Archive for January, 2010

30
Jan

Davos leaves questions over global bank rules push

By alfredlester Closed
Categories: all, business, life, online and world
Tags: , , , ,

DAVOS, Switzerland (MarketWatch) — Bankers and politicians agreed on little in public during this week’s World Economic Forum gathering of top CEOs and policymakers in the Swiss Alps, other than the desire to see regulations coordinated around the globe.

But some attendees say it’s not clear that’s going to happen.

Bankers and politicians met behind closed doors at the annual meeting Saturday, though the discussions didn’t appear to produce any concrete agreements.

Bankers have acknowledged they are going to see more regulation, said U.S. Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, after the meeting.

Deutsche Bank chief executive Josef Ackermann, who has emerged as an unofficial spokesman for the bankers at this year’s WEF , told an audience at a panel discussion later Saturday that “something has to happen quickly to restore confidence in the banking system.”

Ackerman, who chairs the forum’s committee of finance CEOs, on Friday said the bankers were in favor of higher capital requirements, better liquidity management and improved market infrastructure, as well as measures that would ensure failed banks could be wound up without bringing down the system. Read about Ackermann’s presentation.

Davos: Jacob Zuma Promotes World Cup at Forum

South African President Jacob Zuma goes on a public relations blitz at the Davos economic forum to promote the World Cup in South Africa. WSJ reporter Roman Kessler has more.

Meanwhile, questions surround the ability of regulators to internationally coordinate new banking rules.

Ensuring some degree of uniformity in new banking rules amid intense public anger around much of the world was always going to be a tough task.

The importance of policy coordination was a “key lesson of the crisis,” International Monetary Fund Managing Director Dominique Strauss-Kahn said on Saturday. “I’m a bit afraid we’re not going in this direction.”

“The big unknown is the attitude of the United States,” said Barry Eichengreen, an economics professor at the University of California Berkeley, in an interview.

The Obama administration’s introduction last week of the “Volcker rule,” a proposal that would limit the size of commercial banks, barring them from trading for their own account and operating private equity and hedge funds,

British Chancellor of the Exchequer Alistair Darling contends that approach wouldn’t solve the problems that created the crisis fast payday loans. He’s put the emphasis on increased capital requirements and “living wills” that would detail how to close down failed banks.

French President Nicolas Sarkozy told Davos bankers and other luminaries earlier this week that the Obama measures were correct, but that no nation could go it alone. Efforts must be coordinated by the Group of 20 nations, which agreed in April that the Basel, Switzerland-based Financial Stability Board would oversee negotiations. Read about Sarkozy’s speech in Davos.

Banks say that a lack of coordination would make for an un-level playing field. Policy makers say banks would game differences in a damaging round of regulatory arbitrage.

European Central Bank President Jean-Claude Trichet told a Davos audience that failure to coordinate measures “would be a catastrophe.”

Frank has said the Obama plan would be passed within months.

In a panel discussion earlier this week, he dismissed ideas that pressing ahead with the plan threatened efforts to coordinate measures across the globe as a “false dichotomy.”

While Frank was in high demand this week, Obama administration officials were thin on the ground in Davos.

On Saturday, Eichengreen introduced a high-powered panel discussion of central bankers and business leaders on the issue of financial reform, noting that the panel lacked only a representative of the Obama administration. “But why should this panel be any different from others here at Davos this year,” he said.

White House economic adviser Lawrence Summers delivered remarks in Davos Friday, but no other high-profile administration officials were in attendance for the event that began Wednesday.

Eichengreen said a U.S. policy that insists on elements of the Obama plan such as the ban on proprietary trading by commercial banks would make it difficult to reach international agreement.

Davos leaves questions over global bank rules push

Hot News: Batch of Bad News Weighs on Asian Stock Markets

29
Jan

Obama defends economic policies at GOP conclave

By alfredlester Closed
Categories: economic, market, news, online and world
Tags: , , , ,

BALTIMORE – President Barack Obama has staunchly defended his economic policies in a visit with House Republicans, although he acknowledged the administration initially underestimated how high national joblessness would go.

Obama was responding Friday at a GOP retreat to an assertion by Rep. Mike Pence that he should have embraced an across-the-board tax cut early in his term. The Republican conference chairman said that Obama had chosen to rely on targeted “boutique” tax cuts rather than across-the-board relief.

Obama defended his strategy but conceded officials mistakenly believed unemployment would go no higher than “the 8 percent range payday loan with savings account.” He also said that many of the jobs were lost in December, January and February of 2009, before he took office or before any of his programs took effect. Obama told the Indiana Republican, “I’m assuming you’re not faulting my policies for that.”

Obama defends economic policies at GOP conclave

28
Jan

Europe Markets: European shares higher after Fed comments

By alfredlester Closed
Categories: business, economic, life, market and world
Tags: , , , ,

LONDON (MarketWatch) — European shares advanced on Thursday, with investors getting their first chance to react to the U.S. Federal Reserve’s more upbeat comments on the U.S. economy.

The pan-European Dow Jones Stoxx 600 index , which dropped on Wednesday for the fifth time in six sessions, advanced 1.2% to 250.18.

Miners and banks were among the best performers as recent fears about global economic trends appeared to recede, with Santander shares up 2.3% and Xstrata shares up 2.2%.

Global Dow

• MarketWatch Topics: Greece • Asia Markets | Europe Markets | LatAm Markets • Canadian Markets | Israel Stocks | London • U.S.: Market Snapshot | After Hours • Latin American/Canadian indexes • European indexes | Asian indexes • Bond Report | Oil News | Earnings Watch • Currencies | U.S. Economic Calendar

On Wednesday after the European close, the Federal Reserve kept official interest rates unchanged. In its description of the economy, the Fed was slightly more upbeat. Read more on Fed.

“The U.S. Federal Reserve said that there was an improvement in U.S. business spending, adding that the “recovery is likely to be moderate for a time”– a significant change from its characterization of “weak growth” cited in previous statements,” said analysts at MF Global.

Of other regional equity markets, the U pay day loan lenders.K. FTSE 100 index rose 0.8% to 5,259.93, the German DAX index rose 1.1% to 5,705.17 and the French CAC-40 index climbed 1.1% to 3,799.60.

The move in Europe followed gains in Asian equity trading. U.S. stock futures were pointing to moderate gains on Wall Street.

Corporate news was also providing European investors with reasons to be upbeat.

Shares of Swedish fashion chain Hennes & Mauritz jumped 7.4% after its fourth-quarter net profit rose to 6.15 billion Swedish kronor ($844 million), from 5.09 billion kronor a year ago, beating analyst forecasts.

Revenue, excluding sales tax, rose 13% to 18.58 billion kronor, against 16.41 billion kronor in the year-ago period. H&M also said total sales for the month of December rose 15% and 3% on a comparable basis.

Shares of British Sky Broadcasting climbed 2.7% after its first-half net profit rose to 256 million pounds ($415.1 million), from 166 million pounds a year ago. Sales rose to 2.87 billion pounds, from 2.6 billion pounds last year, as strong growth in subscription revenue offset weakness in other categories.

Customer net additions were 172,000 in the second quarter, taking the total base to 9.7 million.

Europe Markets: European shares higher after Fed comments

26
Jan

Opel unions issue strike warning over factory closure

By alfredlester Closed
Categories: all, blog, business, market and world
Tags: , , , ,

ANTWERP, Belgium (AFP) – Unions at General Motors unit Opel on Tuesday warned widespread strike action is a possibility as they refused to accept a planned Belgian plant closure at the troubled carmaker.

"A strike is the last resort, but management has to realise that we will undertake all manner of (industrial) action — and that can include strikes," said Peter Scherrer of the European Metalworkers' Federation (EMF).

"There will be neither sacrifice nor concession by the unions, by the workers at other plants, if the decision is not overturned," Scherrer said in Antwerp after a meeting also assembling Austrian, British, German, Hungarian, Polish and Spanish unions.

The company announced last week its intention to close down an auto factory in Antwerp, probably by the summer, with the loss of 2,600 jobs.

That decision was accompanied by a switch in production for a line of sports utility vehicles (SUVs) to South Korea, against which unions have embarked on legal action new car loans.

Scherrer said workers at other GM Europe plants had agreed not to fill in for Antwerp workers during any stoppage.

"We make the GM management aware of a long history of European solidarity in common action," read a joint declaration by labour movements representing workers at Opel and Vauxhall. "This will be exercised if necessary."

The statement was signed by the European Employee Forum (EEF), the EMF and the European unions and works councils represented at GM Europe.

Opel unions issue strike warning over factory closure

25
Jan

Geithner warns of Bernanke fallout

By alfredlester Closed
Categories: all, market, money, news and online
Tags: , , , ,

Treasury Secretary Timothy Geithner warned that the financial markets would view a Senate rejection of Ben Bernanke's renomination as "very troubling" but said he's sure the embattled Federal Reserve chairman will prevail.

"We're very confident that the chairman will be reconfirmed by the Senate, and we think it's very important he be reconfirmed by the Senate," Geithner said Friday in an interview at the Treasury for POLITICO's new video series, "Inside Obama's Washington," debuting Monday.

"He's done a remarkable job of helping steer this economy out of the great recession. And I think he'll play a very important role in helping in the success of our efforts to try to make sure we are bringing this economy back to durable growth."

Asked about possible market reaction to a defeat, Geithner said: "I think the markets would view that as a very troubling thing to the economy as a whole. But, as I said, I don't think they should be uncertain. I think they should be confident because we are very confident he will be reconfirmed."

Bernanke is having such a rough time, Geithner suggested, because the country is "in a moment where people are incredibly angry and frustrated by the damage this crisis caused."

"You see that across the country," Geithner said. "That's perfectly understandable, and everybody involved in this effort is bearing a lot of the brunt of that frustration and anger."

The Bernanke nomination is the latest headache for the nation's 75th Treasury secretary, who has kept his dry sense of humor while juggling some of the Obama administration's highest-stakes crises — winding down financial bailouts and trying to get banks lending again, instilling confidence despite data that are mixed at best and serving as a public face (and sometimes punching bag) for an economic team often accused of being too close to Wall Street.

He sees his biggest challenge as getting the right incentives in place to help spur private-sector job creation through tax, export and research-and-development policies. And he continues to shepherd the financial reregulation that was a centerpiece of President Barack Obama's first-year agenda. The House has passed a version, and the Senate will continue working on it this winter.

Geithner is most grateful that his strategy to bring private capital in to stabilize the markets has worked effectively. Banks have raised about $200 billion in nongovernment equity and debt, effectively taking the government out. Last year, most everyone assumed the U.S. would have to pony up a lot more taxpayer money. In fact, the government has gotten most of the bank money back and is on track to make a profit on that part of the bailout. Treasury’s view is that without that stability in the system, no progress on the broader economy would have been possible.

Geithner, 48, came up as a staff guy, working in three administrations for five Treasury secretaries. And he was president and CEO of the Federal Reserve Bank of New York during the financial meltdown of 2008. So this is the second time that he's been one of a handful of officials charged with staving off a depression.

Despite the sudden pressure from Bernanke's renomination, Geithner chatted calmly in the Treasury's Diplomatic Reception Room. He joked that he'd like to do a segment explaining the economy on ESPN's "SportsCenter" (he can't tell the anchors apart) and was looking forward to a birthday dinner with his wife, Carole, at Rasika, a hip Indian restaurant in Penn Quarter.

The question hanging over the pleasantries: Is there any way that Bernanke could lose?

"I don't believe so," Geithner replied. "We are very confident that this will happen, and he will have the support he needs to continue in this important role."

On Saturday, Obama made what a White House aide called "a few check-in calls to senators and members of leadership to make sure Bernanke was on track, and he was assured he was."

The White House was rushing to shore up Bernanke as the stock market was dropping, after Obama's announcement that he wanted further restrictions on the activities of the biggest banks. Geithner rejected the banks' contention that the proposed rules could mean thinner markets and less money available for lending.

"That's the argument you're always going to hear when you try to change things," he said no fax pay day loan. "But I do not believe that there is a credible risk of that in the reforms we are pursuing."

One of the most surprising — and persistent — critics of the administration's economic team has been Arianna Huffington, founder of The Huffington Post, who has taken a boisterously populist tack that includes a Move Your Money campaign to get depositors to move their money from big banks to neighborhood banks.

Geithner didn't endorse her idea. But he did say that customers of financial institutions "should be very demanding in the kind of service they expect, the kind of products they get, the disclosure banks offer to basic fairness and dealings."

"I'm very supportive of customers of banks, other investors of banks, creditors of banks holding them to very high standards — that's something that's very appropriate," Geithner said. "I'm not concerned about her campaign, and I agree with the basic principle … that we've been through a period where I think people are right to expect more of their financial institutions."

Huffington had an off-the-record dinner with Geithner shortly after Thanksgiving and gave him some advice he clearly has not taken. Dodging a question about their conversation, the secretary said that his approach of "trying to fix [the system] quickly and cleanly" should have appeal for both ends of the political spectrum.

"If you're on the right, you should be relatively pleased with our strategy, because we were able to pull the government out of the financial system much more quickly than people thought," he said. "We have a much, much smaller footprint today than when I came into office. And if you're from the left, you should be able to look at the strategy and say, by solving this today at much lower cost, we have more resources available to do things that many people think are important for the government to do better."

Other key points by Geithner:

— On whether he remains confident a clear recovery will be under way by this spring: "Very confident. The economy is healing. It's growing. It's more broad-based. You see the classic signs of greater confidence among consumers and businesses now. They see stronger orders. So I think we've been successful in breaking the momentum of the worst recession in generations. But this crisis caused a lot of wreckage.There's still a lot of damage out there. Unemployment is still very, very high, and we have a lot of work to do to make sure that we're restoring confidence, getting people back to work, making businesses comfortable to make the kind of decisions that are necessary to grow the economy. … I think most business economists, most businesses, would say now that you'll probably start to see positive job growth sometime in the spring."

— On when people are going to start to feel better about the economy: "The turn really came in the second quarter of last year — really in the spring and early summer. That's when the economy started to bottom. That's when the financial markets started to show the classic signs of confidence and hope. And there's been a steady, gradual improvement since then. … I just want to emphasize that this crisis caused an enormous amount of damage not just to people's lives and to businesses but to their confidence in how this country is being run. And we need to restore that, rebuild that. That's going to take a lot of effort over time."

— On his philosophy for the job: "The most important thing — and the really only source of credibility and confidence — is to be honest with people about the challenges we face, to try to be open about how we think it's best to solve them and then to act."

— On his own job security: "I'm going to do this as long as the president wants me to help contribute to fixing this mess, and I'm very proud of what he's been able to accomplish in this first year under enormously difficult conditions."

Read More Stories from POLITICODems' Bush-bashing goes bustBeau Biden not running for SenateFive key health reform questionsW.H. hopes to blunt SCOTUS decisionSenate Dems struggle to unite

Geithner warns of Bernanke fallout

24
Jan

India carmaker Maruti profit triples

By alfredlester Closed
Categories: business, economic, life, money and online
Tags: , , , ,

NEW DELHI (AFP) – India's biggest carmaker Maruti Suzuki said Saturday its quarterly net profit more than tripled as it announced plans to increase capacity to maintain its dominance of the domestic market.

Maruti, majority owned by Japan's Suzuki Motor Corp, said net profit during the fiscal third quarter soared to 6.88 billion rupees (149 million dollars) from 2.14 billion rupees a year earlier.

The performance, fuelled by cheap loans and a reviving domestic economy, beat analyst expectations that profit for the three months to December would be around 5.8 billion rupees.

"This has been a good quarter," said Maruti's chief financial officer Ajay Seth, as he announced the company would expand capacity to defend its market leadership position from global rivals and meet increasing domestic demand.

A host of vehicle makers from General Motors to Renault and Toyota have unveiled plans for car launches in India to grab a larger slice of the fast-growing market and counter sluggish demand in developed countries.

India is now Asia's third-largest car market, outstripped only by China and Japan, and is one of the few countries where automobile sales are rapidly increasing. Car sales jumped 19 percent last year to 1.43 million units.

Maruti, which sells about one in two cars in the country, said sales jumped 62.5 percent to 73.34 billion rupees.

Seth said Maruti planned to invest 17 billion rupees to make 250,000 more cars each year from April 2012, increasing total capacity from one million units.

The expansion would take place at Maruti's plant at Manesar near the Indian capital.

Seth said Maruti could further ramp up capacity "if there is a need later no fax cash advances."

The car manufacturer attributed the profit increase partly to government stimulus measures aimed at helping the industry ride out the global economic slump.

The measures have put more money into the hands of India's growing middle class.

"Favourable conditions in the domestic market supported by the government's stimulus package and ease of automobile finance helped achieve good sales," the company said in a statement.

Nearly four-fifths of cars in India are bought using loans.

The central bank has cut interest rates to record lows to cushion the impact of international financial slump.

Maruti's domestic sales in the quarter jumped by 38 percent to 218,910 units while exports soared by 167 percent to 39,116 vehicles, spurred by European government incentives to scrap ageing vehicles.

Seth said the company was "cautiously optimistic" about sales volumes in the fourth quarter but added rising commodity prices would put pressure on profit margins.

"We also have to keep in mind interest rates may rise (as the domestic economy recovers) and it is important that government incentive measures stay in place" to help keep the market buoyant, he told AFP.

Passenger car sales are forecast to reach two million this year and are expected to triple in the next decade, boosted by higher incomes in the country of 1.2 billion people, according to industry estimates.

India carmaker Maruti profit triples

23
Jan

Market Snapshot: U.S. stocks drop for third straight session

By alfredlester Closed
Categories: all, blog, life, online and world
Tags: , , , ,

NEW YORK (MarketWatch) — Stocks closed with steep losses for a third straight day Friday, paced by technology shares, which suffered from analyst downgrades and sky-high earnings expectations.

The selling picked up in the afternoon as fears swirled regarding the possibility that Ben Bernanke might not get confirmed to a second term as Federal Reserve chairman.

The Dow Jones Industrial Average slid 216.90, or 2.1%, to 10,172.98, off 5.2% over its three-day slide. For the week, the Dow was off 4.1%.

Hot Stocks: Energy under pressure

Energy stocks end a punishing week with more losses as a result of lower crude prices, broader-market weakness and less-than-inspiring results from Schlumberger. MarketWatch’s Steve Gelsi reports.

The S&P 500 Index plunged 2.2% to 1,091.75, off 3.9% for the week. The tech-heavy Nasdaq Composite Index ended down 2.7%, the worst decline of the major indexes. It was hurt in part by a 5.7% slide in Google , despite the Internet giant’s surge in fourth-quarter earnings. The company’s earnings and revenue came in well above analysts’ estimates, but investors seemed to have been looking for more.

“Expectations have gotten elevated over the last three quarters and it becomes a very tough short-term bar to clear,” said Jeff Markunas, portfolio manager of the RidgeWorth Large Cap Core Equity Fund. “There’s been a lot of nit-picking.”

Also weighing on the tech sector: Citigroup cut its ratings on seven semiconductor-equipment stocks, citing the risk of a correction of perhaps 30% in the sector for the short term, though a broader bullish trend remains intact.

S&P 500 (1 YEAR)

• Market Snapshot: U.S. stocks in focus • Sign up for free, breaking-news email alerts • Technology stocks | Energy stocks • Metals stocks | Retail stocks • Financials | Airline stocks | Pharma and Biotech • Bond Report | Oil News | EarningsWatch • Currencies | Market Data | Economic Calendar

Of the companies downgraded by Citi, the hardest hit were Entegris , off 11 payday loans with no fax.9%; Brooks Automation , off 9.6%; and Applied Materials , off 7%.

The declines in major averages gathered some steam in late afternoon as President Barack Obama spoke at a town hall meeting regarding his plan to impose tougher limits on big banks’ speculative activity. His proposal fueled a 213-point slide in the Dow when it was unveiled on Thursday and continued to be a hot topic among investors during the latest trading session.

Investors also weighed reports that some congressional Democrats are growing skittish about confirming Bernanke to a second term as Fed chairman.

“The chief sponsor of the economy, the Fed, will be in disarray if Bernanke doesn’t get reappointed,” said strategist Bruce Bittles, of R.W. Baird & Co. “That’s a big concern for investors right now.”

Financial bellwethers extended the previous session’s sharp losses. Goldman Sachs Group was down 4.2%, while Bank of America , which focuses more on traditional banking, was off 3.7%.

General Electric rose 0.6% after reporting fourth-quarter earnings above analysts’ estimates and forecasting a return to growth in 2011. McDonald’s , meanwhile, climbed 0.3%. The fast-food giant’s fourth-quarter earnings rose 23% as same-store sales climbed across all its regions.

American Express fell 8.5% despite a tripling in its quarterly net income. The report topped Wall Street estimates, but fell short of investor expectations. The market may have already priced in the improvements, anticipating the credit card issuer’s strengthening, analysts said.

In other markets Friday, crude-oil prices fell below $75 per barrel. Gold futures also slipped.

The dollar weakened against both the euro and the yen, while Treasurys were little changed. The 10-year note was recently off 2/32 to yield 3.601%.

Market Snapshot: U.S. stocks drop for third straight session

21
Jan

Fed defends actions in AIG case, invites inquiry

By alfredlester Closed
Categories: Free blog Tips, blog, business, economic and online
Tags: , , , ,

WASHINGTON (Reuters) – Federal Reserve officials on Tuesday launched a vigorous defense of their dealings with American International Group (AIG.N), calling for a Congressional audit and denying any inappropriate action with respect to payments the bailed-out insurer made to banks.

Fed Chairman Ben Bernanke invited a full Congressional audit of the U.S. central bank's dealings with AIG and the New York Fed turned over 250,000 pages of documents to a House committee that has scheduled a hearing on the matter next week.

The U.S. House of Representatives Oversight and Government Reform Committee is investigating whether the New York Fed improperly limited public disclosures about payments to banks to unwind $62.1 billion in AIG credit default swaps.

In a lengthy memo posted on its website, the New York Fed contested a number of basic points that had been reported earlier after a batch of emails was released by a lawmaker that appeared to show the New York Fed counseled AIG not to reveal it was paying banks 100 cents on the dollar on credit default swaps it had written.

The New York Fed said it was "incorrect" to say that as a result of its actions, AIG did not tell the Securities and Exchange Commission that it was paying banks including Goldman Sachs Inc (GS overnight pay day loans.N) 100 cents on the dollar for swaps contracts.

AIG, in filings with the SEC, said the securities were being bought by letting banks retain collateral and by making cash payments that — taken together — roughly equaled the full value of the swaps, the Fed said.

The New York Fed also disputed charges that it leaned on AIG not to make required disclosures to regulators about the transactions.

"Some have … suggested that the (New York Fed) pressured AIG not to make required disclosures about material elements of the Maiden lane III transactions," the Fed said, referring to the special entity it set up to fund the rescue of AIG swaps contracts.

"This is also incorrect," the New York Fed asserted.

The central bank further denied that it was as a result of pressure from it that AIG sought to keep the names of the counterparties under wraps.

When pressed to disclose the names by the SEC, AIG sought confidentiality, fearing those firms and others might sever businesses ties over a breach of trust, the New York Fed said.

Fed defends actions in AIG case, invites inquiry

20
Jan

Kraft to Acquire Cadbury in Deal Worth $19 Billion

By alfredlester Closed
Categories: all, economic, money, online and world
Tags: , , , ,

After months of fiercely resisting any deal, Cadbury agreed on Tuesday to an improved takeover offer from Kraft Foods, worth about $19 billion.

For Kraft, the deal offers a chance to expand its footprint in emerging markets and in higher-growth sectors like gum and candy.

“It transforms the portfolio, accelerates long-term growth and delivers highly attractive returns,” Irene B. Rosenfeld, Kraft’s chairwoman and chief executive, said in a statement.

Cadbury for its part will benefit from the supply chain of a larger company, said Jon Cox, a food and beverage analyst at Kepler Capital Management in Zurich.

But the prospect of a takeover of Cadbury, the 186-year-old British company, especially by an American multinational like Kraft, sent shudders throughout Britain and prompted a wave of public protests.

The Mail on Sunday, one of the biggest-selling British newspapers, ran a “Keep Cadbury British” campaign.

“It’s sad to see another British company bought up by a multinational,” Mr. Cox said, “but that’s finance.”

Prime Minister Gordon Brown said Tuesday that his government was “determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained,” and that “at a time when people are worried about their jobs, that jobs in Cadbury can be secure.”

During a conference call Tuesday, Kraft executives reiterated that the company would keep a strong presence in Britain and would be a “net importer” of jobs in the country.

The move will also continue the consolidation that has dominated the food business over the last decade.

While mergers involving food companies dipped somewhat last year — preliminary data from the Food Institute, a trade organization, showed 58 acquisitions in 2009, versus 130 in 2008 — analysts expect deal-making to pick up again as companies seek greater scale and presence in developing countries.

“We’re in the middle of a little wave of deal activity,” Greg Pearlman, the head of the food and consumer group at BMO Capital Markets, said. “Will they all be as big and global and transforming as this? No good credit score. But I do think there’s some pent-up demand for strategic acquisitions.”

That may present challenges for companies like Hershey that lack an international presence to pursue global competitors. Hershey, based in Pennsylvania, had been readying a potential bid for Cadbury, according to people briefed on the matter. Yet with Cadbury’s board recommending the new Kraft bid, a counteroffer from Hershey seems unlikely.

The agreement between Kraft and Cadbury came together over the weekend, after weeks of sometimes blistering volleys.

Cadbury in particular fought fiercely. Its chairman, Roger Carr, derided Kraft as showing “contempt” for the well-known brand and dismissed its hostile bidder as a low-growth conglomerate.

On Tuesday, Mr. Carr softened his language, saying in a joint statement that the new offer “represents good value for Cadbury shareholders.”

“For Cadbury shareholders, it’s the best possible deal, given they were dealt a bum hand, because there were no counterbidders,” Mr. Cox said. “The clear winner is Kraft.”

Kraft’s original, unsolicited offer, made in September, was worth about $16.7 billion.

The new offer is about a 5 percent premium over Cadbury’s closing share price of 807.5 pence on Monday and a 14 percent improvement over Kraft’s first offer in September.

Under the terms, Kraft will pay 500 pence in cash and offer 0.1874 new Kraft shares for each share of Cadbury. That amounts to a payment of 840 pence ($13.80) for each Cadbury share. Additionally, Cadbury will pay out a special dividend of 10 pence a share.

Tuesday was the last day Kraft could raise its offer under British takeover rules. Cadbury shareholders have until 1 p.m. London time on Feb. 2 to decide whether to accept it. While the terms of the offer are final, Kraft reserved the right to raise its bid if a rival offer were made.

William Neuman contributed reporting.

Kraft to Acquire Cadbury in Deal Worth $19 Billion

18
Jan

China markets set for new phase in 2010

By alfredlester Closed
Categories: all, business, life, money and online
Tags: , , , ,

SHANGHAI (AFP) – Shanghai's stock market is set for major changes in 2010 that could help close the gap with London and New York as the Chinese city strives to become a global financial centre, analysts say.

China began the year with a strong signal that it is serious about its goal of turning Shanghai into a leading finance hub by 2020, approving a raft of measures that give investors more sophisticated investment options.

Previously, mainland investors were only able to bet on stocks going up, but the State Council, or Cabinet, has approved trials of short-selling and margin trading that would allow investors to profit from falling markets as well.

"The ultimate introduction of the new investment options is, without doubt, a revolutionary move for China's capital markets," said Zhang Jian, a Beijing-based analyst with BOC International, Bank of China's brokerage unit.

Margin trading allows investors to borrow money from financial institutions to buy shares they expect to rise.

If the share price goes up, they can easily pay back the borrowed money. If the price goes down, investors must still pay back the full amount borrowed.

Short-selling allows investors to sell borrowed shares when they expect the price to decline. If the price falls, they can buy the shares at the lower price and return them to the lender.

"It opens a new chapter for China's domestic equity market. With these new rules, the A-share market will no longer be a 'one-way street,' as shorting and hedging become possible," Deutsche Bank economist Jun Ma wrote in a note.

"It is also a major step towards the internationalisation of the Chinese market," he added.

The central government has also approved a stock index futures market that will also give investors opportunities to profit when the market falls and help them hedge risks.

Preparations for the index futures market began years ago, with mock trading already running for three years. Margin and short trading systems tests began in late 2008.

Now that Beijing has given the green light, the new trading options could begin within three months, analysts said guaranteed online payday loans.

"These steps will speed up the pace for Shanghai to become an international financial centre," said Peng Yunliang of Shanghai Securities.

The changes come on top of expectations that the Shanghai Stock Exchange will see its first foreign listing in 2010 — HSBC has said it hopes to be the first, with a listing that could come as early as March, according to reports.

The developments — combined with the launch on October 30 of China's Nasdaq-style ChiNext board, which aims to boost start-ups as well as small and medium-sized companies — mark huge strides for Chinese capital markets and show growing confidence.

Both shorting and margin trading magnify risks, but experts say the practices could help reduce volatility over the long run by increasing liquidity.

Shanghai's market has seen huge swings in recent years. The benchmark Shanghai composite index soared 80 percent last year, but that came after a 65.5 percent plunge in 2008. So far this year the index is down 1.6 percent.

But China's asset prices are expected to continue to take off in 2010, with the economy expected to expand at roughly 10 percent, and investors will want to keep profiting from growing earnings, Macquarie Bank said in a note.

What impact will index futures trading have on the market?

Goldman Sachs studied the mock trading in China, which has seen eligible brokerages and the general public practising in simulations that involve no money since 2007.

The simulations suggest a maturing market with a bias towards long positions, or bets prices will rise, the US investment bank said in a research note, adding volatility declined as the mock trading progressed.

"The developments bring China a step closer to being ready to start foreign listings and attract world-renowned foreign companies to list in a market that is getting more mature and international," Shanghai Securities' Peng said.

China markets set for new phase in 2010

17
Jan

Sponsor Takes the Next Step in Tennis

By alfredlester Closed
Categories: Free blog Tips, business, economic, market and money
Tags: , , , ,

LAS VEGAS — Fernando Verdasco was straining against a leg-press machine as he raised 710 pounds, yet his strength and conditioning coach, Gil Reyes, was making the most noise. Reyes bellowed in two languages as Verdasco, a Spanish tennis star, raised the massive load 14 times before Reyes finally shouted at him to stop.

“He’s a beast,” Reyes said last month. “I stopped him because I didn’t want him to break down. If he totally maxed out today, there’s a good chance it would throw him off stride tomorrow or the next day.”

Reyes, an American who speaks in the tones and rhythms of an evangelist, was Andre Agassi’s trainer and protector for nearly 20 years. He is now a company man: one of three pillars of the unusual player-development program created and financed by Adidas.

The other pillars are Sven Groeneveld, a veteran Dutch coach who started the program in 2006, and Darren Cahill, an Australian coach who with Reyes helped Agassi keep scaling the heights into his mid-30s.

Groeneveld is based in Amsterdam, and Reyes and Cahill in Las Vegas, the program’s training base. Reyes still works out of his private gym decorated with Agassi’s eight Grand Slam singles trophies and 1996 Olympic gold medal. Agassi remains a frequent visitor and is also an occasional hitting partner and counselor for the players.

But the program’s scope is broader, with Groeneveld and Cahill traveling to tournaments worldwide to offer on-site assistance with Groeneveld’s assistant Mats Merkel.

The executive who devised and supervises the operation is Jim Latham, an American expatriate and former Duke tennis player who saw the program as a way to protect his company’s investment in increasingly young athletes who sometimes lacked structure and expert advice.

“It’s a compact, mobile tennis academy,” said Latham, the head of global sports marketing for tennis at Adidas.

It is also a delicate diplomatic mission in a cutthroat, territorial sport unaccustomed to coaches spreading the wealth of their knowledge democratically or to manufacturers striving to be more than suppliers of apparel and juicy contracts.

“It’s a given that we had to have elite-level coaches,” Latham said. “But the other given for me was that it had to be people who were great communicators, who could go into it with all these people and make them feel included, rather than ‘my way or the highway.’ ”

Manufacturers’ teams are the foundation of sports like Formula One auto racing. But the Adidas developmental team remains unique in tennis, and though it is not without detractors who question its part-time approach, it is playing an increasingly visible role in the sport and has been involved in some big hits as well as misses.

The hits include Ana Ivanovic’s victory at the 2008 French Open and rise to No. 1, and Verdasco’s surprise run to last year’s Australian Open semifinals and rise into the top 10. The team, Groeneveld in particular, also provided counsel and support to Caroline Wozniacki, a Danish teenager coached primarily by her father who broke into the top four last year after reaching the United States Open singles final.

The misses include players like Evgeny Korolev, Anna Chakvetadze, Marcos Baghdatis and Sania Mirza, whose rankings and singles careers have not prospered. Ivanovic also dropped out of the top 10 after a mediocre 2009 season but spent the off-season working primarily with Groeneveld.

National tennis federations have long been involved in developing talent and providing coaching at the professional level. Some private academies have done the same.

But no other company has yet plunged in, and what also makes Adidas’s program unusual is that it does not attempt to be full service, but rather a consultancy business card design.

Latham said Adidas had contracts with about 75 players, more than 40 of whom are in the singles draws at the Australian Open beginning Monday. Luminaries like Jo-Wilfried Tsonga and Justine Henin have not sought help, but Latham estimated that 30 to 35 players have had some contact like seeking a quick tip from Groeneveld or training in Las Vegas, which requires an invitation from Latham.

Working with multiple players reduces a coach’s vulnerability and dependency.

“These guys can give unsugarcoated advice,” Latham said of his team.

But the Adidas principals emphasized that their input should be supplemental and that they wanted top players to have full-time coaches.

“This is not about a threat, this is not about better than, or instead of, it’s a matter of one plus one maybe might equal three,” Latham said.

But Verdasco and Ivanovic thrived under the system when they were without full-time coaches. Patrick Mouratoglou, who owns a prominent academy in France, said that he tried to play a similar role to many players but that he felt it undermined their relationships with their personal coaches. He now focuses on one or two players.

“I don’t doubt the quality or competence of Sven or any member of the team,” he said. “I just think the system is flawed. I stopped doing it. At first, you feel good because everyone loves you, and you give a bit to everyone, and everybody wants you on their court giving input. It’s a drug. If you need affection, it’s amazing. If you want results, it doesn’t work.”

Cahill said that he was sensitive to personal coaches’ concerns but that the benefits of exchanging thoughts and challenging preconceptions outweighed the negatives.

He had other options. Early last year, he trained on a trial basis with Roger Federer in Dubai. But Cahill, who has two children and increasingly strong ties to Las Vegas, said he was not prepared to handle the travel commitment Federer required. Instead, Cahill joined Adidas last March while continuing to do television commentary for ESPN and to work with Agassi’s foundation in Las Vegas.

Latham said the team’s existence has helped Adidas recruit several players, including Daniela Hantuchova, a 26-year-old Slovak who trained with Cahill and Reyes in the off-season. But Latham and Baghdatis failed to reach an agreement, and Baghdatis is no longer under contract.

Verdasco, 26, who won a warm-up event Saturday in Australia, is definitely still with the program: exchanging embraces and fist bumps with Reyes during intense training sessions. He is seeking a second home in Las Vegas to be closer to Reyes and his weights.

Reyes prefers to work one on one, so visitors are limited to three at a time. From the outside, his gym looks like a suburban home. It is in a gated community on a road named after Agassi, who built a house next door for his parents as well as a practice court. The carpeted weight room is filled with machines Reyes designed and built himself for Agassi because nothing tennis specific enough existed.

“If this is the future, I don’t really know,” Verdasco said of the Adidas program. “But of course it really helped me a lot, because I really found Gil that I have this strong connection with. Maybe if Adidas took another guy, maybe I wouldn’t have that same connection, and maybe I wouldn’t like it as much.”

Sponsor Takes the Next Step in Tennis

16
Jan

Stocks & Bonds: Dow Plunges 100 Points on JPMorgan’s News

By alfredlester Closed
Categories: blog, business, market, money and online
Tags: , , , ,

Stock prices fell sharply on Friday, the worst day of trading this year, as worries over the strength of the American consumer eclipsed a round of mostly positive earnings reports.

On its surface, the news that JPMorgan Chase had doubled its 2009 profits from 2008 might seem reason for elation among investors. But on Friday, Wall Street traders took one look at the results and began to sell.

By the end of trading, the three major indexes were down about 1 percent, with the Dow Jones industrial average falling nearly 101 points. The dollar strengthened, and bond yields fell.

Traders saw promise and peril in JPMorgan Chase’s financial report. The bank said it earned $11.7 billion last year and that its profit quadrupled in the fourth quarter, beating expectations. But the firm’s chief executive noted that losses on consumer loans remained high and would remain an issue in 2010.

“It does continue to bring up old fears,” said James W. Paulsen, chief investment strategist for Wells Capital Management.

The Dow Jones industrial average declined 0.94 percent, or 100.90 points, to 10,609.65. The Standard & Poor’s 500-stock index fell 1.08 percent, or 12.43 points, to 1,136.03. The Nasdaq composite index dropped 1.24 percent, or 28.75 points, to 2,287.99.

For the week, the Dow industrials slipped 0.1 percent, the S.& P. 500 index lost 0.8 percent and the Nasdaq fell 1.3 percent.

All sectors posted losses, with shares of banks leading the retreat. JPMorgan Chase declined 2.26 percent, and Bank of America fell 3.33 percent. Many banks will report earnings next week.

Two weeks into the new year, Wall Street finds itself searching for direction. Over the next few weeks, companies will continue to announce fourth-quarter earnings, and the results are expected to be mostly positive.

Expectations this quarter, however, have shifted, and investors are looking for indications that businesses have moved beyond cost-cutting and have started to bring in revenue.

After the market closed on Thursday, Intel reported a 28 percent increase in revenue and the largest gross profit margin in its history. Overnight, its shares climbed, but they closed down 3 payday cash loans.17 percent on Friday.

That seemingly irrational behavior, selling even as a company exceeds expectations, brought an adage to the minds of several investors: “Buy the rumor, sell the news.”

“It is an interesting juxtaposition,” said Hank B. Smith, chief investment officer for Haverford Investments. “These all beat expectations, but by the time all the news is disseminated, there’s concern this may be the peak for profit margins for these companies.”

Mr. Smith said he did not believe the worries were valid. But he said Wall Street’s negative reaction to the cheery reports could indicate that investors were using the earnings season as a selling opportunity.

“It would be healthy for the market to consolidate and pull back,” Mr. Smith said. “It’s very normal to have a correction — defined as 10 percent or more — in a bull market.”

After an energetic rebound in the stock market last year, equities are expected to rise modestly through 2010. The Dow is approaching a psychologically important milestone — 11,000 points, a level not seen since before the financial crisis — and the S.& P.’s 500-stock index is nearing 1,150 points.

Economic data released on Friday provided little relief from investors’ concerns over profits. A report said manufacturing activity fell slightly in December, and a barometer of consumer sentiment released by the University of Michigan rose slightly this month but fell short of expectations.

Still, there were signs that the near-zero interest rates may remain in place for some time, a boon for stocks. A Labor Department report suggested inflation was largely in check, with consumer prices increasing just 0.1 percent in December.

Interest rates were lower Friday. The Treasury’s 10-year note rose 15/32, to 97 16/32, and the yield fell to 3.68 percent from 3. 74 percent late Thursday.

United States markets are closed on Monday for Martin Luther King’s Birthday.

Stocks & Bonds: Dow Plunges 100 Points on JPMorgan’s News

Hot News: London Markets: Man Group underperforms in mildly higher FTSE 100

« Previous Entries