) shares gained on a raised price target at Jefferies. ON Semi (ONNN) will buy California Micro Devices (CAMD) for $4.70 per share.

Crude
oil falls for a ninth session, shedding 12% over that period, on
lingering demand concerns. It's the longest losing steak in eight
years. Crude for January delivery ended down 36 cents, or 0.5%, at
$69.51 a barrel on the New York Mercantile Exchange. Trading remained
volatile Monday, with crude also rising to $70.28 earlier.

Since we don't have a section on politics I just decided to drop this here, maybe later we can come up wth some kind of thread. Joe Lieberman should be dropped from the Democratic Caucus. I can't beleive he has been allowed to flip-flop so many times. He could put a substantial dent in the bill. Republicans love this guy for the most part.




Lieberman Says He May Be Ready to Back Health Bill (Update1)

By Kristin Jensen








Dec. 15 (Bloomberg) -- Connecticut Senator Joseph
Lieberman, an independent who caucuses with the Democrats, said
he may be ready to vote for U.S. health-care legislation if
lawmakers drop a planned government insurance program.
“We’re heading in the right direction,” Lieberman told
reporters today. He said he has wanted to vote for the bill all
along, though he objected to the idea of a new government-run
program or an expansion of the Medicare program for the elderly.
Senate Democrats said yesterday they are leaning toward
dropping both ideas from the legislation. They need all 60 votes
controlled by their party, including Lieberman’s, to win passage
if Republicans remain united against it.
Senator Susan Collins, a Maine Republican who is considered
a possible cross-party ally, said she can’t support the
legislation even with the changes she has heard about. She said
she is concerned about savings that Democrats get from the
Medicare program to help pay for the legislation.
“This bill is getting better, but it’s still too deeply
flawed for me to support it,” Collins told reporters. She said
she is proposing amendments, though their adoption wouldn’t be
enough to get her vote on their own.
“I think something is going to pass and I’d like to make
that bill as good as possible even if ultimately it’s not a bill
that I can support,” Collins said.

• Debtholders disppointed by opaque Dubai.
  Dubai World made no specific proposals on a debt standstill at an
  "expectation management exercise" with its creditors this morning, the
  first meeting since it requested a standstill on $59B in debt on Nov.
  25. The lack of any concrete plan dismayed investors, who have been
  left in the dark for weeks. Dubai's flagship company had been expected
  to formalize a request for a payment standstill at the meeting, until
  it tempered expectations in an email to debtholders, saying its
  two-hour presentation would offer only a glance at its financial
  situation.
  
• GE, Safran snag lucrative plane deal. GE (GE)
  and French aerospace group Safran won a contract to manufacture engines
  for China's future C919 aircraft worth an initial $5B for each company,
  and potentially many times that over coming decades if China succeeds
  in its plan to become a player in the passenger plane market dominated
  by Boeing (BA)
  and Airbus. The Chinese aircraft will be equipped with Leap X turbofan
  engines, the latest developed by Safran in concert with GE. United
  Technologies' (UTX) Pratt & Whitney and Goodrich (GR) were also in the running.
  
• Sanofi buys Chattem for $1.9B. Sanofi-Aventis (SNY) will acquire consumer healthcare firm Chattem (CHTT)
  for $1.9B, or $93.50/share in cash - a 34% premium to Friday's close.
  The transaction creates the world's No. 5 consumer healthcare company
  by revenues, combining Chattem's leading U.S. with Sanofi-Aventis'
  strong international presence in the sector. Chattem has over two-dozen
  branded products, including dental analgesic Benzodent, topical
  analgesic Aspercreme, Icy Hot joint and muscle pain reliever, and
  Pamprin menstrual symptom reliever.
  
• Bucyrus pays $1.3B for Terex's mining division. Bucyrus International (BUCY) will acquire Terex's (TEX)
  mining equipment division, with about $1B in annual sales, for $1.3B.
  Terex's wares are generally smaller than the heavy-duty mining
  equipment made by Bucyrus for global mining giants such as Rio Tinto (RTP) and BHP Billiton (BHP).
  The deal is structured in cash, but Terex has the option over the next
  few days to accept $300M in Bucyrus stock. Bucyrus said the acquisition
  will create a "premier supplier of mining equipment," and double its
  addressable market to $30B from $15B. Greenhill (GHL) advised Bucyrus, Goldman Sachs (GS) advised Terex, and JPMorgan (JPM) is leading a $1.2B term loan to finance the deal. TEX +5.5% premarket.
  
• Strong China sales bolster Japan. Japan posted a bigger-than-expected ¥374B trade surplus
  in November after exports to Asia rose for the first time in more than
  a year - surging 4.7% on a 7.8% gain on shipments to China - helping to
  ease concerns about the fragility of Japan's economic recovery.
  Separately, the Bank of Japan kept its economic outlook
  unchanged in December, suggesting the central bank is still monitoring
  the effects of previous policy measures. Conditions are "picking up
  mainly due to various policy measures taken at home and abroad," BOJ
  said, but added, "there is not yet sufficient momentum to support a
  self-sustaining recovery in domestic private demand."
  
• Shell to shrink Nigeria stake. Sources say Royal Dutch Shell (RDS.A)
  plans to auction off $5B worth of oilfields in Nigeria as the country
  prepares to impose harsher terms on foreign operators. Shell's decision
  to reduce its reliance on Nigeria - once its primary growth engine -
  signals a huge shift. For decades, Shell persisted despite rampant
  piracy and a long-running campaign of militant violence. But with new
  projects in the Gulf of Mexico and Qatar near completion, CEO Peter
  Voser appears ready to reduce Shell's exposure to Nigeria. Two
  state-owned Chinese firms - Sinopec (SNP) and CNOOC (CEO) - are seen as frontrunners for the stake.
  
• Saab's admirers won't let it die. GM said it received inquiries from "several parties" after throwing in the towel on Friday and saying it would shutter its Saab unit. One of the approaches was from Spyker, which submitted a revised bid which it believes deals with all the issues uncovered during due diligence - over which talks fell apart last week.
  
• Yelp walks away from Google. Yelp reportedly shunned an all-but-signed deal to be acquired by Google (GOOG)
  for about $550M plus earnouts over the weekend, indicating it plans to
  stay independent. TechCrunch, which broke both the sale story and its
  subsequent collapse, believes it's likely a large player (AAPL, MSFT...) offered Yelp a strategic partnership that gave the local business review website the confidence to say no.
  
• Healthcare bill passes crucial test.
  The Senate voted 60-40 to advance healthcare legislation in an initial
  procedural vote early Monday, putting the blockbuster bill on track for
  passage by Christmas Eve. The Senate bill, which is likely to form the
  core of any final bill, leaves existing employer-based health-insurance
  benefits largely intact. Last-minute additions toughened restrictions
  on insurers, including barring them from denying coverage to children
  with pre-existing conditions. The House is likely to forfeit its
  planned government-run insurance plan, and a surtax on the wealthy -
  taxing instead high-value insurance plans. Insurers say the bill will
  increase costs, but note modest improvements.
  
• Citadel files for Ch. 11. Citadel Broadcasting (CTDB.PK) the No. 3 U.S. radio broadcaster, filed for bankruptcy protection
  Sunday, hoping to convert a $2.1B credit facility into a new term loan
  of $762.5M, and extinguish $1.4B in debt. Senior lenders would receive
  a portion of the new loan and 90% of the new common stock in
  reorganized Citadel. CEO Farid Suleman said business will continue as
  usual, and that Citadel would seek to emerge from restructuring as
  quickly as possible.
  
• Alcoa, Saudi's Maaden in $10.8B aluminum JV. Alcoa (AA)
  inked a 40/60 joint venture with Saudi state-run Maaden to develop a
  $10.8B aluminum complex, though both companies said they were still
  considering how to raise money for the deal. Asked whether Alcoa would
  conduct a capital raise or seek debt financing, CEO Klaus Kleinfeld
  said only that a variety of funding options were being considered.
  
• Duke may partner with China on U.S. power grid. Duke Energy (DUK)
  is reportedly in talks with State Grid, China's biggest electricity
  distributor, over a JV that may involve installing power transmission
  lines in the U.S. American utilities are keen to tap China's low-cost
  equipment and access to cheap credit to pursue capital-intensive
  projects. Duke spokesman Tom Williams said the company is interested in
  partnering with Chinese companies on transmission line projects in the
  U.S., but added the talks are in their early stages.
  
• Swiss banks face massive increase in cash reserves. Sources say UBS (UBS) and Credit Suisse (CS)
  may have to almost triple their cash holdings relative to customer
  deposits (to 45%) under new proposals being considered by Swiss
  regulators. The banks, not surprisingly, are said to be in talks to
  soften the requirements.
  
• No Nook? Here's $100! Barnes & Noble (BKS) told customers who pre-ordered its Nook ebook reader that if their $259 devices don't arrive by Dec. 24, they will be given a $100 online gift certificate.
  A spokesman says the majority of orders promised for delivery by Dec.
  24 will arrive on time. There's also speculation B&N is planning a "major upgrade" to address some of Nook's shortcomings as soon as this week.
  

Today's Markets

Asia
markets were mixed Monday. Europe stocks opened higher, and U.S.
futures are up a drop in an extremely light overnight session.

• Asia: Nikkei +0.4% to 10183. Hang Seng -1.1% to 20948. Shanghai +0.3% to 3123. BSE -0.7% to 16601.
  
• Europe at midday: FTSE +1% to 5249. CAC +0.7% to 3823. DAX +0.7% to 5870.
  
• Futures: Dow +0.3% to 10301. S&P +0.4% to 1102. Nasdaq +0.4%.
  Crude +0.7% to $74.95. Gold +0.3% to $1,114.70.
  30-year Tsy -0.48% to 117-22. 10-year -0.21%. 5-year -0.11%.
  Euro flat vs. dollar. Yen flat. Pound -0.1%.
  

Monday's Economic Calendar

• 8:30 Chicago Fed National Activity Index
  10:00 Fed's Evans on CNBC live
  
• Notable pre-market earnings: CAG
  
• Notable post-market earnings: JBL
  

-

Good to see some of our fav name's popping up in the headlines




----

Nathaniel Rothschild Said to Be Rusal IPO Cornerstone Investor


By Simon Casey, Bei Hu and Maria Kolesnikova







Dec. 28 (Bloomberg) -- Nathaniel Rothschild’s private
investment company may become a cornerstone investor in United
Co. Rusal’s $2 billion Hong Kong initial public offering, said
three people familiar with the plan.
Paulson & Co., the New York hedge fund run by billionaire
John Paulson, and Russian state-owned lender Vnesheconombank
also may be among investors guaranteed shares in the IPO in
exchange for a pledge not to sell them for a number of months,
the people said, declining to be identified because the
information is private.
BlackRock Inc., the world’s largest asset manager, has
expressed interest in buying shares in the IPO, though it
wouldn’t invest as a cornerstone, one of the people said.
Rusal’s board approved a price range that would value the
company at between $16 billion and $22 billion, the people said,
declining to give a per-share price. The world’s largest
aluminum producer plans to start gauging demand for the sale on
Jan. 4 and begin an investor roadshow on Jan. 12, one of the
people said.
Hong Kong Exchanges & Clearing Ltd. and the city’s
securities regulator approved Rusal’s IPO application this month,
paving the way for the company controlled by billionaire Oleg
Deripaska to become the first Russian firm to list in the
territory. The Securities and Futures Commission said Rusal will
be excluded from offering stock to retail investors.
Paying Debt
Rusal has said it plans to sell a 10 percent stake to help
repay $17 billion of borrowings. The share offering will be led
by Zurich-based Credit Suisse Group AG and BNP Paribas SA of
Paris, with banks including BOC International Holdings Ltd. and
VTB Group helping manage the sale.
Vnesheconombank, also known as VEB, may buy as much as 3
percent of Rusal in the share sale, Russian Finance Minister
Alexei Kudrin, who also sits on VEB’s supervisory board, said
last month.
Russia’s two biggest banks, OAO Sberbank and VTB, both
state-controlled, will buy shares in the IPO alongside state-run
VEB, RIA Novosti reported this month, citing Russian President
Dmitry Medvedev’s chief economic aide Arkady Dvorkovich.
The company’s borrowings almost doubled last year after
Rusal bought 25 percent of Moscow-based OAO GMK Norilsk Nickel,
Russia’s biggest mining company, for $7 billion in cash and a 14
percent Rusal stake. Commodity prices subsequently collapsed,
with aluminum tumbling 36 percent in 2008 on the London Metal
Exchange.
Rusal had a net loss of $6 billion last year, Vedomosti
newspaper reported in October. The company was forced to take
the $4.5 billion loan from VEB in October 2008, the biggest
state-led bailout of any Russian company.
To contact the reporters on this story:
Maria Kolesnikova in Moscow at
mkolesnikova@bloomberg.net;
Bei Hu in Hong Kong at
bhu5@bloomberg.net




Last Updated: December 28, 2009 06:05 EST

We needed a Eurozone thread
=================================================================


Things falling apart in the EUROZONE... (SEEKINGALPHA.COM)

As fears of a dollar meltdown have
loomed ever larger in recent years, major investors, including central
banks, have moved significant portions of their cash reserves into the
euro, the currency of the European Union (EU). And while it is true
that the euro offers some shelter from the American economic
catastrophe, the currency does come with baggage that investors should
not ignore. Introduced as
an accounting medium in 1990, the euro became an actual currency in
1992. It is currently issued by 16 of the 27 EU member countries,
representing some 329 million people. With almost $1 trillion in
circulation, it is the world's largest physical currency. The
birth of the euro was a stunning example of putting the cart before the
horse. When it was first issued as a physical currency in 1999, the
major states that participated were not yet united. Many believe that
this premature introduction was done to hasten the political union. In
hindsight, the strategy was successful. The single currency removed a
key psychological barrier towards unification. As
soon as it made its debut, the euro quickly became the second largest
currency held in the official foreign reserves of central banks. Major
corporations and investors followed suit. By September 2007, former Fed
chairman Alan Greenspan said it would be "absolutely conceivable that
the euro will replace the dollar as the dominant foreign reserve
currency, or will be traded as an equally important reserve currency."However,
the structural problems that were so heavily debated at the birth of
the EU remain unresolved. These uncertainties may undermine the euro as
a viable dollar-alternative. Should recent economic strains continue
unchecked, investors, institutions, and central banks may move heavily
into gold as an ultimate "safe haven."In
the U.S., monetary union depends upon political union. When California
faces a crushing debt burden, it can neither print its own highly
inflationary currency to ease the pressure (though its "IOU's" are a
haphazard attempt) nor leave the union to avoid this constraint. Thus,
crises in U.S. states tend to push states toward the central
government as they seek assistance from Uncle Sam. EU member states
similarly lack their own printing presses and are therefore unable to
monetize their problems. But in Europe, the emergency exit is always
open - states can leave if they believe their interests are not being
considered. The EU does
not have a common fiscal policy, so countries are free to bankrupt
themselves according to their own decree. But when they do, there is no
formal option of seeking a bailout from the pan-European government.
Even if such a road were available under the EU treaties, the European
Central Bank, modeled on the famously inflation-wary German Bundesbank,
would be unwilling to monetize the additional spending.Partially
because of this stringent monetary policy, the euro has risen by some
40 percent against the dollar since its launch. This has severely hurt
eurozone export economies like Spain, Portugal and Italy, who have long
relied on currency devaluation to subsidize their manufacturers.While
countries like Germany, the world's largest exporter, have been
successful in utilizing the benefits of a strong currency to continue
selling products at a real profit, others have failed. Indeed, both
Italy and Greece now have government debts in excess of GDP (115% and
113%, respectively). Furthermore, Greece, with a budget deficit of some
12.7 percent of GDP, is now threatened with default.Although
the EU, by and large, currently spurns talk of a bailout for Greece,
the debate will intensify if the economy deteriorates further. If, in
order to preserve union, the EU does decide to bail out an individual
member state, what precedent would that set?Germany,
the strongest EU economy, found it a Herculean task to bail out just 17
million people in the former East Germany. Could it even contemplate
bailing out not one, but several other EU member states, without
attendant political control? There
seems little room to move forward under the status quo. Though the
Lisbon Treaty (read: EU constitution) just came into effect, it was
passed without the mandate of citizen referenda. The member states
remain culturally distinct, the citizens have little allegiance to the
behemoth in Brussels, and, therefore, it seems far-fetched that the EU
would go to war to compel one of its members to remain in the club.
With little to glue it together, investors are questioning whether the
eurozone is strong enough to withstand the shocks that would accompany
a dollar collapse.As the
credibility of the U.S. dollar has eroded and that of the euro is now
suspect, it is likely that investors will continue their quiet rush
into gold. If so, silver is likely to become a store of value for
smaller investors and the small change of the rich. In such a world,
the price of silver could rise even faster than that of gold.

I'm
not sure sure about the flight into silver but I do see commodities
playing a larger role as reserve "currencies" in the future. However
whe dealing with scarce resources scarcity can control or manipulate
price movement.

On another note, my trip to the EUrozone was
fantastic. Although I was not in a country (Hungary) governed by the
ECB monetary policy (no EUro) it is still an EU country. Inflation
there is noticable since I was last there (9 months before). I am
curious to see what underlying effects this can have have on the zone
as a whole. Fundamentally, eastern europe and western europe need to
emerge from the credit crisis together.

Sauros, I hope you enjoyed yourself in Warsaw, Snapman had a great time in the UK/Morocco I believe.

European Stocks, U.S. Futures Fall After Alcoa Misses Estimates


By Adria Cimino

Jan. 12 (Bloomberg) -- European stocks declined for a
second day and U.S. index futures dropped after earnings from
Alcoa Inc. missed analysts’ estimates and China raised reserve
requirements for the nation’s lenders. Asian shares gained.
Norsk Hydro ASA, Europe’s third-largest aluminum producer,
led a drop among basic-resources companies in the Dow Jones
Stoxx 600 Index, while Alcoa tumbled 5.8 percent in early New
York trading. Beiersdorf AG, the German maker of Nivea skin
creams, slid 2.3 percent after reporting lower-than-projected
profit. Japan Airlines Corp. plunged 45 percent in Asia on speculation it will file for bankruptcy.
Europe’s Stoxx 600 fell 1 percent to 256.29 of 11:11 a.m.
in London, poised for its biggest drop in almost one month.
Record-low interest rates in the U.S. and Europe and about $12
trillion in commitments from governments worldwide have spurred
a 63 percent rally in the measure since March 9. The gauge is
trading at about 59 times its companies’ reported earnings, near
the highest valuation since June 2003, according to weekly data
compiled by Bloomberg.
“Alcoa’s results are a reason for the market to take a
breather after the gains,” said Bruno Ducros, a Paris-based
fund manager at CamGestion, which oversees about $4.3 billion in
stocks. “Investors are going to be very focused on earnings and
that will set the trend for the market. The market can’t afford
to have disappointing earnings.”
Earnings Watch
Intel Corp. and JPMorgan Chase & Co. are among U.S.
companies scheduled to report results this week. Combined profit
for companies in the Standard & Poor’s 500 Index surged 62
percent during the fourth quarter in the first increase since
2007, according to estimate compiled by Bloomberg survey.
U.S. stocks advanced yesterday, sending the S&P 500 higher
for a sixth day. Futures on the gauge slipped 0.8 percent today,
while the MSCI Asia Pacific Index rose 0.3 percent.
The People’s Bank of China raised reserve requirements for
the nation’s lenders by 50 basis points effective Jan. 18,
according to a statement posted today to the Web site of China’s
central bank.
China’s central bank sold bills at a higher yield for
the second time in a week, increasing the likelihood that policy
makers will raise the benchmark interest rate in the first half
of the year. The third-largest economy grew an estimated 8.5
percent last year, leading the world from the worst recession
since World War II.
Alcoa Earnings
Alcoa posted quarterly earnings that trailed estimates as
the company conducted a higher number of metals trades that
boosted revenue while carrying no profit. The shares plunged 5.8
percent to $16.44 in pre-market trading.
Norsk Hydro sank 3 percent to 48.80 kroner. Basic-resources
shares were among the worst performers of the 19 industry groups
in the Stoxx 600 today, dropping 1.2 percent.
Beiersdorf slid 2.3 percent to 44.15 euros. The company
said 2009 profit fell about 33 percent to 379 million euros
($550 million) as sales of beauty products and adhesive tapes
slumped in the economic crisis. That missed the 399 million-euro
average of 12 analysts’ estimates compiled by Bloomberg.
Alstom SA, a French maker of high-speed trains and energy-
generation equipment, dropped 3.3 percent to 51.94 euros after
Societe Generale SA cut its recommendation on the stock to
“sell” from “hold,” citing “rising competition from China”
in a report to clients.
Assa Abloy AB tumbled 3.5 percent to 137.90 kronor as
Goldman Sachs Group Inc. lowered its recommendation on the
lockmaker to “sell” from “neutral.”
Airline Stocks
Japan Airlines, Asia’s biggest carrier, plunged to a record
low. Prime Minister Yukio Hatoyama said today that shareholders
should take responsibility “in general” for JAL, which has
been bailed out at least three times in nine years.
Hatoyama declined to comment on the possibility of JAL
being delisted when speaking to reporters today in Tokyo. The
government has previously said that JAL, unprofitable in three
of the last four years, will continue flying. JAL spokeswoman
Sze Hunn Yap declined to comment.
Air France-KLM dropped 1.7 percent to 12.14 euros. Europe’s
biggest carrier in November said it was prepared to invest in
Japan Airlines. Deutsche Lufthansa AG, the region’s second-
largest carrier, retreated 2.4 percent to 12.51 euros.
European Aeronautic, Defence & Space Co., the parent of
planemaker Airbus SAS, sank 2.2 percent to 14.16 euros. The
company reported its steepest annual revenue drop since the
company went public a decade ago, as the dollar fell and it
missed a delivery target of the A380.
Tesco, Heineken
Tesco Plc climbed 1.1 percent to 422.35 pence. Sales at
U.K. stores open at least a year rose 4.9 percent, excluding
gasoline and adjusting for value-added tax, in the six weeks
ended Jan. 9, Britain’s largest retailer said today.
Heineken NV, which yesterday said it agreed to buy the beer
division of Fomento Economico Mexicano SAB, added 1.8 percent to
34.60 euros after Royal Bank of Scotland Group Plc raised its
recommendation on the brewer to “buy” from “hold.”
SGL Carbon SE, the world’s largest maker of carbon and
graphite products, soared 6 percent to 23.94 euros after Goldman
Sachs Group Inc. added the stock to its “conviction buy” list
and raised its recommendation from “neutral.”
BofA Merrill Lynch Global Research increased the allocation
of equities in its monthly investment strategy report today to
65 percent of total assets, from 60 percent. Strategist Michael
Hartnett said investors should cut investments in bonds to 30
percent, from 35 percent previously, and hold 5 percent in cash.
The trade deficit in the U.S. probably widened in November
as imports climbed faster than exports, economists said before a
report at 8:30 a.m. in Washington.

A sign of things to come with Q4 earnings? Futures down in the U.S.

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Talk about getting in touch with your roots. I dunno about you but id be jealous of this lifestyle...



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Hedge Fund Pro Quitting Job to Take up Farming

Veteran hedge fund manager Graham Birch has quit his highfalutin job at BlackRock to become a farmer.


Graham, 50, is going to run a farm in England-trading his pressure
filled life as a London professional for the chance to live out an
Alfred, Lord Tennyson idyll.

"I want to take a break from the City," Birch told Bloomberg; "the City" being the United Kingdom equivalent to Wall Street.


Farming occupied most of his time anyway, Birch, who had been on sabbatical from BlackRock, explained.


Birch, a natural resource specialist, ran a hedge fund investing in
agriculture. He began his career as a portfolio manager in 1984,
becoming a BlackRock staffer as a result of the BlackRock-Merrill Lynch
Investment Management merger.

His 2,300-acre farm is focused on producing milk and grain.



Taken from HFN daily

I don't really enjoy farms but heis definately one of the few to "Live the life, Leave the life." The decision to ultimately step away from your craft for some type of greater personal gratification is inspiring.

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