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2024-04-19 | Bloomberg | Brazil Unemployment Rises to 6.5% in March, Lowest for Month | Brazil ’s unemployment rate rose less than economists expected in March, reaching the lowest on record for the month, reinforcing signals that the economy remains heated. Unemployment in March rose to 6.5 percent from 6.4 percent in February, below the median 6.7 percent forecast of 36 analysts surveyed by Bloomberg, the national statistics office said today in Rio de Janeiro. Latin America’s largest economy is currently “almost at full employment” and faces labor shortages in many industries, Finance Minister Guido Mantega said yesterday in New York. Policy makers will rely on interest rate increases, spending cuts and measures to rein in credit to slow inflation toward the bank’s target by the end of 2012, economic policy director Carlos Hamilton said March 30. “The figures aren’t showing the economic slowdown we would like to see now,” Andre Perfeito , chief economist at Gradual Investimentos, said in a telephone interview from Sao Paulo. “The macro-prudential measures the central bank is relying on is a beautiful name to avoid interest rate increases, but the effect must be the same otherwise inflation will remain high and expectations will get out of control.” Job Creation The Brazilian economy generated 92,675 government- registered jobs in March, the fewest since a seasonal loss of jobs in December, the Labor Ministry said today in a report distributed in Brasilia. “The labor market is still heated, we had fewer jobs because of the Carnival holiday,” Labor Minister Carlos Lupi told reporters in Brasilia. “Interest rate increases may have an effect, but nothing that will change our course, I’m confident we’ll create 3 million jobs this year.” Brazil created 583,886 government-registered jobs in the first quarter, the ministry said. Government-registered job creation is a balance of posts created minus job eliminated. Registered jobs, so-called formal work, assure employees a range of benefits such as unemployment insurance , bonuses and retirement payments by the government. Brazil’s benchmark consumer price inflation index rose 6.3 percent in the year through March on higher food prices and transportation costs. Brazil targets an annual 4.5 percent inflation rate of plus or minus two percentage points. Inflation may breach the upper-limit of the target between July and August this year, Hamilton said. Benchmark Rate The central bank will raise the benchmark interest rate by 50 basis points by a third consecutive time tomorrow in a bid to cool domestic demand and slow inflation running at the fastest pace in more than two years, according to the median estimate in a Bloomberg survey of 56 economists. Policy makers led by central bank President Alexandre Tombini raised the so-called Selic rate by 100 basis points this year to 11.75 percent. Traders are wagering the central bank will increase borrowing costs by at least 25 basis points to slow inflation that is threatening to breach the upper limit of policy makers’ target, Bloomberg estimates based on interest rate futures show. Yields on the interest-rate futures contract maturing in May 2011, the second-most traded today, rose one basis point, or 0.01 percentage point, to 11.87 percent, at 2:39 p.m. New York time. The real rose 0.9 percent to 1.5751 per dollar. To contact the reporter on this story: Iuri Dantas in Brasilia at idantas@bloomberg.net To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net |
2024-10-10 | Bloomberg | U.K. Regulator Criticizes Auditing of French Banks, FT Reports | Britain’s leading accounting regulator criticized French auditors for allowing France’s banks to report smaller losses on Greek government bonds than some European competitors, the Financial Times reported. Stephen Haddrill, the chief executive officer of the Financial Reporting Council , told the newspaper he doesn’t see “strong auditing going on” in France. In the first half of this year, various French banks and insurance companies posted 21 percent losses on “available for sale” Greek government bonds, rather than the writedown of 50 percent implied by market prices, arguing that trading was too sparse to be meaningful, the FT said. To contact the reporter on this story: Alan Purkiss in London on apurkiss@bloomberg.net. To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net . |
2024-04-23 | Bloomberg | CP All Offers $6.6 Billion for Thai Retailer Siam Makro | Billionaire Dhanin Chearavanont’s CP All (CPALL) Pcl, owner of Thailand ’s 7-Eleven chain, offered to pay about $6.6 billion for discount retailer Siam Makro Pcl (MAKRO) in the biggest takeover announced in Asia this year. CP All, controlled by Dhanin’s Charoen Pokphand Group, agreed to pay 787 baht a share for the 64 percent of Siam Makro owned by SHV Holdings NV, the company said today. It will also make a tender offer to other shareholders at the same price, a 15 percent premium to Siam Makro’s share price of 682 baht before it was suspended from trading yesterday. The deal is the largest on record for Thai companies, which have spent more than $31 billion on acquisitions in the past year as the baht strengthened and after their cash holdings more than quadrupled in a decade, data compiled by Bloomberg show. Dhanin alone accounts for half of that, including CP Group’s purchase of a $9.4 billion stake in China’s Ping An Insurance (Group) Co. “Rising cash flow and the strong baht have given Thai companies some advantages,” said Adithep Vanabriksha, chief investment officer for Thailand at Aberdeen Asset Management Plc, which oversees about $7 billion of Thai assets. “We expect this trend to continue as acquisitions are a better way to utilize cash flow and take advantage of a strong currency.” The baht has appreciated 7.6 percent, the best performance among Asia’s currencies, in the past year. Biggest Acquisition CP All’s acquisition of Siam Makro tops the $5.5 billion purchase of PTT Aromatics & Refining Pcl by PTT Chemical Pcl in 2011 to become the largest on record in Thailand, data compiled by Bloomberg show. Siam Makro operates 57 Makro stores and five Siam Frozen stores. It opened five new Makro stores in 2012, helping to boost revenue by 15 percent to 112 billion baht last year, the company said on Feb. 27. The Bangkok-based company’s profit rose 37 percent to 3.56 billion baht in 2012. Big C Supercenter Pcl (BIGC) , Thailand’s second-largest hypermarket operator, surged 7.4 percent to a record 232 baht today amid speculation investors seeking retailers in the country would prefer it to CP All. CP All, which suspended trading of its shares today, slumped 6 percent yesterday. “Some investors still wanted to stay invested in the Thai domestic consumption theme, but have soured on CP All after this deal,” said Athaporn Arayasantiparb head of research at UOB Kay Hian Securities (Thailand). Retail Multiples The bid values Siam Makro at about 53 times its 2012 earnings per share of 14.82 baht. That compares with a median multiple of 21 times profits paid in 22 takeovers of retailers in emerging Asia announced over the last five years, data compiled by Bloomberg show. CP All arranged a $6 billion bridge loan from HSBC Holdings Plc, Siam Commercial Bank Pcl (SCB) , Standard Chartered Plc, Sumitomo Mitsui Banking Corp. and UBS AG, according to two people familiar with the matter, who asked not to be identified because the details are private. The loan will be refinanced within a year through syndicated finance, bonds and potentially equity, the people said. “The price we paid is not expensive,” Korsak Chairasmisak, chief executive officer of CP All, said at a media briefing in Bangkok. He said the company will use Siam Makro to expand in Southeast Asia , starting with Vietnam and Laos. Corporate Cash CP All and Tesco Plc (TSCO) are adding retail outlets in Thailand after the government raised minimum wages and introduced price guarantees for farmers. Demand for personal loans jumped 22 percent in 2012, the biggest increase in seven years, as Thai consumers took advantage of government incentives to buy new cars and homes. Total cash holdings of the 421 non-financial members of the SET Index for which data is available stands at $21.4 billion, compared with about $4.4 billion in cash at the end of 2002, data compiled by Bloomberg show. Dhanin and SHV founded Siam Makro in 1988, according to the company’s website. Charoen Pokphand was once Siam Makro’s largest shareholder with a stake of as much as 47 percent in 1997, the same year that the devaluation of Thailand’s baht triggered a financial crisis that pushed many Asian economies into recession. After the crisis, Dhanin sold stakes in companies including Siam Makro and Lotus Supercenter, which was bought by Tesco. In May 2005, a Charoen Pokphand unit sold 7 percent of Siam Makro back to the company that controlled the retailer for 60 baht per share. CP All last year said it may open 7-Eleven stores in southern China and Vietnam. Dhanin earlier this month said he’s seeking more acquisitions in China. “It’s really surprising that Siam Makro’s major shareholder decided to sell,” said Adithep from Aberdeen, who owns shares in Siam Makro and hasn’t decided whether to sell them in the tender offer. “Siam Makro is a really good company with strong earnings growth and niche market in the cash-and- carry sector.” To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net |
2024-04-13 | Bloomberg | Spanish Bonds Slide as Draghi Panacea Found Wanting: Euro Credit | Spanish and German government bonds are signaling the respite in the euro-region’s debt crisis created by the European Central Bank ’s unlimited three-year loans is coming to an end. Two weeks after Italian Prime Minister Mario Monti said the “flames of crisis” are unlikely to return, German bund yields have fallen to records and Spanish borrowing costs have surged to the highest since the ECB started its longer-term refinancing operations in December. Spanish 10-year yields rose above 6 percent this week, getting closer to the 7 percent level that triggered the bailouts of Greece and Portugal , as Prime Minister Mariano Rajoy said the country’s future is on the line. “The positive effect of LTRO operations is now well on the wane,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “We are well and truly back in crisis mode.” Spain ’s 10-year rates reached 6.02 percent on April 11, a level last seen on Dec. 12, having climbed from this year’s low of 4.83 percent on March 1. They were little changed today at 5.82 percent at 8:40 a.m. London time. Similar-maturity Italian 10-year yields are 5.41 percent, up from as low as 4.68 percent on March 9. Two-year German note yields dropped to a record 0.091 percent on April 10 as investors sought the safest securities. Five-year rates declined to an all-time low 0.617 percent that day and benchmark 10-year bund yields fell to 1.639 percent, approaching the record 1.636 percent set on Sept. 23. Three-Year Loans The ECB, led by President Mario Draghi , lent euro-area banks more than 1 trillion euros ($1.32 trillion) at an interest rate of 1 percent in its two LTROs: the first on Dec. 22 and the second on Feb. 29. Banks are said to have used the funds to buy bonds issued by the so-called peripheral nations such as Spain, Italy and Portugal. Spanish bonds maturing in a year or more returned 6.7 percent between the ECB announcing its loan program on Dec. 8 and Monti’s speech in Tokyo on March 28, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian and Portuguese securities both gained 14 percent in the same period, the indexes show. Spain’s bonds have since slumped 2.8 percent, Italian debt lost 1.7 percent and Portugal’s government securities declined 3.7 percent. ‘Bear Flattening’ “The LTRO momentum is increasingly fading,” said Michael Leister , a fixed-income strategist at DZ Bank AG in Frankfurt. “Spreads over bunds are widening and peripheral curves bear flattening. The speed of the decline hasn’t surprised me, but rather that the market had been so complacent before.” Bear flattening refers to a situation where short-term yields increase at a faster rate than longer-term securities, reducing the slope of the so-called yield curve. The extra yield investors demand to hold benchmark Spanish securities instead of German bunds expanded to 437 basis points on April 11, the widest since Nov. 28. The gap widened three basis points today to 406 basis points. “A spread of more than 400 basis points is obviously a problem,” assuming it persists in the medium term, Spanish Economy Minister Luis de Guindos said in Barcelona on April 11. “The government needs to put the house in order because the alternative is much worse.” Italy’s 10-year yield spread over bunds increased to as much as 409 basis points on April 11 from 276 on March 16. It was at 365 basis points today. Some strategists predict the increase in Spanish and Italian bond yields will spur the ECB to announce a third round of loans or additional bond purchases to help contain the regional debt crisis. ‘Great Job’ “We have the ECB and they’ve done a great job in securing bank funding for three years,” Francesco Garzarelli, co-head of global macro markets research at Goldman Sachs Group Inc. in London , said yesterday in a Bloomberg Television interview with Sara Eisen. “That has broken the link between sovereign and bank funding to a large extent. Spain has disappointed markets in March. It got some pressures. If these pressures escalate and percolate to other countries, I would think the ECB would step in at that point.” ECB Executive Board member Benoit Coeure signaled on April 11 that the central bank may revive its bond-purchase program to reduce Spanish borrowing costs. “Will the ECB intervene?” Coeure said in Paris on April 11. “We have an instrument, the Securities Markets Program, which hasn’t been used recently but it still exists.” The ECB hasn’t purchased sovereign debt for four weeks, according to the most recent data on its Securities Markets Program released April 5. “It’s very uncertain as to what the ultimate endgame for the peripherals is at the moment,” said Edward Thomas, who helps oversee $6 billion as head of fixed income at Quantum Global Wealth Management, based in Zug, Switzerland. “Even if yields were 100 basis points higher than they are now, we would not be looking to invest in Italian or Spanish debt.” To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net ; Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net . |
2024-10-04 | Bloomberg | Ageas, Agfa, D’Ieteren, Ion Beam: Benelux Equity Market Preview | The following companies may have unusual price changes in Benelux markets. Stock symbols are in parentheses, and prices are from the previous close. The AEX-Index (AEX) in Amsterdam declined 1.6 percent to 275.64. Belgium’s Bel20 Index lost 1.6 percent to 2,096.74. Luxembourg’s LuxX Index dropped 1 percent to 1,073.15. Belgian stocks: Ageas (AGS) : The insurer formerly known as Fortis said Augur Capital AG agreed to buy its German life-insurance unit for an undisclosed amount. Ageas will record a “limited” loss on the transaction. The shares fell 3.1 percent to 1.27 euros. Agfa-Gevaert NV (AGFB) : Europe ’s biggest maker of health-care imaging systems said it won a three-year extension of a contract with Novation to provide digital radiography products to the buying alliance’s 30,000 member organizations in the U.S. Agfa shares tumbled 7.1 percent to 1.82 euros. D’Ieteren SA (DIE) : Belgium’s biggest car dealer’s share of the country’s market widened to 24.3 percent in September as car registrations jumped 12 percent to 41,427, according to figures published by trade group Febiac. D’Ieteren climbed 1.8 percent to 38.20 euros. Ion Beam Applications (IBAB) SA: Europe’s largest maker of proton-therapy equipment said it won a contract with the Willis-Knighton Cancer Center in Shreveport, Louisiana , to install a Proteus ONE facility valued at $25 million to $30 million. Ion Beam retreated 0.6 percent to 5 euros. To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net ; |
2024-01-02 | Bloomberg | Gas Ships With Car Carriers Seen Recovering Best in Glut | Earnings for ships that haul liquefied gases, cars and oil products are most likely to recover this year amid a continued glut of merchant vessels that may spur more bankruptcies, said Arctic Securities ASA. Gas, auto and oil-product carriers are “niche” areas of the industry helped by conditions including barriers to entry, the Oslo-based investment bank said today in an e-mailed report. Arctic selected Golar LNG Ltd. (GLNG) , which operates a fleet of gas ships, and vehicle transporter Wilh. Wilhelmsen ASA (WWASA) as two of its top stock picks for this year. Fleet oversupply will again weigh on freight rates for container vessels, crude-oil tankers and ships carrying dry-bulk commodities including coal and iron ore through 2013, Arctic said. Still, the bank chose dry-bulk carrier Golden Ocean Group Ltd. (GOGL) as a top selection for this year along with Frontline 2012 Ltd. “Shipping equities have generally been under pressure through 2012 as most segments are suffering from overcapacity, but we see 2013 as the year when deliveries abate in most markets,” Arctic said. Billionaire John Fredriksen is the largest investor in Golar LNG, Golden Ocean and Frontline 2012. Charter rates for the largest crude tankers will average $23,000 a day this year, down from $25,200 in 2012, according to Arctic. Hire costs this year for the ships and smaller oil carriers as estimated by the bank are “unlikely to be enough to keep cash balances intact for the industry,” according to Arctic, which maintained a sell rating on the crude-tanker fleet. Scrapped Vessels Earnings for dry-bulk vessels will remain pressured even as deliveries of new ships in 2013 ease from a record and combine with scrapping of older ships to pare fleet growth to 4.1 percent from 12 percent last year, according to Arctic. “Applying our earnings forecasts to any company model should lead to a decline in cash balances and we expect more newsflow on distress sales or companies ‘checking out,’” the bank said of dry-bulk shipping. Arctic said it’s concerned that steps taken by banks to help prevent ship operators from running out of money may create “a sub-class of ‘zombie’ companies,” delaying a rebalancing of supply and demand. Still, now is the right time to invest in the industry, according to the report. “Despite our view that 2012 may have been the trough year viewed across all markets, we find the likelihood of more restructurings in 2013 as very high given the fact that our earnings forecasts only offer a small uptick,” Arctic said. Weaker Demand Shipping of dry-bulk commodities by sea will rise 4.6 percent to 3.9 billion metric tons this year, with the market’s focus likely to shift to slowing demand from the oversupply of vessels, Arctic said. Demand for liquefied natural gas carriers is poised to remain firm in 2013 after rates gained to records last year amid demand for the fuel from leading global importer Japan , according to the bank. Freight rates for very large gas carriers will average $27,000 to $33,000 daily over the next three years, “a level that should keep ship owners and investors happy,” Arctic said. The vessels haul liquefied propane and butane. To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net |
2024-05-10 | Bloomberg | Asurion Seeking $3.57 Billion in Loans After Canceled Deal | Asurion Corp. is seeking $3.57 billion in senior secured loans to refinance debt after pulling a larger deal almost two months ago, according to a person with knowledge of the matter. The private equity-owned provider of wireless handset insurance and roadside assistance will host a lender call tomorrow to discuss the transaction, said the person, who declined to be identified because the terms are private. Asurion follows Tasc Inc. last week and MetroPCS Communications Inc. (PCS) this week in reviving loan transactions amid improved market conditions. The Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index closed yesterday at 95.9 cents, 1.06 cents more than a March 18 low. On March 16, Asurion canceled a $4.64 billion loan transaction due to market conditions, according to a person briefed on the deal who declined to be identified because the terms were private. The Nashville, Tennessee-based company had proposed to pay 3.75 percentage points to 4 percentage points more than the London interbank offered rate with a 1.5 percent floor on a $3.5 billion first-lien facility, according to data compiled by Bloomberg. Asurion was offering the loan at 99 cents to 99.5 cents on the dollar. Bettie Colombo, a spokeswoman for Asurion, didn’t immediately return a phone call and e-mail seeking comment. Bank of America Corp., Barclays Plc, Credit Suisse AG, Morgan Stanley, Goldman Sachs Group Inc. and Deutsche Bank AG are arranging the deal, the person said. To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net. To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net . |
2024-02-02 | Bloomberg | Pemex Combs Rubble for Cause of Deadliest Blast Since 2006 | The probe into a blast that tore the face off a building at Petroleos Mexicanos’s Mexico City headquarters and killed at least 33 people continued, with authorities saying they still don’t know what happened. Forensic, chemical and explosive experts were sifting through clues and haven’t identified the cause of the disaster at the state-owned oil company’s office on Jan. 31, Attorney General Jesus Murillo Karam said yesterday. Pemex has stepped up security at oil production facilities during the investigation, the company said. The government will update on the cause no later than tomorrow, Murillo Karam told reporters at a news conference. He added there weren’t signs of any fire sparked by the explosion. “The federal government is determined to find the truth of this incident whatever it may be, whether it involves an accident, whether it involves negligence, whether it involves an attack.” The nation’s deadliest explosion since a mine accident in 2006 comes as President Enrique Pena Nieto, who took office Dec. 1, plans to submit a bill to increase private investment in the energy industry and lower taxes on Pemex, the nation’s largest company by revenue and the world’s fourth-biggest crude producer. The initiative is set to be the biggest energy- industry overhaul since the nation seized oil fields from British and U.S. companies 75 years ago. Pena Nieto declared three days of national mourning after the incident. Pemex Output Pemex Chief Executive Officer Emilio Lozoya, who took the helm of the oil producer two months ago, told reporters at a yesterday that the incident didn’t hinder Pemex output, the company is producing about 2.57 million barrels of oil daily and the headquarters will reopen Feb. 5. after a three-day federal holiday weekend commemorating Constitution Day. The blast also injured 121 at offices where about 10,000 work or visit daily, Lozoya said. Investigators from the attorney general’s office, the Defense Ministry, the Navy and the National Autonomous University of Mexico are working on the probe, Lozoya said. The nation’s civil protection teams, and federal investigators remain working this morning at the blast site, Pemex said today on its Twitter page. Shattered Windows Milenio TV reported that the incident may have been caused by an implosion due to halon gas, a fire suppressant chemical that the network said Pemex was storing after taking the gas offline amid global bans because of the threat it poses to the environment. Milenio didn’t say where it got the information. Murillo Karam said that while he couldn’t confirm whether halon was found at the scene, an implosion has been ruled out. Footage on Milenio TV showed shattered windows and gaping holes in walls on several floors after the blast rocked the B2 building adjacent to the company’s main office, the second- tallest tower in the country, between 3:40 p.m. and 3:45 p.m. local time on Jan. 31. Security personnel surrounded the complex and roped off the area outside, where dozens of ambulances were parked and a bust of the late President Lazaro Cardenas, who nationalized Mexico’s oil industry in 1938, stood intact. Employees were evacuated from the scene of the blast, some on stretchers. The Army cordoned off the Pemex complex and sent in search parties with dogs to look for survivors. Televisa TV network reported the condition of seven injured as “very grave” as of last night. Economic Impact The explosion won’t have any financial or economic impact, Lozoya said in an interview yesterday after the news conference with journalists in Mexico City. The cost to protect Pemex debt against non-payment for five years with credit-default swaps was little changed at 115 basis points yesterday, according to data compiled by Bloomberg. Credit-default swaps pay the buyer face value if the issuer fails to comply with debt agreements. Yields on Pemex dollar bonds due 2022 rose three basis points, or 0.03 percentage point, to 3.53 percent, according to prices compiled by Bloomberg. The Mexican peso erased earlier losses to rise 0.8 percent to 12.6062 per U.S. dollar. Leticia Vigueras, who was working on the second floor of the adjacent B1 building, said she felt a burst like a shockwave as the windows shattered. “From the magnitude of the damage, it’s hard for me to think it was an accident,” said Vigueras, 38, a finance department employee who said one of her co-workers was killed and another is missing. “The whole structure of the first floor and mezzanine was destroyed.” Basement, Floors The explosion “seriously” damaged the basement and the first two floors of building B2, Interior Minister Miguel Angel Osorio Chong told reporters on Jan. 31. The blast may have been related to maintenance deficiencies in the boilers used for power generation and air conditioning, Mexico City-based newspaper El Universal reported, citing Moises Flores , the leader of one of Pemex’s unions. Pemex said on its Twitter account on Jan. 31 that an electrical failure had prompted a preventive evacuation of the headquarters. Lozoya declined to comment on the bad equipment report. “We’re going to dedicate ourselves as much as possible to first know what happened,” Pena Nieto said from the explosion site when he toured the area hours after the blast. “If there are people who are responsible in this case, we’ll put the full weight of the law on them.” National Mourning After visiting yesterday with people injured in the blast, Pena Nieto declared three days of national mourning, saying the incident has filled Mexico with sadness. Pena Nieto on Jan. 30 spoke at a conference for his Institutional Revolutionary Party, promoting his proposed energy-industry overhaul in a bid to stem production declines at Pemex. While he’s promised not to privatize Pemex, he’s also pledged to forge ahead on a modernization that would allow more non-government investment and boost competitiveness. The government undertook some overhaul efforts with Pemex under the previous administration. In 2008, then-president Felipe Calderon pushed through a bill that allowed outsourcing production projects through performance-based contracts. At least three other incidents have caused significant casualties at Pemex in the past five years. A fire at a gas distribution hub near the U.S. border left at least 30 dead last year, and 21 workers were killed in 2007 when an oil rig hit a drilling platform in the Gulf of Mexico. Domestic Product In addition, an explosion prompted by a criminal gang attempting to steal oil from a pipeline in the state of Puebla killed 28 in 2010. Mexico has been wracked by drug violence since Calderon sent troops to fight the nation’s organized crime groups after taking office in December 2006. The drug war resulted in more than 58,000 deaths during his term, and his government estimated it shaved one percentage point annually off gross domestic product. Milenio newspaper reported that between 2008 and 2011 Pemex requested funds to update disaster-prevention equipment, such as smoke detectors, at its headquarters. The government repeatedly denied those requests, Milenio said. The explosion could have been even deadlier at other times of day. “At the time of the blast many Pemex employees, including my staff and those of other board members, were out” board member Fluvio Ruiz said in an interview on Jan. 31. “It was lunch hour.” Pemex Reform The Pemex facilities are “very well maintained,” leaving a “low probability” of accidents at the site, Sergio Flores, a former Pemex employee who teaches architecture at Mexico’s National Autonomous University in Mexico City, said in an interview. Barclays Plc said in a note to clients yesterday that the explosion is “very unlikely” to have been caused on purpose. “We believe that if the blast is proved to have been an accident, it should not affect discussions on Pemex reform,” Marco Oviedo, Barclays analyst, wrote in the note. Tomas Torres, vice-coordinator of the Green Party in the lower house of congress, said the incident will probably intensify debate over Pena Nieto’s plans to overhaul the oil industry. “Positions may harden,” Torres said in a telephone interview from the central state of Queretaro. “It could be an element that strengthens the argument to invest in, modernize and take care of” Pemex, although those opposing changes may lobby against “using the pain of the families who died there for political reasons,” he said. To contact the reporters on this story: Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net ; Brendan Case in Mexico City at bcase4@bloomberg.net ; Nacha Cattan in Mexico City at ncattan@bloomberg.net To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net ; Andre Soliani at asoliani@bloomberg.net |
2024-06-08 | Bloomberg | U.S. Federal Reserve Beige Book: Philadelphia District (Text) | The following is the text of the Federal Reserve Board’s Third District-- Philadelphia. Business activity in the Third District has improved overall since the last Beige Book , although the pace has softened. Manufacturers reported increases in shipments and new orders in May, although at a much slower pace than the past two months. Retailers posted slight year-over-year sales increases in May. Motor vehicle dealers reported a slowdown in sales during May compared with the first four months of the year. Third District banks reported little overall change in loan volume outstanding, on balance, since the last Beige Book. Residential real estate agents said sales have increased seasonally, but house prices have been flat to down. Contacts in the commercial real estate sector said that market conditions have shown little change since the first quarter. Service-sector firms reported modest increases in activity. Business contacts reported further price increases for inputs as they did in the previous Beige Book. There have been some retail price increases, and more firms in a range of sectors have implemented fuel surcharges. Expectations among Third District business contacts are mostly for slow growth. Manufacturers forecast a modest rise in shipments and orders during the next six months. Retailers expect sales to advance slowly on a year-over-year basis. Auto dealers say the outlook is uncertain. Bankers expect only slight growth in lending. Contacts in residential real estate expect moderate seasonal gains in sales, but they expect sales for this year as a whole to be about the same as sales last year. Contacts in commercial real estate expect conditions to improve slowly, with markets firming around the end of the year. Service-sector companies expect continued slow growth. Manufacturing Reports of widespread, robust demand growth for manufactured products as of the last Beige Book gave way to two months of easing in the breadth and pace of recovery. Less than 30 percent of Third District manufacturers reported increases in shipments and orders in May -- slipping from over 50 percent since the last Beige Book. Among key manufacturing sectors in the Third District, the number reporting increases of both shipments and orders narrowed to 7 from 13 since the last Beige Book. The strongest reports of orders came from producers of chemicals; food; stone, clay, and glass; and fabricated metal products. Since the last Beige Book, declines in orders broadened from producers of apparel and rubber products to include producers of electronic equipment and instruments. Failure to pass a multiyear transportation infrastructure reauthorization bill and the ongoing real estate slump were cited by five different manufacturing sectors as hampering the recovery. Third District manufacturers remain mostly positive about business conditions over the next six months; however, the percent of firms expecting increases fell off sharply since the last Beige Book, from 66 percent to 36 percent. Among the firms contacted in May, about 38 percent expect increases in new orders and shipments, while about 20 percent expect decreases. A little uncertainty has crept back into manufacturers’ expectations, with several contacts citing “swings” in activity. Capital spending plans over a six-month planning horizon have changed little since the last Beige Book, with about one-third of firms projecting increases. Retail Third District retailers generally reported small year-over-year increases in sales in May, although results varied by store type. Discount stores and some luxury goods retailers posted better increases than mid-price retailers and department stores. Retailers said sales of spring apparel have been held back by cool, rainy weather. Several merchants said that high gasoline prices were deterring shopping trips and constraining consumers’ discretionary buying. Looking ahead, store executives expect just slow growth in sales. One merchant’s comment expressed the general opinion: “The consumer is responding to value. Only confidence in the job situation will prompt broader buying.” Third District auto dealers generally reported that sales slowed in May from the pace set from January through April. Some dealers said they were facing supply constraints resulting from the interruption of Japanese vehicle and parts production, and some dealers said demand has slowed as consumers reconsider model preferences in response to higher gasoline prices. Dealers are uncertain of the future course of sales; most said the sales rate going forward will be more sensitive to gasoline prices and consumer confidence than it had been earlier in the year. Finance Third District banks contacted in May gave mixed reports on loan volume outstanding. Some posted increases in consumer and business loans, but others reported drops in these categories since the last Beige Book. On balance, total credit extended by banks in the region has been flat in recent weeks. Although some bankers have had recent increases in loan demand from small and medium businesses, most said demand for credit from this sector has been weak. “Loan demand hasn’t moved at all,” one said, even as competition among lenders has increased. Most of the banks surveyed in May indicated that credit quality has been improving, although some said the pace of improvement has been slow. Looking ahead, the general view among the region’s bankers is that loan demand will move up slightly, at best, in the near future. Real Estate and Construction Residential real estate activity has picked up since the previous Beige Book in most parts of the Third District, according to residential real estate agents contacted for this report. Agents continued to note that the sales pace has been relatively stronger for middle- and lowprice homes and weaker for high-price homes. Agents attributed the improved sales pace to the usual seasonal gain and buyers’ concern that mortgage loan rates are likely to increase in the future. Looking ahead, residential real estate agents expect sales for this year as a whole to be level with last year. An agent who remarked that “we are off the bottom, but it’s going to be a slow comeback” expressed a common opinion. Residential agents generally reported flat to slightly falling house prices for existing homes. New homebuilders indicated that these lower existing home sales prices further reduced their customer traffic in May. While they see more committed buyers among the traffic, overall demand for new homes remains flat. Commercial and industrial market conditions in the Third District have shown little change since the previous Beige Book, according to area nonresidential real estate contacts, although some noted that office vacancy rates have edged down slightly in some areas. Rents have been steady in most areas, and concessions remain common. Contacts in commercial real estate reported that demand for space in Class A office buildings has strengthened relative to Class B space as local companies relocate upon lease expirations. “Companies are trading up for higher quality,” one contact said. This trend is expected to continue for the rest of this year, and any reduction in vacancy rates for less desirable buildings is expected to lag the modest decline in Class A vacancy rates that commercial real estate agents forecast for the balance of 2011. Industrial rents have been flat, but some contacts expect them to rise toward the end of the year as demand for space grows in the absence of new supply. Services Third District service-sector firms contacted for this report generally described demand for their services as growing modestly. Business-service firms noted some increased activity as a result of both greater usage by current clients and demand from new client companies. An executive at a business-service firm said, “Our activity in cyclical sectors is starting to improve.” Contacts in the transportation sector reported some recent easing in the slow, steady growth rate that held for the first four months of the year. Contacts in engineering and architectural services reported slight gains in current activity and a somewhat stronger upturn in inquiries. Most of the service-sector firms polled in May expect growth to continue at around its recent pace. Prices and Wages Since the previous Beige Book, nearly half of all manufacturers reported rising factor prices, especially for energy and commodities, but less than half of those firms are able to pass costs through to their customers. However, imposition of fuel surcharges by service firms in the region has increased. Retailers generally indicated that selling prices have been steady, except for food products and some petroleum-based products and imports. Retailers noted that consumers continue to favor lower price-point merchandise, and stores are continuing to alter merchandise selection to include more of those items. Business firms in the region reported mostly steady wages since the last Beige Book. Reports on nonwage employment costs varied; some firms indicated that benefits costs, primarily for health insurance, have been stable, but others indicated that they have had increases ranging up to 10 percent or more compared with a year ago. |
2024-07-12 | Bloomberg | China's Insurers Fall After Regulator Plans Removal of Interest-Rate Caps | China Life Insurance Co. and China Pacific Insurance (Group) Co. tumbled in Shanghai trading after the regulator said it plans to remove a cap on the guaranteed rate of return for some life insurance contracts, scrapping a decade-old ceiling that helped contain price competition. China Life , the nation’s biggest insurer, fell 6.7 percent, the most since Nov. 28, 2008, to 23.00 yuan as of 2:04 p.m. local time. China Pacific declined 6.6 percent. Ping An Insurance (Group) Co. shares are suspended pending an announcement on a restructuring of its bank unit. The China Insurance Regulatory Commission said July 9 it plans to allow insurers to decide the “preset interest rate” paid to holders of traditional life insurance policies. Price competition will likely intensify and squeeze profit margins, while the increased attractiveness of such contracts may slow down sales of other types of products, said Olive Xia , a Shanghai-based analyst at Core Pacific Yamaichi. “The short-term negative impact on life insurers is fairly obvious,” Xia said in a phone interview today. “The market will need some correction in evaluations to digest the impact.” Companies were asked to submit their feedback to the proposal by July 20, according to the statement. The regulator cut the ceiling on preset interest rates for all life insurance policies to 2.5 percent in June 1999, after insurers racked up losses as price competition drove returns paid to policyholders above investment yields. The higher the preset rate is, the cheaper the insurance policies are for customers. ‘Controllable’ Impact Traditional life insurance refers to contracts with premiums and policyholder benefits already set when they are written, the regulator said. Such contracts, which focus on risk coverage and compare to participating policies and investment- related products, account for less than 20 percent of China’s insurance market by premiums, according to Xia. “The overall impact on the industry is controllable,” Guosen Securities Co. analysts Shao Ziqin and Tong Chengdun said in a report yesterday. “Given the environment of low market rates, the likelihood of vicious competition and a repeat of the high interest rate contracts is small.” Least Affected Ping An , China’s second-biggest insurer, will be least affected by any increase in the guaranteed rate of return given the company’s lowest proportion, at 9.7 percent, of traditional policies out of the total individual life premiums, the Guosen Securities analysts said. That compares to China Life’s 45 percent and Pacific Insurance’s 50 percent. The profit margin of life insurance companies will be squeezed by 8 percent, Shenyin & Wanguo Securities Co. analyst Robert Hu wrote in a report today. He cut the target price for Pacific Insurance to HK$27.00 from HK$30.00 and downgraded the stock to “underperform” from “neutral.” China Life’s “neutral” rating was maintained. The benchmark Shanghai Composite Index advanced 0.6 percent, while Hong Kong’s Hang Seng Index gained 0.7 percent. -- Chua Kong Ho , Zhang Dingmin. Editors: Malcolm Scott , Chitra Somayaji To contact the reporter on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net |
2024-11-17 | Bloomberg | Comerica Doubles Dividend as Biggest U.S. Lenders Prepare to Boost Payouts | Comerica Inc. ’s decision to double its dividend may signal that U.S. regulators will allow more of the biggest lenders to begin restoring their payouts. Comerica, the Dallas-based bank that posted annual profits throughout the financial crisis, boosted its quarterly dividend to 10 cents a share yesterday. Comerica also authorized the repurchase of as much as 7 percent of stock outstanding, according to a company statement. Banks including JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp and PNC Financial Service Group Inc. may be next, said Jennifer Thompson , an analyst at New York-based Portales Partners LLC. “You will see a number of the stronger banks increase their dividends over the next quarter,” Thompson said yesterday in a phone interview. She assigns a “hold” rating on Comerica, the 15th-biggest U.S. commercial lender by assets. “The regulators have put rules in place and now it will be a matter of making individual decisions for each bank.” Investors and analysts have used quarterly conference calls to press banking executives about the timing of dividend increases and bank managers have chafed against limits set by regulators. Federal Reserve Governor Daniel Tarullo said last week that banks seeking to raise payouts must undergo stress tests to show they have sufficient capital for two years. JPMorgan CEO Jamie Dimon said Oct. 13 that he hopes to raise the dividend in the first quarter of 2011. The lender had repurchased $2.6 billion of its own shares this year through September. Wells Fargo finance chief Howard Atkins said last month that an increase in the payout is a “top priority” for the bank. Bloomberg dividend forecasts show JPMorgan, based in New York, may quadruple its quarterly payout to 20 cents in February, while San Francisco-based Wells Fargo may double its to 10 cents in April. Capital Pressure Concerns that bank capital was under pressure from souring loans prompted Fed officials in February 2009 to issue a letter saying financial firms “should reduce or eliminate dividends” when earnings decline or the economic outlook deteriorates. The six largest U.S. banks currently pay quarterly dividends totaling 51 cents a share, down from $2.49 in 2007. Barbara Hagenbaugh of the Fed and Andrew Gray , a spokesman for the Federal Deposit Insurance Corp., declined to comment. Comerica’s dividend is payable Jan. 1 to shareholders of record on Dec. 15, and the buyback plan may include almost 12.6 million shares. The bank also may repurchase warrants covering about 11.5 million shares. Comerica climbed $1.01, or 2.8 percent, to $37.75 at 9:31 a.m. in New York Stock Exchange composite trading. The shares advanced 24 percent this year through yesterday. Home Lending Comerica has made little residential-mortgage lending compared with many rivals, Thompson said. In March, Comerica repaid $2.25 billion to the Troubled Asset Relief Program and in October it redeemed $500 million of trust-preferred securities, which will be discontinued as a form of regulatory capital starting in 2013. “Historically they have operated with a very conservative capital structure,” said Jeff Davis , an analyst at Guggenheim Securities LLC in Nashville, Tennessee. “They have more flexibility to do things early in cycles like this.” Larger banks like JPMorgan and Wells Fargo may have to wait for clarity on Basel III capital rules and costs of mortgage buybacks before boosting dividends, Davis said. The Basel Committee on Banking Supervision said last week that it will identify which firms will be subject to stricter rules by the middle of next year and how much of an additional cushion they’ll need by the end of 2011. Comerica “is a bank that has run with a lot of equity capital and that’s where Basel III is steering the banking sector,” Davis said. The bigger banks may “have to wait to see how the capital ratios play out because in a lot of ways JPMorgan is the ‘bank of America’ and while Wells Fargo is highly profitable I think they will be subject to the Basel III rules as well.” To contact the reporter on this story: Dakin Campbell in New York at dcampbell27@bloomberg.net. To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net ; Rick Green in New York at rgreen18@bloomberg.net . |
2024-06-23 | Bloomberg | Greece Has ‘Russia-in-1998’ Feel, World Bank Economist Says | The Greek crisis has all the elements that dogged Russia during its 1998 default, according to Sergei Ulatov, the resident World Bank economist in Moscow. “The Greece example reminds me very much of what was happening in Russia in 1998, but on a much larger scale,” Ulatov said in an interview during the Russia and CIS Capital Markets Forum organized by Euromoney in London today. Greece is struggling to convince investors it can keep its finances intact as European officials scramble to put together a second bailout package for the debt-strapped nation. Greek Prime Minister George Papandreou earlier this week won a vote of confidence, bolstering his new government’s chances of pushing through austerity measures to secure further financial aid. Failure to secure the aid would push Greece to the brink of default, with the country needing the funds to cover 6.6 billion euros ($9.3 billion) of maturing bonds in August. European finance ministers said earlier this week they would hold off on approving a 12 billion-euro payment to the country promised for July until passage of the plans to cut the budget deficit and sell state assets. Russia defaulted on bonds in 1998, when failure to repay $40 billion worth of local-currency debt caused the ruble to be devalued by 70 percent in two weeks and the economy to contract by 5.3 percent that year. Ulatov, like some of the other participants of the forum, said he expects a Greek default. Default Worries “I don’t see any alternatives,” said Alexander Morozov , chief Russia and CIS economist for HSBC Holdings Plc. Zdenek Turek, president of Citibank’s CIS division, said European nations maybe postponing the pain. With a Greek default, the “sooner the better,” he said. The yield difference, or spread, between 10-year German bunds and Greek securities of a similar maturity was at 1,388 basis points today, up from 1,317 at the beginning of the month. Swaps on Greece rose 25 basis points to 2,012, signaling an 82 percent chance of default within five years, according to CMA. European leaders have sought to present a common front to avoid a Greek default. Germany ’s attempt to demand a “substantial” participation from bondholders, which would have effectively been a default according to credit rating companies, met pushback from the European Central Bank and France, the country most exposed to Greek debt. German Chancellor Angela Merkel dropped the idea of a compulsory Greek debt exchange on June 17. Too Big to Fail “There is a threat that all available capital in Europe will be sucked up for all the government projects that have gone very wrong,” Anders Lidefelt, a managing partner at Moscow- based Brunswick Rail Ltd., told the conference. At a Brussels summit tonight and tomorrow, European leaders will debate the size of new loans to the Athens government and how to get holders of Greek bonds to chip in. “It begins from the notion that Greece is too large to fail,” the World Bank ’s Ulatov said. “Then, there is an international consensus that we need to come up with a package, but there is a lot of moral hazard involved.” “Some private investors, even though they think it’s going to fail, push this package so they can exit,” he said. “Some big investment banks just want this package so they can exit.” To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net |
2024-11-04 | Bloomberg | Productivity in U.S. Rose More Than Forecast in Third Quarter | Employers in the U.S. squeezed more productivity from workers in the third quarter, leading to an unexpected drop in costs that signals inflation will remain low. Employee output per hour rose at a 1.9 percent annual rate, more than forecast, after falling 1.8 percent in the previous three months, Labor Department figures showed today in Washington. Worker costs fell for the fifth time in the past seven quarters. Companies remain focused on cutting expenses to boost profits more than a year into the economic recovery, indicating why the Federal Reserve yesterday said progress toward cutting unemployment and boosting growth was “disappointingly slow.” Another report showed more Americans filed claims for jobless benefits last week, reinforcing expectations the labor market will take time to improve. “Corporate America is running extremely lean,” said Ellen Zentner , a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who correctly forecast the drop in costs. “They’ve only been hiring the bare minimum. That’s part and parcel behind what is driving the Fed at this feverish pace to try to bring unemployment down.” Stocks rose on improved earnings at companies from Gap Inc. to Time Warner Cable and on expectations the Fed’s latest initiatives will revive the world’s largest economy. The Standard & Poor’s 500 Index climbed 1.9 percent to 1,221.06 at the 4 p.m. close in New York. Treasury securities jumped, sending the yield on the benchmark 10-year note down to 2.49 percent from 2.57 percent late yesterday, as the report confirmed the central bank’s inflation outlook. Fed Initiative The Fed yesterday said it would buy an additional $600 billion of Treasuries through June, expanding its record stimulus of $1.7 trillion in asset purchases, in a bid to lower borrowing costs, boost growth and prevent prices from dropping. The median forecast of 65 economists surveyed by Bloomberg News projected productivity would rise at a 1 percent pace. Estimates ranged from no change to a 2.6 percent gain. Unit labor costs, which are adjusted for efficiency gains, dropped at a 0.1 percent rate last quarter after increasing 1.3 percent in the previous three months. They were projected to rise 0.6 percent, according to the survey median. Employee compensation per hour adjusted for inflation fell 0.8 percent in the third quarter from the same time last year. “We could be in for a period of wage deflation, which would be a serious problem for the Fed,” said Zentner. More Claims Another Labor Department report showed the number of claims for unemployment insurance payments rose by 20,000 to 457,000 in the week ended Oct. 30, exceeding the median forecast of economists surveyed. The increase more than offset an 18,000 decrease the prior week, dashing hopes firings were abating. A lack of jobs shows why productivity “ is a double-edged sword,” said John Herrmann , a senior fixed income strategist at State Street Global Markets in Boston. “On one hand, it slows the pace of hiring” in the near-term, he said, “but it’s a strong plus for business operating results, which in the long run translates into job growth.” Republicans on Nov. 2 gained at least 60 seats in the House of Representatives, capitalizing on concern about unemployment and government spending and delivering a rebuke to President Barack Obama ’s domestic agenda. Democrats retained control of the Senate by a slimmer margin then they previously had. Hours, Output The productivity report showed the number of hours worked rose at a slower pace last quarter even as output accelerated, showing companies were focused on streamlining operations through new technologies rather than on increasing staff. Hours climbed at a 1.1 percent pace after increasing at a 3.5 percent pace from April through June. Output rose at a 3 percent pace, up from 1.6 percent the prior quarter. Newell Rubbermaid Inc. , which makes and markets a range of products including housewares and tools, is among companies focusing on improving efficiency rather than raising prices to make up for increasing material expenses. “We’re looking to productivity to offset most of the inflation in raw materials and input costs,” Juan Figuereo , chief financial officer at the Atlanta-based company said on an Oct. 29 teleconference. “We haven’t really had to rely on pricing.” Corporate profits climbed 37 percent in the second quarter from the same time a year earlier, according to figures from the Commerce Department. Analysts surveyed by Bloomberg predict an average 28 percent gain in third-quarter profit from a year earlier for all Standard & Poor’s 500 companies, and a 36 percent advance for all of 2010. Job Cuts United Technologies Corp ., the maker of Pratt & Whitney jet engines and Carrier air conditioners, is among companies still cutting jobs while trying to sustain output. The Hartford, Connecticut-based company plans to cut about 3,300 jobs through 2011 as part of cost-reduction efforts previously announced. The Labor Department may report tomorrow that the unemployment rate held at 9.6 percent in October for a third month, according to the median forecast of economists surveyed by Bloomberg. Private payrolls, which exclude government agencies, rose by 80,000, the survey showed. To contact the reporter on this story: Bob Willis in Washington at Bobwillis@bloomberg.net To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net |
2024-10-28 | Bloomberg | DAX Climbs, Led by Deutsche Telekom, Infineon Technologies; Wirecard Gains | German stocks rose for the first time in three days as applications for U.S. unemployment benefits unexpectedly fell to the lowest level in three months. Deutsche Telekom AG climbed 3.1 percent as rival France Telecom SA reported third-quarter profit that beat analysts’ estimates. Siemens AG advanced 1.3 percent after winning a wind- turbine contract. Wirecard AG gained 1.5 percent after reporting a rise in third-quarter earnings. The benchmark DAX Index rose 0.4 percent to 6,595.28 at the 5:30 p.m. close in Frankfurt. The measure has rallied 5.9 percent this month amid speculation policy makers at the U.S. Federal Reserve will announce another round of asset purchases at their November meeting in a bid to jumpstart economic growth. The broader HDAX Index also climbed 0.4 percent today. “There is growth potential on the German equity market in the next six to nine months as we’ll continue to see an expansionary monetary policy,” Christian Gattiker , Zurich-based head of research at Bank Julius Baer & Co., said at a press conference in Frankfurt today. “German equities are attractive as the country’s exporters are significantly oriented towards Asia and should benefit from the global economic growth.” U.S. initial jobless claims decreased by 21,000 to 434,000 last week, the lowest level since early July, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance dropped to a two-year low, while those getting extended payments also fell. Deutsche Telekom Deutsche Telekom, Europe’s biggest phone company , rose 3.1 percent to 10.44 euros, the largest advance this year. France Telecom, the nation’s largest phone company, said third-quarter profit increased 1.9 percent, driven by its expansion into Africa and the Middle East. Siemens gained 1.3 percent to 82.41 euros, the first advance in a week. Europe’s largest engineering company said it signed a contract with Enel Green Power for wind turbines with a capacity of as much as 1,200 megawatts. Wirecard climbed 1.5 percent to 10.43 euros, the first advance in three days. The maker of electronic-payment and risk- management software said third-quarter earnings before interest and taxes rose to 17.7 million euros from 15.1 million euros. Aurubis AG, Europe’s biggest copper, dropped 4.2 percent to 37.04 euros as Salzgitter AG sold about 275 million euros of bonds exchangeable into Aurubis shares. Salzgitter fell 1.7 percent to 51.77 euros. To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net. To contact the editor responsible for this story: at dmerritt1@bloomberg.net . |
2024-11-19 | Bloomberg | Bank Bashers Will Regret Their Zeal | Banks are taking a beating from every quarter. They are fined billions of dollars by national and international regulators because their traders manipulated this or that market indicator. They are slapped with hundreds of millions of dollars in penalties for deceptive practices in selling insurance. They are told to delever, pressured to cut bonuses and cap salaries. In short, banks are in retreat. The question is whether the zealous bank-bashers will like the alternative. In its recently issued Global Shadow Banking Monitoring Report for 2013, the Financial Stability Board, an international advisory body, estimates the end-2012 assets of non-bank financial intermediaries at 117 percent global output, up from 111 percent in 2011. These assets grew 8.1 percent in 2012, while bank assets remained stable because the effect of growing valuations was offset by shrinking balance sheets. The institutions that the FSB calls "other financial intermediaries" include equity, fixed income, money market and hedge funds, broker dealers, structured finance vehicles, real estate trusts and funds -- entities that do not receive the regulatory attention enjoyed, or rather suffered, by banks. The FSB's assessment of their growth is intentionally conservative, and the international body admits that some trends, such as the growing role of non-banks in direct lending to businesses, cannot be quantified at all. According to the FSB report, non-bank institutions "have recently initiated or stepped up their lending activities in some jurisdictions in order to fill the void left by banks or get access to higher yielding exposures. At the riskiest end of lending activities, leveraged loans, of which a sizeable proportion is syndicated to non-banks, have also experienced buoyant activity since 2012." The business opportunity for non-banks to go into, well, banking is especially obvious in Europe. According to asset management company Alcentra, banks handle 75 percent of corporate financing in Europe, compared with only 30 percent in the U.S. This year, companies from the European periphery, denied their traditional funding source as banks grow more risk-averse, are setting records on the bond market: Greek firms alone have raised $5.4 billion. Unfortunately, this option is available only to bigger firms. Small and medium-sized enterprises, which employ 72 percent of the workforce in Europe, are forced to find alternative solutions. Regulators seem to like the phenomenon. In the U.K., non-bank lenders are actually invited to co-finance small business with the government. The idea is that funds and insurance companies are often less levered than banks, so why not tap them for some liquidity for cash-starved businesses? Problem is, nobody knows how much the non-banks are actually lending. "As direct lending markets are by nature private, information is scarce and patchy," the FSB notes. And while insurers' lending activities are not particularly risky because of their high capital levels, unregulated funds engage in the kind of loose lending that banks are now conditioned to avoid. Those same insurance companies can take on these risks indirectly by investing in the funds. The FSB believes that non-bank lending represents only a small share of financing made available to companies, but because the activity is not systematically monitored, it can grow fast without attracting attention. There is no question that banks have to exercise caution and clean up their practices, but incessant regulatory pressure on them is creating a void in the market that more adventurous players will fill. If the chase for yields ends as badly for them as it did for banks in 2008, governments might find the mess much harder to clean up, because they will know too little about it. (Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. He is also a former managing director at KIT Finance Investment Bank. Follow him on Twitter.) |
2024-09-13 | Bloomberg | Texans in Dark on Obamacare as Enrollment Startup Looms | Randy Osban’s job selling ribs and brisket from a yellow trailer on Texas ’s state road 71 offers a sweeping view of the hill country beyond Austin. One benefit his business doesn’t provide is health insurance. Osban, 55, could use it now, as his wife Kathy, 59, has a heart condition and the money he makes barely covers current expenses, much less a hospital bill. While he’s heard of Obamacare , he doesn’t know if it can help him or how to enroll. “I’m in the dark; total darkness,” Osban said. In 18 days, Americans will start signing up for medical coverage through the Affordable Care Act’s online exchanges. The law, targeting most of the 50 million uninsured, promises to change the way health care is provided in the U.S. It forces most Americans to buy coverage, offers subsidies to pay for it, mandates insurer outlays for disease prevention and guarantees a pre-existing condition won’t get you turned down. You wouldn’t know it in Texas. Distrustful of the U.S. government, with a defiant and independent heritage, Texans are largely unsupportive of a law they little understand. While no state has a higher proportion of uninsured , the Republican governor, Rick Perry , has refused to help build or promote an insurance exchange in the state and he won’t expand Medicaid, the joint state-federal health plan for the poor, to care for more people. “It’s still Texas and it’s still, ‘pull yourself up by your own bootstraps,’” said Jim Young, who runs a private health program for the uninsured in San Antonio. The attitude is “if someone can’t do that, it’s their own problem. It’s a holdover from the Old West.” Cruz’s Fight More than 6 million Texans who now lack insurance coverage may be eligible to purchase it through a U.S.-run exchange that will open on Oct. 1, according to the nonprofit Kaiser Family Foundation. Yet Texas has provided no help to groups working to educate residents on the exchange, said Keilah Jacque, a policy coordinator at City Square, a social service agency in Dallas. For more coverage of healthcare, see The Prognosis for Obamacare Instead, the state’s top officials and representatives are focused on getting the law overturned. U.S. Senator Ted Cruz , a Republican pushing a plan to defund Obamacare in Congress, appeared Aug. 20 at a rally against the law in Dallas. Organized by Heritage Action for America, the “Defund Obamacare” event drew more than 1,500 people to a hotel ballroom, a crowd that leaned elderly and white and treated Cruz like a folk hero. Cruz’s speech largely focused on politics, until a woman stood up and challenged him, asking what he would do for the 6 million Texans “that can’t afford health care.” Self Sufficiency “We can take care of ourselves!” a man in the crowd shouted at her, to applause. Cruz thanked the woman. “I think we need to reform our health care to make health care more accessible, reduce the cost of health care and empower patients,” he said. “I’ve gotta tell you, Obamacare is making it worse.” Perry, meanwhile, has swatted away efforts by U.S. Health and Human Services Secretary Kathleen Sebelius to publicize the law in trips she’s made this year to Dallas, Austin, San Antonio and Houston. The governor has greeted Sebelius’s arrival with critical press releases. “Texans are already subject to too much costly and burdensome federal regulation, and Obamacare only makes the problem worse,” Perry wrote in statement released while Sebelius was visiting Houston. Personal Stakes Combating this are activists such as Luis Veloz, a 19-year-old who works with the Texas Organizing Project, part of a nationwide informational drive being organized and run by Enroll America, a Washington-based nonprofit whose president previously worked on behalf of the Obama campaign and later held a position as an aide in the White House. The Texas group, a network of 20,000 volunteers, had contacted more than 100,000 people with a month to go before signups begin, Allison Brim, organizing director for the Texas Organizing Project, said in an interview. For Veloz, the effort is personal. His own family is uninsured and facing about $200,000 in medical bills after his father suffered a heart attack in November, Veloz said in an interview over lunch at a Dallas Tex-Mex restaurant. He spends his evenings knocking on doors in neighborhoods with high numbers of uninsured and accosting Texans on the street to educate them on the law, he said. “It’s my fight,” he said. “The more people sign up, the better it’s going to work out for my family.” Obama Supporters Veloz said he measures his progress through the telephone numbers he collects from people who want more information on the law and those he will check in with later to see if they’re enrolled through the exchanges and offer them his help. He was escorted out of Cruz’s event after heckling the senator. “While there may be some in Texas who want to make it more difficult for Americans to access affordable health insurance, we are fortunate to have a strong network of partners throughout the state who are committed to this effort,” said Joanne Peters, a spokeswoman for Sebelius, in an e-mail. “We have a broad coalition of stakeholders who are working every day to provide Texans with accurate information about how they can get the coverage their family needs.” Lucy Nashed, a spokeswoman for Perry, said the governor didn’t have time for an interview the week of Aug. 19. The federal government is building an insurance exchange for Texas, a marketplace where people can choose plans on the Internet or by phone, or work with insurance brokers who will purchase coverage for them. Doctor Backlash Federally supported health clinics in Texas have received about $10 million from the Obama administration to hire 193 workers who will educate patients about the health law. The federal government is spending $11 million more on navigators who will help people enroll in insurance plans. That’s about 80 cents per Texan, and the lack of resources is evident across the state, where there’s little recognition the law exists. The Obama administration’s work is made more difficult by some Texas doctors, who aren’t shy about sharing their dislike of the law with patients. The Texas Medical Association, the state’s professional society for physicians, broke with the American Medical Association in 2009 and opposed the Affordable Care Act while it was under consideration in Congress. Large Hospitals That’s because the law favors large hospitals and integrated care systems like California’s Kaiser Permanente over the independent medicine prevalent in Texas, said Edward Buckingham, a facial plastic surgeon who owns a practice in Austin. Care will increasingly move from doctors’ offices into more expensive hospital settings under the law, he said. His wife, Dawn, a surgical ophtalmologist who is part owner of a six-doctor practice, said over dinner at a restaurant overlooking Lake Travis that she advises patients who ask about the Affordable Care Act to get elective procedures done now, before the law is fully in effect. “I tell them that I personally think it’s going to bring the downfall of the whole medical system,” she said. “I think there are going to be people without any medical experience determining what they can and cannot have done.” Both Buckinghams described themselves as Republicans. Only the most intrepid and motivated Texans seek out information about the law on their own. Meggan Marasek, 28, of the city of Burnet, said she was diagnosed with ocular melanoma -- a cancer of the eye -- in September 2010. She learned of a program under the law called the Pre-Existing Condition Insurance Plan when an aunt showed her an AARP Magazine article. Marasek joined, and the plan paid for most of her care at the M.D. Anderson Cancer Center in Houston. Medical Deadlines Her PCIP coverage costs her about $210 a month and expires on Dec. 31, when Marasek will have to enroll in an exchange plan instead. She is concerned that the new insurance won’t cover as much of her care, which has cost $500,000. She has told her doctors that if they must remove her eye to do it before Jan. 1, in case she faces higher out-of-pocket costs next year. Like Osban, Marasek said she had heard nothing about the law or its programs from her doctors, authorities or media sources, beyond AARP Magazine and her own research at the government’s website, healthcare.gov. Both of them worry what the new exchange plans will cost. Osban, in an interview outside his trailer, said an insurance broker whose name he couldn’t remember had come by a few weeks earlier, trying to sell him a health plan before the Texas exchange opens. The woman told him rates would probably double under Obamacare, Osban said. She didn’t mention subsidies that would bring down the cost. “I’m definitely interested if it’s going to bring it down to the level that everybody should be able to pay,” he said. He figures about $200 a month would be affordable, after subsidies. The Obama administration plans to announce rates later this month. To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net |
2024-01-28 | Bloomberg | RIM’s Heins ‘Here to Fight’ for BlackBerry Revival Against Apple | Research In Motion Ltd. (RIMM) ’s Thorsten Heins, five days into his job as chief executive officer, pledged to regain lost ground in the U.S. smartphone market and said he held talks with rivals eager to license its software. RIM will begin a campaign with U.S. carriers next week to entice consumers to try its latest BlackBerry 7 devices with touch screens and better Web browsers, Heins said yesterday in an interview at Bloomberg headquarters in New York. The promotions won’t be about “just simply money,” they will also involve mobile applications, or apps, he said. “We have to do something dramatically different in the U.S. to get our market share back,” said Heins, 54. “I’m here to fight. I’m here to win.” Heins, a 24-year veteran of Siemens AG (SIE) , faces the challenge of reversing momentum at RIM after the company lost out in the smartphone market to Apple Inc. (AAPL) ’s iPhone and devices that run on Google Inc. (GOOG) ’s Android software. RIM’s revenue has slumped for two quarters, driving RIM shares down 75 percent last year. Heins, who took over from co-Chief Executive Officers Jim Balsillie and Mike Lazaridis , said his immediate priority is to revive BlackBerry sales in the U.S., get a revamped version of Waterloo, Ontario-based RIM’s struggling PlayBook tablet onto the market next month and introduce its new operating system, BlackBerry 10, on time later this year. “In the first 100 days, that is what you’re going to see me focus on,” Heins said. “My first job is to get BlackBerry 7 into all of your hands.” U.S. Missteps The Munich native is getting by on a handful of hours sleep a night so that he can travel by day to meet customers and run the business by night on his BlackBerry. The company needs to improve its marketing and communicate better to build excitement about its products, he said. U.S. sales fell 45 percent last quarter, dragging revenue lower even as sales in emerging markets like Indonesia and India surged. The BlackBerry’s share of the global smartphone market fell to 11 percent in the third quarter of 2011, from 21 percent two years earlier, according to Gartner Inc. The aging BlackBerry lineup failed to match the features and number of applications available on the iPhone and Android devices. “When BlackBerry got positioned the way you experienced it, it was on a set of values: battery life, network efficiency, security and best typing experience,” Heins said. “In the U.S. specifically, what we missed is a shift in those paradigms” to more consumer-oriented features like Web-browsing and apps, Heins said. Licensing Talks Now, RIM is rebuilding its lineup of BlackBerrys on BB10, an operating system based on software used to run nuclear power plants and unmanned aerial drones. During his interview, Heins repeatedly went back to a video demonstration of PlayBook 2.0, its new tablet software which incorporates many of the features that will come with BB10. He showed how users can flip between e-mail, Web browsing, Facebook and Twitter without ever leaving any of those programs. RIM’s new software is appealing enough that he’s been approached about licensing it, Heins said. The company has held discussions with interested handset makers and personal-computer makers, he said, declining to name them. “We’ve had lots of interest about this,” Heins said. RIM rose 3.3 percent to $16.80 yesterday. The stock was given a lift after Fairfax Financial Holdings Ltd. (FFH) said it doubled its stake in RIM. Prem Watsa, who runs Fairfax, was named as a director at RIM this week as part of RIM’s leadership changes. The stock has rebounded after falling earlier in the week when comments by Heins on a conference call were interpreted by some investors as a sign that he would run RIM much in the way of his predecessors. Neither that nor the suggestion that he will be unduly influenced by Lazaridis, who is staying on as vice chairman and leads RIM’s innovation committee, is correct, Heins said. “I love to work with Mike in his visionary capacities,” he said. ’’But make no mistake, I run the company.’’ To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net |
2024-10-18 | Bloomberg | BofA’s Drop in Trading Revenue Exceeds Citi’s | Bank of America Corp. (BAC) , the second- largest U.S. lender by assets, posted a third-quarter plunge in trading revenue that was more than twice as big as any U.S. rival so far. Trading revenue was $1.07 billion excluding an accounting gain, a 71 percent decrease from the second quarter, according to figures released today by the Charlotte , North Carolina-based company. Fixed-income, currency and commodities trading generated $314 million, the lowest amount since 2008, while equities revenue was $757 million excluding debt-valuation adjustments, or DVA. The global banking and markets division, overseen by co- Chief Operating Officer Thomas K. Montag, trailed JPMorgan Chase & Co. (JPM) , whose trading revenue fell 28 percent from the second quarter to $3.85 billion. Citigroup Inc. (C) ’s declined 31 percent to $2.56 billion. Bank of America’s trading revenue had topped both rivals in the year-earlier period, excluding DVA. “Brutal trading results” were among the biggest disappointments in Bank of America’s results, Glenn Schorr , an analyst at Nomura Holdings Inc. in New York , wrote today in a note to investors. The decline in trading revenue helped lead the banking and markets unit to its first loss since at least the first quarter of 2009, the furthest back the bank reports results for the division. The lender’s stock advanced in New York trading as overall results swung to a profit on higher revenue, better credit quality and one-time gains. Proprietary Trading Fixed-income results were affected as the company wound down its proprietary trading business, which makes bets with the firm’s own money and contributed $434 million in the first half of the year and zero in the third quarter, Chief Financial Officer Bruce Thompson said today on a conference call with analysts. A slow market for new bond issues also hurt the FICC unit, Thompson said. While structured-credit trading and the fair-value loan book posted small losses, the firm didn’t incur “significant losses” in any one area, Thompson said. Revenue at the rates and currency trading businesses fell 14 percent from the second quarter, he said. “Obviously the volatility in the credit markets were particularly challenging in August and September,” Thompson said. “To date, I would say October has been a fair bit better” than August and September. ‘Uniquely Difficult’ Goldman Sachs Group Inc. (GS) said today that trading revenue climbed about 5 percent from the second quarter to $3.61 billion, excluding DVA. Stock and bond markets were roiled during the quarter by Standard & Poor’s decision to downgrade the U.S. government’s debt rating, a protracted Congressional debate over raising the government’s borrowing limit and the Federal Reserve ’s decision to leave rates near zero until 2013 to combat stalling economic growth. Debate among European policy makers about how to solve deteriorating government finances and whether to add capital to banks also fueled investor concerns that missteps might lead to a new financial crisis. The S&P 500 Index dropped 14 percent during the quarter, the worst decline since the fourth quarter of 2008, and the Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of buying insurance against drops in the S&P 500 Index (SPX) , surged 160 percent to its highest quarterly reading since the first three months of 2009. “You have to appreciate how uniquely difficult the third quarter was,” Charles Peabody, an analyst at Portales Partners LLC in New York, said in an interview with Betty Liu on Bloomberg Television’s “In the Loop.” “The correlation between asset classes, product sets and geographies was so unusual in the third quarter. There was no place to hide.” To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net |
2024-06-06 | Bloomberg | U.S. Medical Device Backers Face Tough Health Care Vote | Senate Democrats from states including Minnesota and Pennsylvania are caught between their support for medical-device industries and their party’s reluctance to make major changes to the 2010 health-care law. The U.S. House of Representatives is scheduled to vote this week to repeal a 2.3 percent excise tax for medical devices. To Senate Majority Leader Harry Reid , a Nevada Democrat, the vote is part of a Republican attack on the health law. To Senator Amy Klobuchar , a Minnesota Democrat seeking a second term, the repeal is necessary to prevent harm to an industry that provides jobs in her state. “Senator Klobuchar is faced with a difficult choice between voting the kind of narrow particularistic interest of industry in her state versus voting her personal and partisan platform,” said Lawrence Jacobs , a political scientist at the University of Minnesota. Klobuchar, first elected in 2006, has been a “knight in shining armor” for a home-state industry that includes St. Jude Medical Inc. (STJ) and Medtronic Inc. (MDT) , Jacobs said. Medtronic’s employees have been the seventh-largest contributors to Klobuchar’s campaign this election cycle, according to the Center for Responsive Politics. Device companies have been lobbying to kill the tax, and the House repeal bill sponsored by Minnesota Republican Erik Paulsen is co-sponsored by more than 55 percent of the House. Excise Tax Congress included the tax in the 2010 health-care law as a way to help pay for expansion of health insurance coverage. The 2.3 percent excise tax will be levied on devices such as coronary stents and hip implants that aren’t sold directly to consumers. Similar fees and taxes were levied on health insurers, pharmaceutical companies and the indoor tanning industry. The law passed without a single Republican vote, and the party has been trying to unravel it since, even as the Supreme Court considers its constitutionality. Efforts to pick apart the health-care legislation are finding favor with some Democrats who agreed to the measure despite misgivings about individual provisions. Senator Orrin Hatch , a Utah Republican, said he’s looking for ways to force a vote on the issue. “I think there are Democrats who are willing to work with us on it,” he said. “It would be a smart thing for everybody to do it.” Administration Opposed The Obama administration announced its opposition to the bill today, saying that device companies are benefitting from additional customers because of the coverage expansion in the health care law. “Instead of working together to reduce health care costs,” the administration wrote, the bill “chooses to refight old political battles over health care.” President Barack Obama ’s advisers would recommend that he veto the legislation, according to the statement. Senator Bob Casey , a Pennsylvania Democrat who is seeking a second term this year, said he has had “a lot of discussions” with manufacturers and others in Pennsylvania that raised concern about the tax. The state’s device industry includes Synthes Inc. (SYST) in West Chester, which manufactures and sells products used in orthopedic trauma surgery, and Dentsply International Inc. (XRAY) in York, which makes dental equipment. Based on those discussions, Casey said he wanted to revisit and perhaps do away with the tax before it is implemented. ‘Middle Ground’ “We’ve been trying to do our best to come up with some middle ground, another approach that maybe hasn’t been examined yet, to get as much support as possible,” Casey said in an interview, adding that the Senate probably would vote on the issue before the November election. Adam Jentleson, a spokesman for Reid, said conversations were continuing about whether to hold a vote on some form of device tax repeal. J.C. Scott, senior executive vice president of government affairs at AdvaMed , an industry trade group, said such a middle ground short of repeal would be tough to support. “We are focused on full repeal,” he said. “The tax is going to hurt every company in the medical-device space. Anything short of full repeal is going to leave something on the table that is going to be problematic.” Device Industry Industry groups agreed to the tax during health-care negotiations, said Senator John Kerry , a Massachusetts Democrat. “We worked out a compromise with them, and people signed onto the compromise,” said Kerry, whose state is home to Boston Scientific Corp. (BSX) Senator Scott Brown , a Massachusetts Republican, supports repeal, as does Elizabeth Warren , a Democrat who is challenging Brown. Scott, of the device makers’ group, said the industry worked with lawmakers who helped reduce the tax’s bite though didn’t endorse the idea. “We never agreed to this tax in any form or fashion,” he said. As a percentage of total employment, Minnesota, Utah, Delaware and Massachusetts have the largest concentrations of medical technology jobs, according to AdvaMed. The top 10 states, including New Jersey and California, have 12 Democratic senators. The House bill would repeal a portion of the health-care law that requires taxpayers to obtain prescriptions if they want to use their tax-advantaged accounts to purchase over-the- counter medication. Spending Accounts It would allow people with such flexible spending accounts to get as much as $500 back if they don’t spend all of their money. That would overturn a “use it or lose it” provision that existed before the health-care law. The House bill would cover the estimated $29 billion, 10- year cost of repealing the device tax by changing rules governing what happens when taxpayers qualify for insurance subsidies under a prior year’s lower income and then make more money than expected. As written, the health-care law limited what those people would have to repay. The House bill would make them return all overpayments, and most Democrats oppose that change, saying it would penalize taxpayers for getting bonuses or raises. The addition of that language could limit the number of Democratic votes for the repeal bill. Two Democrats, Nevada ’s Shelley Berkley and Wisconsin’s Ron Kind, supported the repeal proposal in the House Ways and Means Committee, without the flexible spending or repayment provisions attached. ’Many Options’ Klobuchar, 52, said there are “many options” for addressing the device tax. “We’ve always been working on repeal and we’re going to continue to do that,” she said in a brief interview yesterday. Al Franken , Minnesota’s other Democratic senator, said in an e-mailed statement that he had “serious concerns about the impact this tax will have on Minnesota’s medical device businesses and their more than 30,000 employees.” “I still think we need to eliminate the tax,” Franken said. “But any plan to do so must be offset in a responsible and fiscally sound way.” Franken, a former talk-radio host known for his views on an expansive role for government, doesn’t face the same skepticism from Democratic activists as Klobuchar does, Jacobs said. The former prosecutor isn’t trying to be a senator who is known for delivering federal benefits to the state or as a pure partisan, he said. “She’s trying to walk a tightrope that delivers both,” Jacobs said. The House bill is H.R. 436. To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net ; Kathleen Hunter in Washington at khunter9@bloomberg.net To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net |
2024-10-30 | Bloomberg | Obamacare’s Biggest Threat Isn’t the Website | This past weekend, thinking enough time had passed for the kinks to be ironed out, I installed the latest versions of Apple Inc. (AAPL) ’s operating systems on my laptop and iPhone. Trying to sync the phone after this was accomplished, I became trapped in what I’ll call an upgrade death spiral. With each failed attempt, vast chunks of my music vanished. As it began to seem as though Lou Reed ’s sadly misunderstood “Metal Machine Music” was all that would be left (respect, Lou), I had to stifle the urge to hurl both devices into the river that runs by my house. I’d have happily attached weights to Apple Chief Executive Officer Tim Cook and tossed him in, too. I gather from discussion boards that I was by no means alone in this. Yet a few days and a great deal of hassle later - - wipe this, reset that -- the devices seem to be communicating amicably again. The bug, if it was a bug, will be fixed. I’ve decided I really like both upgrades. I won’t be switching to Android after all. Perhaps you’ve heard the rollout of the government’s health-insurance website hasn’t gone so well, either. That’s so shocking. The world’s most successful and admired maker of computers and software can’t create new information technology without driving its customers crazy now and then, but one expects so much more from the federal government. In due course, the bugs will be fixed and the site will work. There’s still time to get it right, and, provided the shambles doesn’t drag on too long, it’s unlikely to do much harm to the economics of the reform. Administrative Nightmare What about the notorious health-insurance death spiral? The site isn’t going to make much difference. Adverse selection, to use the correct term, is a problem with any kind of insurance: In this case, sick people want health insurance more than healthy people do, which tends to make the pool of customers riskier; that drives up costs, which makes healthy people even less willing to buy. It’s true that sick people will be more persistent than healthy people in engaging with a broken website to get coverage, but a brief delay won’t matter. If the problems drag on and the individual mandate has to be suspended, that’s different. Then you’d see adverse selection with a vengeance. For now, the damage is mostly political: The administration has again overpromised and underdelivered. Tolerance for the next phase of setbacks will be that much less. That next phase of setbacks will come, even if the mandate and its timid penalties succeed in curbing adverse selection in the longer term (which isn’t certain). Even now, the most embarrassing broken promise -- if you’re happy with your insurance, you can keep it -- has nothing to do with the website. More of this is on the way, and while the site’s problems aren’t directly implicated, they do hint at these larger difficulties. I’d focus on two. One is the subsidy mechanism; the other is the Medicaid gap. Those eligible for subsidies to make their insurance more affordable need to provide an estimate of their future income so their subsidy can be calculated. One of the problems with the site, it seems, has been the difficulty of integrating the insurance marketplace with the subsidy calculation so that buyers can see net-of-subsidy prices. But that blending of prices and estimated future income -- modified adjusted gross income, to be precise -- poses problems that go far beyond the site. Health insurance is complicated to start with. Now marry it to fluctuating incomes and a tax system of ludicrous complexity. It’s an administrative nightmare, with or without a working website. Politically Unsustainable The Medicaid gap, on the other hand, undermines the reform’s very purpose. To achieve near-universal insurance coverage, the health-care law envisaged a big expansion of the program for the poor. Even though the federal government promised to meet almost all of the cost, 25 states at last count have declined to widen eligibility. As a result, about 5 million Americans will fail to benefit: They’re too poor to qualify for the federal subsidy, and in many states , they’re not poor enough to qualify for Medicaid. Perhaps the states will have second thoughts; perhaps the administration will change its subsidy rules. At any rate, this anomaly seems politically unsustainable. Both these issues -- the burdensome complexity of a subsidy-based plan glued to the existing insurance model and the failure to achieve genuinely universal coverage -- were emphasized by critics from the left and the right when the law was being debated. If the costs and complications mount and the goal of universal coverage slips further away, the politics of health-care reform are unlikely to settle down, whatever happens to the website. The left will say, “We told you so -- it has to be single-payer.” The right will say, “We told you so -- the whole idea was a mistake.” If I were President Barack Obama , I wouldn’t take it for granted that my signature achievement is secure. Was there a better way to advance the unimpeachable goal of universal health insurance without moving to the single-payer model that many Americans would find hard to accept? And starting from the Patient Protection and Affordable Care Act , is it possible to get there without wiping the whole project and starting all over again? I’ll come back to both questions. (Clive Crook is a Bloomberg View columnist.) To contact the writer of this article: Clive Crook at ccrook5@bloomberg.net. To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net . |
2024-11-07 | Bloomberg | Nationstar Leads Mortgage-Firm Plunge as Earnings Hit Shares | Nationstar Mortgage Holdings Inc. (NSM) led a slump in companies involved in making, servicing, backing or investing in U.S. mortgages after the firms posted quarterly results and executives discussed their outlooks. Nationstar fell 17 percent to close at $40.75 in New York, the most since March 2012, after reporting earnings today that missed analysts’ estimates. The Lewisville, Texas-based company created by Fortress Investment Group LLC said it will sell part of its origination unit. PennyMac Mortgage Investment Trust (PMT) , Walter Investment Management Corp. (WAC) , Annaly Capital Management Inc. (NLY) and Radian Group Inc. (RDN) also declined. Mortgage origination and servicing companies including Nationstar and Walter Investment are facing increased competition amid falling new loan volumes and fresh rivals. Radian shares dropped 8.6 percent in New York trading after Chief Executive Officer S.A. Ibrahim said today that increased competition from existing firms and newcomers drawn to the business has pressured insurance rates. “We think it will take two to five days for investors to readjust to the quarter’s disappointing news and then investors will need to take a more realistic, long-term view,” Henry Coffey Jr., an analyst with Sterne Agee & Leach Inc., wrote in a note to clients about mortgage lenders and servicers. PennyMac, the Calabasas, California-based lender and investor in distressed mortgages, dropped 3.5 percent, while Tampa, Florida-based Walter Investment, which specializes in servicing and reverse mortgages, tumbled 7 percent. To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net |
2024-10-18 | Bloomberg | Twitter’s Lack of Patents Seen as a Risk to Investors | Profits aren’t the only thing lacking at Twitter Inc. (TWTR) ahead of its planned initial public offering. It’s got a dearth of patents, too. The microblogging service said in its prospectus this week that it has nine issued U.S. patents. That compares with 774 cited by Facebook Inc. before its initial public offering in May 2012 and International Business Machine Corp.’s 6,478 patents accrued last year alone. Twitter’s smaller patent trove reflects its philosophy of letting engineers and designers own their inventions. While Twitter’s policy is an effort to limit patent litigation, some investors and analysts are concerned it could backfire. Evidence shows that intellectual property can help companies raise more funds in their offerings, as patents enable investors to quantify the value of technological breakthroughs. Those safeguards are important for potential Twitter investors, amid the company’s widening losses and a lack of other financial metrics to go by. “The lack of a large number of issued patents is a little concerning,” Maulin Shah, managing director at Envision IP LLC, an advisory and research firm in New York , said by phone. “If Twitter does deal with patent-infringement lawsuits, they don’t have too many patents to lean on to countersue. That does put Twitter at a disadvantage.” Innovator Agreement Twitter says in its prospectus that many competitors have “substantially larger patent” portfolios, which could make it a target for litigation. At the same time, Twitter has said that too many patents may hinder innovation. In May, the San Francisco-based company implemented the Innovator’s Patent Agreement , or IPA, to keep ownership of inventions in the hands of the people who created them. As part of the policy, Twitter can’t pursue offensive litigation without the inventor’s permission. The IPA ensures that the patents “will be used only as a shield rather than as a weapon,” according to Twitter’s website. The IPA will help the company lure and retain more talented engineers, said Robert Clarkson, a partner in the capital markets practice at corporate law firm Jones Day. More than 5,000 patent actions were filed last year, the highest number ever recorded, according to a 2013 study by PricewaterhouseCoopers LLP. “Twitter has taken a somewhat different approach in that agreement,” Clarkson said in a phone interview from San Francisco. “This helps them attract leading individuals. They get more by attracting the best and brightest.” Investor Risk The policy’s biggest risk is that employees will take their inventions with them, posing a competitive threat if they leave, according to Jeff Sica, president and chief investment officer of Sica Wealth Management LLC. “This is a radical way of dealing with patents, which is far different than anything investors have seen before,” said Sica, who oversees about $1 billion under management. “People may appreciate the openness and invitation of competition.” Sica, who’s considering buying shares of Twitter, said that the company has developed a strong enough brand to withstand the competition. Jim Prosser, a spokesman for Twitter, declined to comment. Twitter is seeking to raise more than $1 billion in its IPO, people familiar with the situation said last week, and will probably start a roadshow to market the offering in the last week of October. The company pegged the fair value of its common stock at $20.62 a share in August. Active Users Twitter’s potential, as it lures advertising with more than 230 million monthly active users, means it could fetch $50 a share by the end of 2014, according to Robert Peck, an analyst at SunTrust Robinson Humphrey Inc. That user base is also critical to defending Twitter from competitors, he said. “Investors are asking if Twitter’s not protecting their business,” Peck said by phone. “I think there’s a business risk there, but at this point, the network effect protects Twitter.” Adding patents ahead of an IPO can help a company raise a higher amount in its market debut, according to a study of 234 software firms in the U.S. An additional patent obtained prior to the debut increased proceeds by about 0.9 percent, according to a working paper presented last year by Diego Useche, a researcher at the University of Bordeaux. “The more that IP is protected, the less infringement opportunity there is, and therefore, would increase the valuation,” said Peter Adriaens, a professor of entrepreneurship and strategy in the Stephen M. Ross School of Business at the University of Michigan. Patent Boost Facebook placed a large focus on strengthening its patent portfolio before going public to protect itself from potential infringement cases, according to Envision IP. The social network acquired about 750 patents from IBM and another 650 from Microsoft Corp. prior to its IPO, Envision IP said in a Sept. 13 note. While LinkedIn Corp. (LNKD) , the professional-networking website, and Zynga Inc. (ZNGA) , maker of the online social game “FarmVille,” both went public with two or fewer patents, they were each profitable before their IPOs. Twitter’s net loss widened to $133.9 million in the first nine months of this year. Twitter has been named in more than a dozen patent-infringement lawsuits, according to data compiled by Bloomberg. So far, it has successfully fended off the cases. In August, Twitter won a U.S. appeals court ruling that it didn’t infringe a patent owned by Eaton Corp.’s Cooper Notification for a mass messaging system. In April 2012, it won a jury verdict that it didn’t infringe patents owned by closely held VS Technologies for a way to build virtual communities. TechRadium Inc., a closely held company that provides a system for emergency response services, sued in 2009 after municipalities said they were opting for Twitter’s system. The two sides settled in December 2010, according to court records. Patents Pending Twitter may have access to eight more patents through its recent acquisitions of TweetDeck, Bluefin Labs and Dasient, though these patents have yet to be legally assigned to the company, according to Envision IP’s research note. Twitter also said in the regulatory filing that it has about 95 patent applications pending in the U.S. and abroad. The company’s lack of offensive litigation could cut down on expenses. Each patent lawsuit can cost as much as $5.5 million, depending on the size of IP at risk, according to a 2013 study by the American Intellectual Property Law Association. “It does help the company to reduce the litigation costs to reduce patents,” said the University of Michigan ’s Adriaens. “You need to have enough to project confidence to investors in terms of what you have in the way of intellectual property.” To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net |
2024-09-17 | Bloomberg | Obama’s Short-Run Fixes Neglect Long-Term Reform | Should voters blame President Barack Obama for America’s current economic malaise? The Mitt Romney campaign, hard as it tries, will find it difficult to convince moderates that Obama completely mishandled the short-term stimulus. Their better argument is that the president focused too much on the immediate crisis, and did too little for the future. That future is already upon us. Obama took office in 2009, in the middle of an economic crisis he didn’t create. At worst, he was only one of many members of Congress who failed to support a 2005 bill to reform those benighted mortgage behemoths: Fannie Mae and Freddie Mac. As president, he has faced constant headwinds, most recently from Europe , but he has chosen to respond to these troubles with short-run fixes that missed opportunities to carry out more lasting reforms. The automotive-industry crisis illustrates the conflict between short- and long-term objectives. When General Motors Co. (GM) and Chrysler Group LLC were in a freefall, Obama chose a bailout, a solution that probably saved thousands of jobs and stopped a bad situation from getting worse. Bailouts come at a high cost, however, because the promise of federal largess discourages painful restructuring and corporate breakups that can create nimbler, more competitive companies. The short-run answer isn’t always wrong, and the bailout may have been better than any alternative. But the president should have ensured that industry and labor unions understood this was a one-time, unfortunate event. Big Commitment Instead, he announced that “I believe the nation that invented the automobile cannot walk away from it,” which sounds like an open-ended commitment (as well as demonstrating ignorance about the German origins of the car powered by the internal-combustion engine). More generally, it is hard to argue that the stimulus package -- $772 billion as of Sept. 12 -- was too large given the depths of the recession. But it is fair to claim that the administration failed to couple short-term palliatives with a more sustainable, long-range economic plan. The American Recovery and Reinvestment Act had four important elements: significant tax cuts, especially in the payroll tax ; big increases in entitlements, particularly unemployment-insurance extensions; grants to states, which primarily went for Medicaid and education assistance ; and direct government spending , mainly for transportation and infrastructure. Some of these initiatives were sensible, others were less so, but all dealt with near-term exigencies. The tax cuts were generally sound and supported by Republicans and Democrats. Reducing the payroll tax and expanding the earned-income tax credit put money in people’s pockets, and increased the incentive to work. Even so, Obama missed a chance to show more commitment to fiscal rectitude for the long haul. He could have insisted that the younger workers who benefited from lower payroll taxes cover the cost of those cuts by accepting a slightly higher retirement age for Social Security. Other tax breaks, such as the first-time-homebuyer tax credit, which was heartily supported by Republicans, created benefits so short-lived as to be positively ephemeral. The credit generated only a temporary increase in housing prices from May 2009 to May 2010; they began declining again when the incentive was phased out in the summer of 2010. Delaying the housing market’s transition to a new, lower plateau by a year seems like a small return for $10.4 billion in lost revenue. As for entitlements, we spent $61 billion on extra unemployment insurance, expanding the weeks that the jobless could receive benefits from 26 to 99. In addition, spending on food stamps ballooned from $30 billion to $72 billion from 2007 to 2011, as benefits were made more generous and restrictions on receiving aid were lifted. Discouraging Work These entitlement programs enabled people to spend, which may have helped the economy. More important, they assisted needy Americans. But extending the duration of unemployment insurance also created a strong incentive for people to stay out of work. A famous paper by the economist Bruce Meyer demonstrated that people work less when benefits rise and that the unemployed go back to work right before their unemployment-insurance benefits end. Food-stamp payments decrease by 30 cents with every extra dollar earned, which discourages people from trying to make more money. Unemployment “hysteresis” can set in when people spend serious time out of the workforce -- as some Obama administration officials recognize -- which makes it dangerous to pay people not to work. The relief could have been combined with incentives to reduce prolonged joblessness. The administration might have considered one-time lump-sum payments to those affected, instead of limiting the aid to continued unemployment, which provides almost two years of financial incentives not to work. The third leg of the stimulus act’s four-legged stool was aid to states: $50 billion for education and $89 billion for Medicaid grants. Because states, unlike the federal government, have to balance their budgets during economic declines, the aid from Washington reduced their need to lower spending and raise taxes. But in a better world, states would have rainy-day funds, following the biblical Joseph’s advice of accumulating assets during good times. This would mean service levels could be maintained during temporary recessions. The Obama administration could have moved states in that direction, by linking assistance to a requirement that they commit to saving more during booms. The least defensible part of the stimulus package was the direct federal spending , $66 billion of which predominantly went toward transportation and infrastructure. It is impossible to build public works both quickly and wisely, meaning they are terrible candidates for a short-term boost to the economy. Useless Projects These projects are often high-tech operations, employing a few skilled engineers rather than the masses of high-school dropouts. Moreover, the government has an unfortunate knack for picking politically motivated, foolish projects, from Detroit ’s People Mover monorail to high-speed rail outside the Northeast corridor. You would think Republicans would squawk about infrastructure spending. But the party’s platform bizarrely complains in the “the vaunted stimulus package, less than 6 percent of the funds went to transportation.” Spending any general tax revenue on projects such as roads is a mistake, as fiscal purists going back to Adam Smith have argued. Highways should be funded by user fees, such as tolls and gas taxes. By increasing the use of general tax revenue for these purposes, Obama set a bad precedent, which is reflected in the recent highway bill that directs $18.8 billion to subsidize drivers in low-density states. A better path would have been to push for public-private partnerships that would build today, but be financed by future user fees. To be fair, the president has pushed some far-reaching reforms, notably the Race to the Top program, which sets higher standards for education and invests in human capital, the nation’s most important long-term resource. His mistake was that he let health care, not education, dominate his first term. The recession did call for a short-term stimulus, perhaps even a larger one than the U.S. received, but long-run growth requires fiscal stability, robust corporate and individual incentives, and limited regulation. Luckily for Obama, and unfortunately for the country, the Republicans have yet to show that they have the wisdom and character to be better long-term stewards of the economy. They have squandered much time and now have less than two months to make that case. ( Edward Glaeser , an economics professor at Harvard University , is a Bloomberg View columnist. He is the author of “Triumph of the City.” The opinions expressed are his own.) Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View editorials, columns and op-ed articles. Today’s highlights: the editors on how Congress has let companies shortchange pension funds and on the Obama administration’s trade dispute with China ; Adam Minter on China’s anti-Japanese riots ; Ramesh Ponnuru on the makers versus takers election ; Shikha Dalmia on why immigrants can’t save U.S. cities by themselves; Harvey S. Rosen on economic growth from Romney’s tax-reform plan. To contact the writer of this article: Edward Glaeser at eglaeser@harvard.edu. To contact the editor responsible for this article: Katy Roberts at kroberts29@bloomberg.net . |
2024-01-16 | Bloomberg | Goldman Sachs Mulls Selling Stake in Reinsurance Business | Goldman Sachs Group Inc. (GS) said it’s weighing whether to sell a stake in its reinsurance unit, which generated $1.08 billion of revenue last year. The business may be “better held in other people’s hands and we can be a minority owner” after global capital rules take effect, Harvey M. Schwartz, who is set to become chief financial officer this month, said today on a conference call after New York-based Goldman Sachs reported fourth-quarter results. It was the first time the bank disclosed the contribution of its Goldman Sachs Reinsurance Group. Reinsurance revenue climbed 23 percent last year from 2011 and accounted for 13 percent of the firm’s $8.21 billion of equities revenue. Goldman Sachs is in talks to sell a majority stake in the business in a deal that would value the unit at about $1.1 billion, Insurance Insider reported yesterday. David Wells , a company spokesman, declined to comment on the report. The division has a global property and casualty reinsurance business as well as life and annuity reinsurance operations primarily in the U.S. Goldman Sachs agreed in March to buy Ariel Holdings Ltd.’s Bermuda-based insurance and reinsurance businesses to expand property and casualty coverage. Increased reserves in the reinsurance unit added to non- compensation expenses, the firm said today without providing figures. To contact the reporters on this story: Christine Harper in New York at charper@bloomberg.net ; Michael J. Moore in New York at mmoore55@bloomberg.net To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net |
2024-08-14 | Bloomberg | Retirees in Enemy Territory Go Door-to-Door on Obamacare | Republican governors seeking to make their states enemy territory for Obamacare are facing a counteroffensive. Among the vanguard: two 74-year-old retirees walking the streets of working-class New Jersey. Margot Lee and Claude Cesard recently went door-to-door to pitch the health law’s benefits. They’re among thousands of supporters mobilized by the nonprofit group Enroll America to encourage the uninsured to sign up for the Affordable Care Act’s new health plans, one household at a time. The campaign is relying on tactics honed in Obama’s election victories to promote the law in states where leaders such as New Jersey Governor Chris Christie have shown little support. Low enrollment early on could deal the act a serious blow, raising costs for consumers, bolstering Republican attacks and deepening public skepticism. Success could smooth its path into the future. “It’s a cause we believe in,” said Lee, a retired attorney, as she canvassed homes last month in Englewood, New Jersey, five miles west of New York City. “Health care in this country is a mess, and this is a step in the right direction.” Lee got her start in political activism in 1948 at age 10, helping her grandmother hand out fliers for Harry Truman’s election. She registered voters for Obama in 2008 and 2012, and felt compelled to act this year after seeing relatives struggle without insurance, she said. It’s her job to help counter “the big lie” being pushed by the law’s critics, Lee said. Unfavorable Surveys It won’t be an easy task. In June, the nonprofit Kaiser Family Foundation found 43 percent of people had an unfavorable view of the law, compared with 35 percent in support. An April survey by the group, which studies health-care policy, found 40 percent weren’t even sure the measure was still in effect “You can’t just turn on the exchanges Oct. 1 and expect people to show up,” Thomas Buchmueller, a University of Michigan health economist, said in a telephone interview. “For a lot of people, it’s just not on their radar screen.” Enrollment is scheduled to begin Oct. 1 through new call centers and online exchanges created by the act. As in an election, turnout will be crucial. The Obama administration has estimated about 40 percent of the new enrollees need to be young and healthy, to offset an older, sicker population expected to flood into the market. Without that balance, premiums may soar. 10 States Enroll America is concentrating its efforts on 10 states, including Texas , Florida and New Jersey, many of them with elected officials who’ve shown little interest in promoting the law. The Washington-based group, led by a former Obama campaign field director, has organized 3,000 volunteers so far. It’s working with local partners, from churches to health clinics to barbershops, to advance the message. The goal is to contact potential enrollees at least a half-dozen times, said Mimi Garcia, the group’s director in Texas. “It might be somebody on their doorstep,” Garcia said in a telephone interview. “And then they go to church, and their pastor is talking about it. There’s a table with information afterwards at the Sunday social, and then they’re going to CVS and there’s info about it at the pharmacy. It’s all of these different messages that are going to make an impact.” The effort, like Obama’s political campaigns, is driven by target lists culled from opinion surveys and carefully mined consumer data. In New Jersey, Christie has vetoed bills seeking to set up a state insurance exchange. That’s put the state among 27 that have refused to run their own markets, instead leaving the work to the Obama administration and its allies. Pitching Englewood Lee and Cesard took the pitch to Englewood recently, knocking on doors in a neighborhood of converted bungalows and aging Colonials. They carried maps with red dots showing where the uninsured lived. Color-coded charts explained the law’s new insurance subsidies for consumers. Their script from Enroll America didn’t mention “Obamacare” or the “Affordable Care Act,” potential red flags in the political war over the health-care overhaul. Instead, it stressed the “new health coverage options that will make it easier to afford quality health insurance.” Lee and Cesard both get their health care through Medicare, the U.S.-funded program for the elderly. Cesard, a retired engineer, said the kind of security he gets from the U.S. plan seems to be drifting away for many Americans. “I have a plan that works fine for me, but that’s not the case for everyone,” he said. “I’m concerned for the younger people, for my sons and grandsons.” Unanswered Doors The pair mostly knocked and found no answers on a sunny Saturday afternoon. Those who did come to the door mirrored the national conversation, offering a mix of confusion, contempt and hope for the law. Fernando Perez, a construction worker, told the pair his insurer had raised the copay for a medicine he needed by tenfold, to $200. He blamed Obamacare. Insurance is “expensive to begin with, and now it’s going to cost even more,” he said afterwards, in an interview with a reporter who accompanied the volunteers. “If you need to go out and sell it and have a campaign,” he said, “it can’t be that good.” A few doors away, the canvassers found more support from Diego Arenas, an uninsured truck driver who said he’d been without coverage for “many years.” Talking across a fence decorated by a tumble of pink roses, Arenas, 50, said he’d suffered with a sore shoulder for more than a year because he couldn’t afford a health plan. When he finally went to a hospital, he left with a Tylenol and a bill for $3,200, he said. ‘Something Good’ “Every time I need to go to the doctor, I pay $800, $700,” he said. The law sounded like “something good for people in the lower-middle class.” He smiled politely at the older pair as they handed him a brochure. “We don’t want everything from the government,” Arenas said. “But a little help, especially in this economy, I think it’s a good idea.” Aida Cortez, 44, said she, her husband and two young daughters had lost their coverage at the start of the year because of “paperwork problems.” Her solution has been to “take better care of myself, exercise more, eat right,” she said. Still, she worried about her children, she said. While the health law sounded promising, she hadn’t kept up on the details, Cortez told Lee. Would it be an HMO, or health maintenance organization, the kind of insurance plan that keeps tight reins on the doctors members can visit? One Option That’d be one option, Lee told her. The law’s tax subsidies, she said, could offer help in affording the plans. Would Obamacare cover everybody in the house? “It’s for everyone in America,” Lee said. Lee and Cesard departed, moving slowly in the midday heat and humidity. After two hours, they’d knocked on more than a dozen unanswered doors, found one skeptic, a few supporters and several people, like Cortez, who were unsure about the law’s provisions or confused about its potential effects. Lee called it a success. “Anytime you can talk to people who don’t know about the law and give them some information, that’s a success,” she said. “This is just the first step. These people, we’ll be contacting them again.” To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net |
2024-06-11 | Bloomberg | Ex-Goldman Director Gupta Won’t Testify at Trial, Lawyer | Rajat Gupta , the former Goldman Sachs Group Inc. (GS) director accused of passing tips to Galleon Group LLC co-founder Raj Rajaratnam, will remain silent as his insider-trading trial enters its final week, his lawyer told the judge. Gary Naftalis , who said in court June 8 that it was “highly likely” Gupta would testify in what will be the trial’s final week, told U.S. District Judge Jed Rakoff in a letter dated yesterday that Gupta wouldn’t be a witness. “We have spent the last day reviewing what we believe we need to present in the defense case,” Naftalis said in the letter. “After substantial consideration, we have determined that Mr. Gupta will not be a witness on his own behalf in the defense case. We wanted to alert the court and the government of this decision as soon as it had been made.” Gupta, who ran McKinsey & Co. from 1994 to 2003, is accused of giving Rajaratnam inside information about Goldman Sachs and Procter & Gamble Co. (PG) , where Gupta was also a director. Tips Gupta allegedly passed to Rajaratnam involve Goldman Sachs earnings in the first quarter of 2007 and fourth quarter of 2008. Another involves a $5 billion Berkshire Hathaway Inc. (BRK/A) investment in New York-based Goldman Sachs on Sept. 23, 2008. Prosecutors also say Gupta told Rajaratnam that Cincinnati- based P&G planned to sell its Folgers Coffee unit to J.M. Smucker Co. Gupta has pleaded not guilty to one count of conspiracy and five counts of securities fraud, which carries a maximum term of 20 years in prison. Naftalis declined to comment on the letter. Ellen Davis , a spokeswoman for U.S. Attorney Preet Bharara in Manhattan, also declined to comment. ‘Hundred Reasons’ “There could be a hundred reasons Gary would have said one thing on Friday and changed his mind,” Roland Riopelle, a former federal prosecutor in New York , said in a phone interview. Now a white-collar defense lawyer, Riopelle represented David Plate , a former trader at Schottenfeld Group LLC who pleaded guilty and testified at the trial of Galleon Group trader Zvi Goffer. If Gupta were to take the stand, he would face cross- examination by Assistant U.S. Attorney Reed Brodsky , who is experienced at questioning accused insider traders. In 2010, Brodsky spent parts of two days cross-examining Joseph Contorinis, a former Jefferies Paragon Fund money manager who was subsequently convicted at trial. Contorinis was sentenced to six years on prison, while prosecutors had asked for a lengthier term because they said he lied on the witness stand. “There’s really no way to tell whether that was some kind of faked arch tactic, that if you fail, the prosecutor, Reed Brodsky, would spend all weekend working on his cross- examination of Rajat Gupta rather than his summation,” Riopelle said. A defendant taking the stand often allows prosecutors the chance to reprise their best evidence, he said. Talking to Jury “A lot of the time the very successful corporate types want to testify because they’ve been talking people into doing things their entire careers, so they think they can do it,” he said. “But talking to a jury is much different. The smart money was betting against his taking the stand.” A defendant taking the stand is a risk, said Gerald Shargel , a veteran criminal defense lawyer in New York who represented Marc Dreier , the New York law firm founder who pleaded guilty to federal fraud charges. “The conventional wisdom is that if you feel comfortable about the weaknesses in the government’s case you don’t have your client take the stand,” Shargel said. “But if you think there are points to be explained in the case, you may make that decision and put them on.” Shargel said he defended a client accused of securities fraud and bribery who testified in his own defense and was acquitted after he explained statements that were recorded. ‘Judgment Call’ “There have been cases lost on the defendant’s testimony and I’ve seen cases that result in acquittal based on a defendant’s testimony,” Shargel said. “It’s a case-by-case judgment call.” Before dismissing jurors on June 8 for the weekend, Rakoff told them that their deliberations may begin as early as June 13. The trial began May 21. After the jury left, Rakoff pressed defense lawyers about their lineup of witnesses, including whether Gupta would testify. “I can say that it’s highly likely that my client will testify,” Naftalis responded. Witness Lineup Rakoff told defense lawyers that they would have to limit their character witnesses to six, instead of the dozen which Naftalis had sought to put on the stand. The judge said prosecutors would need the weekend to prepare for testimony by Gupta. Naftalis responded that he would reach out to prosecutors if Gupta decided he wouldn’t testify. The government rested its case against Gupta on June 8 after Goldman Sachs Chief Executive Officer Lloyd Blankfein completed his testimony. Blankfein, under cross-examination from Naftalis, acknowledged that senior firm executives had briefed outside analysts in July 2008 on the likelihood that Goldman Sachs would acquire a bank. The defense brought out the testimony to counter a prosecution claim that Rajaratnam learned about the bank’s acquisition plans from Gupta. Disclosed Information “Items that your senior management disclose to analysts are no longer confidential?” asked Naftalis. “Yes,” Blankfein responded. Naftalis also attacked an allegation that Gupta leaked tips on Oct. 23, 2008, about Goldman Sachs’s unprecedented losses after Gupta learned of them at a meeting that afternoon. Through questioning by Naftalis, Blankfein testified that board members had probably been briefed about losses as early as Oct. 13. Naftalis confronted Blankfein with a news article based on unidentified sources from the morning of Oct. 23 disclosing Goldman’s plans, as-yet unannounced, to cut 10 percent of its staff. The Goldman Sachs CEO didn’t recall the news story or the voice-mail he distributed to the firm’s 32,500 employees after the report came out. Naftalis had Blankfein read part of the transcript of the voice-mail, including the sentence, “We regret that many of you heard of this decision from news accounts.” Buffett Investment Other Goldman Sachs executives who testified for prosecutors included director William George and former vice chairman of investment banking Byron Trott , the architect of the $5 billion investment by Warren Buffett ’s Berkshire Hathaway. Juries heard testimony June 8 from defense witnesses, Ajit Jain , Berkshire Hathaway’s reinsurance chief and a close friend of Gupta’s, and Richard Feachem, former executive director of the Global Fund to Fight AIDS, Tuberculosis & Malaria. Jain, whose May 27 testimony was videotaped and played for the jury because of a scheduling conflict, said he spoke to Gupta about Rajaratnam on Jan. 12, 2009, when both men met for lunch in Stamford, Connecticut. “He told me, as best I can remember, that he had a 10 million investment with Rajaratnam in some venture and he had been gypped, swindled or cheated by Raj,” Jain said. “He lost his entire investment with Mr. Rajaratnam.” “So it wasn’t just an issue of a bad investment?” Naftalis asked. “Right,” Jain said. Falling Out Jain’s testimony supports the defense’s contention that Gupta wouldn’t have tipped Rajaratnam because the fund manager and the defendant had a falling out after Rajaratnam lost Gupta’s entire $10 million investment. Jain’s recorded testimony is scheduled to continue today. Rajaratnam was convicted of insider trading last year and is serving an 11-year prison sentence. Unlike Rajaratnam’s trial, in which prosecutors played recordings of the defendant in wiretapped phone calls, the Gupta case is built on circumstantial evidence, including records of trades, mobile- phone call logs and business deals. Blankfein testified that he briefed his board over the phone on the Buffett investment on Sept. 23, 2008, beginning at 3:15 p.m. Within a minute after the call concluded at 3:53 p.m., Rajaratnam answered a call from a McKinsey conference room being used by Gupta, according to phone records and witness testimony. Call, Shares Former Galleon trader Ananth Muniyappa testified Rajaratnam got off a call at that time and hurriedly told him to buy Goldman Sachs shares. Galleon bought 267,000 shares. Prosecutors played a wiretapped recording of a Rajaratnam phone call from the next day. “I got a call at 3:58, right?” Rajaratnam could be heard telling trader Ian Horowitz. “Saying something good might happen to Goldman.” Michael Cardillo, a former Galleon portfolio manager who pleaded guilty and is cooperating with the government, testified that he traded on P&G stock in 2009 after learning that Rajaratnam claimed to have a “guy” on the consumer-product company’s board. The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York ( Manhattan ). To contact the reporters on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net ; David Glovin in New York at dglovin@bloomberg.net To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net |
2024-11-01 | Bloomberg | Hartford Reports Third-Quarter Profit as Focus Narrows | Hartford Financial Services Group Inc. (HIG) , the insurer divesting life operations to focus on property-casualty coverage, said third-quarter profit rose as claims from storms fell. Net income rose to $401 million, or 83 cents a share, from $60 million, or 11 cents, a year earlier, the Hartford, Connecticut-based company said today in a statement. Excluding some investment results, profit was 78 cents a share, missing the 83-cent average estimate of 14 analysts surveyed by Bloomberg. Chief Executive Officer Liam McGee reached deals this year to sell Hartford’s broker-dealer, retirement-plans business, a life operation and individual-annuities distribution unit after pressure from John Paulson to simplify the company. Paulson, whose hedge fund is among Hartford’s largest shareholder s, urged McGee in February to split property-casualty operations, such as auto and commercial coverage, from life insurance. “The company really is making progress towards property and casualty,” Randy Binner , an analyst at FBR Capital Markets, said in an interview before results were announced. He rates Hartford outperform. The insurer joined rivals Travelers Cos. and Chubb Corp. in benefiting from reduced storm costs in the third quarter from a year earlier, when Hurricane Irene lashed the U.S. East Coast. Catastrophes cost Hartford half a cent for every premium dollar at Hartford’s commercial property-casualty business, compared with 6.1 cents per premium dollar a year earlier. Sandy Impact Claims from Sandy, the Atlantic superstorm that battered the East Coast this week, will affect results in the current period. Property-casualty insurers have been lifting prices for coverage as low interest rates put pressure on income from bond portfolios and natural disasters add to claims costs. Hartford raised standard commercial rates 8 percent in the quarter for renewing customers and 4 percent and 6 percent for personal auto and home policies, respectively. “We had lower catastrophes in the third quarter of 2012 than in the third quarter of 2011, which contributed to some of our more normal performance,” McGee said in an interview after results were announced. “But, in addition, we benefited from strong pricing trends.” Accounting Costs Earnings also reflected lower accounting costs in the company’s wealth-management division. Life insurers guarantee minimum returns for some clients, and adjust profit assumptions when investment returns don’t meet the company’s targets. McGee, 58, said in September that the divestitures and narrower focus will give the insurer more flexibility in returning capital to shareholders. The firm’s book value, a measure of assets minus liabilities, may make share buybacks among the best uses of capital, he said in a Sept. 27 interview in New York. “The businesses that we’re staying in have generated a substantial amount of capital,” McGee said. “The businesses that we’re getting out of consume virtually all of that capital. By selling and shutting down the businesses, we’re eliminating that consumption of capital.” Hartford’s book value rose to $48.13 a share from $45.59 at the end of June. Hartford advanced 1 percent to $21.92 at 4:03 p.m. in New York before the earnings announcement. Costs related to the insurer’s decision to stop selling new individual annuities and the divestitures led to $34 million in expenses in the quarter. To contact the reporters on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net ; Zachary Tracer in New York at ztracer1@bloomberg.net To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net |
2024-04-15 | Bloomberg | Emerging-Market Losses Break From Global Stock Gains: Currencies | For only the third time since 2001, emerging-market currencies are weakening as global stocks rise, revealing doubts about the ability of economies from South Africa to South Korea to reverse a slowdown. A group of 20 developing-nation currencies lost an average of 0.3 percent this year, including losses of more than 5 percent for the rand and won, while the MSCI World Index of equities advanced 8.3 percent. The 60-day correlation between the group and the stock index fell this month to the lowest since October 2008, data compiled by Bloomberg show. Currencies that typically benefit most from an increase in investors’ appetite for risk are falling out of favor as emerging-market nations struggle to boost growth. Developing- country economies will expand at about the slowest pace in a decade relative to advanced nations, and their current-account surpluses will shrink to the least since 2001 as export markets contract, according to the International Monetary Fund. “The model of global growth has been broken,” Stephen Jen, the managing partner at SLJ Macro Partners LLP in London and the former head of currency strategy at Morgan Stanley, said in a phone interview. “Those countries with questionable fundamentals in emerging markets are exposed, one by one, by the deceleration. They are starting to feel the pain.” Won, Rand The won sank to 1,144.82 per dollar on April 9 and Taiwan’s dollar touched NT$30.058, their weakest levels in more than eight months. The rand lost 6.5 percent this year to 9.0667 per dollar. The Hungarian forint’s 1 percent drop versus the euro this year leaves it 10 percent weaker since April 2011. The won pared that decline today, climbing the most in more than two months after the U.S. agreed to work with China , Japan and South Korea to try and draw North Korea back into nuclear talks. The currency strengthened as much as 0.9 percent to 1,119.38 per dollar, data compiled by Bloomberg show. Correlation between emerging-market currencies and the global stock index fell to 0.57 on Feb. 11, the lowest in more than four years, before ending last week at 0.61, according to data compiled by Bloomberg. A reading of 1 means they move in lockstep, while minus 1 means they move in opposite directions. The only other periods since 2001 when emerging-market currencies fell during a stock rally were in the final quarter of 2011, when the MSCI World Index (MXWO) climbed 7.1 percent, and in the last three months of 2010, when the gauge rose 8.6 percent. Hedge Exposure JPMorgan Chase & Co. recommended March 25 that its clients hedge the currency exposure in emerging-market local-currency bonds for the first time since September. Analysts including New York-based Holly Huffman on April 9 cut their forecasts for local bond returns this year to as low as 6 percent, from 8 percent, citing currency weakness. Credit Suisse Group AG lowered its estimate for Asian currencies on April 8, saying the won will fall 6 percent in 12 months. The performance is mirrored in other assets. The MSCI Emerging Markets Index (MXEF) of stocks has lost 4.3 percent this year, compared with an 11.4 percent gain in the Standard & Poor’s 500 Index. Since the end of 2009, emerging-market stocks returned 3 percent, versus 42 percent for the S&P. “People are a bit disappointed with emerging markets,” Bhanu Baweja , a strategist at UBS AG in London, said in a phone interview from London. “What has changed is that your growth trend is failing. That’s a big problem.” On average, developing countries ’ exports will rise 5.6 percent this year, compared with average growth of 10.8 percent in the five years through 2007, according to IMF estimates. U.S. Boost The sovereign-debt crisis in the euro region is hurting emerging economies, while the recovery in the U.S. is mostly boosting other developed nations because it’s concentrated in sectors such as housing and autos, said Baweja. Developing countries will expand 5.5 percent this year, compared with 1.4 percent for advanced economies, the IMF forecast in January. The difference between the two groups is close to the smallest since 2002. In countries such as Brazil and India, credit-fueled consumption growth is hitting a wall after current-account deficits widened to the most since at least 2002, analysts at Goldman Sachs Group AG wrote in an April 4 report. China’s exports rose 10 percent in March from a year earlier, the government said on April 10, trailing economists’ forecasts for the first time in four months. Brazil’s retail sales declined 0.2 percent in February from a year earlier, the first annual drop in a decade. Petering Out Industrial output and manufacturing data suggest that the economic rebound starting in late 2012 is petering out, Roger Bootle , the managing director at Capital Economics Ltd. in London, wrote in an April 10 report. Emerging-market nations’ economic activity fell short of economists’ forecasts by the most since July, according to data compiled by Citigroup Inc. BHP Billiton Ltd. (BHP) , the world’s biggest mining company, sees growth in China “trending down” toward 6 percent, Chief Financial Officer Graham Kerr said at the Bloomberg Economic Summit in Sydney on April 10. China is the world’s second-largest economy and the Melbourne-based miner’s biggest customer, and its slowdown represents the main risk to the company’s prospects, Kerr said. China grew 7.7 percent in the first quarter from a year earlier, the National Bureau of Statistics in Beijing said today, after expanding an average 11.6 percent in the decade through 2011. “They cannot rely on the levered-up, developed-market consumers anymore,” said Rashique Rahman, an emerging-market strategist at Morgan Stanley in New York. “That source of growth is gone. Fundamentals are just not as supportive for emerging markets” as they were 10 years ago. Recouping Losses Higher-yielding currencies recouped some of their losses last week amid speculation Japanese pension funds and insurance companies will buy emerging-market debt to boost returns. The forint, Polish zloty and Brazilian real gained at least 2 percent and the rand climbed more than 1 percent since April 4, when the Bank of Japan (8301) said it will boost purchases of Japanese government bonds. The next day, yields on the nation’s 30-year notes fell to as low as 1.04 percent. Citigroup estimates Mexico may attract $20 billion of inflows from Japanese investors, pushing the peso through 12 per dollar for the first time since August 2011. The peso strengthened to 12.0194 last week, from 12.8533 on Dec. 31. ‘Game Changer’ “The recent policy signals from the BOJ have been a game changer for risky assets, including for global emerging-market currencies,” Benoit Anne , head of EM strategy at Societe Generale SA in London, said in a client note on April 11. “The market backdrop has changed dramatically over the past few days. Some differentiation continues to be key, of course, but the important development is the strong rejuvenation of the hunt for yields as a major market-driving theme.” The rally in higher-yielding, developing-nation currencies will be short-lived as rising wages make their exports less competitive, said Morgan Stanley’s Rahman. Adjusted for inflation, emerging-market currencies are 6 percent above levels prior to the 2008 global banking crisis, he estimates. “Emerging markets are graduating in terms of their income- per-capita profile,” said Rahman. “Growth is slowing as the result of that because there’s less catching-up to do.” Rahman said he favors currencies of nations that are pushing through reforms to improve productivity, such as Mexico, Russia and India. Telecoms Reforms Mexico’s peso has strengthened 5.9 percent this year, the most among 31 major currencies, as President Enrique Pena Nieto carries out reforms in the energy and telecommunications markets to foster investment and growth. From 2003 to 2007, 22 of 25 emerging-market currencies rallied, with the real, won, forint and Philippine peso gaining at least 20 percent against the dollar as U.S. and Europe consumers bought their cheaper shoes, textiles and toys. Since then, only nine emerging currencies advanced against the greenback, data compiled by Bloomberg show. “When the world was imbalanced, emerging markets fed into the imbalance and benefited from it,” said UBS’s Baweja. “As the world rebalances, the emerging market is in a bad place. There isn’t a plan B yet. It’s not surprising emerging-market currencies are not performing.” To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net To contact the editor responsible for this story: Laura Zelenko at lzelenko@bloomberg.net |
2024-02-15 | Bloomberg | Syncora Guarantee Claims Fraud by EMC in Mortgage-Backed Securities Suit | Syncora (SYCRF) Guarantee Inc. sued JPMorgan Chase & Co.’s EMC Mortgage unit over mortgage-backed securities, alleging fraud and breach of contract in a lawsuit filed in New York state court. The suit was brought in connection with a transaction known as SACO I Trust 2006-1, which involved the securitization of residential mortgage loans with an aggregate principal balance of more than $310 million, Syncora said in the complaint. That transaction served as collateral for the issuance of about $303 million in securities. EMC Mortgage was a unit of Bear Stearns Cos. until the investment bank was bought by JPMorgan in 2008. Bear Stearns and EMC obtained a financial-guaranty insurance policy from New York-based bond insurer Syncora “to enhance the marketability of the securities and their return on the transaction,” according to the lawsuit. Bear Stearns made “materially false and misleading representations to induce Syncora to insure the transaction,” and didn’t conduct “extensive due diligence” as it had promised, lawyers for the bond insurer said in the lawsuit. The transaction had experienced cumulative losses of $96.7 million as of Sept. 30, which has resulted in Syncora making more than $51.9 million in claim payments, the complaint says. Jennifer Zuccarelli , a spokeswoman for New York-based JPMorgan Chase, declined to comment on the lawsuit in an e-mail. The case is Syncora Guarantee Inc. v. EMC Mortgage LLC, 650420/2012, New York State Supreme Court ( Manhattan .) To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net |
2024-08-26 | Bloomberg | Detroit Mediator Orders Syncora Into Swaps Accord Talks | Detroit ’s lead bankruptcy mediator ordered the city and bond-insurer Syncora Guarantee Inc. into talks in their dispute over a proposed $253 million swaps settlement. The city is seeking to buy its way out of an interest-rate swaps contract to save about $50 million a year, a proposal that Syncora asked a bankruptcy judge to reject when it comes before the court next month. U.S. District Judge Gerald Rosen in Detroit ordered Syncora, the city and swaps holders including Merrill Lynch Capital Services Inc. to meet with a bankruptcy judge from Oregon to try to settle their differences. After Detroit filed the biggest-ever U.S. municipal bankruptcy last month, the city’s emergency manager, Kevyn Orr, asked the judge overseeing the $18 billion case to approve the settlement with Merrill Lynch and UBS AG. Syncora, which sold insurance on the swaps, opposes the settlement, claiming that ending the contract too early could hurt its economic interests. In an Aug. 23 order filed with the bankruptcy court , Rosen told participants to e-mail the mediator with “suggested ways that the mediation might resolve,” the dispute. The city, New York-based Syncora and about 20 other groups were ordered to meet with, U.S. Bankruptcy Judge Elizabeth Perris of Oregon, on Aug. 29 in Detroit. Perris has been a court-appointed mediator for three California cities that also filed bankruptcy, Vallejo, Mammoth Lakes and Stockton. Stockton remains in bankruptcy. Detroit Hearing The judge overseeing the Detroit case, U.S. Bankruptcy Judge Steven Rhodes, is to consider approving the settlement next month. That hearing will see the first major court fight over Orr’s proposal to cut city debt while in bankruptcy. Under the settlement, swap providers would be paid at least 75 percent of what they’re owed, depending on when the contract is canceled. City attorney Corinne Ball, a partner at Jones Day in New York, said in court on Aug. 21 that the discounted value of the swaps was about $190 million. That means the swaps providers are owed about $253.3 million. Retirees and many of the city’s other unsecured debtholders, with about $11.5 billion of claims, were asked to take about $2 billion, or 17 percent, under Orr’s June 14 proposal. The case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court , Eastern District of Michigan (Detroit). To contact the reporters on this story: Steven Church in Wilmington, Delaware , at schurch3@bloomberg.net. To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net . |
2024-05-02 | Bloomberg | U.S. to Delete Data on Life-Threatening Mistakes From Website | Two years ago, over objections from the hospital industry, the U.S. announced it would add data about “potentially life-threatening” mistakes made in hospitals to a website people can search to check on safety performance. Now the Centers for Medicare and Medicaid Services is planning to strip the site of the eight hospital-acquired conditions, which include infections and mismatched blood transfusions, while it comes up with a different set. The agency said it’s taking the step because some of the eight are redundant and because an advisory panel created by the 2010 Affordable Care Act recommended regulators use other gauges. The decision to pull the measures is a retreat from a commitment to transparency, according to organizations representing employers that help pay for health insurance. “We have a right to know if hospitals are making errors that are catastrophic to patients,” said Leah Binder, president of the Washington-based Leapfrog Group, whose members include General Motors Co. and Verizon Communications Inc. “What they’re saying basically is hospital claims of unfairness have more weight than consumers’ right to know.” The initial proposal CMS has made for new safety-assessment data suggests the Hospital Compare website won’t be as comprehensive as it is now, Binder said. Bill Kramer, executive director for national health policy at the Pacific Business Group on Health, said removing the data “would be a significant step backwards.” The coalition, including Wal-Mart Stores Inc. and Walt Disney Co., was among 33 business, labor and consumer organizations that argued against taking the hospital-acquired conditions, or HACs, off the site. Error Rates The debate over public reporting of hospital errors underscores the challenges regulators face in balancing patient and provider interests in an economy that spends $2.7 trillion a year on medical care, about one-third of it at hospitals. The statistics were first posted in October 2011. CMS officials have said they’ll be removed during the website’s annual update in July, according to Binder and the American Hospital Association. Binder estimated it could be two years before data from the new HACs appear on Hospital Compare. Patrick Conway, CMS’s chief medical officer and top quality-control official, declined to be interviewed and didn’t respond to written questions about the HACs’ removal, the new measures and when they might appear on the site. The hospital industry argued against adding the statistics to Hospital Compare from the beginning, contending the data, culled from Medicare billing records, aren’t precise enough and can paint inaccurate pictures. ‘Real Picture’ “Our members have long been in favor of transparency,” said Nancy Foster, vice president for quality and patient safety policy at the Washington-based American Hospital Association. “The only thing we have insisted upon is that the measures be accurate and fair, that they represent a real picture of what’s going on in an individual hospital if you’re going to put it up on a public website.” Baltimore-based CMS, which oversees the government health insurance programs that pay almost half of all U.S. medical bills, revealed it would be stripping Hospital Compare of the HACs in an Aug. 31 regulation. CMS said it was doing so in part because two of them, both involving catheter infections, are already mentioned in other sections on the site and that three more are included in composite scores in another category. New List In addition, the Measure Applications Partnership or MAP, the group created by the health-care overhaul law, recommended that CMS instead use hospital-acquired conditions endorsed by the National Quality Forum. MAP is part of the nonprofit, which advises the U.S. government and hospitals on best practices. The health-care law requires CMS to cut Medicare payments starting in October 2015 to hospitals that score in the 25 percent of worst-offenders on a list of hospital-acquired conditions, which the law leaves to regulators to define. CMS proposed on April 26 that the measures include versions of two currently on the site -- bed sores and objects left inside surgical patients’ bodies -- and others that cover accidental cuts and tears, collapsed lungs, blood clots after surgery and other post-operative complications. Two now on Hospital Compare that aren’t among those proposed by CMS are transfusions of the wrong type of blood and air embolisms, which are air bubbles that become trapped in the bloodstream. Both are known in the medical community as never- events, because they should never happen. The agency will accept comments from the public on the suggested new HACs until June 25. ‘Great Concern’ Binder said it “should be a great concern to every American” that blood transfusion and air embolism aren’t among the proposals. “We deserve to know where they happen.” Foster at the American Hospital Association said she couldn’t comment yet on the specific CMS proposals. While the trade group is concerned some might not be reliable indicators, she said, AHA experts are still studying them. The website’s current HAC data are for the period from July 1, 2009, to June 30, 2011. Hospitals are scored on incidents per 1,000 discharges, and compared to a national ranking. Regulators have emphasized curbing infections and injuries since the Institute of Medicine reported in 1999 that as many as 98,000 Americans die annually from preventable hospital mishaps. While some states track them, Hospital Compare is the only national compilation. ‘Done Right’ “It’s better to have measures that might not meet the highest level of statistical reliability than to ask your next- door neighbor,” said Dolores Mitchell, executive director of the health-care program for Massachusetts state employees, who said she was the only member of the MAP panel that opposed removing the HACs. In Los Angeles, the Ronald Reagan UCLA Medical Center has a Hospital Compare score of .079 per 1,000 discharges for air embolisms, compared to a national average of .003. After a transplant patient died in 2010 because an air bubble blocked a vein, UCLA conducted a root cause analysis and identified and put into place several changes in procedure, said Tom Rosenthal, who is chief medical officer of the UCLA Hospital System. “We have done everything we can do to reduce patient harm, and we’ve had no cases since.” Opposition to the HACs on the website doesn’t mean the industry is “trying to cover up our dirty linen,” Rosenthal said. “The public does have a right to know what’s going on at UCLA and every other hospital in the country. But it should be done right.” With assistance from Danielle Ivory in Washington. Editors: Anne Reifenberg, Gary Putka To contact the reporter on this story: Charles R. Babcock in Washington at cbabcock1@bloomberg.net To contact the editor responsible for this story: Gary Putka at gputka@bloomberg.net |
2024-05-01 | Bloomberg | RSA Starts Search to Replace Chairman Napier, Telegraph Reports | RSA Insurance Group Plc (RSA) began a search for Chairman John Napier’s replacement as part of an overhaul of the company’s board, the Sunday Telegraph reported, citing a person with knowledge of the matter it didn’t identify. The insurer hired headhunter Anna Mann to search for a new chairman and an unspecified number of non-executive directors, the London-based newspaper said. An RSA spokesman declined to comment, it said. To contact the reporter on this story: Zijing Wu in London at zwu17@bloomberg.net. To contact the editor responsible for this story: Jeff St.Onge at jstonge@bloomberg.net . |
2024-06-18 | Bloomberg | China Banking Stress May Come Faster on Cash Crunch, Fitch Says | China ’s worst cash crunch in at least seven years is an indicator of shadow lending gone awry and a banking crisis may appear earlier than expected if liquidity remains tight, according to Fitch Ratings. “We are starting to see some issues emerging” in liquidity, Charlene Chu, Fitch’s head of China financial institutions, said in an interview today with Zeb Eckert on Bloomberg Television in Hong Kong. “It will be very important over the next month or so to see how that plays out. If that doesn’t go away, some of this may be moving ahead faster and earlier than we thought.” The seven-day repurchase rate , a gauge of interbank funding availability, has averaged 6.03 percent in June, the most since the National Interbank Funding Center began compiling a weighted average in 2006. Agricultural Development Bank of China Co. scaled back the size of two bond offerings today by 31 percent as the liquidity crunch squeezes demand for the securities. Chinese finance companies are calling for the central bank to resume capital injections as the nation’s slowing growth and speculation the U.S. will rein in monetary stimulus curbs global demand for the Asian nation’s assets. Yuan positions at local financial institutions accumulated from sales of foreign exchange, an indication of capital flows into China, rose 66.9 billion yuan ($10.9 billion) in May, the central bank reported June 14. That was the smallest gain since November. Shadow Banking The tightening is “emblematic of some of the shadow banking issues coming to the fore as well as some of the tight liquidity associated with wealth management product issuance, and the crackdown on some shadow channels,” Chu said. She earlier estimated China’s total credit, including off-balance-sheet loans, swelled to 198 percent of gross domestic product in 2012 from 125 percent four years earlier, exceeding increases in the ratio before banking crises in Japan and South Korea. In Japan, the measure surged 45 percentage points from 1985 to 1990, and in South Korea, it gained 47 percentage points from 1994 to 1998, Fitch said in July 2011. “Triggers and timing is the biggest question related to China,” Chu said. “We are going to have banking sector problems. Those can manifest either in a crisis or they can manifest in slow growth.” Morgan Stanley lowered China’s 2013 economic growth estimate last week to 7.6 percent from 8.2 percent, joining banks including UBS AG and Barclays Plc in cutting projections after weaker expansion in exports, industrial output and new lending last month. Chu said that the outlook on the nation’s sovereign rating will be stable, while ratings for smaller financial institutions are under downward pressure. To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net |
2024-05-20 | Bloomberg | Tornadoes Test Alabama’s Bentley as He Begins Governorship Few Foresaw | Alabama Governor Robert Bentley was moments from going on television to warn residents about tornadoes ravaging the state when he picked up the phone in his Montgomery office. On the other end, his wife, Dianne, held up her handset to relay a broadcast of a twister with winds of almost 200 mph hitting Tuscaloosa. “I knew it was coming right towards my house there, and coming towards my children’s homes, and I had to get on television,” Bentley, 68, said in an interview in his office at the Capitol in Montgomery. “Was that tough? It was.” What may be tougher for the first-term Republican is rebuilding Alabama while balancing the budget as $1 billion in federal stimulus money disappears. On April 27, more than 50 tornados swept through the state’s northern half, turning homes to rubble heaps, making forests woodpiles and leaving 238 dead. “We cannot and we will not let these people down,” Bentley said in a May 3 address to the Legislature. “We will see Alabama is rebuilt.” Few predicted that Bentley, a dermatologist who is a deacon and Sunday school teacher at Tuscaloosa’s First Baptist Church, would be the one leading the way out of the ruins. He served eight years in the minority of the state House of Representatives , where he was known mainly for strengthening the rights of organ donors and funding a program that trains doctors serving rural Alabama. Lone Survivor “Nobody doubts his sincerity, but his whole experience prior to this was an undistinguished tenure in the state House,” said Larry Powell, a communications professor at the University of Alabama at Birmingham who is a former political consultant. “The others just sort of killed each other off and he was left standing.” Granted statehood in 1819, Alabama’s economy was dominated by cotton plantations that relied on slave labor. Birmingham, founded in 1871, became a center of iron and steel production, the “Pittsburgh of the South,” and by the 1920 was the 19th- largest city in the U.S. It is overlooked by a 56-foot statue of Vulcan, god of the forge, perched on a 124-foot pedestal. Even after the city’s industrialization, the state was controlled by white, rural interests that disenfranchised blacks who composed about half the population. In 1963, Birmingham became the focal point of the civil rights movement as protest marchers led by the Reverend Martin Luther King Jr. were attacked by police dogs and firehoses. Cotton to Cars In the past decade, Alabama has emerged as a car manufacturing hub as Honda Motor Co. , Daimler AG ’s Mercedes Benz and Hyundai Motor Co. opened plants. Transportation, trade and utilities made up 19.4 percent of the state’s nonfarm employment in 2009, second only to government, according to bond documents. While Alabama’s gross domestic product grew 45 percent from 2000 to 2009 according to Standard & Poor’s, Bentley’s first months in office were consumed by combined deficits of more than $265 million in the general fund and education budgets. He cut them by 15 percent and 3 percent, respectively, for the rest of the fiscal year that ends Sept. 30. Then, on his 100th day, more than 50 twisters decimated cities and rural towns alike. In Tuscaloosa, a tornado ripped a path a mile wide and six miles (10 kilometers) long, destroying more than 7,200 homes and businesses and killing 41. In the northern part of the state, Hackleburg was leveled. Twenty-nine of its 1,500 people were killed. Aid and Comfort Since the storms, Bentley has been on a whirlwind tour of his own, traveling to 26 counties to comfort a stunned populace. Bentley said his training, including a stint as a medical officer at Pope Air Force Base at Fort Bragg, North Carolina, during the Vietnam War, has helped him deal with emergencies. “You have to think through problems, you have to do it quickly, and you have to do it in an organized fashion,” Bentley said. One of his first acts was to pledge that the state would pay the local share of the cleanup for the first 30 days. “He’s promised all the resources of the state and he’s delivered,” said Tuscaloosa Mayor Walter Maddox , a Democrat. “Governor Bentley has been there and he’s continued to be there for us in our darkest hour.” On the evening after the tornado, National Guard troops were maintaining order and distributing food and water, as the city, without power, was shrouded in darkness, Maddox said. Moving Mountains While the city runs operations on the ground, the state has also coordinated the removal of 2 million cubic yards of debris with the Army Corps of Engineers. Bentley is pressing President Barack Obama to cover 100 percent of the clean-up costs. John Zippert, director of program operations with the Federation of Southern Cooperatives , said Bentley must be mindful of poor communities. Many residents didn’t have insurance, he said. “The real question is, what is going to be the plan to replace all of these homes that were destroyed?” said Zippert, who is based in Epes, near the Mississippi border. Bentley was born in 1943 and reared 10 miles outside Columbiana, a town of about 3,000 between Birmingham and Montgomery. His father, David, had a mobile sawmill and later hauled pulpwood, the governor said. During summers, Bentley helped his father and worked on a surveying crew to pay for college. Bentley knew when he was young that he wanted to be a doctor, “a calling,” he said. He attended the University of Alabama at Tuscaloosa, majoring in chemistry and biology. After graduating in three years, Bentley entered the University of Alabama School of Medicine in Birmingham. The Girl Knew Following his military service and his residency, Bentley moved to Tuscaloosa, where he and his wife raised four boys. When Bentley began his gubernatorial run in May 2009, there was little indication that he had a shot. About three dozen people came to hear him announce his candidacy in Montgomery. The only person convinced Bentley could win was his 13-year-old granddaughter, he said. Bentley said he took out second and third mortgages and a personal loan, used his retirement funds and tapped his life insurance policy. He loaned himself more than $2 million for the primary and general election campaigns, which has been paid back, according to Rebekah Mason, a spokeswoman. Starting out with 3 percent support in the polls, Bentley pledged not to take a salary until the state’s unemployment rate reached 5.2 percent. The rate was 9.2 percent in March, 0.4 percentage points higher than the national average. “People saw in me somebody who isn’t a politician,” said Bentley. Chosen One Bentley came in second in the Republican primary. In a runoff, he faced Bradley Byrne , a former chancellor of the two- year college system, who was endorsed by former Governor Bob Riley. Byrne’s platform of changing tenure laws and allowing charter schools was anathema to the Alabama Education Association, which represents 100,000 teachers, administrators and support workers. The AEA spent about $1 million on advertising painting Byrne as a liberal. One ad noted that he supported the teaching of evolution. Bentley defeated Byrne by almost 57,000 votes and then beat Democrat Ron Sparks in the general election, capturing 58 percent of the vote. The new governor’s term got off to a rocky start. In an inauguration day speech at Montgomery’s Dexter Avenue King Memorial Baptist Church , where King was once pastor, Bentley said that people who hadn’t accepted Jesus weren’t his brothers or sisters. He apologized after the incident drew national attention. People Are Listening “He didn’t mean to do anything wrong,” said Powell, the UAB communications professor. “When you’re in the state House you can give a speech like that and nobody notices. When you’re governor, every word is noticed.” The controversy was overtaken by Alabama’s Bentley’s biggest challenge before the storms: its finances. Bentley, who has pledged not to raise taxes, has proposed a $1.8 billion general fund budget and $5.6 billion education budget for the next fiscal year. Some agencies may face cuts as deep as 45 percent. Zippert, of the Federation of Southern Cooperatives, said it is too early to tell whether Bentley’s governorship will be successful. “He said Alabama was sick and needed a doctor,” Zippert said referring to Bentley’s campaign advertising. “He’s a dermatologist. Some of this might require brain surgery.” Robert Bentley at a glance: Born: Feb. 3, 1943, Columbiana (Age 68) Party: Republican Spouse: Dianne Children: Four sons, John Mark, Paul, Luke, Matthew; five grandchildren Education: Bachelor of Science, University of Alabama, Tuscaloosa, 1964; M.D. University of Alabama School of Medicine, 1968 Career: Founded Alabama Dermatology Associates in 1974; Alabama House of Representatives (2002-2010) Favorite drink: Sunkist soda Famous nose: Removed a precancerous growth from the proboscis of Paul “Bear” Bryant, coach of the University of Alabama football team. To contact the reporter on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net . |
2024-12-01 | Bloomberg | South Africa Medical Insurers Ask Court for Price Clarity, The Star Says | South Africa’s Board of Healthcare Funders will today ask a court to clarify a law that requires medical insurance operators to pay so-called prescribed minimum benefits “in full,” the Star said. The board said “in full” means paying for 270 medical conditions and 28 chronic illnesses at medical insurance rates and not at private tariffs charged by some healthcare providers, the Johannesburg-based newspaper reported, citing BHF spokeswoman Heidi Kruger. Since reference prices, there haven’t been tariff guidelines for the industry, the newspaper cited Kruger as saying. The Council for Medical Schemes’ interpretation of the Medical Schemes Act doesn’t provide a cap on charges and would result in higher premiums for consumers, Kruger told the Star. To contact the editor responsible for this story: Ana Monteiro at amonteiro4@bloomberg.net |
2024-06-20 | Bloomberg | RBS’s Hester Says Europe Crisis Resolution to Take Years | Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester said it may take years before Europe finds a solution to the debt crisis as economies in the region struggle to implement reforms. “At issue is the ability for some countries in Europe, particularly in southern Europe, to make themselves more competitive,” Hester, 51, said today in an interview with Bloomberg Television in Hong Kong. “In the meantime, we’re talking about pieces of sticking plaster to buy time for economic reform to bite.” World leaders told Europe to pull together to overcome the crisis and prevent further damage to the global economy after Spain’s borrowing costs jumped even as Greek election results eased concern about the first exit from the euro. RBS (RBS) shares have lost 37 percent in the past year as the turmoil outweighed Hester’s steps to repay loans, cut jobs and sell assets. The RBS chief, who took the helm at the Edinburgh-based lender in November 2008 following the U.K.’s largest bailout of a bank, said now is the “wrong moment” for the government to sell its stake as the company’s share price is “very low.” “They want to sell,” he said. “They need to wait until the crisis is past, economies are growing again.” With contagion from the debt crisis rippling through the world economy, participants at the Group of 20 summit in the beach resort of Los Cabos backed measures to spur growth and cut budgets in Europe. Euro-zone chiefs pledged to take “all necessary policy measures” to defend the currency union. Hester said the euro will probably survive the crisis. ‘Strong Reasons’ “There are very strong reasons for the euro, at least as it relates to the big countries, staying intact,” Hester said. Policy makers need to focus on restoring the health of economies in southern Europe such as Spain , rather than on supporting their financial institutions, he said. The euro pared gains, falling 0.3 percent to 99.86 yen today. The currency’s weakness comes before Spanish bond auctions tomorrow, which may cast doubt over the country’s funding capabilities. The nation is also readying a request for as much as 100 billion euros ($127 billion) for its banks. “The concentration on banks in the southern European area is a bit of a red herring,” said Hester, whose company is Britain’s biggest government-controlled bank after being rescued by the U.K. government during the 2008-2009 global crisis. “Any amount of recapitalization of banks, if the country itself is not on the right track, is a waste of time.” Borrowing Costs G-20 leaders prodded Spanish Prime Minister Mariano Rajoy to spell out the scope of his country’s bank bailout as government borrowing costs breached the 7 percent level that forced sovereign bailouts for Greece , Ireland and Portugal. In its final statement, the G-20 backed Europe’s plans to consider a more integrated banking industry with common deposit insurance , a step that Germany has resisted. With attention shifting to a summit of European Union leaders in Brussels on June 28-29, the G-20 supported EU plans for closer economic union “that lead to sustainable borrowing costs.” RBS said on May 4 it was poised to return the last of the emergency loans received in its rescue. The repayment of 164 billion pounds of emergency aid from British and American taxpayers removes an obstacle to the lender’s return to private ownership. RBS still has to exit a government program that insures its riskiest assets, start paying dividends on ordinary shares and boost the stock price. ‘Crushing Effect’ The stock trades at a level equivalent to less than half the price at which taxpayers bought an 82 percent stake for about 45.5 billion pounds. The shares have gained 21 percent this year, compared with a 1.5 percent drop in the 43-stock Bloomberg Europe 500 Banks and Financial Services index. “All share prices of banks are substantially below where they used to be,” said Hester. “That’s partly people’s worries about lack of economic growth, especially in the West, it’s partly the crushing effect that dramatic reregulation is having on bank returns.” Hester had previously been CEO of London-based British Land Co. and has had stints as chief financial officer and then chief operating officer at Abbey National Plc, following 19 years at Credit Suisse First Boston. He had been appointed deputy chairman of mortgage lender Northern Rock Plc in February 2008 after it was nationalized by the U.K. To contact the reporters on this story: Susan Li in Hong Kong at sli31@bloomberg.net ; Gavin Finch in London at gfinch@bloomberg.net To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net |
2024-05-04 | Bloomberg | RBS Damps Speculation of Immediate Sale as Aid Repaid | Royal Bank of Scotland Group Plc damped speculation of an immediate sale of the government’s stake in the bank after the lender said it’s poised to repay the last of the emergency loans received in its bailout. “There is no desire to sell at the current share price ,” Chief Executive Officer Stephen Hester told reporters as the lender posted a 4 percent increase in first-quarter operating profit today. “While I think everyone is focused on that being the desired end game, I’m not aware of anything imminent.” The repayment of 164 billion pounds ($265 billion) of emergency aid it received from the U.K. and U.S. governments by will remove an obstacle to the lender’s return to private ownership. The bank still has to exit a government program that insures its riskiest assets, start paying dividends on ordinary stock, and boost the stock price. RBS trades at less than half the level at which the taxpayer bought its 82 percent stake for about 45.5 billion pounds. “It’s in the government’s interests to wait until there’s a much higher dividend prospect in the hope that has a positive impact on the share price,” said Neil Smith , an analyst at WestLB AG in Dusseldorf who rates RBS a buy. “There’s a small probability the government may try to sell a small stake at a loss, but the likelihood of that happening looks more remote.” The shares fell 0.3 percent to 24.47 pence in London trading, for a market value of 27.1 billion pounds. The stock has jumped 24 percent this year, fueling speculation the government may sell part of its stake for less than the average 50.2 pence a share it paid for it. Gulf Talks The U.K. could start selling its stake in RBS at a loss, Jim O’Neil , chief executive officer of U.K. Financial Investments Ltd., the body that manages the government’s holding in the bank, told lawmakers on March 14. The government has also made presentations to potential investors, including Middle Eastern sovereign wealth funds, about a sale of its stake, two people familiar with the matter said in March. The talks are still at an early stage, the people said. RBS said it will resume discretionary dividend payments to preference shareholders after a European Union ban expired at the end of April. The plan will cost 350 million pounds in 2012. The Edinburgh-based bank still has to repay the government’s access share, which was created in 2009 and gives the taxpayer priority over ordinary shareholders. Ordinary shareholders may have to wait at least a year for dividends because regulators in the U.K. and the U.S. are pushing banks to bolster capital as the latest round of rules set by the Basel Committee on Banking Supervision are implemented, Hester said today. ‘Time Bomb’ “We are very clear one of the manifestations of the end state of RBS is we should be a strong dividend payer,” the 51- year-old said. “The issue is how we get there.” Hester, who has said his job is equivalent to defusing the “biggest time bomb in history,” has shrunk assets by more than 700 billion pounds and cut more than 35,000 jobs since he took over from Fred Goodwin in 2008. Operating profit rose 1.18 billion pounds in the first quarter from 1.13 billion pounds in the year earlier period, RBS said in a statement today. That beat the 917 million-pound median estimate of six analysts surveyed by Bloomberg. Loan impairments at the bank fell 32 percent in the quarter to about 1.3 billion pounds from the year-earlier period after souring bad loans at the so-called non-core unit shrank 52 percent to 499 million pounds, RBS said. ‘Enormous Progress’ “RBS has made enormous progress and they are delivering on what they said they would,” said Ian Gordon , an analyst at Investec Securities Ltd. in London. “The balance sheet metrics are very impressive.” Revenue at the securities unit slipped 18 percent to 1.73 billion pounds as income from credit markets dipped 27 percent and that from asset-backed securities dropped 31 percent. Operating profit at the bank’s consumer unit fell 7.9 percent to 477 million pounds, while operating profit at the corporate unit slid 20 percent, RBS said. The bank’s net loss increased to 1.52 billion pounds in the first quarter from 528 million pounds as the bank took a 2.5 billion pound accounting charge on fluctuations in the value of its own debt. So-called credit valuation adjustments require banks to book losses when the value of their debt rises, and gains when it declines, on the theory that a loss, or profit, would be realized were the bank to repurchase that debt. APS Exit? RBS took about 52 billion pounds from the U.S. Federal Reserve, 75 billion pounds of loans and guarantees from the U.K. Credit Guarantee Scheme and the Bank of England’s Special Liquidity Scheme and 36.6 billion pounds from the central bank’s Emergency Liquidity Scheme. The SLS was introduced at the peak of the credit crisis to allow banks to swap hard-to-trade mortgage-backed securities for government bonds while the CGS was designed to ensure short-term liquidity. All of these will be repaid by the end of the month, RBS said today. RBS still has about 120.8 billion pounds of assets covered under the government’s Asset Protection Scheme, which it intends to exit in the fourth quarter. The program, started in 2009, allows the bank to insure its most toxic loans against default in return for a fee. RBS said it has set aside 2.5 billion pounds to cover the costs of the APS. RBS followed Lloyds Banking Group Plc (LLOY) and Barclays Plc (BARC) in increasing the amount it is putting aside to compensate customers who were improperly sold payment protection insurance. The bank earmarked an additional 125 million pounds after taking an 850 million-pound charge last year. That was less than the increase of between 200 million pounds and 300 million pounds, as estimated by three analysts in a Bloomberg News survey. PPI Charge Lloyds this week took an additional 375 million-pound PPI charge after a 3.2 billion-pound hit last year while Barclays last week set aside an additional 300 million pounds for compensation after a 1 billion-pound charge last year. The insurance of payments on credit cards and mortgages, in case of illness or unemployment, was improperly sold by the biggest U.K. banks. Clients who bought the policies rarely compared prices or terms and sometimes were not covered. The lender’s loss-making Ulster Bank unit continues to face “exceedingly difficult market conditions,” RBS said in the statement. The loss decreased to 310 million pounds in the first quarter from 365 million pounds on impaired mortgages. RBS injected as much as 800 million pounds into the unit in the first quarter on top of the 10 billion pounds it has pumped in since 2008. To contact the reporter on this story: Gavin Finch in London at To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net |
2024-01-30 | Bloomberg | U.K. Stocks Fall From 2008 High on U.S. GDP | U.K. stocks fell from a 4 1/2-year high as a report showed the U.S. economy , its largest trading partner, unexpectedly contracted in the fourth quarter. Imperial Tobacco Group Plc (IMT) , Europe ’s second-biggest tobacco company, slid 4.3 percent after saying first-half profit will decline. Petrofac (PFC) Ltd. slumped 7 percent as Italian peer Saipem SpA cut its profit forecasts. Antofagasta Plc (ANTO) fell the most in 16 months after projecting increased costs. WPP Plc (WPP) climbed to a 12-year high as Jefferies Group Inc. advised investors to buy the shares. The benchmark FTSE 100 Index lost 16.08 points, or 0.3 percent, to 6,323.11 at the close in London as separate data showed the Spanish economy also contracted in the fourth quarter. The stocks gauge has still rallied 7.2 percent this month, on course for the biggest jump since October 2011. The broader FTSE All-Share Index also fell 0.3 percent today, while Ireland’s ISEQ Index slipped 0.5 percent. “Upside momentum may be hard found in the days ahead, with the poor growth figures from the U.S. and Spain today reminding the market that perhaps it isn’t the right time to be aggressively bullish,” Ishaq Siddiqi, a market analyst at ETX Capital in London, wrote in a note. “It is difficult at this point to see what would act as a catalyst for a resumption of January’s rally next month.” The number of shares changing hands in FTSE 100 (UKX) companies was 26 percent greater than the 30-day average today, according to data compiled by Bloomberg. U.S. Economy The U.S. economy, the world’s largest, shrank in the fourth quarter, restrained by the biggest plunge in defense spending in four decades and dwindling inventory growth. Gross domestic product dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, Commerce Department figures showed. The Federal Reserve will probably renew its commitment to continue buying assets into next year at a policy decision, according to a Bloomberg News survey of 44 economists. The Federal Open Market Committee concludes its two-day meeting today and will publish its statement after the close of European equity trading. In the euro area, economic confidence rose more than economists forecast in January, adding to signs that the 17- nation currency bloc may be emerging from a recession. An index of executive and consumer sentiment rose to 89.2 from a revised 87.8 in December, the European Commission in Brussels said today. Economists had forecast a reading of 88.2, according to the median of 30 estimates in a Bloomberg survey. Imperial Tobacco Imperial Tobacco lost 4.3 percent to 2,361 pence, the lowest price in almost three months. The company said first-half profit will decline because of worsening conditions in Europe and reported a smaller gain in first-quarter revenue than analysts estimated. British American Tobacco Plc (BATS) , Europe’s largest cigarette maker, slipped 0.8 percent to 3,275.5 pence. Petrofac slumped 7 percent to 1,615 pence, the biggest drop in 16 months. Saipem plunged 34 percent in Milan trading after Europe’s largest oil-service provider cut profit forecasts, stoking concern that earnings across the industry will be lower than analysts estimated. JKX Oil & Gas Plc (JKX) , an energy producer active in Ukraine and Russia, fell 5 percent to 58.88 pence, the lowest price in nine years. Antofagasta Forecasts Antofagasta sank 8.3 percent to 1,169 pence, the largest decline since September 2011, as it forecast the cost to mine a pound of copper would increase by 14 percent this year. The mining company said it sees 2013 copper output at 700,000 tons and gold output at 260,000 ounces. Rio Tinto Group slipped 0.7 percent to 3,552 pence. The second-biggest mining company is considering a temporary halt to construction at its $6.2 billion Oyu Tolgoi copper and gold project in Mongolia as the government demands a greater share of profit from the mine, two people familiar with the plans said. WPP advanced 1.3 percent to 990 pence, the highest price since September 2000. Shares of the world’s largest advertising company were raised to buy from hold at Jefferies. Phoenix Group Holdings soared 9.3 percent to 630 pence, the largest gain since June. The U.K.’s biggest manager of closed life-insurance funds plans to raise 250 million pounds ($394 million) in a share sale to lower its debt burden. Imagination Technologies Group Plc (IMG) rallied 13 percent to 497.9 pence, snapping five days of losses. Morgan Stanley upgraded the U.K. designer of chip technology for phones and tablet computers to overweight, the equivalent of buy, from equal weight. To contact the reporters on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net ; Adria Cimino in Paris at acimino1@bloomberg.net To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net |
2024-09-02 | Bloomberg | Singapore Stocks Worst in Developed World: Southeast Asia | Singapore stocks tumbled by the most among developed markets last month as investors pulled cash from Southeast Asia on concern about the future of global stimulus. Singapore’s Straits Times Index, the benchmark gauge for the region’s biggest market, dropped 7.5 percent in the 10 days through Aug. 28, its longest losing streak since 2002. The gauge slumped 6 percent in August, the worst performance among the world’s developed equity markets. Jardine Cycle & Carriage Ltd., the largest shareholder of Indonesia ’s PT Astra International (ASII) , and commodities trader Olam International Ltd. led declines. Stocks in Southeast Asia sank faster than global equities on signs regional economic growth is slowing and as Federal Reserve policy makers prepare to reduce U.S. bond buying that had prompted investors to buy riskier assets. Investors pulled $2.2 billion from Thailand , Indonesia and the Philippines in August, after plowing $6.8 billion into the markets in 2012, data compiled by Bloomberg show. “Singapore is a barometer for Southeast Asia,” Wellian Wiranto, Singapore-based Asian investment strategist at Barclays Plc’s wealth-management unit, said in an interview on Aug. 28. “Choppiness elsewhere brings ripples here. Investors are probably concerned about the risk of contagion amid capital outflows from neighboring markets like Indonesia and the Philippines.” Stimulus Tapering The Straits Times Index has slumped 12 percent since Fed Chairman Ben S. Bernanke said May 22 the central bank may start tapering $85 billion in monthly U.S. bond purchases if the world’s biggest economy improves. The gauge rose as much as 0.8 percent today. The city’s stock market benefited from loose monetary policy in the past few years as shares offered investors attractive dividend yields, said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which manages about $57 billion. Policy makers were “broadly comfortable” with Bernanke’s plan, minutes of their last meeting showed. The Fed will probably begin paring bond purchases when it next meets Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg last month. Singapore is the only developed market among countries in the Association of Southeast Asian Nations , which also includes Laos, Brunei, Cambodia, Indonesia, Malaysia , Myanmar and Vietnam. Asean Redemptions Shares listed in Singapore are worth $558.4 billion, compared with $455.4 billion for Malaysia, the second-biggest equities market in the region, according to data compiled by Bloomberg. “Singapore has been affected by redemptions from Asean since it’s the biggest market,” Baring’s Do said in a telephone interview on Aug. 26. “It’s being lumped together with Indonesia, Thailand and the Philippines where capital outflows have accelerated.” While Singapore’s assets are more attractive than those in neighboring Indonesia, investors may be choosing to sell their holdings in Singapore because the city-state’s currency is more stable, he said. The Singapore dollar fell 0.3 percent against the U.S. dollar last month, compared with a 5.9 percent decline for the Indonesian rupiah, a 2.8 percent drop for the Thai baht , a 2.5 percent slide for the Philippine peso and a 1.2 percent loss for the Malaysian ringgit, according to data compiled by Bloomberg. Currencies Slump Regional currencies slumped as capital markets began to price in reduced inflows when the Fed starts tapering stimulus, Kelvin Tay, Singapore-based chief investment officer for southern Asia-Pacific at UBS AG’s wealth management unit, wrote in a note on Aug. 23. UBS said Singapore was its preferred market in Southeast Asia, upgrading its rating from neutral. “Singapore is likely to outperform,” Tay said. “Singapore’s strong currency, resilient domestic economy, good earnings-growth potential and exposure to developed markets’ recovery make it appealing to foreign investors.” The nation’s economic growth rate accelerated to 3.8 percent in the second quarter from a year earlier as services industries expanded, offsetting weaker exports. In the same period, economic expansion slowed in Thailand, Indonesia and the Philippines. Singapore’s Straits Times Index (FSSTI) traded at 14 times estimated earnings as of Aug. 30, compared with 16.1 for the FTSE Bursa Malaysia KLCI Index, 17.4 for the Philippine Stock Exchange Index and 10.4 for Hong Kong ’s Hang Seng Index, according to data compiled by Bloomberg. ‘Less Attractive’ Shares on the Straits Times Index offer an average dividend yield of 3.4 percent compared with 2.7 percent for 10-year Singapore government bonds, the data show. CapitaMall Trust (CT) , the retail property trust controlled by Southeast Asia’s biggest developer CapitaLand Ltd., and Hutchison Port Holdings Trust, partly-owned by billionaire Li Ka-shing ’s Hutchison Whampoa Ltd., are among the gauge’s 30 members. “We don’t see a lot of catalyst for the market to recover at this stage,” Daphne Roth , Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion, said in a telephone interview on Aug. 26. “As investors start to price in rising interest rates, Singapore’s high-yield REITs become less attractive.” The FTSE Real Estate Investment Trust Index, which tracks prices of the city’s biggest REITs and has an average dividend yield of 5.3 percent, sank 6.7 percent in August. U.S. 10-year bond yields climbed for a fourth month, touching the highest since July 2011. “Singapore is getting hit from two sides,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages more than $130 billion, said in a telephone interview on Aug. 23. “Firstly, it’s being lumped together with other Southeast Asian markets like Indonesia and the Philippines. Secondly, investors are selling high-yield Singapore REITs as bond yields are rising.” To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net |
2024-12-29 | Bloomberg | Polish Cabinet May Approve Pension Changes to Curb Widening Budget Deficit | The Polish government may decide as early as tomorrow on a method for limiting transfers to private pension accounts as it seeks to curb a widening budget deficit, Labor Minister Jolanta Fedak said. “As all the ministers and most of the economists agree that the biggest problem right now is the excessive deficit, and the pension funds generate that deficit, we should simply limit transfers,” Fedak told TVN24 news channel in an interview. Poland may permanently cut contributions to private pension funds to 2 percent or 3 percent of salaries, from 7.3 percent now, with the rest going to the state social-insurance fund, Dziennik Gazeta Prawna reported on Dec. 22, citing a document from Prime Minister Donald Tusk ’s Economic Council. Eastern European Union members including Poland have diverted pension contributions from the pay-as-you go state system to private accounts, setting up a model that the 27- nation bloc says will be more sustainable. The overhaul sapped their budgets of funds to pay current retirees. Hungary decided to direct the contributions back to the state to meet EU-imposed deficit targets after the European Commission rejected a request to change the accounting rules for the transfers. Poland and the commission agreed this month that the burden of payments to private funds will be “taken into account” when the bloc evaluates deficits and debt, Deputy Finance Minister Ludwik Kotecki said. The new rules would apply during the EU’s excessive-deficit procedure, which puts sanctions on countries with budget shortfalls wider than 3 percent of gross domestic product, the ministry said in a statement on Dec. 12. Deficit Swells Poland’s general government deficit has more than quadrupled since 2007 even as the country became the only EU economy to avoid recession during the credit crisis. The gap will swell this year to 7.9 percent of GDP, according to EU forecasts. It stood at 1.9 percent in 2007. Since 1999 Poland has transferred 211 billion zloty ($69.6 billion) of employee contributions to the private funds, the equivalent of a third of the country’s public debt. Total borrowing would be about 40 percent of GDP if government bonds held by the pension funds were excluded, according to Finance Minister Jacek Rostowski. Economy Minister Waldemar Pawlak proposed suspending budget transfers to the private funds to keep public debt from exceeding 55 percent of gross domestic product, which would trigger austerity measures. The government expects the ratio to rise to 53.2 percent this year, or 55.4 percent under EU accounting standards. To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net |
2024-05-09 | Bloomberg | Ferrari Joy Rider Burns Rubber on 600-Year-Old Wall | A Ferrari SpA dealership employee took a spin on Nanjing’s 600-year-old city wall, leaving tire marks on the Chinese relic and prompting an apology from the automaker. The Ferrari dealer had rented a gate along the state- protected cultural property encircling the former imperial capital for a May 7 showing of the limited edition Ferrari 458 Italia, according to the official Xinhua News Agency and videos on youku.com. The car was lifted by crane onto the wall the night before the show, then a driver gunned the engine and performed an unauthorized donut spin that left tread marks, according to Xinhua and youku.com videos, which didn’t identify the driver by name. A news clip showed workers attempting to remove the marks with a mop. “Ferrari has always respected Chinese traditional culture and values the protection of historical and cultural relics,” the Maranello, Italy-based company said in the Chinese-language statement posted on its blog and verified by Shanghai-based spokeswoman Cathy Wen. “Ferrari deeply regrets the incident.” The event promoting the car was canceled and Ferrari is taking measures to ensure such actions are not repeated, according to the statement. Yang Houyin, who is in charge of the agency managing the city wall, was removed from his position because of “incompetent supervision and management,” according to a Yangtse Evening Post report carried on Xinhua. Built in the early Ming dynasty, Nanjing’s wall is the oldest intact city wall in China today, according to China’s submission to UNESCO in preparation for application for World Heritage site status. To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net |
2024-06-24 | Bloomberg | Banks, Insurers Said to Signal Willingness to Aid Greece on Right Terms | Germany ’s biggest banks and insurers, including Deutsche Bank AG (DBK) and Allianz SE (ALV) , signaled a willingness to roll over maturing Greek debt if governments offer guarantees and other European lenders also participate, according to five people with knowledge of the situation. Talks between financial companies, the finance ministry and central bank officials resumed at 10 a.m. Frankfurt time today after a June 22 gathering was hampered by storms, preventing participants from traveling to attend, said the people, who declined to be identified because the information is private. German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed last week to pursue a Vienna-style solution, encouraging creditors to replace expiring bonds that would buy time until Greece’s austerity program bears fruit or a permanent rescue fund kicks in from mid-2013. A linchpin in the effort to save the first euro-area country from default would be a pledge by the private sector to share the burden with taxpayers. “There will be some participation because banks and insurance companies know that public opinion is demanding that private investors have to contribute to the rescue package,” said Konrad Becker , a Munich-based analyst at Merck Finck & Co. “They know that they are depending on state help in any case of emergency that may come in the next two or three years because of the euro and debt crisis.” High-Level Meetings Under discussion at today’s working-level talks is how much German banks and insurers will contribute in total and whether each company’s share will be based on its size and financial strength or its current Greek holdings, one of the people said. The meeting may be followed next week by meetings with top executives and policy makers, the people said. The banks and insurers have been given until June 26 to provide details of their Greek sovereign exposure as well as proposals on how much they are willing to roll over, the people said. A year after the first bailout for Greece that aimed to stop the spread of the debt crisis, the country remains mired in a third year of recession, shut out of financial markets and saddled with the biggest debt load in the euro’s history. European estimates put Greece’s 2012-14 financing gap at as much as 170 billion euros ($242 billion). It would be filled by about 45 billion euros of loans, plus around 57 billion euros in unspent aid from the 2010 bailout, roughly 30 billion euros in asset-sale proceeds and about 30 billion euros from creditors. France, Netherlands France and the Netherlands have also begun talks with banks and insurers on getting private investors to participate in a Greek rescue. France held meetings with financial industry executives on June 22, and the Netherlands has also initiated discussions with the country’s financial industry on a voluntary rollover of outstanding Greek debt, people familiar with the matter said at the time. “If EU governments would guarantee the debt, banks and insurers would roll over everything, so it’s not realistic to expect state guarantees,” said Becker. “Therefore, it will be a minor part of the outstanding Greek sovereign debt owned by private investors that is rolled over.” Holders of Greek debt have a “very high interest” in achieving a solution to the current crisis, German Finance Ministry spokesman Martin Kotthaus said today. Talks with banks and insurers on rolling over their Greek debt are ongoing and “discretion” is required during the negotiations, Kotthaus told reporters in Berlin. Contagion Asked whether the government will consider incentives to encourage bondholders to roll over the debt, Kotthaus said that it was in their own interests to do so. A French official said on June 22 that details of a Greek debt rollover package will be completed by a July 3 meeting of European finance ministers. Investors say European banks haven’t raised sufficient capital or cut loans enough to withstand the contagion that may follow a Greek default. While European lenders reduced their risk tied to the country by 30 percent to $136.3 billion last year by not renewing loans, writing down the value of debt and shifting it off their books, they still have almost $2 trillion linked to Portugal , Ireland, Spain and Italy , figures from the Bank for International Settlements show, leaving them vulnerable if the crisis spreads. German lenders’ total foreign claims on the Greek public sector totaled 9.91 billion euros in March, excluding aid provided by the country’s state development bank KfW Group, according to Bundesbank data. Deutsche Bank, Commerzbank AG (CBK) , DZ Bank , HVB Group, WestLB AG, Landesbank Baden-Wuerttemberg, WGZ Bank, DekaBank Deutsche Girozentrale, HSH Nordbank AG, Allianz and Munich Re are among the companies invited to the talks, according to the people. Spokespeople for the banks and insurers either declined to comment or couldn’t immediately be reached by phone. To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net ; Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net ; Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net ; Will Kennedy at wkennedy3@bloomberg.net |
2024-10-17 | Bloomberg | Merkel Ally Meister Says Greek Writedown Push Must Be Voluntary | Efforts to persuade banks to accept bigger writedowns on Greek bonds must remain voluntary to avoid causing turmoil in financial markets, the parliamentary finance chief of German Chancellor Angela Merkel ’s party said. “For us, the main motive is to stay in a controllable situation, not in a situation that sparks contagion,” Michael Meister, the Christian Democratic Union parliamentary finance spokesman, said today in an interview in Berlin. “If the voluntary component is removed then we could find matters spinning out of control. I believe everyone has understood this well enough.” European officials led by Germany and France are pressing for banks to accept losses of as much as 50 percent on their Greek debt as part of a package to fight the euro-area debt crisis being prepared for a European Union summit on Oct. 23, people familiar with the discussion said last week. While Merkel’s chief spokesman tried today to damp investor expectations of a complete fix by the Brussels summit, Finance Minister Wolfgang Schaeuble said that a 21 percent voluntary writedown agreed in July needs to renegotiated to bring down Greece ’s debt level. Euro-region governments and bank leaders, including Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann , aim to achieve an “optimized” writedown on Greek debt, Meister said. Ackermann said on Oct. 13 that getting investors to accept larger losses on Greek holdings may prove difficult. EU leaders also aim to agree on what Schaeuble has called a more “effective use” of the European Financial Stability Facility bailout fund. While as many as seven models are in discussion to boost the fund’s strength, an “insurance” vehicle that would commit the EFSF to underwrite a fraction of euro-region debt is “conceivable,” Meister said. “What’s decisive for us is that the German government, parliament and the taxpayer approved a certain level of risk in the EFSF,” said Meister. “What counts for us is that this level is not increased.” To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net ; Rainer Buergin in Berlin at rbuergin1@bloomberg.net. To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net |
2024-06-28 | Bloomberg | Sanlam to Sell Insurance in Nigeria Through Partnership With First Bank | Sanlam Ltd., the largest South Africa-based insurer, said it will team up with First Bank of Nigeria Plc to sell insurance products in the West African nation. While Sanlam’s rivals such as Old Mutual Plc and banks like FirstRand Ltd. seek to eventually gain ground in the Nigerian market, which is also the continent’s most populous nation, the insurer may start selling its products as early as next month. “About 60 percent of all our potential clients in Nigeria bank with First Bank,” Sanlam Chief Executive Officer Johan van Zyl said in an interview at the Fortune Global Forum in Cape Town yesterday. “We can get the money in from those clients fairly easily and quickly.” Sanlam, with operations in 12 African countries and a business in India, is chasing growth after doubling its profit last year even as other insurers reported losses in the wake of the global financial crisis. First Bank is Nigeria’s largest bank by number of customers. “We have 35 percent of the arrangement and it’s a simple model where we’ll roll out 30 to 50 branches this year,” Van Zyl said. With First Bank having more than 400 branches, the CEO said the first year of partnership is akin to “opening a tap and feeling the water.” “If it works we can do a hell of a lot in the next 18 months to two years,” he said. Sanlam said yesterday it will spend as much as 1.5 billion rand ($197 million) expanding its business in Africa and India and may look for a European insurance partner. The insurer rose 0.6 percent to 24.14 rand as of 9:27 a.m. in Johannesburg trading. To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net |
2024-03-16 | Bloomberg | U.S. Stocks Gain in Week on Economy as S&P 500 Nears High | U.S. stocks climbed for the week, sending the Standard & Poor’s 500 Index within five points of a record high, as better-than-estimated retail sales and jobless claims data boosted optimism in the world’s largest economy. Benchmark indexes retreated on the last trading day as a gauge of consumer confidence declined. Boeing (BA) Co. led advances in the Dow (INDU) Jones Industrial Average during the week, jumping 6.4 percent after saying safety upgrades to the 787 Dreamliner’s battery systems may allow commercial flights to restart within weeks. Bank of America Corp. (BAC) rallied 4.1 percent after winning Federal Reserve support to buy back stock. The S&P 500 advanced 0.6 percent to 1,560.70, for its third straight weekly gain. The Dow climbed for a fourth week, adding 117.04 points, or 0.8 percent, to 14,514.11. The 30-stock index posted 10 straight days of gains through March 14, the longest winning streak since 1996. The consumer and the labor market are “in a word, healing,” Matthew Peron, head of active equity investing at Northern Trust Corp. in Chicago , said by telephone. His firm manages about $750 billion. “We’re more resilient than we have been. We’re able to weather punches. People are seeing that and getting comfortable that major potholes aren’t right around the corner.” Equities advanced as economic reports showed sales at U.S. retailers climbed twice as much as forecast in February, indicating that improving job prospects are helping consumers. First-time jobless claims unexpectedly fell in the week ended March 9 to the lowest level since mid-January. Stocks slumped on the last day as confidence among American consumers unexpectedly slumped in March. Two Points The S&P 500 (SPX) climbed on March 14 to within two points of its record closing level of 1,565.15 set in October 2007, before retreating on the final day of trading. The gauge has more than doubled from its bottom in 2009, fueled by corporate earnings that topped estimates and monetary stimulus from the Fed. The 116-year-old Dow surpassed its record on March 5, and climbed higher each day through March 14. “Even though it’s a lot of days, the magnitude of the rally hasn’t been huge,” Andrew Slimmon, Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney, said by phone. His firm has $1.7 trillion in client assets. “It’s been small, incremental moves. The reason for that is that there’s still a relatively high level of skepticism towards equities and that leaves me to believe the capitulation is still out there. It hasn’t still run its course.” Volatility Index The CBOE Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500 , dropped 10 percent to 11.30 during the week, the lowest level since February 2007. The gauge, known as the VIX (VIX) , is down 37 percent this year. Financial, utility and energy stocks advanced at least 1.1 percent, leading gains among 10 S&P 500 groups. Investors bought shares of companies most tied to economic growth, sending the Morgan Stanley Cyclical Index (CYC) up 1.4 percent and the Dow Jones Transportation Index higher 2.1 percent. Both indexes touched all-time highs during the week. Boeing jumped 6.4 percent to $86.43, the highest level in almost five years. The safety improvements to the 787 Dreamliner’s battery systems will allow the resumption of service once the U.S. Federal Aviation Administration and other regulators sign off, and Air India may fly its five 787s as soon as April. Banks Climb Lenders rose as the KBW Bank Index added 1.6 percent in the wake of Fed stress tests. Bank of America gained 4.1 percent to $12.57 after the second-largest U.S. lender won federal approval for a $5 billion share buyback , the firm’s first repurchases since the financial crisis. Morgan Stanley added 2.4 percent to $23.59 after it got permission to buy the remaining stake in its wealth-management venture. JPMorgan Chase & Co. slid 0.4 percent to $50.02 while Goldman Sachs Group Inc. advanced 1.2 percent to $154.84. The world’s biggest trading firms must submit new capital plans to regulators to address weaknesses the Fed found in their planning processes. Separately, a Senate investigation found that JPMorgan Chief Executive Officer Jamie Dimon misled investors and dodged regulators as losses escalated on a “monstrous” derivatives bet last year. DirecTV surged 9.8 percent to $54.99. The largest U.S. satellite-TV provider pulled out of bidding for Vivendi SA’s Brazilian phone and Internet unit, GTV, forgoing an option to add more services in South America. Apple’s Cash Apple Inc. rose 2.8 percent to $443.66 for the biggest weekly rally in over a month. The iPhone maker will outline what it plans to do with a growing pile of cash by next month, said Howard Ward, chief investment officer at Gamco Investors Inc. Legg Mason Inc.’s Bill Miller said on CNBC, “We just went overweight on Apple again.” Dick’s Sporting Goods Inc. (DKS) sank 7.1 percent to $47 for the biggest weekly decline of the year after forecasting annual profit that was less than analysts estimated on costs to remodel stores and improve its Web operations. Carnival Corp. declined 2 percent to $34.95. The cruise operator beset by mishaps at sea this year cut its annual earnings forecast to reflect costs from an engine fire that crippled the Carnival Triumph last month. To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net |
2024-04-11 | Bloomberg | MF Global Lawyers’ Fee Requests Criticized by U.S. | MF Global Holdings Ltd. (MFGLQ) ’s lawyers and advisers shouldn’t get all of the $13.7 million in fees they’ve requested, as their billing was vague, repetitive, or improper, the U.S. said. The U.S. Trustee, a bankruptcy watchdog for the Justice Department , objected to fees and expenses submitted by eight parties in the bankruptcy of the failed broker-dealer in papers filed today in Manhattan bankruptcy court. Together, the eight parties seek $13.7 million in fees and $387,922.13 in expenses for Oct. 1, 2012, through Jan. 31, 2013. Morrison & Foerster LLP , the company’s main bankruptcy counsel, Proskauer Rose LLP, counsel to creditors, and Freeh Group International Solutions, LLC, an accountant for the company’s bankruptcy trustee Louis Freeh , were included in the objection. Morrison Foerster charged the estate from $342.00 to $400.00 an hour for the services provided by “Trainee Solicitors,” who should have had lower billing rates commensurate with the company’s non-attorney employees, said lawyers for Tracy Hope Davis, the acting U.S. Trustee. Davis also objected to $52,278.50 billed by Proskauer, saying that time records showed the work was revising billing statements and reviewing time entries -- services that are “part of Proskauer’s overhead, and thus are not compensable.” Freeh Bill Davis also said expenses including Freeh Group’s bill for $4,163.29 in reimbursement for airfare for an American Airlines flight from an unknown departure in the U.S. to London and an overnight stay at the Chancery Hotel in London costing $632.74 need to be more detailed to show if they are reasonable. Covington & Burling LLP, insurance counsel to Freeh, FTI Consulting Inc., a restructuring adviser, Garden City Group, Inc., an administrative agent, Pepper Hamilton LLP, special counsel to Freeh and Capstone Advisory Group, financial adviser to the creditors’ committee were the other parties whose fee requests should be reduced or more fully documented, the U.S. Trustee said. MF Global Holdings won final approval of its plan to repay creditors on April 5, paving the way for the eighth-largest bankruptcy in U.S. history to wind down under court protection. The parent company of brokerage MF Global Inc. filed for bankruptcy on Oct. 31, 2011, after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe ’s most indebted nations. The company, once run by former New Jersey Governor and Goldman Sachs Group Inc. Co-ChairmanCorzine, listed assets of $41 billion and debts of $39.7 billion. The holding company’s Chapter 11 case is In re MF Global Holdings Ltd., 11-15059, U.S. Bankruptcy Court , Southern District of New York (Manhattan). The liquidation of the broker is In re MF Global Inc., 11-02790, in the same court. To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net |
2024-04-20 | Bloomberg | CIT Says Regulators Lift Cease-and-Desist Orders Against Bank, Shares Rise | CIT Group Inc. (CIT) , the business lender run by John Thain , said regulators lifted cease-and-desist orders against its Utah bank unit that prevented the company from boosting deposits or paying dividends. CIT shares rose the most in more than 11 months. The orders, issued in July 2009 by the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions , also prevented Salt Lake City-based CIT Bank from extending credit or engaging in certain transactions without prior approval, CIT said in a filing with regulators today. CIT filed for bankruptcy in November 2009 after racking up losses on home loans and being shut out of short-term capital markets. A five-week reorganization cleared away $10.5 billion of debt, and the government lost its $2.3 billion bailout investment. The lifting of the cease-and-desist orders may not immediately result in CIT taking on more deposits, said Michael Taiano , an analyst at Sandler O’Neill & Partners LP. “It’s more of a perception issue as opposed to an operational issue,” Taiano said in an interview. “It’s more of a shot of confidence that the regulators are becoming more amiable to CIT’s transformation.” The bank doesn’t need to increase deposits because it has enough cash to meet current demand for loans, Taiano said. CIT could eventually transfer its small-business lending and vendor- finance units to the bank, which would require approval from the Federal Reserve, he said. Shares Surge CIT climbed $2.81, or 7 percent, to $43.26 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain since May 10, 2010. The shares fell 14 percent this year through yesterday. CIT is still required to submit to tighter supervision by Federal Reserve Bank of New York regulators. “This is one piece of the regulatory puzzle, the second being the Federal Reserve’s written agreement, which is probably more significant,” Taiano said. Thain, the former Merrill Lynch & Co. chief executive officer who joined CIT in February 2010, shrunk total assets by 15 percent last year, selling off non-core businesses to help recover from bankruptcy. “We are pleased with this decision, which serves as another example of the progress we have made in CIT’s restructuring efforts,” Thain said in a statement today. To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net. To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net . |
2024-08-03 | Bloomberg | HDFC Standard Says India Stocks Slump ‘Great Time’ to Buy Shares | Prasun Gajri, chief investment officer at HDFC Standard Life Insurance Co., which has more than $5 billion in assets, comments on the outlook for the nation’s stocks. He spoke in an interview with Bloomberg-UTV. The Bombay Stock Exchange Sensitive Index, or Sensex, dropped 0.9 percent to 17,956 at 1:46 p.m. close in Mumbai. On equity valuations: “These levels are good. Markets will remain range bound for some more time till a trigger on the positive side emerges. It is a great time to build a portfolio as valuations are supportive. Short-term volatility is here to stay.” The Sensex has lost 13 percent this year, the second-worst performer after Brazil ’s Bovespa among major indexes in the 10 biggest markets. Companies on the measure trade at 14.5 times estimated earnings, down from 21.5 times in March 2010, last year’s high. On investment strategy: “We have cut our weight on defensive sectors. We remain marginally overweight, but it has come down. We are reducing our underweight on financials, believing that the valuations are supportive.” “The rally in telecom has played out for the time being. Valuations are no longer where they can be said to be a value proposition. There is a regulatory overhang. I don’t see any runaway movement.” On interest rates : “The Reserve Bank did surprise us. Where the market got it wrong was the assessment of growth. We felt that the growth is slowing. RBI feels growth is slowing only in certain parts of the economy and it’s not significant enough to warrant a kind of situation where they get into a rate-neutral stance. So, they continued with their hawkish stance. ‘‘It doesn’t change the overall tone, which means that the RBI is definitely closer to the end of the cycle. The argument is whether it will be 25 or 50 basis point increase. Beyond that it will be difficult for the RBI to even contemplate any further rate hike.” The Reserve Bank of India July 26 increased the repurchase rate to 8 percent from 7.5 percent. None of the 22 economists surveyed by Bloomberg News had predicted the decision. On outlook for earnings: “Earnings downgrades for fiscal 2012 will happen after this quarter. I don’t think it is going to be very significant. It is reasonable to assume we can get easily get 15 percent to 18 percent earnings growth over the next three to five years.” On U.S, European Debt Talks: “Global factors are going to be there for the next 12 to 24 months. I don’t think there’s any solution to the European problem even today. It’s just a question of trying to defer the problem by lending things for a while and hoping that nothing deep breaks out. It is a solvency issue, not a liquidity issue. ‘‘The U.S. problem was more a political problem; it was never a liquidity or solvency issue. If the deficit continues this way then at some point rating agencies will cut the rating of some developed countries, including the U.S. That will have a negative impact on markets. ‘‘Global factors will always remain on the horizon. I am not too bothered about them. Irrespective of Europe and the U.S., India will continue to remain a place where growth will be reasonable and will continue to attract flows. ’’ To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net |
2024-05-30 | Bloomberg | Bank Foreclosures Loom for Tanker Owners Hauling Iranian Crude | With a month to go before the start of a full European embargo on Iranian oil, ship owners seeking to keep hauling the crude by switching insurance provider risk having their tankers seized by lenders. Most loans to buy vessels require insurance against risks including spills and collisions, and banks will normally only accept cover provided by members of the International Group of P&I Clubs, according to Harry Theochari, a London-based shipping and asset-finance lawyer at Norton Rose LLP. The group’s members insure about 95 percent of the tanker fleet and follow European Union law , which will prohibit all such cargoes from July 1 as part of international efforts to curb Iran’s nuclear program. Oil shipments from Iran, the Organization of Petroleum Exporting Countries’ second-largest producer, already declined 23 percent this year, Barclays Plc estimates. While ship owners in China, Japan and India , the biggest buyers of the crude, have said they will seek alternative insurance, switching cover would require the assent of lenders. European banks finance about 80 percent of the world’s fleet, according to Petrofin Research, an Athens-based industry consultant. “If the insurances are not in a form that’s acceptable to the bank, that’s an immediate event of default and the bank would have the right to foreclose,” Theochari said by phone. “It’s sort of the atomic-device option. The insurances are just so fundamental there’s never any grace period.” Tankers taking Iranian cargoes will face legal proceedings from banks, said Iris Schrecker, the head of compliance at DVB Bank SE (DVB) in Frankfurt , which finances 1,500 vessels through 450 loan accords. A ship losing its insurance would be an event of default, said Thomas Midteide, an Oslo-based spokesman for DNB ASA (DNB) , the second-biggest shipping lender. Shipping Loans Nordea Bank AB (NDA) , which has about 13.6 billion euros ($17.7 billion) of shipping, offshore and oil loans, follows regulations and takes “appropriate” measures in the event of breached loan accords, said Stephan Ghisler-Solvang, a spokesman for the bank. Rune Hoffmann, a spokesman for HSH Nordbank AG, the largest shipping lender, declined to comment. Commerzbank AG (CBK) accounts for sanctions and embargoes, the industry’s third- biggest financier said in an e-mailed statement. At least 62 non-Iranian tankers have loaded at Kharg Island, the nation’s largest oil terminal, since EU ministers agreed to the embargo on Jan. 23, according to ship-tracking data compiled by Bloomberg. The EU ban covers the purchase, transportation, financing and insuring of Iranian oil, with pre- existing contracts and third-party liability insurance exempt until July 1. “The banking is a separate issue that we don’t think was at all foreseen and is potentially more far-reaching,” said Andrew Bardot, London-based secretary and executive officer of the International Group of P&I Clubs. Biggest Buyer With four weeks to go, ship charters are already being curbed because of the time it takes the vessels to deploy, load and deliver cargoes. A journey to China, the biggest buyer of Iranian crude, takes about 20 days and tankers are normally hired about three weeks in advance. Iran and Western negotiators agreed to hold another round of talks about the country’s nuclear program next month after failing to reach a deal at a summit in Baghdad last week. The government in Tehran faces four set of United Nations sanctions urging the country to stop enriching uranium. UN inspectors found Iran almost doubled its stockpile of 20 percent medium-enriched uranium since February and some particles at the nation’s Fordo facility were enriched to 27 percent, the International Atomic Energy Agency said May 25. That’s closer to the 90 percent level needed for atomic weapons. Iran says it’s only enriching uranium to that grade to fuel a research reactor producing medical isotopes for cancer treatment. Declining Supply Iran’s oil exports of 1.7 million barrels a day may fall by another 300,000 to 500,000 barrels from July, Barclays analysts led by Helima Croft in New York said in a May 15 report. Crude traded in London rose as much as 25 percent from mid-December to early March on concern about declining supply. It has since retreated 17 percent to $106.32 a barrel on speculation that slowing global growth will curb demand for energy. Japan is considering sovereign guarantees for tankers carrying Iranian crude, two government officials familiar with proposed legislation said this month. Indian vessel owners have also asked the state to provide cover. The government in China has already underwritten some Iranian cargoes, the Paris-based International Energy Agency said in March. Banks that allow ships to change to an insurer who’ll cover Iranian shipments would potentially violate U.S. sanctions because it might be interpreted as facilitating trade with the Persian Gulf nation, according to Clare Hatcher, a London-based consultant at Clyde & Co., an international trade law firm. The U.S. has restricted dealings with Iran since 1979, when militants took 52 hostages at the American embassy in Tehran. Sanctions Violations An executive order signed May 1 penalizes people outside the U.S. who facilitate sanctions violations, for instance by using the U.S. financial system to access dollars. About 90 percent of the fleet is financed in the currency, Petrofin estimates. Under a U.S. law signed Dec. 31, countries that fail to show they are reducing their oil imports from Iran by June 28 will have their banks’ access to the U.S. financial system blocked. Japan and 10 European nations received exemptions in March for a renewable period of 180 days. To contact the reporters on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net ; Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net To contact the editors responsible for this story: Dan Weeks at dweeks1@bloomberg.net ; Alaric Nightingale at anightingal1@bloomberg.net |
2024-04-23 | Bloomberg | Check Point Software Declines Most Since 2008 in New York | Check Point Software Technologies Ltd. (CHKP) , the world’s second-largest maker of security network equipment, headed for the biggest decline since 2008 on concern earnings growth will slow. Shares of the Tel Aviv-based company dropped 8.1 percent to $58.86 at 1:28 p.m. in New York, set for the steepest retreat since Oct. 15, 2008. Check Point said first-quarter product licenses revenue rose 5 percent from last year after growing 13 percent in 2011, according to a Marketwire statement. The company reported adjusted earnings of 74 cents per share, beating the 72-cent median estimate of 27 analysts surveyed by Bloomberg. Check Point reaffirmed its forecast for the year, Chief Executive Officer Gil Shwed said today in the earnings call. “Investors likely are concerned with full-year 2012 guidance being kept intact rather than upped, and product license revenue growth of 5 percent year-on-year potentially indicating decelerating growth in 2012,” Shaul Eyal, an analyst at Oppenheimer & Co. in New York , wrote in an e-mailed report today. To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net |
2024-03-21 | Bloomberg | Treasury 10-Year Yield Surge May Be Ending: Technical Ana | A surge in 10-year yields may be coming to an end after they reached a technical barrier, according to Shin Kong Life Insurance Co., citing trading patterns. Treasury rates climbed to 2.40 percent yesterday, above the so-called upper Bollinger band level of 2.37 percent. It was also the highest level since October. “The current level is oversold,” said Will Tseng, who trades U.S. debt at Taipei-based Shin Kong Life, which has the equivalent of $52.2 billion in assets. Investors should “jump in” to buy, based on the indicator, he said. Bollinger bands gauge volatility by plotting standard deviations above and below a moving average. Analysts use them to determine a probable range for a rate or security. Ten-year yields were higher than the upper Bollinger level from March 14 through yesterday. The rate was 2.37 percent today as of 8:18 a.m. in London , versus the current Bollinger level of 2.41 percent. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net . |
2024-12-16 | Bloomberg | Taiwan Stocks Movers: Formosa International, Quanta, Powertech | Shares of the following companies had unusual (TWSE) moves in Taiwan trading. Stock symbols are in parentheses and prices are as of the close in Taipei. The Taiex Index rose 0.3 percent to 6,785.09. The benchmark retreated 1.6 percent this week, a second consecutive loss. First Steamship Co. (2601) (2601 TT) advanced 1.2 percent to NT$32.60. The company’s unit bought 8 million of New China Life Insurance Co.’s H-shares. Formosa International Hotels Corp. (2707) (2707 TT) retreated 0.9 percent to NT$366.50, the lowest close since July 6, 2010. The company was cut to “neutral” from “buy” at Jih Sun Securities Ltd. by analyst Rita Hsueh. Quanta Computer Inc. (2382) (2382 TT), which assembles Amazon.com Inc.’s Kindle Fire tablet computer, advanced 2.1 percent to NT$61.80, the highest close in a week. Amazon.com, the world’s largest online retailer, said customers have bought about 1 million of its Kindle e-book readers and tablets in each of the past three weeks, the most detailed sales numbers the company has released. The Kindle Fire has been the best-selling product on Amazon.com since its introduction 11 weeks ago, the Seattle- based company said in a statement. Powertech Technology Inc. (6239) (6239 TT) lost 1.5 percent to NT$65.60, the lowest close since Nov. 25. The company offered to buy a controlling stake in Greatek Electronics Inc. (2441) (2441 TT) at a 26 percent premium above the stock’s closing price yesterday. Greatek surged 7 percent to NT$21.40. To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net |
2024-08-06 | Bloomberg | AIG Says Italian Life Insurance Unit Is Investigated by Milan Prosecutor | American International Group Inc. said an Italian subsidiary is being investigated by a prosecutor in Milan and was sued by policyholders after suspending client withdrawals from some investments that declined in value. AIG’s Alico Life International Ltd. is cooperating with Italian regulators, the company said today in a regulatory filing reporting quarterly earnings. Clients said the company provided inadequate disclosure about the investments, AIG said. Withdrawals were halted in late 2008 as the parent company faced a liquidity squeeze that forced a U.S. bailout. “The public prosecutor in Milan had opened a formal investigation into the actions of employees of ALIL, as well as employees of ALIL’s major distributor, based on a policyholder’s complaint,” New York-based AIG said in the filing. The insurer is “in discussions to address their concerns as well as those of the affected policyholders.” AIG, which was rescued by the U.S. government in 2008, agreed in March to sell Alico to MetLife Inc. for about $15.5 billion. As part of the deal, AIG said it will indemnify MetLife for legal claims and regulatory fines tied to suspended funds. MetLife, the largest U.S. life insurer, will be protected against losses tied to real estate bets in Japan and Alico’s U.K. Premier Access Bond offering, the insurer said in March. Withdrawals Halted AIG halted withdrawals from the U.K. bond in 2008 after clients took out more money in three days than they typically do in three months. Assets backing the investments were put into a Protected Recovery Fund, which guarantees customers a specified sum by 2012 and will be managed by MetLife, the company said. AIG reported $44 million in life insurance premiums in Europe in the second quarter of 2008. AIG, which lists more than 20 grouped lawsuits and probes in today’s filing, is seeking to resolve a backlog of litigation since its near-collapse. The insurer hired Thomas Russo in February to be general counsel. Russo was the Lehman Brothers Holdings Inc. chief legal officer when the securities firm went bankrupt in 2008. The insurer agreed to pay $725 million last month to settle a lawsuit by investors, including public pension funds in Ohio, New Mexico, Mississippi and California. They claimed AIG fraudulently inflated results, causing its share price to plummet when the deception was uncovered. “The key here is for the company to go forward and make money and do business and have issues dealing with supervisors and shareholders all in the past,” Ernest “Ernie” Patrikis , a partner at White & Case and a former general counsel at AIG, said last month. Mark Herr , a spokesman for AIG, declined to comment. Christopher Breslin , a MetLife spokesman, didn’t return a call. To contact the reporter on this story: Sarah Frier in New York at sfrie@bloomberg.net |
2024-12-12 | Bloomberg | EU to Dilute Timeline for Euro-Area Overhaul, Draft Shows | European Union leaders are set to dilute the timeline for overhauling the euro zone, as German Chancellor Angela Merkel steps on the brakes. A draft statement for tomorrow’s EU summit drops a three- stage timetable that would commit euro leaders to consider as of 2014 paying into a budget to help absorb economic shocks. Such a budget could be weighed as the euro area “evolves toward deeper integration,” the document obtained by Bloomberg News said, without giving a deadline. Advances toward fiscal federalism “will take more time and will require in-depth consultations.” With Merkel running for a third term in late 2013, the Berlin government has chafed at offering further debt-crisis aid or venturing into a longer-term euro remake potentially bearing hidden costs for German taxpayers. Merkel’s objections had already led EU President Herman Van Rompuy to banish talk of moves toward common debt issuance from a roadmap for the euro’s future issued last week. Pushback from Germany and northern creditor-country allies was reflected in today’s proposed summit statement, which abandoned the stage-by-stage timetable for deeper integration that featured in a Dec. 3 draft. German Stance While the three-stage timetable lives on in Van Rompuy’s Dec. 6 roadmap , it won’t be binding on euro governments. Merkel dismissed the roadmap as “preliminary” yesterday, according to a German official who sat in on a closed-door session with the chancellor. Germany’s focus is on steps to increase Europe ’s competitiveness, leaving questions such as a euro-area “fiscal capacity” to an indeterminate point in the future, another German official told reporters in Berlin today. German emphasis on economic discipline clashes with France ’s call for the pooling of financial burdens, echoing the ideological battles of the 1980s and 1990s that led to the euro’s fragmented management. For now, the upper hand rests with the German-led bloc, the main underwriters of 486 billion euros ($634 billion) in rescue loans for four countries since the outbreak of the debt crisis three years ago. Germany’s plea for sounder economic policies was endorsed in the latest summit draft, which foresaw “individual arrangements of a contractual nature with EU institutions” to keep governments on the reform path. Bank Supervisor France wants the tighter discipline to go hand in hand with financial support. While Merkel has dangled the prospect of European funding for national reforms, she has stopped short of backing France’s call for a European unemployment insurance program. As debate swirls over what the euro will look like in five to 10 years, the near-term priority is to set up a single bank supervisor followed by a common bank-resolution system, a European official told reporters in Brussels. With European leaders coming to town tomorrow, finance ministers returned to Brussels today to tackle the bank- supervision proposals. German Finance Minister Wolfgang Schaeuble spoke of a “good chance” of an accord, if not today, then before the Christmas break. The summit draft set a target of June 2013 for finance ministers to agree on common norms for handling failing banks and setting minimum standards for deposit guarantee schemes. More ambitious proposals for a “single resolution mechanism” for countries that take part in common bank supervision will be made by the European Commission in 2013, the draft said. Creditor countries have resisted putting up extra money to fix bank failures elsewhere. Separately, there are no plans for tomorrow’s summit to appoint a successor to Luxembourg Prime Minister Jean-Claude Juncker as chairman of euro finance meetings, the Brussels official said. Juncker plans to step down in early 2013. To contact the reporters on this story: Rebecca Christie in Brussels at rchristie4@bloomberg.net ; James G. Neuger in Brussels at jneuger@bloomberg.net To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net |
2024-02-28 | Bloomberg | RBC, TD Post Record Consumer Lending Profits | Royal Bank of Canada , Canadian Imperial Bank of Commerce and Toronto-Dominion Bank (TD) reported first-quarter profits that topped analysts’ estimates on record earnings from personal and commercial lending. Royal Bank, Canada’s largest lender by assets, said net income for the period ended Jan. 31 rose 12 percent to C$2.07 billion ($2.02 billion), or C$1.36 a share. CIBC, the fifth- biggest bank, said profit fell 4.4 percent to C$798 million, while Toronto-Dominion, the No. 2 bank, said profit climbed 21 percent to C$1.79 billion, or $1.86 a share. The three Toronto-based lenders posted record profits from consumer and business lending, defying an expected slowdown after household debt rose to a record. The banks benefited from rising demand for corporate loans, credit cards and personal financial services. A Canadian residential mortgage lending slowdown is “pretty much to be expected when you consider that consumers are starting to deleverage,” Toronto-Dominion Chief Financial Officer Colleen Johnston said today in a telephone interview. “An area of huge growth for us, though, has been on the business banking side. That’s an area where we’ve really taken a lot of market share.” Royal Bank shares rose less than 1 percent to C$64.02 at 4 p.m. in Toronto. Toronto-Dominion gained 0.7 percent to C$84.85, while CIBC fell 0.9 percent to C$83.14. ‘Solid Quarter’ Royal Bank said profit at its personal and business banking unit, which includes Caribbean banking, rose 11 percent to C$1.12 billion. CIBC’s retail and business banking business had profit of C$611 million, a 7.8 percent increase, the firm said. Toronto-Dominion said adjusted earnings from consumer and commercial banking rose 11 percent to C$944 million. “CIBC reported a solid quarter, with surprisingly stronger retail banking earnings than anticipated,” John Aiken , an analyst at Barclays Plc, said today in a note. Royal Bank said it set aside C$349 million for bad loans, up 31 percent from a year ago. Provisions in Canadian banking fell 12 percent to C$213 million. Canadian Imperial set aside C$265 million for bad loans, down 22 percent from a year ago. Royal Bank and Toronto-Dominion raised their dividends , while CIBC’s was unchanged. Royal Bank’s profit excluding some items was C$1.38 a share, beating the C$1.32 a share average estimate of 16 analysts surveyed by Bloomberg News. Revenue rose 4.4 percent to C$7.91 billion from C$7.57 billion. Credit Cards Profit at RBC Capital Markets rose 25 percent to C$464 million on higher fees from advising on North American takeovers and an increase in U.S. lending and loan syndication. Wealth management earnings rose 23 percent to a record C$233 million, while insurance fell 14 percent to C$164 million, the bank said. Royal Bank’s revenue from Canadian personal financial services grew 6.9 percent to C$1.68 billion in the quarter from a year ago and business financial services rose 2.4 percent to C$738 million. Credit cards and payments rose 5.3 percent to C$620 million. Revenue from Caribbean and U.S. banking was little changed at C$204 million. CIBC’s earnings were eroded by a settlement with the Lehman Brothers Holding Inc.’s estate to end a two-year-old legal dispute over collateralized debt obligation deals. The lender said Dec. 31 that the after-tax cost of the settlement is $110 million. Excluding the cost and other items, CIBC said it earned C$2.15 a share, beating the C$2.09 a share average estimate of 16 analysts surveyed by Bloomberg. Revenue rose 0.8 percent to C$3.18 billion. CIBC-Aeroplan CIBC’s wealth-management profit was C$90 million, down 10 percent. The lender’s investment-banking business earned C$91 million, down 32 percent from a year earlier. CIBC also said today in its statement that its Aeroplan credit-card partnership with Aimia Inc. (AIM) will expire Dec. 31 unless both companies agree to extend. “CIBC has engaged in periodic extension discussions with Aimia, but is also exploring alternatives to extending the Aeroplan agreement,” the bank said. Toronto-Dominion’s Johnston said today the bank will probably raise its dividend again this year. The bank topped expectations largely because of lower-than-expected provisions for credit losses, said Andre-Philippe Hardy, an analyst at RBC Capital Markets. “While expenses came in higher than we had forecast, provisions for credit losses came in lower than our forecast,” Hardy said today in a note to clients. Toronto-Dominion The lender’s domestic consumer banking climbed 11 percent to C$944 million as wealth and insurance earnings increased 8 percent to C$377 million. U.S. consumer banking earnings climbed 9.4 percent to C$385 million, Toronto-Dominion said. The bank has spent more than $25 billion on U.S. acquisitions since 2004, building a network of branches that spans from Maine to Florida. Wholesale profit declined 18 percent to C$159 million. Toronto-Dominion CEO Edmund Clark also denied reports that the bank was interested in acquiring a stake of Citizens Financial Group Inc. from Royal Bank of Scotland Group Plc. Such a transaction wouldn’t “fit the bank’s strategy, timing and risk appetite,” Clark told investors today. To contact the reporters on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net ; Sean B. Pasternak in Toronto at spasternak@bloomberg.net To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net ; David Scanlan at dscanlan@bloomberg.net |
2024-06-06 | Bloomberg | Cohen Defiant Said to Vow Keeping SAC Open as Money Flees | Even after SAC Capital Advisors LP received billions of dollars in withdrawal requests this week, founder Steven A. Cohen isn’t about to give up managing other people’s money. SAC President Tom Conheeney, in a June 4 e-mail to employees, said the hedge-fund firm has no plans to become a family office even after it received “significant” redemptions requests for the second quarter, according to two people who saw the contents of the e-mail. SAC doesn’t see significant staff reductions, Conheeney wrote. SAC employees had expected that clients, who faced a June 3 redemption deadline, would take back most of the $4 billion they haven’t already marked for redemptions by early next year, people familiar with the firm said earlier this week. Investors are exiting as the U.S. government intensifies its probe of insider trading at the Stamford , Connecticut-based firm, once one of the best in the industry, with returns averaging 25 percent since 1992. “We don’t like losing capital, but even with the investors that are leaving, we still have a stable capital base and have been performing well this year,” Conheeney said in the e-mail. Even if the firm ended this year with assets close to where it was four years ago, “we will still be a good-sized firm.” At the beginning of 2010 the firm managed about $10 billion. Cohen and employees currently account for about $9 billion of the firm’s assets. A spokesman for SAC declined to comment on the e-mail. ‘Defiant Stance’ “Cohen is taking a defiant stance that will make the government more determined to pursue charges and more difficult for Cohen to settle if the heats get too high,” said Erik Gordon , a business and law professor at the University of Michigan in Ann Arbor. The mood at the red-brick headquarters has darkened in recent weeks after Cohen and the other employees were subpoenaed to appear before a grand jury. Some workers have started putting out feelers for new jobs, and Cohen has reduced his own trading to the lower end of his normal $2 billion to $3 billion range to spend time with lawyers, said people with knowledge of the firm. While it would be a logical step for Cohen to focus on managing his own wealth, two people who know Cohen said his decision not to throw in the towel is in keeping with his personality. Cohen doesn’t want to let the government get the best of him and is seeking to defend a reputation as one of the most successful hedge-fund managers ever, said the people, who asked not to be named because the information is private. Reinsurance Money Cohen’s desire to continue as clients flee isn’t completely unrealistic. A few investors have called SAC asking to put money into its funds, according to two people familiar with the situation. Some key investors have told the firm they may reconsider their redemption requests once they have greater clarity of legal issues surrounding the firm, Conheeney told employees in the e-mail. In addition, SAC raised $500 million last year for a reinsurance company that can invest in its hedge funds. The scrutiny on Cohen and his firm grew in November when former portfolio manager Mathew Martoma was charged in what U.S. prosecutors called the biggest insider-trading scheme in history. It was the first time the SAC founder was directly linked to trades that allegedly used inside information. Facing Deadlines The five-year statute of limitations covering the 2008 trades, in which SAC netted $276 million in profits and averted losses from alleged inside information concerning a drug trial, expires in late July. Cohen hasn’t been accused of any wrongdoing. Martoma has pleaded not guilty and will go on trial Nov. 4. The U.S. Securities and Exchange Commission, which won a record $602 million civil settlement with SAC over the trades in March, also must move by July if it decides to sue Cohen personally. After Cohen was subpoenaed, SAC told clients in a May 17 letter that it was no longer cooperating unconditionally with the government, news that prompted many clients who had supported the firm through the government’s multiyear investigation to put in withdrawal notices. To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net ; Saijel Kishan in New York at skishan@bloomberg.net ; Kelly Bit in New York at kbit@bloomberg.net To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net |
2024-01-07 | Bloomberg | Israel Presses U.S. for Military Threat Against Iran | Israel is again turning up the pressure on the Obama administration to issue an ultimatum threatening military action if Iran refuses to abandon its suspected pursuit of an atomic weapons capability. Israeli Finance Minister Yuval Steinitz is the latest member of Israel’s cabinet and national security establishment to come to Washington to press senior U.S. officials to lay out a tougher line on the Islamic Republic’s nuclear activities. The time has come for President Barack Obama to give Iran a “very clear ultimatum, very clear deadline combined with a very credible also military threat” Steinitz told a group of reporters this morning before planned meetings with Treasury Secretary Timothy F. Geithner and other administration officials today and tomorrow. Steinitz declined to comment on Obama’s announcement today that he will nominate former Senator Chuck Hagel, a Nebraska Republican, as defense secretary, saying “it is not our custom to interfere in democratic procedures in other democracies.” Hagel has come under criticism from Republicans including Senator Lindsey Graham of South Carolina who say he is soft on Iran and not a strong enough ally of Israel. As a two-term senator until 2009, Hagel opposed unilateral U.S. sanctions against Iran, while supporting United Nations and multilateral penalties. Hagel, currently chairman of the Atlantic Council, a Washington policy institute, has also served as co-chairman of the group’s Iran Task Force, which has studied Iran’s internal politics, the impact of sanctions, the likely cost of military action and the possibility of improved relations with Western nations. Sanctions Bite “We will accept and respect any results, any decision made by the president and the Congress here,” the Israeli finance minister said of Hagel’s nomination. Steinitz said he would tell Geithner that Israel views the financial sanctions imposed on Iran by the Obama administration as “very serious and very effective and the Iranian economy is in bad shape already now.” During Obama’s first term, the U.S. and its European allies have imposed dozens of new sanctions affecting banking, finance, energy, shipping, insurance and trade with Iran. The Obama administration persuaded the 20 countries that imported crude oil from Iran in 2011 to cease imports entirely or “significantly reduce” their crude purchases from Iran. Exports Drop Oil is Iran’s leading source of revenue and, according to the International Energy Agency in Paris, Iranian exports in November were estimated at 1.3 million barrels per day, down from almost 2.3 million barrels last year. Iran’s economy minister Shamseddin Hosseini said last month that Iran had lost half its oil revenues in 2012 because of sanctions, and that drop in revenue was responsible for a 40 percent government budget deficit for the year starting March 20. Steinitz said he would discuss with Geithner and other White House and State Department officials what Israel perceives as loopholes in sanctions and Iran’s efforts to subvert legal restrictions. He declined to provide examples. Steinitz said he is encouraged by the sanctions that are crippling Iran’s economy, and said it appears that “for the first time maybe at least some Iranians” are questioning whether the nuclear program is “worth the cost.” Iran says its uranium-enrichment and other nuclear activities are for civilian energy production and medical research. Israel, the U.S. and European powers say Iran is clandestinely seeking the technology to produce a nuclear weapon. ‘Credible’ Threat Steinitz said Israel’s government is “not confident” to say that the sanctions alone will be sufficient to deter Iran from nuclear-weapons ambitions. The U.S. needs to make clear that Iran will never be allowed to build nuclear weapons, so that any reasonable Iranian leaders should conclude that it is pointless to “suffer from the sanctions,” he said. Asked if he thinks negotiations between Iran and six world powers, including the U.S., may yield a durable deal to avert any military action, he said he hopes “a sound and credible diplomatic solution” is possible. Still, he said, sanctions alone -- or sanctions combined with negotiations -- are “insufficient” to stop Iran from continuing to pursue an atomic-bomb capability. The U.S. must issue “a credible military threat” to persuade Iran’s leadership to abandon any nuclear military ambitions, he said. “It seems they need something else” to “convince them to change their behavior, to make significant compromises at least for several years,” Steinitz said. In Israel, Prime Minister Benjamin Netanyahu emphasized the Iranian threat in remarks today to Jewish youth touring Israel on “Birthright” scholarships. “The time has come for the world to wake up,” he said according to remarks issued by his office. “The danger to the world is not Jews building in Jerusalem. The danger is from nuclear weapons in Iran and chemical weapons in Syria .” To contact the reporter on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net |
2024-09-20 | Bloomberg | Colorado Flood Cost to Top $2 Billion, Eqecat Says | Flooding and mudslides in Colorado this month caused more than $2 billion in economic losses, most of it uninsured, according to catastrophe risk modeler Eqecat. The estimate includes damage to homes and roads, lodging expenses for displaced people and the cost of restoring services, Eqecat said in a statement yesterday. About 1,500 homes were destroyed, and replacing them will cost $300 million, or $200,000 each, Eqecat said. Losses were estimated at $350 million in houses that were flooded without being destroyed. Record rainfall affected counties from Denver to the Wyoming border, damaging 17,500 homes, according to the modeler. Most of the property is outside zones covered by the National Flood Insurance Program, Eqecat said. Basic homeowners insurance excludes such losses. “Restoring the destruction from this series of events will take time, further affecting businesses and residents,” Eqecat said in the statement. “Hundreds of miles of roads have been flooded. Many bridges and at least four dams have been damaged or destroyed.” The cost in Colorado compares with as much as $50 billion last year from Superstorm Sandy, which struck states including New York and New Jersey. Rainfall in Boulder, Colorado, exceeded 17 inches (43 centimeters) this month, according to the National Weather Service. That compares will less than 3 inches for September in each of the past five years, Jim Kalina, a meteorologist for the service in Boulder, said in a phone interview. To contact the reporter on this story: Marci Jacobs in New York at mjacobs63@bloomberg.net To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net |
2024-10-27 | Bloomberg | Deutsche Bank Beats Estimates on Investment Bank | Deutsche Bank AG , Germany’s biggest bank, reported third-quarter results that beat estimates after the investment banking unit posted higher profit. Deutsche Bank rose as much as 2.4 percent in Frankfurt trading after earnings before tax at the corporate banking and securities unit rose 12 percent to 1.1 billion euros ($1.5 billion), beating analysts’ estimates. The Frankfurt-based company posted an overall loss for the quarter after writing down its stake in Deutsche Postbank AG. At the investment bank, run by Anshu Jain , sales and trading revenue slipped 4 percent, compared with the average 26 percent decline at Goldman Sachs Group Inc. , Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp., UBS AG and Credit Suisse Group AG, data compiled by Bloomberg show. Foreign exchange and a September rebound in client activity underpinned the sales and trading performance, the bank said. “Deutsche Bank’s investment bank fared relatively well compared to competitors, which is leading to the positive reaction from investors,” said Thomas Koerfgen , who helps oversee about $19 billion at SEB Asset Management in Frankfurt. “The securities division as well as the stable businesses helped absorb the Postbank writedown.” Deutsche Bank was up 94 cents, or 2.3 percent, to 42.13 euros by 12:52 p.m. in Frankfurt. The shares have fallen 6.6 percent this year, compared with a 2.5 percent drop in Bloomberg’s European Banking Index. Debt and Equity The German company reported a net loss of 1.21 billion euros in the quarter, less than the 1.52 billion-euro loss predicted by analysts. The Frankfurt-based bank said on Sept. 21 it would book a 2.3 billion-euro charge related to Postbank. Revenue from debt and other products at the investment bank increased 5 percent to 2.24 billion euros. Equity trading revenue slipped about 25 percent to 650 million euros, as client activity “remained muted” and Deutsche Bank exited “dedicated equity proprietary trading,” the bank said. UBS , Switzerland’s biggest bank, reported a surprise third- quarter loss at its investment bank yesterday on a slump in trading. Credit Suisse , the No. 2 Swiss bank, posted a 74 percent drop in profit as lower client activity curbed trading. Deutsche Bank increased the amount it set aside to pay corporate and investment banking employees in the first nine months by 9 percent to 4.62 billion euros from a year earlier as revenue at the unit rose. That’s enough to pay each of the unit’s 16,194 employees 285,352 euros for the period. ‘Positive’ Outlook Chief Financial Officer Stefan Krause , asked for an outlook on the fourth quarter and trading conditions on an analyst call, said the company is “very positive” after seeing how business went since the end of September. Deutsche Bank aims to return to a dividend payout ratio of 30 percent to 40 percent of profit as quickly as possible, Krause also said. Chief Executive Officer Josef Ackermann completed a record 10.2 billion-euro share sale this month to buy the rest of Bonn- based Postbank and meet stricter capital rules. Ackermann is building up his consumer-banking and asset-management operations to counterbalance the investment bank, where earnings are more vulnerable to financial market swings. Deutsche Bank offered 25 euros a share in cash last month to Postbank’s outstanding shareholders. The purchase, which may cost an estimated 6.4 billion euros if all shareholders accept the offer, would more than double Deutsche Bank’s retail clients to 24 million and add about 1,100 branches. Deutsche Bank had to mark down its existing 30 percent holding in Postbank before consolidating the company’s results with its own after the takeover. Net income excluding the Postbank charge amounted to 1.1 billion euros, the bank said. Highest Since Lehman The results “again prove the robustness of our recalibrated business model despite the difficult ongoing macro- economic and market conditions,” said Ackermann, 62, in a statement. Earnings at the retail-banking unit, run by Rainer Neske , 46, rose 64 percent to a better-than-estimated 245 million euros in the third quarter, the highest result since the collapse of Lehman Brothers Holdings Inc. in September 2008. The asset and wealth management unit posted pretax profit of 78 million euros, down from 134 million euros in the year- earlier period. Profit from transaction banking increased 6 percent to 214 million euros. Regulators from 27 nations last month more than doubled capital requirements for banks to avert future financial crises. Deutsche Bank expects to meet higher standards planned for 2019 as early as the beginning of 2013, Ackermann said today. The bank’s Tier 1 capital ratio, a measure of financial strength, totaled 11.5 percent at the end of September, compared with 11.3 percent at the end of the second quarter. The ratio doesn’t include the share sale. To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net ; Elena Logutenkova in Zurich at elogutenkova@bloomberg.net To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Edward Evans at eevans3@bloomberg.net |
2024-04-16 | Bloomberg | White House Burns as MIT’s Johnson Broods Over Default | Alexander Hamilton knew the secret for making public credit “immortal”: Back up your borrowing with taxes, to prove you can pay the money back. So Simon Johnson and James Kwak say in “White House Burning,” a selective survey of how the U.S. government, ignoring Hamilton’s precepts, has piled up $15.6 trillion in debt. This may be the last book Americans want to read as they scramble to file their income-tax returns today. Yet Johnson and Kwak bring dispassionate insights to bear on the bedeviling question of how to fix our fiscal mess before it gets fixed for us. “Our national debt problem will be solved, one way or another,” they write. “After all, even default is a solution, though probably the worst possible one.” Johnson, a former chief economist for the International Monetary Fund , teaches at the Massachusetts Institute of Technology and advises the Congressional Budget Office and the Federal Deposit Insurance Corp. Kwak is a law professor at the University of Connecticut and a fellow at the Harvard Law School Program on Corporate Governance. Free to Choose They are, in short, Eastern establishment wonks. Though they lean toward a paternalistic government, they work hard here to stand above the political sniping in Washington. “We could have a minimal federal government that protects our borders, runs the federal court system, and largely leaves people and companies to their own devices,” they write. “We could have a social-democratic welfare state.” Or we could have “something in between,” such as the mixed economy that already exists. What we can’t have -- unless we want to break our promises |
2024-06-09 | Bloomberg | Schaeuble Rejects Europe-Wide Deposit Insurance, Passauer Says | German Finance Minister Wolfgang Schaeuble said the time isn’t right to set up joint deposit insurance as part of a proposed European banking union, the Passauer Neue Presse reported , citing an interview. Joint liability would be unacceptable under current circumstances, Schaeuble said in comments published today in the newspaper. Taking on joint liability requires joint decision- making, he said, according to Passauer. To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net |
2024-11-11 | Bloomberg | Panamericano Bonds Worth Buying on Caixa Takeover Prospect, Standard Says | Bonds sold by Banco Panamericano SA , the lender that received a 2.5 billion reais ($1.5 billion) rescue this week, are attractive because the bank will likely be absorbed by state-owned Caixa Economica Federal, according to Standard Bank New York Inc. Future funding for Sao Paulo-based Panamericano will be an “insurmountable obstacle,” prompting Caixa, which bought a 35 percent stake in the lender in December, to absorb the bank, Ruth Mazzoni , a corporate bond analyst at Standard Bank, wrote in a report published yesterday. “The bonds would become sovereign risk,” Mazzoni wrote in the report. “Given that we see the default risk as very low, we believe that current trading levels represent an opportunity.” Panamericano’s 8.5 percent subordinated bonds due in 2020 traded at 97.8 cents on the dollar to yield 8.9 percent at 12:34 p.m. in New York, according to Trace. They have rebounded from as low as 80 cents yesterday, Trace data show. The lender is being investigated by the central bank after its controlling shareholder, Grupo Silvio Santos , borrowed 2.5 billion reais from the deposit insurance fund to cover potential losses at the bank that it said were caused by accounting “inconsistencies.” Bonds sold by other mid-size Brazilian banks may suffer because comments by the central bank yesterday “heightened our concern that the Panamericano affair has opened a Pandora’s box and that this is not a problem limited to Panamericano,” Mazzoni wrote in the report. The analyst rated debt sold by Banco Cruzeiro do Sul SA, Banco BMG SA, Banco Industrial e Comercial SA and Banco Pine SA as unattractive. To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net |
2024-08-30 | Bloomberg | Intellectual Ventures, Beasley, BSA:Intellectual Property | Intellectual Ventures, the so-called “invention company” begun by former Microsoft Corp. chief technology officer Nathan Myhrvold , has set up an in-house lobbying team in Washington , according to the Washington Post. The focus of the lobbying efforts will include patent reform, intellectual property rights and taxation of patent royalties for the company that has bought more than 70,000 patents, the newspaper reported. Robert Merbeth, former vice president of government affairs at San Diego’s Cricket Communications Inc., will lead the office, according to the Post. Merbeth told the Post that while in the past Bellevue, Washington-based Intellectual Ventures has had an under-the-radar presence in the capitol, the goal of the new office is to educate Congress and the administration on its issues, and be more consistently visible. University of Alabama Captures Carbon Dioxide Patent The University of Alabama received a patent for a method of capturing carbon dioxide. Patent 8,506,914, issued Aug. 13, covers a method of using the class of organic solvents known as imidazolium-based compounds to capture carbon dioxide from industrial emissions. The named inventor on the patent is Professor Jason E. Bara , in the university’s departments of chemical and biological engineering. According to Bara’s website, his research focuses on the development of processes for clean energy generation that use new solvents with little or no volatility for scrubbing carbon dioxide emissions. The university said in a statement that the technology covered by the patent has been licensed to Ion Engineering of Boulder, Colorado, a clean-tech company. The school applied for the patent in March 2012, with the assistance of Meunier Carlin & Curfman LLC of Atlanta. For more patent news, click here. Trademark Beasley, Sun Settle Trademark Dispute Over Call Letters Beasley Broadcasting Group Inc. (BBGI) and its competitor Sun Broadcasting Inc. settled a trademark suit, according to an Aug. 21 court filing. The two companies, both Florida-based radio broadcasters, were feuding over the letter “X.” The dispute had its origins in a change of format for one of Beasley’s radio stations, WJBX-FM. According to court papers, the station’s location on the FM dial is 99.3, and Beasley promoted the station as “99X,” using a neon green logo. On June 20, Beasley changed the station’s format from music to sports talk, affiliated it with the ESPN network, and changed the call letters. The rock music formerly available on that station is now heard on Beasley’s WRXK-FM station at 96.1 FM. The Naples, Florida-based company said it continues to use its “X” marks on outdoor sings, business cards, on-air materials and promotional items. The same day Beasley changed formats, Fort Myers-based Sun sent out a press release announcing that it would now “pleased to offer the X brand” a new home at a different frequency. The press release mentioned that Beasley’s “incredibly loyal audience was outraged to lose their brand,” Beasley said in its complaint filed in federal court July 12. The company also objected to Sun’s use of a neon green logo containing the “X” and written in the same font that Beasley used. The case was dismissed on Beasley’s request Aug. 21. Court filings don’t mention any settlement terms. The case is Beasley FM Acquisition Corp. v. Sun Broadcasting Inc., 2:13-cv-00516-JES-UAM. Insurer Seeks Indian Trademark for Hindi Word for Insurance An insurance company in Hyderbad, India , filed an application to register the Hindi word for insurance as a trademark in that country, The Hindu newspaper’s Business Line website reported. MFL Insurance Services is seeking to register “Bima” in spite of objections from other insurance companies, according to Business Line. The competitors say the word is too generic to be afforded trademark protection, Business Line reported. Last week India’s Intellectual Property Appeal Board rejected an application from Britannia Industries Ltd. (BRIT) to register “Snax” on the grounds it was phonetically similar to “Snacks,” which is a generic term, according to Business Line. Counterfeit Goods Worth $5.1 Million Seized in Two U.S. Raids U.S. Customs and Border Protection seized $5.1 million worth of fake consumer goods in two separate actions, according to Aug. 27 government statements. In New Jersey , at the port of Newark , a shipment of 70,000 items coming from China with an estimated value of $3.9 million was seized. Among the categories of fake products were razor blades, toys, sunglasses, markers and batteries, the government said. Customs officials worked with the Consumer Products Safety Commission, and used the commission’s health and safety rules to target the cargo for physical examination, the government said. At Los Angeles International Airport, customs seized 215 watches, which, had they been genuine, would have had an aggregate retail price of $1.2 million. Among the companies whose trademarks were found on the counterfeits were Rolex Group, Omega SA, Cartier International, and LVMH Moet Hennessy Louis Vuitton SA. (MC) These fakes also originated in China, the government said. The shipping manifest for the watches listed a declared value of only $173, according to the government’s statement. During the 2012 fiscal year, the government said it seized fake watches and jewelry with a retail value of $186 million. For more trademark news, click here. Copyright New Zealand Police Say No Criminal Charges in Dotcom Spying Case New Zealand police yesterday ruled out filing criminal charges in relation to the government spying on Internet entrepreneur Kim Dotcom. While the Government Communications & Security Bureau did contravene the Crimes Act by intercepting communications between Dotcom and an associate, it “did not have the necessary intent to satisfy the elements of the offense and be considered criminally liable,” police said in a statement. “No criminal charges will be laid against any person.” Prime Minister John Key was forced to apologize to Dotcom in September for the GCSB’s surveillance of him during a U.S.- led operation to close his Megaupload website on piracy charges earlier last year. The government this month changed the law to allow the GCSB to spy on New Zealand citizens under certain circumstances. The agency was previously restricted to monitoring “foreign” communications, organizations and people. While Dotcom was born in Germany as Kim Schmitz, he has New Zealand residency. Dotcom still faces extradition to the U.S., which has described his cloud-storage Internet site as the biggest copyright infringement case in its history. Armed police stormed Dotcom’s Auckland mansion in January last year, seizing 18 luxury vehicles , including a 1959 pink Cadillac, art, cash, computers and hard drives. For more copyright news, click here. IP Moves BSA Hires Victoria Espinel, Former U.S. IP Czar, as President The Business Software Alliance has named Victoria Espinel president and chief executive officer, the Washington-based software-industry advocacy group said in a statement yesterday. Espinel left her post as the first U.S. Intellectual Property Enforcement Coordinator earlier this month. Known informally as the Obama administration’s IP czar, Espinel had served for four years, developing and implementing the administration’s strategy for intellectual property enforcement. Before that she was senior counsel for intellectual property issues at the Office of the U.S. Trade Representative and assistant U.S. trade representative for intellectual property and innovation. There she served as chief U.S. trade negotiator for intellectual property and innovation issues. She has also been a professor teaching intellectual property law at George Mason University , and served as an adviser on intellectual property issues to the staff of the U.S. Senate Judiciary Committee, Senate Finance Committee, House of Representatives Judiciary Committee and House Ways and Means Committee. Espinel has an undergraduate degree in foreign service and a law degree from Georgetown University and a master’s degree in law from the London School of Economics. To contact the reporter on this story: Victoria Slind-Flor in Oakland, California , at vslindflor@bloomberg.net. To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net . |
2024-06-03 | Bloomberg | Fed’s Rosengren Says Money Market Funds May Be Vulnerable to Europe Crisis | Federal Reserve Bank of Boston President Eric Rosengren said U.S. money-market mutual funds may be vulnerable to Europe ’s debt crisis. Money-market funds “have sizeable exposures to European banks, by virtue of holding the banks’ short-term debt,” Rosengren said today in a speech at Stanford University in Stanford, California. Some funds “are potentially sensitive to a disruption in the European banking system, should one arise from the fiscal and sovereign-debt problems we are seeing.” Concerns that money funds could hurt stability haven’t been adequately addressed by Congress or regulators to prevent a recurrence of the outflows after the bankruptcy of Lehman Brothers Holdings Inc. in 2008, Rosengren said. The Dodd-Frank Act passed last year mandated the Fed to monitor emerging risks to financial stability in the wake of the U.S. recession that ended two years ago. “The set of issues surrounding” money funds “is in sum a vulnerability that needs to be addressed,” Rosengren, 54, said. Money-market mutual fund assets totaled $2.73 trillion as of this week, according to the Washington-based Investment Company Institute. European Union and International Monetary Fund officials have agreed to pay the next installment to Greece under last year’s 110 billion-euro ($161 billion) bailout, and will focus on wrapping up a new bailout package to prevent the euro area’s first sovereign default. The EU and IMF have also arranged rescue packages for Ireland and Portugal to stop the spread of the crisis. Address Vulnerability One solution to address the vulnerability of money market funds would be to “think about extending insurance” to them, Rosengren said in response to a question after the speech. However, there isn’t much political will to do something like that and other solutions are more viable, he said, such as forcing them to hold capital cushions or allowing the net asset value of the funds to float. Speaking about the U.S. economy , Rosengren said “it’s been a very slow and halting recovery that we’ve experienced to date,” similar to the pace after previous financial crises. Regulators are seeking to determine what companies could cause problems to the overall financial system, and which types of asset price movements could be threats. Federal Reserve Vice Chairman Janet Yellen said on June 2 that growth in syndicated loans needs to be monitored, while Kansas City Fed President Thomas Hoenig has said he’s watching rising farmland prices. Threaten Stability Rosengren, a former bank regulator before becoming president of the Boston Fed in 2007, said rising asset prices may threaten stability only if they impair credit. For example, recent “dramatic” rises and declines in the price of silver indicate the volatility of commodities prices without requiring any policy response, he said. The Boston Fed chief said he agreed with the view of economists Carmen Reinhart and Kenneth Rogoff, co-authors of the 2009 book “This Time Is Different,” that recoveries following recessions caused by financial crises tend to be slower than normal. One reason is that banks that experienced large losses may choose to shrink their balance sheets to improve their capital ratios rather than issuing new shares and diluting current shareholders, Rosengren said. That can reduce their willingness to lend and, if widespread, curb overall credit growth, he said. Lenders may need to be required to have capital buffers which would not be rebuilt by shrinking loans, he said. To contact the reporters on this story: Steve Matthews at smatthews@bloomberg.net Dakin Campbell in San Francisco at dcampbell27@bloomberg.net. To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net |
2024-10-04 | Bloomberg | U.S. Oct. NAHB/First American Improving Markets Index (Text) | Following is the text of the Housing Opportunity Index from the National Association of Home Builders. List of Improving Housing Markets Eclipses 100 in October A total of 103 housing markets across the United States qualified to be listed on the National Association of Home Builders/First American Improving Markets Index (IMI) for October, released today. This is up from 99 markets listed as improving in September and is the largest number of metros on the IMI since it was created one year ago. A total of 33 states and the District of Columbia are represented on the October list. The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in October include such geographically diverse locations as Santa Cruz , Calif.; Pocatello, Idaho; Abilene, Texas; and Savanna, Ga. “While 11 new housing markets were designated as improving in October, 92 metros retained their spots on the IMI and just seven slipped from the list,” noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This is an encouraging sign that the housing recovery is proceeding at a steady pace as firming prices and employment help spur new building activity, which in turn generates new jobs and more home sales.” “The fact that most markets are maintaining their spots on the improving list from month to month is an important indication that the recovery trend is solidifying,” agreed NAHB Chief Economist David Crowe. “At the same time, overly tight credit conditions are certainly constraining consumers’ ability to purchase homes as well as builders’ ability to construct them.” “The expansion of the improving markets list to more than 100 metros marks an important milestone on the road to recovery,” noted Kurt Pfotenhauer , vice chairman at First American Title Insurance Company. “For potential buyers across the country, it is becoming increasingly apparent that now is a good time to explore a new-home purchase.” The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six months following those measures’ respective troughs before being included on the improving markets list. A complete list of all 103 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in October, is available at www.nahb.org/imi. Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m., ET, unless that day falls on a Friday - in which case, the index is released on the following Monday. A full calendar of future release dates can be found at www.nahb.org/imi. Source: National Association of Home Builders http://www.nahb.com/facts/economics/housingopindex |
2024-09-06 | Bloomberg | Wauthier’s Life Is in Spotlight After Ackermann Exits | Three years ago Pierre Wauthier ran a half-marathon on his 50th birthday. Last month he took his own life, leaving a typed note criticizing Josef Ackermann , one of Europe ’s most prominent financial figures. The decision by the triathlete, husband and father of two to end his life was described as shocking by friends and co-workers, who knew the chief financial officer of Zurich Insurance Group AG (ZURN) as a hard-working problem-solver who brought humor to the dry world of insurance accounting. His letter mentioning Ackermann, who stepped down as Zurich’s chairman after Wauthier, 53, committed suicide, also confounded colleagues. Zurich Insurance held a memorial service for Wauthier today at Zurich’s Grossmuenster church, an edifice built in the Middle Ages overlooking the Limmat River. “Pierre was a resilient chap, and his suicide seems totally out of character,” said Paul Goodhind, an independent insurance industry consultant, adding he knew Wauthier well from the time he followed Zurich Insurance as an analyst. “Pierre had an air of self-confidence about him, and I always saw him as a high flyer.” Suicide Note Wauthier, born in London to a German mother and French father, returned to Switzerland in late 2007 after a stint in California to take the position of group treasurer at Zurich Insurance, the country’s biggest insurer. Four years later, he was promoted to CFO. His tenure under Ackermann, who joined the company after 10 years as the chief executive officer of Deutsche Bank AG (DBK) , lasted about 15 months. In a typed and signed note, under the heading “to whom it may concern,” Wauthier wrote that Ackermann created an unbearable working environment, according to a person who read the letter and asked not to be identified because the matter is private. Ackermann, who resigned on Aug. 29, said allegations that he bore some responsibility for the suicide were “unfounded,” while acting Chairman Tom de Swaan, 67, and CEO Martin Senn said they saw no signs of conflict between the executives. The board will conduct a review to make sure no undue pressure was put on the CFO, they said. In a statement on Sept. 1, Ackermann said that “out of respect,” he doesn’t want to make any further comments about the matter. Phone calls to Joerg Neef, a spokesman for Ackermann, were not returned over the past two days. ‘Always Respectful’ Among the attendees of today’s memorial service were Axel Lehmann and Geoff Riddell, both members of Zurich Insurance’s executive committee, as well as former Chairman Manfred Gentz. Zurich Insurance wants to “learn the lessons of the recent past and use them to build a stronger future,” de Swaan said at the service. Senn told attendees that the firm needs to “continue on its path and continue to look after its values.” “Colleagues speak of his kindness, humor, his great sensitivity and his quirky taste of ties,” de Swaan said. “Despite his superiority, he was always respectful to others.” Wauthier, who had French and British citizenship, worked a lot and enjoyed it, former co-workers said. In his early days at Zurich’s investor relations department, colleagues would find him poring over spreadsheets until late at night, according to two people who knew him at the time. He was knowledgeable and loved numbers, they said. Ackermann Meeting Ackermann, 65, didn’t know Wauthier well and typically saw him about once a month as part of regular board briefings, said a person close to the former Deutsche Bank CEO, asking not to be identified because the matter is private. While the former colonel in the Swiss Army put pressure on management to improve Zurich Insurance’s performance, he didn’t consider his efforts excessive, the person said. One meeting occurred before the presentation of second-quarter earnings on the afternoon of Aug. 14. The two men, together with James Quin, the head of investor relations, had a discussion about how to present the progress the company was making on reaching year-end targets , according to two people briefed on the meeting who asked not to be identified because they aren’t authorized to speak publicly. There was no indication the meeting, or other encounters between the men, would have upset Wauthier to the point of suicide, said one of the people. London Trip Ackermann’s abrupt departure after sent the company’s shares down as much as 3.8 percent on Aug. 29 and sparked doubts about Zurich Insurance’s financial health after it missed analysts’ profit estimates in three of the past four quarters and announced a surprise write-off in October. That forced Senn to tell analysts on a conference call on Aug. 30 there was no link between Wauthier’s death and the company’s business. The shares closed at 236.50 Swiss francs in Zurich, unchanged on the day. They dropped 5.1 percent in the five days through Aug. 30, bringing annual declines to 2.8 percent. Senn, who spent two days in London with Wauthier less than a week before he was found dead on Aug. 26, said the CFO seemed “as fit as a fiddle,” according to an interview in NZZ am Sonntag, published Sept. 1. Executives were making presentations to investors and Wauthier “did an excellent job, for which I complimented him,” he said. “He was a person of high integrity,” Senn, who declined to speak to Bloomberg, told the newspaper. “Pierre was humble and concentrated fully on his work. That’s why he was not well known publicly.” Tunisia, Algeria Wauthier grew up traveling and living with his parents in Africa because of his father’s work as a journalist for Agence-France Presse, said his widow, Fabienne Wauthier, in a telephone interview. The family lived in Tunisia , South Africa and Algeria , she said, adding that the two met while studying at the Sorbonne University in Paris. Wauthier held a master’s degree in international finance from l’Ecole des Hautes Etudes Commerciales outside Paris and a master’s in private law from the Sorbonne. After starting his career in 1982 with a year at KPMG , Wauthier joined the French ministry of foreign affairs and returned to Africa as assistant manager for cultural and technical cooperation affairs at the French embassy in Khartoum, Sudan. He returned to Paris in 1985 and joined JPMorgan Chase & Co. (JPM) , where he worked in investment banking for French financial institutions, and in 1994 moved to London with responsibility for the bank’s insurance product group. In late 1996, Zurich Insurance hired him as the corporate credit and investment risk manager, a newly established position with responsibility for controlling and evaluating the company’s credit risks. ‘Expat Life’ Wauthier served as the head of investor relations between 1999 and 2002, before taking the CFO job at the company’s Los Angeles-based unit Farmers Group Inc., where he stayed until late 2007. “We were leading the expat life, moving around a lot and living in different countries, and you really rely on each other,” Fabienne Wauthier said, adding that there were “no problems” within the family. They bought the former hotel and restaurant Loewen, in Walchwil, Switzerland , on the eastern shore of Lake Zug, with plans to renovate it. They were given permission to renovate the façade, remodel existing spaces and build extensions in 2011 and again this year, according to the municipality’s records. The town, with just over 3,500 residents and about a 45-minute drive from Zurich, describes itself as an “oasis of relaxation.” The area, popular with expatriates because its income taxes are among the lowest in the canton, also has properties of Fiat SpA CEO Sergio Marchionne and German Formula One driver Sebastian Vettel. ‘Great Dad’ Wauthier earned about 3 million francs ($3.2 million) in compensation last year, according to a person with knowledge of the matter who asked not to be identified because the company doesn’t disclose the information. He remained approachable and attentive to his subordinates, according to former colleagues. Wauthier was a runner and a triathlete as well as “a great rock ’n’ roll dancer,” according to his widow. He registered for a half-marathon in Switzerland in each of the past four years, according to Datasport, the main service provider and data manager for sporting events. “He was a great dad,” Wauthier’s daughter Laura said by phone. “He wasn’t always home, but when he was home he was a great dad.” To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net Carolyn Bandel in Zurich at cbandel@bloomberg.net To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net |
2024-09-27 | Bloomberg | China Stocks Jump Most in Three Weeks | China’s stocks jumped the most in three weeks on speculation the government will announce measures to bolster the equities market after the Shanghai Composite (SHCOMP) Index fell below the 2,000 level yesterday. The Shanghai Composite rose 2.6 percent to 2,056.32 at the close. It pared a rally of as much as 3.2 percent after a person with direct knowledge of the situation said the China Securities Regulatory Commission will hold a regular press briefing at 4 p.m. and has no plans to announce a halt on initial public offerings. The CSI 300 Index (SHSZ300) added 3.1 percent to 2,251.72. China’s stocks surged in the afternoon after the Shanghai Securities News, operated by the Xinhua News Agency, said there was speculation the CSRC would announce 10 measures to boost equities while Zheshang Securities Co. said there was market talk the regulator might suspend IPOs. Citic Securities Co. (600030) and China Shenhua Energy Co. led a rally for brokerages and energy producers. China’s markets will be shut next week for holidays. “Stocks are up because of the speculation that there’s an announcement about IPO reform later at 4 p.m.,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Even if it is true, it will be a short-term rally because the main issue is economic growth. After reaching new lows yesterday, investors are also finding excuses to buy today and make quick profit before the last day of trading tomorrow.” The Shanghai index briefly fell below the 2,000 level for the first time in three years yesterday, when trading volume plunged 35 percent from the daily average this year. China’s stocks have fallen because of “low” investor confidence, share oversupply and concerns about corporate governance, Dennis Lim, who helps manage $48 billion of emerging-market funds at Templeton Asset Management Ltd., said yesterday. IPO Sales “There’s speculation that the securities regulator may do something to reform IPO sales and suspend IPO sales for a while,” said Wang Weijun, a strategist at Zheshang Securities in Shanghai. After the market close, the China Securities Journal reported the CSRC issued information security rules for the securities and futures industry. There’s definitely no halting of IPOs, the 21st Century Business Herald reported on its website, citing an unidentified official from the CSRC. So far this year, the CSRC has expedited approvals of foreign investors, cut stock-trading fees by 25 percent and allowed individual investors to advise on pricing IPO shares as part of efforts to boost the market. Citic Securities, China’s biggest listed brokerage, jumped 4.9 percent to 11.54 yuan. Haitong Securities Co., the second largest, climbed 6.3 percent to 9.42 yuan. GF Securities Co., the third biggest, gained 6.4 percent to 13.40 yuan. Cyclicals Rebound Investors should increase their stock holdings as market- boosting measures may be introduced should the Shanghai index stay below 2,000, Ling Peng, a strategist at Shenyin & Wanguo Securities Co., said in a note today. The index may end higher in October, he said, recommending brokerage, insurance and cyclical stocks. Anhui Conch Cement Co., the nation’s biggest cement maker, gained 3.2 percent to 15.71 yuan. Zoomlion Heavy Industry Science and Technology Co., China’s second-biggest maker of construction equipment, added 4 percent to 8.43 yuan. China Shenhua, the nation’s largest coal producer, rallied 3.7 percent to 22.51 yuan. The time for a rebound in stocks is coming as the September-to-November period is the traditional peak season for production, Zhang Yidong, an analyst at Industrial Securities, wrote in a report dated yesterday. Industrial Securities was ranked No. 1 for the equity strategy research by the New Fortune magazine last year. Smallcap Rally Downstream demand is improving as cement, steel, iron ore and coal prices have started to stabilize and rebound, and liquidity may improve next month, according to the report. The People’s Bank of China added a record net 365 billion yuan ($57.9 billion) to the financial system this week as cash demand rises before a weeklong holiday starting Oct. 1. Beijing Toread Outdoor Products Co. (300005) rose 5 percent to 17.16 yuan, pacing an advance for companies in the smallcap ChiNext index, after the China Securities Journal said major stockholders offered to extend the period for when they must hold shares to ease oversupply. Major shareholders of 32 ChiNext companies have offered to extend the lockups on the holdings, the China Securities Journal reported today, citing statements. The extension covers 2.78 billion shares worth about 38.4 billion yuan and major holders either promised not to cut stake this year or offered to extend the lockups, it said. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong added 1.3 percent today. The Bloomberg China-US 55 Index (CH55BN) , the measure of the most-traded U.S.-listed Chinese companies, fell 0.6 percent in New York yesterday. Poor Sentiment The Shanghai Composite has lost 7.6 percent this quarter, the most in a year, and is the worst performer among global markets after Cyprus and Mongolia. It’s valued at 9.5 times estimated earnings, compared with the average of 17.9 since Bloomberg began compiling the weekly data in 2006. China’s dispute with Japan over contested islands in the East China Sea , the effect of Europe ’s debt crisis on China exports and policy uncertainty before a change of leadership later this year have also hurt investor sentiment. A report today showed Chinese industrial companies’ profits dropped for a fifth month in August. Net income for Chinese industrial companies fell 6.2 percent from a year earlier to 381.2 billion yuan, the National Bureau of Statistics said today in Beijing. That compares with a 5.4 percent decline in July and a 1.7 percent slide in June. Today’s report may increase pressure on Premier Wen Jiabao to step up easing measures as risks grow that annual expansion in the world’s second-biggest economy will be the weakest in 22 years. The People’s Bank of China has cut rates twice since early June and lowered lenders’ reserve requirement ratios three times from last November. --Zhang Shidong. With assistance from Weiyi Lim in Singapore. Editors: Allen Wan, Richard Frost To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net |
2024-02-14 | Bloomberg | Mitsubishi, Apple, Halliburton: Intellectual Property | Mitsubishi Heavy Industries Ltd. failed to persuade a U.S. judge that General Electric Co. infringed its patent on wind turbine technology. The U.S. District Court in Orlando, Florida ruled on Feb. 8 that Mitsubishi Heavy doesn’t get anything on its claim of infringement and General Electric won its counterclaim for judgment of non-infringement, according to a posting from court clerk Sheryl Loesch. The ruling upheld a July 5 decision in favor of General Electric that eliminated a need for a trial. The court, in its interpretation of the claims in Mitsubishi’s patent 7,452,185, “has too narrowly interpreted the patent’s scope,” Mitsubishi Heavy said in a statement Feb. 12. The company has the option to appeal the ruling to the U.S. Court of Appeals for the Federal Circuit, the Washington-based court that hears appeals of patent cases. Mitsubishi Heavy, based in Tokyo, sued Fairfield, Connecticut-based General Electric in 2010 claiming infringement of a patent which applies to technology to reduce the burden on a wind turbine by controlling the pitch angle of the blades in accordance with the blade rotation angle and other factors. “Mitsubishi Heavy will quickly issue notification if there’s any progress that merits disclosure,” Hideo Ikuno, a spokesman for the company, said in a phone interview yesterday. The case is Mitsubishi Heavy Industries Ltd. v. General Electric Co., 6:10-cv-00812-JA-GJK, U.S. District Court for the Middle District of Florida (Orlando). Enservio Gets Patent on Debit Card Insurance Reimbursement Enservio Inc. , a company that develops software products for insurance companies, received a U.S. patent on a method of insurance claims reimbursement that involved the use of debit cards. Patent 8,346,665 covers what the company calls “dual activation financial products.” It explained in the patent that often the reimbursement method of giving a check to the insured can be expensive and subject to loss and fraud. The debit cards can be loaded with a specific amount, and their use can be limited to “participating retail establishments.” Enservio says this method permits the insurance company to restrict the goods and services for which the money can be used. The technology enables the use of multiple cards tied to the compensation, permitting their use by more than one person. Needham Heights, Massachusetts-based Enservio applied for the patent in April 2010, with the assistance of Boston’s Bingham McCutchen LLP. For more patent news, click here. Trademark Apple, Gradiente Electronica Must Share Brazilian IPhone Mark Apple Inc. , doesn’t have the sole right to use the iPhone trademark in Brazil, that country’s IP regulators ruled, the BBC reported. Gradiente Electronica , a Brazilian company, registered the mark in 2000, according to the BBC. Apple had contended it was entitled to sole use of the mark because Gradiente Electronica took 12 years from its registration of the mark to produce a product and didn’t use the mark between January 2008 and this month, according to the BBC. Brazil’s Institute of Intellectual Property said that while Apple doesn’t have the exclusive right to use the mark with telephones, it can use it exclusively for other products, such as clothing or software, the BBC reported. Thailand Rice Variety Given EU Geographic Origin Protection In what may be the first regulation of its kind, the European Union has entered a name written in the Thai language and alphabet for a product that originates in Thailand into the register of protected designations of origin and protected geographic indications. The product is a kind of gelatinous rice known as Khao Hom Mali Thung Kula Rong-Hai. It took the applicant five years to persuade the European Commission to grant the protection. According to the registry entry, the rice is grown in five provinces in northeast Thailand. When cooked it is “velvety, spongy and slightly sweet.” The regulation specifies that it must be packaged within the five-province area, which has slightly saline soil. It can be cultivated only once a year. The regulation was published in the Official Journal of The European Union on Feb. 11. For more trademark news, click here. Copyright Government Argues Against Review of $220,000 Downloading Damages The Obama administration has filed a brief to the U.S. Supreme Court in a copyright case involving unauthorized music downloading. The case, which began in federal court in Minnesota in 2006, is against a woman who is accused of downloading 1,702 songs without authorization from the file-sharing website Kazaa and making them available for free to other computer users. Three juries reached verdicts in favor of the record companies. The judge granted a second trial after the first because of an improper jury instruction. A third trial was set after the record companies refused to accept the judge’s reduction of the jury’s $1.92 million award in the second trial. In September a federal appeals court said Jammie Thomas- Rasset owed the record companies $222,000 in damages, overturning a lower-court ruling that had reduced the amount. She had been sued by labels owned by the world’s four largest recording companies, Sony Corp.’s Sony Music Entertainment, Access Industries Holdings Inc.’s Warner Music Group Corp., Vivendi SA’s Universal Music Group and Citigroup Inc.’s EMI Group. After the appeals court ruling, Thomas-Basset asked the Supreme Court for review. In its Feb. 11 filing, the government argued that the appeals court correctly increased the damages, and that a $220,000 award is “consistent with due process” and that further review of the case isn’t warranted. The high court case is Jammie-Thomas Rasset v. Capitol Records Inc. 12-715, U.S. Supreme Court (Washington). The appeals case is Capitol Records v. Thomas-Rasset, 11-2820, U.S. Court of Appeals for the Eighth Circuit (St. Louis). The lower- court case is Capitol v. Thomas-Rasset, 06-01497, U.S. District Court, District of Minnesota. Africa IP Forum, Postponed Over NGO Objections, Set for Feb. 26 South Africa’s Department of Trade and Industry has rescheduled a conference on IP issues that was postponed last year because of strong objections from a variety of non- governmental organizations. The conference, organized by the U.S. Commerce Department together with the World Intellectual Property Organization, was originally set for April 2012 in Cape Town, South Africa. It was put on hold after many objections were raised that it put too much emphasis on enforcement. Among the organizations that raised objections were Electronic Information for Libraries ; Consumers International; the Center for Health, Human Rights and Development, Uganda; and Knowledge Ecology International. Global Health Watch, a coalition of public health experts, NGOs, community groups, health workers and academics, said in a statement that last year’s proposed conference failed to address conflict of interest, lacked a development and public interest intention, and lacked transparency and information. The conference is now set for Feb. 26 and 27 in Midrand, South Africa, which is between Pretoria and Johannesburg. According to a statement from the Department of Trade and Industry, the conference will now “ emphasize the successes, challenges and strategies in the establishment of IP regimes that encourage innovation and entrepreneurship, and improve trade and investment, while protecting public health and safety.” Photographer’s Trade Group Submits ‘Orphan Works’ Proposal American Photographic Artists , a trade group of professional photographers, has responded to a request from the U.S. Copyright Office to submit a proposal for legislation dealing with so-called “orphan works.” This term refers to works that have been abandoned, forgotten, or are otherwise unprotected by their creators. APA argued in its proposal that many apparently orphan works have actually been hijacked or kidnapped, with information about their authorship stripped away. The association asked that Congress include in any proposed legislation dealing with orphan works the ability of the copyright holder to recover damages and attorney fees for “unwittingly orphaned creative work.” The organization noted that technological advances in recent years have enabled those in the photography community to develop a registry that can minimize the instance of works being treated as orphans. This registry, called the Picture Licensing Universal System, allows for multilingual machine-readable and human-readable rights information to accompany images For more copyright news, click here. Trade Secrets/Industrial Espionage ‘I Drank Halliburton Fracking Fluid,’ Colorado Governor Says In efforts to support drilling companies’ desires to keep from disclosing the ingredients in the fluids they use for the hydraulic fracturing process, Colorado Governor John Hickenlooper told a U.S. Senate committee that the fluid is so safe that he has even drunk it, the Washington Times reported. In testimony before the Senate Committee on Energy and Natural Resources he said that if companies such as Houston- based Halliburton Co. -- which produced the fluid he drank -- were required to disclose all the ingredients that they consider trade secrets, “they wouldn’t bring it into our state,” the Washington Times reported. The fluid was comprised entirely of ingredients from the food industry, he told the committee, and is “a benign fluid in every sense,” according to the newspaper. Fracturing fluid is forced into the ground to break apart rock structures and release oil or gas, the newspaper reported. To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at vslindflor@bloomberg.net. To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net . |
2024-05-11 | Bloomberg | JPMorgan Loss May Force Shift in Debate on Wall Street Rules | JPMorgan Chase & Co. (JPM) ’s $2 billion trading loss has intensified the call for tighter regulation in Washington, with presidential campaign officials weighing in alongside lawmakers in response to the bank’s disclosure. Any progress by financial-industry lobbyists in securing changes to the Dodd-Frank Act’s proprietary-trading ban may have been halted with the May 10 announcement by Jamie Dimon , JPMorgan’s chairman and chief executive officer, said Representative Barney Frank , the Massachusetts Democrat who co- wrote the regulatory overhaul. “They sensed some momentum in undercutting things, but this strengthens our case strongly politically,” Frank said yesterday in a telephone interview. “It tears a lot of holes in Jamie’s arguments.” In addition, New York-based JPMorgan is facing new scrutiny, with lawmakers calling for hearings, Securities and Exchange Commission Chairman Mary Schapiro saying her agency is monitoring the bank. The Commodity Futures Trading Commission planning to review the loss, according to a person briefed on the matter. Dimon, 56, has been a prominent critic of Dodd-Frank provisions including the so-called Volcker rule, which is meant to bar proprietary trading by banks with federally insured deposits. In a conference call to discuss the losses stemming from “egregious” failures in the bank’s chief investment office, Dimon accurately forecast the Washington response. ‘Very Unfortunate’ “It is very unfortunate,” Dimon said. “It plays right into all the hands of a bunch of pundits out there.” Senator Tim Johnson, the South Dakota Democrat who leads the Senate Banking Committee, said in a statement that the loss underlines why “opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers.” Senator Bob Corker , a Tennessee Republican who serves on the committee, called yesterday for hearings on the loss. Sean Oblack, Johnson’s spokesman, said in a statement that the Banking Committee is “waiting to learn more of the facts before making a decision on a hearing.” Senator Carl Levin , the Michigan Democrat who co-wrote the trading ban named for former Federal Reserve Chairman Paul Volcker, said in a conference call with reporters that the loss shows Dimon’s view to be “dramatically proven wrong.” ‘Telling Moment’ “It’s a very telling moment and I guess we should thank JPMorgan for exposing an area where we clearly need more oversight,” Jared Bernstein , former chief economist for Vice President Joe Biden , said yesterday. Andrea Saul, a spokeswoman for Republican presidential contender Mitt Romney , said yesterday that the loss “demonstrates the importance of oversight and transparency in the derivatives market, something Governor Romney has called for in the past.” “As president, Governor Romney will push for common-sense regulation that gives regulators tools to do their jobs, and that gives investors more clarity,” Saul said in a statement. Romney, a former private-equity executive who served as Massachusetts governor, declined to answer questions about JPMorgan during a campaign rally yesterday in Charlotte , North Carolina. ‘Textbook Illustration’ Levin and Senator Jeff Merkley, the Oregon Democrat who co- wrote the proprietary-trading provision, said yesterday during their conference call that JPMorgan has become a “textbook illustration” of why federal regulators should tighten the restrictions being drafted in the Volcker rule. “Four years after the downfall of Bear Stearns, Lehman Brothers and the hundreds of billions in a bank bailout, we still see that there is a nagging need for regulators to implement financial reforms which became law in 2010,” Bart Chilton , a Democrat on the Commodity Futures Trading Commission, said yesterday. Wall Street firms such as JPMorgan, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) have lobbied regulators including the Fed, Securities and Exchange Commission and Federal Deposit Insurance Corp. to expand exemptions included in their initial Volcker rule proposal, complaining that the measure is so broad and ill-defined that it will increase risks for clients. The rule would allow banks to continue activities that are considered hedging, as well as to serve as market-makers, accepting risk or holding shares of trades to facilitate client orders. Levin and Merkley said JPMorgan’s loss shows the need for a stricter interpretation of the hedging exemption included in the draft proposal released in October. Dimon has said the trade wouldn’t have run afoul of the Volcker rule restrictions, which are scheduled to take effect on July 21. Frank said he planned to use the bank’s loss to defend the law against efforts to roll back derivatives regulations and force wider exemptions in the Volcker rule. He pointed to the impact of the losses on Dimon, who has been the leading voice against many of the regulations Frank put into place. “This will diminish his ability to be that voice,” Frank said. To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net |
2024-08-11 | Bloomberg | Berlin Marks 50 Years of Wall Building, Taunts to Border Guards | East Germany’s communist regime built the Berlin Wall overnight, by stealth, on a Sunday in August 1961 when many Berliners were out of town. Just two months earlier, as the exodus out of East Germany swelled to a flood, the communist leader Walter Ulbricht had said, “No one intends to build a wall.” That wall, reinforced over the years to become the most impenetrable border in the world, survived for 28 years and claimed at least 136 lives, including nine children. Dozens of exhibitions, events and ceremonies in Berlin mark the 50th anniversary of Aug. 13, 1961. One of the most intriguing is “The Other View,” a photographic documentation of the wall in the years after it was built. The photos were taken by East German border guards equipped with official cameras and show the rarely seen eastern side. The pictures -- more than 1,000 of them -- were discovered in an innocuous-looking cardboard box in the Intermediate Military Archive in Potsdam by the author Annett Groeschner and photographer Arwed Messmer. They show a border that has nothing to do with the image of the Berlin Wall that first springs to mind -- those 4-meter-high walls of reinforced concrete with curved tops on either side of the treacherous death strip and painted with colorful graffiti on the western side. Patchwork Wall In the early years, the wall was a patchwork of whatever materials the East German regime could scrape together: barbed wire, bricks, concrete, even wooden fencing. It was also easier to communicate across, as the exhibition in the dilapidated former Italian Cultural Center on Unter den Linden makes clear. The East German border guards were under orders to note details of any attempted contact from the west and were barred from responding to the sometimes bizarre taunts, exhortations to flee and invitations. “Nordgraben, 12:40: Two West Berlin building workers pull down their trousers and show the border guards their naked behinds,” is one dry entry. “Puderstrasse, 11:30: A man throws Bild newspapers over the wall” is another. Equally well documented is an incident the guards must have been tempted to keep to themselves: “Britzer Allee-Bruecke, 19:15: A woman and a man silently throw a parcel over the border. It contains two packs of cigarettes with 24 cigarettes in each, two bags of peanuts, two bars of chocolate, one West German pfennig coin, and a note saying: ‘Best wishes and greetings to you and your colleagues.’” Patterns in Snow The guards’ notes serve as captions to the photos, which were digitally stitched together by Messmer to create a 250- meter panorama of 43 kilometers of Berlin Wall. Groeschner also documented praise and criticism from border guards for colleagues, noted in the logs of regiments. Some of the reprimands are very funny. “When bored, he used his feet to make patterns in the snow while on duty,” is one example. Others are more tellingly sinister: “He used his gun at such an angle that the border violator was not forced to stop.” Information on “The Other View”: http://www.aus-anderer-sicht.de Merkel Event Chancellor Angela Merkel and President Christian Wulff will be among the guests at tomorrow’s official event at the Berlin Wall Memorial on Bernauer Strasse, where one of the few intact sections of the wall still stands. A huge program of events includes accounts by eyewitnesses of the construction of the wall, concerts, discussions with people who assisted refugees in their escape, readings of the biographies of victims and a dance performance. The outdoor museum and a new area of parkland with information posts about the Berlin Wall don’t give much of a sense of how formidable it was. Twenty-two years later, this is now one of the most desirable residential areas of town, with swish new townhouses encroaching onto the former death strip. To remember what it was really like, go inside the documentation center and watch the film shown on a loop there, shot from a helicopter 50 meters above the wall in 1990, just months after the border opened. Information on the film: http://www.mauerflug.de/. For the Berlin Wall Memorial site, go to http://www.berliner-mauer-gedenkstaette.de/en/. (Catherine Hickley writes for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own.) To contact the writer on this story: Catherine Hickley in Berlin at chickley@bloomberg.net. To contact the editor responsible for this story: Mark Beech at mbeech@bloomberg.net . |
2024-09-12 | Bloomberg | Goldman Sachs Says Shanghai Trade Zone to Boost Airlines Further | China’s biggest domestic carriers are among stocks that will extend gains as Shanghai opens a free-trade zone, according to Goldman Sachs Group Inc. China Southern Airlines Co. and China Eastern Airlines Corp. have share “upside,” along with Lao Feng Xiang Co., a Shanghai-based jewelry company, and Hong Kong-traded Shanghai Industrial Holdings Ltd. (363) , Goldman Sachs analysts led by Chenjie Liu wrote in a note dated today. The Shanghai Composite Index has risen 15 percent since reaching this year’s low on June 27. Banks, shippers and port operators have paced the gains since Aug. 22, when the Ministry of Commerce said the city’s free-trade zone proposal was approved in July. Shanghai International Port Group Co. (600018) climbed 170 percent from Aug. 22 through yesterday, the most among the 995 companies on the Shanghai index. China Eastern , which is based in Shanghai, has climbed 35 percent. “Be selective in choosing potential beneficiaries,” the Goldman Sachs analysts wrote. “Given actual earnings boost may show up only in the medium term, we prefer beneficiaries that have upsides based on existing businesses, with the Shanghai free trade zone potentially providing room for additional upside.” The free-trade zone is part of the central government’s plan to develop the city into a global financial and shipping center by 2020. A draft plan for the area seen last week by Bloomberg News included expanded opportunities for foreign companies in industries from banking to health insurance. Details of the new zone’s policies and rules haven’t been announced. To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net |
2024-03-10 | Bloomberg | John Byrne, Geico CEO Buffett Cited for ‘Brilliance,’ Dies at 80 | John J. Byrne, whose turnaround of auto insurer Geico Corp. led billionaire Warren Buffett to buy the company and call him “the Babe Ruth of insurance,” has died. He was 80. Byrne died on March 7 at his home in Etna, New Hampshire , according to Robert E. Snyder, a family spokesman. The cause was prostate cancer. In his letter to Berkshire shareholders reviewing 1980, Buffett credited Byrne’s “managerial brilliance” with resuscitating Geico after his arrival in 1976. “There aren’t many Jack Byrnes in the managerial world, or Geicos in the business world,” Buffett wrote. “What could be better than buying into a partnership with both of them?” At the time of the letter, Buffett’s Berkshire Hathaway Inc. (BRK/A) owned about one-third of Geico. Buffett bought the remaining two-thirds in 1996 for about $2.3 billion and made it a unit of Berkshire. By then, Byrne had left Geico for White Mountains Insurance Group (WTM) Ltd. “Jack’s performance in reviving Geico from near-bankruptcy was truly extraordinary, and his work resulted in enormous gains for Berkshire,” Buffett wrote in his letter summarizing 1985, noting Byrne’s departure. “We owe him a great deal for that.” Byrne’s tough-love tenure at Geico entered the annals of corporate turnarounds. He arrived in 1976 as president and chairman of Geico -- an acronym for Government Employees Insurance Co. -- after working as executive vice president at the Travelers Corp. Geico was near bankruptcy, having posted a net loss of $126 million in 1975, according to a 1981 article in Forbes magazine. Cutting Costs Byrne closed about 100 offices, cut the workforce to about 4,000 from 7,000, quit the highly regulated auto-insurance markets of New Jersey and Massachusetts and raised rates by as much as 40 percent, Forbes said. He also reached a reinsurance agreement with competitors, potentially saving the industry, and sold $75 million in preferred stock to restore the company’s capital, Forbes said. By 1980 the company was back to health, with $44 million in net operating income in the first nine months, Forbes said. Buffett, who had bought his first Geico shares in 1951 as a business student at Columbia University in New York , was among the buyers of the preferred stock that was part of Byrne’s rescue plan. Buffett, attracted to Geico’s depressed share price, had arranged to meet Byrne soon after he took over as CEO. Meeting Buffett “We talked to maybe 2, 3 a.m.,” Byrne said of the meeting, held at the home of Washington Post publisher Katharine Graham, according to Roger Lowenstein ’s “Buffett: The Making of an American Capitalist” (1995). “He wanted to know the things I would do. What did I think of our ability to survive?” When the business day dawned a few hours later, Buffett called his broker and bought 500,000 shares of Geico at 2 1/8 and left a standing order for shares in the “multimillions,” Lowenstein wrote. At the Washington Post board meeting that drew him to town, Buffett announced, “I’ve just invested in something that might go under. I could lose the entire investment next week.” Instead, Geico’s share price almost quadrupled within six months, to 8 1/8, and Buffett became the controlling investor over the next few years, Lowenstein wrote. By 1981, Buffett was hailing Byrne as the “ Babe Ruth of insurance,” according to Forbes. Father’s Business Byrne, with advice from Buffett, hired Louis Simpson as Geico’s chief investment officer in 1979. Simpson rose to president and CEO of Geico’s capital operations from 1993 until 2011 and was once identified by Buffett as a candidate to succeed him in an emergency to oversee all of Berkshire’s investments. John Joseph Byrne was born on July 11, 1932, in Paterson, New Jersey, to John J. Byrne and Winifred Mohr Byrne. As a teenager, he worked at his father’s insurance agency in Wildwood, New Jersey, according to a death notice on the website of Rand-Wilson Funeral Home in Hanover, New Hampshire. He graduated from Rutgers University in New Jersey in 1954 and earned a graduate degree in mathematics from the University of Michigan. He began his career as an actuary at Lincoln National Life Insurance Co. After Geico, Byrne led the Fireman’s Fund Insurance Co. until its acquisition in 1991 by Allianz AG Holding of Germany , now Allianz SE. (ALV) He retained control of the fund’s holding company, which he renamed Fund American Enterprises Inc. Today it is White Mountains Insurance Group. Byrne served on the Board of Overseers of the Tuck School of Business at Dartmouth College in Hanover, which his three sons -- John, Mark and Patrick -- attended, according to the death notice. He served on the board of Internet retailer Overstock.com Inc., the company his son Patrick led as CEO. The two clashed at one point over Patrick Byrne’s public campaign against short selling. Besides his sons, Byrne’s survivors include his wife, Dorothy; seven grandchildren; and his brother, James Byrne, according to the funeral home. To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net To contact the editor responsible for this story: Charles W. Stevens at cstevens@bloomberg.net |
2024-02-22 | Bloomberg | Humana to Set Up a Health-Insurance Joint Venture with Discovery in U.S. | Humana Inc ., a U.S. healthcare group, will partner with Discovery Holdings Ltd ., Africa’s largest medical insurance administrator, to offer clients of the U.S. company wellness and loyalty programs. As part of the plan, Humana, based in Louisville, Kentucky , will set up a new entity in the U.S. in which Discovery will have a 25 percent stake. Humana will also buy 25 percent of The Vitality Group, Discovery’s U.S. subsidiary, the companies said in a statement today. The value of the transaction wasn’t disclosed. The partnership will give Humana customers access to the wellness and loyalty programs designed by Discovery and provide the Johannesburg-based insurer with the opportunity to sell its incentive plans to Humana’s 10 million medical members, the companies said. Discovery’s program in South Africa offers discounted gym memberships and subsidizes the purchase of fruit and vegetables to help the insurer lower medical claims. Discovery posted net income of 1.42 billion rand ($197 million) for the six months through December, up from 829 million rand a year earlier, the company said in a separate statement. Sales rose 83 percent to 5.98 billion rand. To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net |
2024-05-17 | Bloomberg | Stamford Targets $100 Million for Bordeaux Wines, Jade Antiques | Stamford Management Group, a Singapore-based family office that oversees about $300 million, is seeking $100 million from investors as it opens up funds that buy French Bordeaux wines and jade antiques. Stamford , which looks after the wealth of three families including that of Chairman William Chan, plans to raise $50 million for a fund that invests in wines and the same amount for a fund that buys Asian antiques, said Chan. Stamford is in talks with local and foreign private banks to raise money from high- net-worth individuals and other family offices, he said. The manager is betting rising affluence in the world’s fastest growing region will drive demand for luxury items. Asia’s 3.3 million high-net-worth individuals had $10.8 trillion in assets, outnumbering those in Europe for the first time, according to the 2011 World Wealth Report by Capgemini and Bank of America Corp.’s Merrill Lynch Global Wealth Management unit. “The larger family money is increasingly looking to professionalize and is looking at Asia ,” said Chan in an interview in Singapore yesterday. Dealing with tangible assets makes it “easier to connect more on an emotive level than say stocks or bonds, which are non-physical and which you would just keep with the bank,” he said. The Cornerstone Grand Cru Investment Fund buys only wines with a lifespan of 30 years to more than 100 years mainly from Bordeaux and some from Italy and Spain , Chan said. Principals, including Stamford Asset, have invested about $5 million in the fund, which returned about 28 percent from May 2010 through July 2011, according to Chan. Wine Bets The fund bought futures contracts on Latour 2008 En Primeur, a French Bordeaux wine, at about 150 euro ($191) a bottle in the middle of 2009, Chan said. The price rose to about 800 euro and the fund took profit by selling the futures at 700 euro, he said. Stamford has teamed up with Singapore-based wine distributor Hock Tong Bee (S) Pte, which has a wholesale distribution channel in Asia, to ensure the liquidity of the fund by giving it access to customers, Chan said. “As lifestyle improves in Asia, the potential take up rate and growth for wines will be very large,” Chan said. The value of the Liv-ex 100 Index of Fine Wines , the industry benchmark, has almost tripled in the past decade. Art, Antiques The Asian Art and Antique Fund buys artefacts including jade, royal porcelain and Chinese calligraphy at public auctions such as those run by Christie’s International Plc, Chan said. The fund will only hold on to the investments for about six months to 18 months before selling at auctions and to institutional buyers, Chan said. The fund targets annual returns of 20 percent, he said. The transaction amount of the Chinese auction market has expanded to 93.4 billion yuan ($14.8 billion) in 2011 from 125 million yuan in 2000, according to data compiled by Artron Group, which provides services to Chinese art collectors. Demand for art is increasing as high-net-worth individuals look at the asset class as part of their succession planning, Chan said. Efforts by the Chinese government to buy back art works from its citizens as part of the nation’s cultural preservation policy is sustaining prices, he said. Last year, China overtook the U.S. to become the world’s largest art and antiques market, said a report published by the Netherlands-based European Fine Art Foundation in March. Auctions in mainland China, Hong Kong , Macau and Taiwan raised 9.8 billion euros in 2011, according to the report. “What has been produced in the Qing Dynasty will never be replicated,” Chan said. “We think that with more funding, we can get into the market more efficiently.” To contact the reporter on this story: Tomoko Yamazaki in Singapore at tyamazaki@bloomberg.net To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net |
2024-06-04 | Bloomberg | B.P. Marsh Rises Sixth Day on Possible Dividend: London Mover | B.P. Marsh & Partners Plc, the U.K. private-equity firm with investments ranging from risk assessment to financial advising, rose for a record sixth consecutive day as investors await a potential payback from the sale of an insurance stake. B.P. Marsh didn’t address dividend plans in an earnings report today, meaning a special payment based on the planned sale of 80 percent of its stake in Hyperion Insurance Group Ltd. to private-equity firm General Atlantic may be possible, Barrie Cornes, an analyst at Panmure Gordon, said in a note. The shares rose as much as 1.6 percent to 131 pence, the highest intraday price since Oct. 2007, and were up 0.8 percent at 11:44 a.m. in London. B.P. Marsh has gained 5.7 percent since the stock began rising on May 28, the longest winning streak since the company’s 2006 listing. B.P. Marsh (BPM) is an early-stage minority investor in financial businesses, particularly insurance, that was founded in 1990 by majority holder Brian Marsh. Profit rose 56 percent to 5.7 million pounds ($8.7 million) in the year ended Jan. 31, the London-based company said today. The venture capital provider said yesterday that Besso Insurance Group Ltd., in which it owns 36.5 percent, bought Istanbul-based aviation broker HSB. B.P. Marsh is also “in the final stages of completing a new investment,” it said today. “The uncertainty over what will happen to the Hyperion proceeds and a flagged new investment” prompted Cornes to maintain a hold recommendation on shares, with a price target of 130 pence. The stock has risen 12 percent this year compared with a 10 percent advance in the 83-company FTSE AIM Financial Services Index. To contact the reporter on this story: Patricia Laya in Madrid at playa2@bloomberg.net To contact the editor responsible for this story: David Risser at drisser@bloomberg.net |
2024-05-07 | Bloomberg | King Coal Losing Crown as U.S. Gains Energy Independence | After working 37 years in the coal mines of West Virginia , Ronny Justice punctuates his sentences with coughs. He lost his job a year ago, leaving him without health insurance just as he’s battling the early stages of black-lung disease. Justice, 57, had planned to work four more years in a job that paid him about $58,000 a year, enough to eat out anytime he wanted. Now he can’t remember the last time he hit the Park Avenue Restaurant and Motel for a $6.95 steak dinner. Boone County, where he lives, hosts 91 mines and an annual festival meant to celebrate “coal and its heritage.” Like Justice’s health, that heritage is under siege. In the next three years America will close a record number of coal-fired power plants , enough electricity to power 18.4 million households for a year, government estimates show. Lower-cost gas, new environmental rules and increased use of renewable energy sources, such as wind and solar, are reducing coal usage. “Things are looking grim,” Justice says. “I’ve never seen it this bad, no. Coal’s what pays the bills in West Virginia.” Pain is being felt from Appalachia to Wyoming as the U.S. reduces its dependence on coal to almost the lowest level in 63 years -- the cost of the country becoming more energy self-sufficient through the production of more natural gas and oil. Prices have retreated 57 percent from a record in June 2008 as coal’s share of U.S. electricity generation sank to a record low of 37 percent last year from 50 percent in 2005. Its future looks even bleaker after President Barack Obama said in his State of the Union address that fighting climate change would be a second-term priority. Greenhouse Gases Obama failed in his first term to get Congress to pass legislation controlling greenhouse gases. His new pick to run the Environmental Protection Agency, Gina McCarthy , helped create the U.S. Northeast’s cap-and-trade program for power plants as Connecticut ’s environmental chief. Cap-and trade is a system aimed at reducing greenhouse gas emissions by allocating permits to polluters that must surrender enough allowances to cover their discharges of carbon dioxide or pay fines. In his Feb. 12 State of the Union Address, Obama said more aggressive steps to address climate change are needed, citing natural disasters, from last year’s drought that reduced Mississippi River levels to Hurricane Sandy , which pummeled the East Coast, killing at least 147 people and causing an estimated $50 billion in damage. Superstorm Sandy “We can choose to believe that Superstorm Sandy and the most severe drought in decades and the worst wildfires some states have ever seen were all just freak coincidence,” he said in his address. “Or we can choose to believe in the overwhelming judgment of science and act before it’s too late.” Burning coal emits 205.7 pounds of carbon dioxide per million British thermal units compared with 117 pounds per million Btu for natural gas, according to data from the Energy Information Administration. Natural gas will fuel 28 percent of generation this year, compared with 30 percent last year and up from 16 percent in 2000. Coal’s decline is being exacerbated by increased reliance on renewable energy as its share of electricity jumps by about 54 percent during the next four years, spurred by federal and state mandates and tax incentives. As many as 5,400 direct U.S. jobs could be lost by 2015 as regulations prompt utilities to shut plants to comply with tighter environmental laws, based on data from the Energy Department and estimates from Matt Preston, principal coal analyst for the Americas region at Wood Mackenzie in Annapolis, Maryland. Mining Jobs Another 30,000 more may disappear in the coalfields and ripple through the businesses that support them, from local diners to the companies that help replace worn tires on mining equipment, said Douglas Blackburn Jr., president of Blackacrellc, a Richmond, Virginia-based industry consultancy, whose clients include Goldman Sachs Group Inc., Duke Energy Corp. and the U.S. government. Hydraulic fracturing, or fracking, has unlocked shale deposits that previously were uneconomical to produce. The losses in coal may be more than made up by the gains in shale. About 3.5 million new jobs will be created by 2035 as the U.S. exploits its shale reserves, a 2012 IHS study sponsored by the American Petroleum Institute , the Natural Gas Supply Association and others estimated. While most analysts expect a short-term bounce in coal this year as natural-gas prices rise, total U.S. coal production in March was down 3.3 percent from a year earlier, according to data from Bloomberg Industries. That trend is likely to continue because of tightening environmental restrictions and cheaper natural gas. Appalachian Pain No region is more affected than Appalachia , where West Virginia, the second-largest U.S. producer, accounted for 25 percent of the nation’s 91,611 coal jobs in 2011, Energy Department data show. Nationwide, industry payrolls plunged 46 percent from 1985 to that year, according to the figures. Houses and trailer homes line Route 85 as it slithers through hills to the foot of a mountain that holds Alpha Natural Resource Inc.’s (ANR) Independence mine. Many of the units have sagging roofs and rotting wooden porches, one with a rusty water heater sitting on it. The number of West Virginia miners or workers connected to mining who applied for unemployment benefits rose to almost 6,000 in 2012, from 2,045 in 2011, according to the state’s Commerce Department. Like many of them, Justice has run out of jobless benefits. After being unable to find a job, he sought the help of the United Mine Workers of America to get his pension, worth less than half of what he was earning, and to secure medical insurance. Unemployed Ranks About a mile away, James Gray, 47, of Danville, has also joined the ranks of the unemployed. He worked in the mines for 24 years. He and his wife, a licensed practical nurse, live off her salary. After he was fired from his $65,000-a-year job in 2011, they canceled cable television , reduced their auto insurance to just liability coverage and stopped eating out. “If she wasn’t working, we wouldn’t be making it,” he said. “We’re just barely getting by.” Linda Meeker has run the “Heart of God Soup Kitchen” in Danville since June 2010. The operation is open Monday through Friday for two hours in the last 10 days of the month. “That’s when people run out of money,” she said. The kitchen served a record 8,100 meals in 2012, about 30 percent more than in 2011, Meeker, 64, said. “In the past three months the meals have doubled because all the men have lost their jobs,” she said as the smell of garlic, spaghetti sauce and fried chicken filled the air. Food Stamps The number of West Virginians receiving food stamps last year averaged 346,833, data from the U.S. Department of Agriculture shows, up 25 percent from 2008. Even the prospect of employment in the mines can be ephemeral these days. Charles Williamson, of Logan, vowed to himself not to follow his father into the coal mines. After getting a bachelor’s degree in finance from Marshall University in Huntington, West Virginia, though, he was unable to find work as a stock broker. Burdened with student loans , he took a job with Alpha Natural Resources Inc. (ANR) He was laid off before he started. “I’m actually living with my parents,” he said. “A 40-year-old man living with his parents -- there’s no more jobs around here.” Blackburn, the industry consultant, is a fourth-generation miner. He has witnessed downturns before and heard about others from his father and grandfather. Losing Miners “It’s different,” he said. “We’re going to lose a lot of miners. The difference is even in the ’80s we were able to sell coal. Right now if you don’t have contracts, I don’t know where you’re going to sell coal. This is intense.” Each of the coal industry’s jobs generates six others, from hydraulic repair shops and fabrication businesses to conveyor belt repair, restaurants and health care, Blackburn said. The fuel’s decline is having the reverse effect. At Stephens Auto Center in Danville, new and used-car receipts were down 20 percent in November from a year earlier, said Richard Stephens, owner of the dealership. “There will come a time when I may have to make some hard decisions,” possibly laying off his workers, he said. Peabody, Arch Coal Inc. (ACI) and Consol Energy Inc. (CNX) are among the companies that have reduced production. Patriot Coal Corp. (PCXCQ) , spun off from Peabody in 2007, filed for bankruptcy protection in July, saying “the coal industry is undergoing a major transformation.” ‘Painful Adjustment’ “It’s got to go through a painful adjustment,” said Gerard McCloskey, chairman of Merlin Trade & Consultancy and founder of IHS’s McCloskey Group, a Petersfield, U.K-based coal market research company. “It’s got to happen so quickly. That makes it that much more painful.” Global demand for coal isn’t nearly as grim. Worldwide consumption will rise 2.6 percent annually in the next six years and even challenge oil as the top energy source, the International Energy Agency said Dec. 18 in its Medium-Term Coal Market Report. U.S. producers also may benefit in the European Union as carbon permits have plunged 48 percent in the past year and lawmakers resist measures to boost the market because it may negatively affect the economy as it tries to recover from recession. Prices would first have to rise to a level that makes it economical for U.S. companies to ship the power-plant fuel to the continent, said Lucas Pipes, an analyst at Brean Capital LLC in New York. Port Trouble While coal from Wyoming’s Powder River Basin (COALPWDR) and the Illinois Basin (COALIBMD) fare better domestically than the Appalachian variety because they’re more competitive with gas, the ability to capitalize on Asian demand has been slowed as environmental groups block expansion of U.S. port capacity, Wood Mackenzie’s Preston said. Back in Boone County, West Virginia, Richard Light, 46, frets about how he and his three daughters will make it in the next three years. He’s still employed by Hobet Mining, where he took a $5-an-hour pay cut and saw his personal days cut to six from 24. If he can make it three more years he’ll have 20 years of service, guaranteeing a pension and medical benefits. “You don’t know what’s going to come out of this,” he said. “People say there’s other jobs, but that’s not true. There’s nothing around here.” To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net |
2024-09-30 | Bloomberg | ‘Torturous’ Dodd-Frank Rulemaking Can Succeed, Regulators Say | U.S. financial-industry regulators said implementing the biggest Wall Street overhaul since the 1930s is both daunting and doable, even as tensions arise over jurisdiction under the Dodd-Frank Act. Federal Reserve Chairman Ben S. Bernanke , Deputy Treasury Secretary Neal S. Wolin and heads of agencies including the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Deposit Insurance Corp. told the Senate Banking Committee today their agencies will work together to ensure the law becomes an effective safeguard against a repeat of the 2008 credit crisis. “It is a process that is sometimes torturous, but it has worked before and it will work again,” John Walsh , acting Comptroller of the Currency, said at the Washington hearing. Lawmakers called regulators to testify on progress in implementing the measure signed by President Barack Obama on July 21 as rulemaking delays, battles over substance and the threat of missed deadlines emerged at the start of the effort. FDIC Chairman Sheila Bair this week was forced to delay a vote on her agency’s first major rulemaking. CFTC Chairman Gary Gensler , looking at a list of rules his agency must pass for derivatives markets, said some may not meet deadlines. “We’re human,” Gensler said during a Sept. 21 speech at the U.S. Chamber of Commerce. “Certainly something will slip.” Obama’s signing of the Dodd-Frank Act set off a race among lobbyists, banks and lawyers to influence how regulators put the mandate into action. Agencies must write more than 500 rules, conduct 81 studies and submit 93 reports in coming years. according to an analysis released by the Chamber of Commerce. Too Much Power Lawmakers at today’s hearing, including Republicans who voted against Dodd-Frank, questioned whether regulators had too much power to design and implement the new regulatory structure. “In many instances, Dodd-Frank has outsourced this committee’s responsibilities to unelected bureaucrats,” said Senator Richard Shelby of Alabama, the banking panel’s top Republican. Banking Committee Chairman Christopher Dodd , the Connecticut Democrat who co-wrote the law, said the job of turning lawmakers’ words into enforceable rules was properly placed with the agencies. “I don’t think anyone wants the Senate writing detailed prescriptions that require technical expert knowledge,” Dodd said in his opening statement. “Nor could we afford to tie regulators’ hands with rigid legislative requirements that can’t be adapted to changing circumstances.” The agencies may find it difficult to meld the legislation into a regulatory structure, something battles over jurisdiction won’t help, Senator Bob Corker , a Tennessee Republican, said in an interview yesterday. ‘Turf Protection’ “There was a lot of turf protection as we were going through the legislation, and I want to see how they are all working together to implement this,” Corker said. “When the rulemaking process gets under way, there are actually further turf battles, so we all need to keep an eye on that.” The FDIC vote on interim guidelines for winding down systemically risky firms was delayed Sept. 27 as regulators sought more time to review the agency’s proposal. Bair had circulated the measure to the members of the Financial Stability Oversight Council, a panel of regulators created by Dodd-Frank, on Sept. 17. Council Meeting The council, which is scheduled to hold its first meeting tomorrow, will focus on which financial firms may be deemed “systemic,” risk retention for securitizations and implementation of the so-called Volcker rule, which bans bank holding companies from trading for their own accounts, Wolin told lawmakers. Members of the council, including the heads of the Fed, Treasury Department, FDIC, CFTC, OCC and the Securities and Exchange Commission, will have to work together while respecting other agencies’ independence to ensure the regulatory overhaul achieves its goals, Bair said. “If we all start writing each other’s rules, this council will become an impediment and not a way to facilitate reform,” Bair said. The Fed, the Treasury and the regulators responsible for implementing the law have spent the past few months preparing a slew of rulemakings. In July, a day after Obama signed the law, the CFTC had 20 staff members at SEC headquarters to align their efforts. Within a week, the CFTC was meeting with the Fed on the derivatives provisions, trying to coordinate one of the most complicated undertakings, Gensler said. ‘Hard Pressed’ Gensler and SEC Chairman Mary Schapiro told lawmakers that new rules that require derivative contracts to be cleared should be “prospective and not retrospective.” Schapiro said that regulators would be “hard pressed” to retroactively apply margin requirements to firms. The regulators were addressing concerns of many in the market, including Warren Buffett ’s Berkshire Hathaway Inc., that contracts agreed to prior to the passage of the Dodd-Frank Act would either be broken or fall under increased regulatory burden. Gensler, addressing the concerns of non-financial companies that use derivatives to hedge risk that they may need to post more cash or collateral with each trade, told lawmakers that they would be considered “out of” the “margin requirement.” Derivatives are financial instruments based on the value of another security or benchmark. Some instruments, including contracts that insured mortgage-backed bonds, have been blamed for fueling a financial crisis that led to the worst recession since the Great Depression. New Offices The SEC has laid out at least 38 rules the agency plans to propose or adopt before the end of the year, according to its website. It will also establish five new offices, including the Office of Women and Minority Inclusion and the Office of the Investor Advocate, send at least two reports to Congress and award an independent consultant contract. Gensler’s agency has held at least 165 meetings since July 26, according to the agency’s website. The CFTC created 30 teams to address its own rulemakings, meeting with lobbyists and interested parties including JPMorgan Chase & Co.’s Blythe Masters , the bank’s head of commodities, and Peter Fisher , the head of fixed income for BlackRock Inc. The Fed, SEC and FDIC are also using their websites to disclose meetings with groups that want to shape the rules. To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net. To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net . |
2024-07-02 | Bloomberg | Chilean Reinsurance Prices Surge As Much as 65% After Quake, Brokers Say | Reinsurance rates in Chile have surged since the world’s fifth-strongest earthquake in a century struck the country, attracting more carriers to the market. Prices for reinsurance against catastrophic losses to property rose as much as 65 percent since the Feb. 27 quake, Aon Corp., the industry’s largest broker, said in a report yesterday. Because of the rate increases, “capacity has been plentiful,” Chicago-based Aon said. The earthquake and a subsequent tsunami killed more than 400 people, toppled bridges and closed factories and ports in an area of the country that provides 17 percent of Chile’s gross domestic product. Insurers and reinsurers led by Munich Re and Swiss Reinsurance Co. have said the quake would cost them a combined total of more than $6 billion. “Reinsurers have really been enlightened about Chile and now realize it is a more seismically active territory,” said David Flandro , head of global business intelligence at Guy Carpenter & Co., a unit of brokerage Marsh & McLennan Cos. He said he expects losses from the earthquake to rise as more damage is discovered. Chile’s earthquake could cost insurance companies as much as $9 billion, said analyst Amit Kumar of Macquarie Capital USA Inc., who said he discussed Chilean rates with reinsurance companies last week in Bermuda. Global reinsurance capacity is close to $450 billion, he said. Reinsurance contracts, which provide backup coverage to primary carriers, are often renewed on June 30 and Dec. 31 of each year. ‘Important and Necessary’ The rate adjustments were “important and necessary” for the industry, said Rolf Steiner, a region head of Swiss Re , the world’s second-biggest reinsurer, with responsibilities in South America. “Such adjustments are beneficial not only due to potential aftershock activity in the next years, but also given the volatile environment in the financial markets and low interest rates.” Munich Re, Swiss Re and Warren Buffett ’s Berkshire Hathaway Inc., the world’s three largest reinsurers, have said the quake will cost them a combined total of more than $1.5 billion. Hurricane Katrina, the most costly natural disaster in U.S. history, with more than $70 billion in insured losses, brought capital to existing carriers and led to the creation of new ones such as Harbor Point Ltd. and Validus Holdings Ltd. Wall Street formed the so called Class of 2005 with $35 billion of new capital after Hurricanes Katrina, Rita and Wilma that year boosted the price of coverage. Chile is one of the only places rates went up at the midyear renewal season, according to a report this week from the reinsurance broking arm of Willis Group Holdings Plc. Insurance premiums were 4.1 percent of Chile’s gross domestic product in 2008, equal to Norway and higher than the average 2.5 percent of GDP for nations in Latin America and the Caribbean, according to 2008 data from Swiss Re. To contact the reporter on this story: Sarah Frier in New York at sfrier@bloomberg.net A home damaged by an earthquake-induced tsunami stands in ruins in Iloca, Chile. Photographer: Morten Andersen/Bloomberg //<![CDATA[ $(document).ready(function () { $(".view_story #story_content .attachments img.small_img").each(function(){ var self = $(this); if (self.width() != 190){ self.width(190); } }); }); //]]> |
2024-09-17 | Bloomberg | Stocks, Spain Bonds Slip as Crops Lead Commodities Lower | U.S. benchmark stock indexes fell from almost five-year highs and Spanish bonds slid after finance chiefs deadlocked at euro-area debt-crisis talks and New York manufacturing slumped. Oil plunged, extending losses in commodities and shares of energy producers. The Standard & Poor’s 500 Index slipped 0.3 percent to 1,461.19 at 4 p.m. in New York. China ’s Shanghai Composite Index (SHCOMP) sank 2.1 percent amid concern the world’s second-largest economy is slowing and as tensions with Japan escalated. The euro slipped 0.1 percent to $1.3111 after rising more than 0.3 percent earlier. Spain ’s 10-year yield briefly climbed above 6 percent for the first time in a week and its two-year yield surged 20 basis points. Corn, soybeans and wheat lost more than 4 percent and oil tumbled 2.4 percent, the most in eight weeks. EU ministers failed to agree on a timetable for a more unified banking sector and clashed over terms of bailout requests and the role of the European Central Bank at a meeting Sept. 14 in Cyprus. A Federal Reserve report showed manufacturing in the New York region contracted at the fastest pace since 2009, underscoring concerns about the economy that prompted the central bank to announce plans to buy mortgage securities last week. “There was disappointment in Europe , the finance ministers met over the weekend and did not come to an agreement on bank regulation, which is fairly significant,” John De Clue, the Minneapolis-based regional investment director at U.S. Bank Wealth Management, which oversees $80 billion, said in a telephone interview. “People are waiting and watching now to see will this Federal Reserve action have the legs of the past or not. It’s difficult to say.” Market Movers The S&P 500 and Dow Jones Industrial Average retreated from the highest levels since December 2007. The Fed Bank of New York’s general economic index dropped to minus 10.41, the lowest since April 2009, from minus 5.85 in August. The median forecast of economists in a Bloomberg survey called for a minus 2 reading in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut. Gauges of raw-material, energy and financial companies led losses among the 10 main groups in the S&P 500 today, dropping at least 0.8 percent each. Netflix Inc. fell 5.8 percent today after the world’s largest video-subscription service was rated underperform in new coverage at Macquarie Capital USA Inc. Boeing Co. retreated 1.9 percent as Oppenheimer & Co. analyst Yair Reiner said the shares of the world’s largest maker of cargo aircraft may fall, citing GEnx engine issues after one cracked on a Boeing 787 Dreamliner during testing on July 28, spewing hot metal parts. Apple Climbs Apple Inc. climbed for a fourth straight day, rising 1.2 percent, after pre-orders of its iPhone 5 topped 2 million units in one day, more than double the sales record set by the previous model of the device. Because demand for the iPhone 5 exceeds the initial supply, some pre-orders will be delivered to customers in October, rather than September as previously planned, Apple said today in a statement. Two shares fell for every one that advanced in the Stoxx Europe 600 Index, which lost 0.3 percent after closing at the highest level since June 2011 last week. SSAB (SSABA) sank 6.9 percent, the most in seven months, as the Swedish steelmaker said demand for strip products has been much weaker than expected. Spanish 10-year bonds declined, with the yield rising as much as 22 basis points to 6.01 percent before trimming its gain and trading at 5.97 percent. The nation’s debt agency said it planned to sell 4.5 billion euros ($5.9 billion) of three- and 10-year debt on Sept. 20. The rate on 10-year Italian debt increased nine basis points to 5.11 percent. Yields on 10-year German bunds fell three basis points to 1.67 percent. ECB Governing Council member Luc Coene said rising bond yields may force Spain into asking for aid and agreeing to the ECB’s conditions for granting it. If “markets see that Spain will not” ask for aid, “then it will not last long before spreads will rise again, and then Spain will be somewhat forced to come back on its decision and submit to the conditionality program,” Coene said at a panel discussion in London today. ‘Ultimate Endgame’ “The euro area finance ministers meeting has come and gone, and despite the indication of willingness by the ECB to buy bonds, we are still no closer to what many in the market consider the ultimate endgame,” said Brian Barry , an analyst at Investec Bank Plc in London. “Until we reach a position where their resolve to contain yields can be tested, yields could continue to drift higher.” Swaps, Commodities The cost of insuring European corporate debt using credit- default swaps rose from a 13-month low. The Markit iTraxx Crossover Index of contracts tied to 50 mostly junk-rated companies climbed eight basis points to 468, gaining from the lowest level since Aug. 1, 2011. Oil dropped the most in eight weeks, declining more than $3 in less than a minute in late trading, as October options were about to expire. Oil for October delivery fell $2.38, or 2.4 percent, to settle at $96.62 a barrel on the New York Mercantile Exchange. Prices are down 2.2 percent this year. The decline was the largest since July 23. CME Group Inc. did not suffer any technical issues during the afternoon plunge in crude oil, gasoline and heating oil on the NYMEX, said Chris Grams, a spokesman for CME. Soybean futures plunged the maximum allowed by the Chicago Board of Trade on speculation that rain will aid planting and early crop development in South America. Corn dropped the most since May. Zinc and aluminum fell more than 1.2 percent. The S&P GSCI gauge of 24 commodities declined 2.3 percent after jumping 1 percent on Sept. 14 to the highest settlement since April 2. Bullish commodity wagers rose to a 16-month high just before the Fed’s pledge for more stimulus drove prices to a seventh weekly advance and banks from HSBC Holdings Plc to Citigroup Inc. forecast more gains. Hedge funds and other speculators lifted their net-long positions across 18 U.S. futures and options by 0.3 percent to 1.33 million contracts in the week ended Sept. 11, the most since May 2011, U.S. Commodity Futures Trading Commission data show. Copper holdings surged 25-fold to 17,509 contracts, the biggest gain on record. Gold bets climbed to the highest since Feb. 28, and silver wagers advanced for a seventh week. The MSCI Emerging Markets Index (MXEF) retreated 0.2 percent after climbing for a seventh day on Sept. 14, the longest run of gains in 11 months. Citigroup Inc. cut its 2013 Chinese economic growth forecast, while a dispute with Japan over islands claimed by both nations led to public protests in a dozen cities. India ’s Sensex index rose 0.4 percent after the central bank unexpectedly cut lenders’ reserve requirements and the government said last week it will open its retail and airline industries to foreign investors. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net |
2024-04-19 | Bloomberg | Humana Fires Law Firm Tied to Possible Medicare Leak | Humana Inc. (HUM) , the second-biggest private provider of Medicare coverage, is no longer employing a law firm whose actions are being reviewed by a U.S. senator in connection with his probe into whether government information was leaked this month that sent insurers’ stock soaring. Humana cut its connections with Greenberg Traurig LLP after learning of the review, according to Tom Noland, a spokesman for the Louisville, Kentucky-based company. The insurance carrier also has begun an internal investigation, Noland said yesterday in a telephone interview. U.S. Senator Charles Grassley , an Iowa Republican, is reviewing whether an investor company, Height Analytics LLC, received inside information from a Greenberg Traurig employee before telling clients the afternoon of April 1 that officials would change plans and reduce a proposed rate cut for Medicare Advantage plans sold by private insurers. Height today terminated its relationship with the Greenberg firm, a person familiar with the decision said. Grassley has also requested information from New York-based Greenberg Traurig about an e-mail one of its lobbyists, Mark Hayes, sent to a Height analyst on April 1 saying Medicare would change its decision. Jill Perry, a spokeswoman for Greenberg Traurig, declined to comment today on the firm’s relationships with Height and Humana. On April 17, Perry said the law firm didn’t receive or share any “material non-public” information. Hayes also didn’t immediately return telephone messages or e-mails today seeking comment. Humana Shares Shares of Humana and other insurers jumped in the last 20 minutes of the trading day after Height sent an e-mail to clients predicting the rate cut would be reduced. Medicare officially announced the decision about 45 minutes later. Humana rose 1.2 percent to $73.05 at the close of New York trading today. The shares (S15MANH) have declined 19 percent in the past 12 months. Noland said Humana had no advance notice of Medicare’s decision. The internal probe is meant to determine if Greenberg Traurig “in any way hurt Humana’s interests,” he said. It was unclear how long the investigation may take or if its results would be shared with Grassley, he said. WellCare Evaluating WellCare Health Plans Inc. (WCG) , another Medicare insurer, also employs the law firm. The Tampa, Florida-based carrier is “following Senator Grassley’s review of Greenberg Traurig closely, and we are evaluating potential next steps regarding our future relationship with the firm,” Jack Maurer, a spokesman, said in an e-mail. The Centers for Medicare and Medicaid Services, which oversees the insurance program, has also said it’s reviewing the situation. Height did nothing wrong, its managing partner, Andrew Parmentier, said in a statement on April 17 to the firm’s clients. Its report was based on “careful and close analysis” and not inside information, he said. Height sent Greenberg a letter today ending their business relationship, a person familiar with Height’s decision said. The person isn’t authorized to discuss the relationship between the firms and asked not to be identified. Parmentier declined to comment on the move in an e-mail. Height hired Greenberg in November to advise the firm’s analysts on “policy and regulatory implications of developments at the federal level affecting categories of providers and plans,” according to a letter outlining the relationship obtained by Bloomberg. Hayes handled the deal for Greenberg and said he would bill Height $595 per hour for his services. Hayes didn’t bill Height for his advice on the Medicare Advantage decision and wasn’t paid for it, the person said. Humana’s actions were reported earlier by the Wall Street Journal. UnitedHealth Group Inc. (UNH) , based in Minnetonka , Minnesota , is the largest private provider of Medicare coverage. To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net |
2024-09-05 | Bloomberg | Money Fund Lehman Moment Lurks as New Protections Stall | A year ago, when opposition from the asset-management industry killed her plan to make money-market mutual funds safer, U.S. Securities and Exchange Commission Chairman Mary Schapiro looked to Timothy Geithner, then the Treasury Secretary, to tackle “one of the pieces of unfinished business from the financial crisis.” It remains unfinished. As Schapiro and Geithner prepared to leave government toward the end of 2012, the effort started anew to make the $2.6 trillion money-fund industry less likely to disrupt global financial markets. Norm Champ, a Harvard University-trained lawyer and the SEC’s top regulator of mutual funds, canvassed the remaining four commissioners, seeking to find common ground on which new rules could be built after Schapiro failed to corral enough votes to push her plan forward. “We had hit a stalemate,” Commissioner Elisse B. Walter said in an interview. “We started with a blank sheet of paper to figure out where we could all agree, using the knowledge we’d acquired over the prior two years.” Champ and Walter succeeded in putting together a compromise acceptable to the other commissioners, no small feat given the divisiveness of the issue. In doing so, they scaled back Schapiro’s controversial proposals to require all money funds to float their share prices or set aside capital to absorb losses. No Change Even so, companies including Fidelity Investments and Federated Investors Inc. (FII) oppose the more moderate proposal, saying it will damage the appeal of money funds and add significant costs. What’s more, there’s no consensus that the SEC’s rules, unveiled in June for public comment, would prevent the kind of investor run that in 2008 woke up regulators to the threat money funds pose to the financial system. “Nothing has fundamentally changed to address the structural weaknesses of money funds,” said Sheila Bair, former chairman of the Federal Deposit Insurance Corp. who now leads the Systemic Risk Council, a nonpartisan group whose members include former Federal Reserve Chairman Paul Volcker and former Treasury Secretary Paul O’Neill. Yesterday, the European Union proposed money-fund regulation that in some ways is tougher than the SEC plan. The SEC began working with the Fed and Treasury Department on ways to buttress money funds shortly after the $62.5 billion Reserve Primary Fund was brought down in 2008 by a loss on Lehman Brothers Holdings Inc. debt. Vulnerability Exposed The fund’s decision to re-price its shares below $1, known as breaking the buck, set off a panic among investors, who had assumed their principal would never be lost. They pulled $310 billion from money funds in a single week, almost exclusively from those that were big buyers of corporate debt, according to the SEC. That almost froze the $1.76 trillion market for commercial paper, a short-term IOU used by companies to pay everything from bills to salaries. To halt the run, the Treasury Department guaranteed all money-fund shareholders against losses from default, putting the government on the hook for about $1.6 trillion in corporate and municipal debt, according to an estimate by research firm Crane Data LLC in Westborough, Massachusetts. The crisis showed that money funds were vulnerable to runs that could damage broader credit markets. Fifteen months later, the SEC imposed new rules, with the industry’s support. The rules improved portfolio liquidity, required higher-rated assets, shortened the average maturity of fund holdings and forced more disclosure of fund holdings. Round 2 “They were way less controversial and we could get them done reasonably quickly,” Schapiro said in an interview. “We were bolstering the resiliency of money-market funds, but we were not solving for the underlying structural problem. That was going to take more time.” Schapiro unveiled her second set of reforms -- which would have stripped funds of their fixed share price or required capital buffers against losses -- in November 2011. Several commissioners, whose votes she needed to approve new rules, publicly expressed doubts from the start. Industry lobbyists met with SEC commissioners and began pressing their arguments -- that regulators needed to study the impact of the 2010 reforms, and that Schapiro’s ideas would impose bank-style regulation on an investment product. Swing Vote The 10 biggest money-fund providers and the Investment Company Institute, the industry’s trade group, reported combined lobbying spending of about $63 million from the beginning of 2011 through the first quarter of 2013 in disclosures that reference money-market mutual funds, according to a review of documents by Bloomberg News. They found the most receptive audience with commissioners Daniel M. Gallagher and Troy A. Paredes, two Republicans, and Luis A. Aguilar, a Democrat. The industry considered Aguilar, a former general counsel at money-management firm Invesco Ltd., as a possible swing vote to block Schapiro’s proposal, according to a lobbyist who asked not to be named because the meetings were private. Both Aguilar and Gallagher complained that Schapiro’s team wouldn’t consider their input on the plan, including Aguilar’s call for a study of the impact of the 2010 rule changes. Gallagher accused Schapiro of ceding too much control to the Federal Reserve and Treasury. Schapiro’s Setback Schapiro’s effort collapsed in late August 2012 when Aguilar, Gallagher and Paredes told her they would vote against it, a rare move to block a proposal from being issued. Aguilar said the staff’s proposal was too narrow and should analyze “the cash management industry as a whole and the effects of the 2010 amendments.” Money-market mutual funds first appeared in 1971 as a higher-earning substitute for bank deposits, whose interest rates were capped by the Federal Reserve. Thousands of households and businesses use them as a safe place to park cash, though unlike bank accounts they’re not federally insured. For investors, the appeal of money funds stems from their stable pricing of $1 a share, implying that the value of the principal won’t decline. Investor Stampede Only two money funds have ever dropped below $1. The $35 million Community Bankers U.S. Government Mutual Fund was too small to cause wider fallout when it blew up in 1994. The Reserve Primary Fund proved to be a bigger deal in September 2008. Unsure of the safety of other funds and the stability of other large banks, companies and large institutions across the world responded to Reserve Primary’s troubles by stampeding out of scores of money funds, known as prime funds, that held commercial paper. One large sovereign wealth fund pulled more than $10 billion from BlackRock Inc. in a single withdrawal, according to an employee of the money manager who asked not to be named because the information wasn’t public. Money-market funds are the largest collective buyer of U.S. commercial paper, and their sudden withdrawal caused the market to seize up. Companies with outstanding paper faced possible insolvency because they couldn’t roll maturing debt into new issues. No Net After the crisis, Schapiro aimed to prevent another seizure in the commercial paper market more than she sought to protect investors in any one money fund. That mission gained urgency after Congress stripped the Treasury and Fed of their abilities to bail out money funds. “This core part of our financial system is now operating without a net,” Schapiro told the Senate Banking Committee on June 21, 2012. When Schapiro left the SEC in mid-December, after four years of steering the agency’s response to the financial crisis, the seeds of a new effort were already planted. Aguilar, Gallagher and Paredes had taken heat from former regulators such as Arthur Levitt, who led the SEC during the 1990s and labeled the failure to propose new rules for money funds a “national disgrace.” Geithner had called on the Financial Stability Oversight Council, a creature of the 2010 Dodd-Frank law, to recommend new money-fund rules. FSOC was created by Congress to fill regulatory gaps and monitor the kind of threats that contributed to the financial crisis. In late November, the FSOC issued a proposal consistent with the ideas favored by Schapiro and her staff. Preemptive Action With FSOC looking over their shoulder, SEC commissioners were united in wanting to show the agency could get the job done, Walter said. “The interest of FSOC changes the dynamic, brings in another force,” Walter said. “Everyone at the SEC agreed, no matter what their view was on the merits, that it was preferable that action on this issue should be taken by us.” Aguilar, Gallagher and Paredes also had gotten something they wanted: in late November, the SEC issued a study on the 2008 run and the role of current rules. The report made it clear that investors ran from prime funds and parked cash in funds that bought U.S. government debt, whose assets grew by $409 billion between early September and early October 2008, according to SEC data. It also showed that retail investors hadn’t contributed much to the run. Exemptions Sought After the study was issued on Nov. 30, Aguilar said he would consider additional regulation. Some fund companies were already pushing the commission to exempt retail funds from new rules, laying the grounds for a compromise. On Nov. 22, Charles Schwab Corp. Chief Executive Officer Walter Bettinger wrote in the Wall Street Journal that imposing a floating share price on prime funds used by institutions “is the right thing to do to bring the debate to closure.” Retail funds should be allowed to keep the fixed $1 share price, he wrote. Bettinger’s article, along with the SEC staff study, became an important factor because it signaled a compromise acceptable to key people in the industry, according to a person familiar with the SEC’s deliberations, who asked who asked not to be named because negotiations over the rule were private. A retail exemption was also favored by some commissioners, including Walter. Hallway Diplomacy When Walter stepped into the chairman’s job in December, she began by holding individual meetings with each commissioner, a type of walk-the-halls diplomacy that Schapiro rarely practiced. Gallagher and Paredes gave her a list of must-do issues, which included a new proposal for money funds, according to two people familiar with the matter. From the start, Walter expected she would have to find a way to bridge diverging views on the commission. Gallagher and Paredes were united against the idea for a capital buffer, though they were open to changing the fixed-share price. The Republican commissioners also liked an idea favored by the Investment Company Institute. ICI wanted to give money funds the ability to put down “gates,” or suspend withdrawals, when a fund was under stress, and to impose fees on redemptions, which would help rebuild a fund’s liquidity. Walter also worked with a new director of investment management, the SEC division developing the rule. Champ, who joined the SEC in January 2010 from hedge-fund manager Chilton Investment Co., was less enamored of capital buffer, according to two people familiar with the matter who asked not to be named. New Dynamic Champ worked side-by-side with Craig Lewis, the SEC’s chief economist, whose division had produced the study showing how investors fled prime funds and rushed into those that held U.S. Treasury debt. By late December, Champ had produced a two-page summary that didn’t include a capital buffer or other costlier reforms championed by the Federal Reserve and systemic-risk regulators. “Norm Champ brought an openness and willingness to engage in dialogue that was missing,” Aguilar said in an interview. “He was instrumental in turning the tide toward a constructive process.” Champ and his staff were looking for a way to carve out retail money funds, but there wasn’t an existing rule that distinguished them from institutional products. Investment companies themselves had different categorization methods. Eureka Moment The breakthrough came when the United Services Automobile Association, an investment adviser that caters to military members and veterans, proposed identifying retail funds as ones that limit a shareholder’s redemptions to $250,000 a day. Funds that set the limit would be able to keep the stable $1 share price. The SEC embraced the concept and adjusted the threshold to $1 million a day. “That was sort of a eureka moment, like ‘here is a really good idea,’” Walter said. Walter was replaced in April by Mary Jo White, who was favored by the White House to reestablish the regulator’s reputation as a tough sheriff of Wall Street. By then, the proposal’s main ingredients were already decided. White didn’t ask for substantive changes, according to two people familiar with the matter. In an interview, Schapiro questioned the decision to exempt funds that invest in government debt. Schapiro now works for Promontory Financial Group LLC, which has done work for Bloomberg LP, the parent company of Bloomberg News. “There is no investment product that is risk-free,” Schapiro said. “While the run was on a prime fund, my preferred approach would be to fix the structural weaknesses of a stable share price for all money-market funds.” Other critics say the proposal is weak because it didn’t include the capital buffer, which had been advocated by Robert E. Plaze, the SEC’s longtime expert on money funds, and some at the Federal Reserve. Plaze retired from the agency in August. Forcing money funds to hold capital against losses wasn’t popular with some securities regulators, who thought it would impose costly, bank-like rules on an investment product. Buffer Opposed Walter shared that concern, although she didn’t say so publicly, as the commission struggled with the rule in early 2012. Her doubts were supported by SEC economists, whose work showed that many prime funds couldn’t raise capital without reducing the returns they promise to investors or reducing their holdings of commercial debt. “The capital buffer was very different because it was adding a feature that doesn’t exist in this space,” she said. “Frankly, I had always worried, and then when I heard from the economists, I was more worried that capital buffers would really be too expensive to work.” EU Plan In Europe, Michael Barnier, the EU’s financial services chief, proposed yesterday that money-market funds there that maintain a fixed share price be required to build a cash buffer equivalent to 3 percent of assets. Existing funds would have three years to meet the requirement. German Finance Minister Wolfgang Schaeuble and his French counterpart, Pierre Moscovici, had called for stable-NAV funds to be banned in the EU. Federal Reserve Chairman Ben S. Bernanke said in June that, by including a floating share price in its proposal, the SEC was “moving in the right direction, and I’m hopeful that what comes out will be something that’s sufficient to meet the very important need of stabilizing the money-market funds.” The Treasury Department, whose secretary chairs FSOC, shares that view, according to a person familiar with the matter who asked not to be named. Treasury officials believe the SEC’s plan is largely consistent with FSOC’s recommendations issued in November, the person said. Industry Resistance “The Fed and Treasury will declare victory if there is either a floating NAV or a redemption limit,” Jaret Seiberg, senior policy analyst at Guggenheim Securities LLC’s Washington Research Group, said in a phone interview. “If the SEC can’t get this across the finish line, FSOC will wade back in.” The Investment Company Institute and many fund companies still oppose a floating-share price for institutional prime funds. Boston-based Fidelity Investments wants the SEC, at a minimum, to exempt funds that buy municipal debt from the proposal, said Nancy Prior, head of money funds at Fidelity. Plaze, who became a law partner at Stroock & Stroock & Lavan LLP, has criticized the agency’s decision to include ICI’s proposal for redemption gates. In an interview, Plaze said investors might flee a struggling fund if they thought it was preparing to suspend withdrawals. “The way the SEC structured the gates would be destabilizing,” Plaze said in an interview. Plaze also said the floating-share price should be imposed on retail funds as well. Looking back, Plaze said, the agency might have achieved a stronger rule had it moved forward with fuller reforms in 2010. The crisis was fresher in the minds of investors, regulators and taxpayers at that time. “Every time there is a crisis, there is an immediate effort with missionary zeal to fix it,” Plaze said. “The problem, of course, is we didn’t know what to do. We just didn’t.” To contact the reporters on this story: Dave Michaels in Washington at dmichaels5@bloomberg.net ; Christopher Condon in Boston at ccondon4@bloomberg.net To contact the editors responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net ; Christian Baumgaertel at cbaumgaertel@bloomberg.net |
2024-07-26 | Bloomberg | Fidelity National Financial Jumps After Profit Beats Analysts’ Estimates | Fidelity National Financial Inc. (FNF) , the largest U.S. title insurer, climbed the most in a year after profit beat analysts’ estimates on a rebound in sales to commercial real estate clients. The insurer jumped 90 cents, or 5.7 percent, to $16.66 at 4 p.m. in New York Stock Exchange composite trading. Fidelity National has advanced 22 percent this year, the biggest gain in the 24-compamy KBW Insurance Index. Second-quarter earnings per share of 36 cents beat by 5 cents the average estimate of four analysts surveyed by Bloomberg. Net income was $80 million, compared with $139.6 million a year earlier when the insurer recorded an after-tax gain of $63 million tied to the sale of a claims-management unit, the Jacksonville, Florida-based company said late yesterday in a statement. “The strength of our commercial business” aided results amid a slump in the residential market, Chairman William P. Foley said in the statement. Title insurers use their records and public documents to verify a seller is the property’s true owner and that the real estate is free from liens. Revenue from the commercial segment climbed 38 percent to $93.8 million from $68.1 million a year earlier. To contact the reporter on this story: Dan Kraut in New York at Dkraut2@bloomberg.net To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net |
2024-07-28 | Bloomberg | Singapore's New Hedge-Fund Regulation Puts City `Back on Map' | Singapore hedge fund startups are on the rise after the central bank approved new rules that didn’t impose a licensing requirement on most funds. Seven new hedge funds set up in May and June, according to Eurekahedge Pte , after the Monetary Authority of Singapore said in April that small funds can keep operating without a license as part of its review. The number of new funds last year fell 13 percent to 26, the lowest since 2003, as uncertainty over pending rule changes kept managers away, according to data from the Singapore-based industry researcher. “Singapore did not shoot itself in the foot by putting up proposals that will kill off the business,” said Kher Sheng Lee, a senior associate in the financial services group at Philadelphia-based law firm Dechert LLP in Hong Kong. “While some places are moving towards over-regulation with rigid rules and increase in compliance costs, Singapore has attempted to go for sensible regulation.” Singapore is vying with Hong Kong for a slice of the global $1.7 trillion hedge-fund industry as the region’s growth leads the world. Singapore has made it easier for hedge funds to set up shop on the island than in other Asian cities such as Hong Kong, where hedge-fund managers face the same licensing requirements as mutual-fund managers. New Rules After consulting the industry since September, Singapore’s central bank proposed in April that managers with less than S$250 million ($183 million) and serving not more than 30 qualified investors will be able to choose not to be licensed by submitting a “notification” to the MAS. They and their bigger licensed counterparts will need to maintain a minimum base capital of S$250,000 and have at least two directors. The regulator has recognized the needs of startups and smaller managers “not to be overburdened by regulatory costs,” said Michael Coleman , chairman of the Singapore branch of the Alternative Investment Management Association. Woodsford Capital Management Pte and Pure Capital Ltd. are among hedge funds being lured by Asia’s biggest hedge-fund center after Hong Kong. The lack of clarity on Singapore’s rules throughout last year made relocation to the city-state a difficult decision and cost business, said Peter Douglas , the principal of GFIA Pte, which advises investors seeking to allocate money to hedge funds and runs a wealth management business on the island. “The proposed changes will, and already are, taking off the brakes that were applied because of regulatory uncertainty,” he said. “Singapore is now fully back on the map as an attractive location for our industry.” Growing Industry Hedge-fund managers are currently exempt from holding a capital-markets services license provided they manage funds on behalf of 30 or fewer of what the regulator describes as “qualified” investors. They are still subject to local rules on securities and futures trading as well as money laundering. Singapore’s hedge-fund industry grew to $43 billion at the end of 2009, from about $10 billion in 2005, according to the central bank. There were 320 hedge-fund managers in the city- state last year, compared with fewer than 20 before 2001, according to the MAS. The number of hedge funds overseen by managers licensed by the Securities and Futures Commission in Hong Kong grew to 542, nearly five times the 2004 number, according to a September report from the regulator. Total assets managed by the industry stood at $55.3 billion as of March 31, 2009, representing six times the level in 2004, according to the SFC. Hong Kong While Singapore is attracting more interest with clearer regulation, it’s unlikely to overtake Hong Kong because of the latter’s “access to China-driven flow,” said GFIA’s Douglas. Hong Kong’s securities regulator “has made minimal changes to its regulatory framework, which some will say is because it went into this crisis with better rules and thus did not have to resort to ‘knee jerk’ reactions,” said Christophe Lee , chairman of AIMA’s Hong Kong/China national group. He said he doesn’t expect “any dramatic changes in Hong Kong.” By contrast, the European Union’s draft directive on alternative investment fund managers would limit borrowing by funds and may restrict European investors’ access to hedge funds based outside the 27-nation bloc. U.S. lawmakers are proposing to require hedge funds that manage more than $100 million to register with the Securities and Exchange Commission, subjecting them to audits, and to provide information on trades so authorities can assess systemic risk. Woodsford Capital The review by the MAS, which acts as Singapore’s central bank and regulator, is the most comprehensive of the fund- management industry since the city-state introduced incentives to lure alternative asset managers in 2002. The new rules still need to be legislated. Managers have about 18 months to meet the new requirements, the Singapore branch of AIMA said in a statement on April 29. Woodsford Capital, which started a macro fund in May, chose to set up in Singapore as the increased regulatory oversight would “provide assurance for investors” after Bernard Madoff’s $65 billion fraud shook confidence in the industry, said Chief Executive Officer Zhijian Wu. “Singapore has been as sensible and forward thinking as they can be about this,” said Peregrine Cust , founder of Prana Capital, which moved its investment team to Singapore from London in April. “It’s a very high-margin business, it brings lots of highly paid professionals into the local economy. It’s not going to take them that long to take this industry to critical mass.” Revamping Strategies Han Ming Ho, a partner at Clifford Chance, one of the first international law firms awarded a Singapore license, said he is handling more inquiries since the rules were announced. “A lot of guys are revamping their strategies, a lot of them are kick-starting their processes which they’ve put on hold,” said Ho, who heads the law firm’s funds practice group in Singapore. London-based Algebris Investments LLP, a $1.5 billion global financial hedge-fund manager, and Fortress Investment Group LLC , the $42 billion buyout and hedge-fund firm co-founded by Wesley Edens, have registered their offices in Singapore, according to the Accounting and Corporate Regulatory Authority , which regulates businesses in the city-state. Singapore, where the top tax rate for individuals is 20 percent, is also attracting more managers after the U.K. increased the top rate of income tax to 50 percent and European regulators work on tougher rules. The island-state was named Asia’s most livable city in a Mercer Consulting survey in May. Pure Capital, which uses computer models to pick trades, is “seriously considering” moving its head office to Singapore from London, with research and trading still in Wellington, New Zealand, said Chief Investment Officer Anthony Limbrick. The firm had planned to move more of its operations to London last year to be closer to investors. “Europe is going to very much become the ‘old world’ and get left behind; the hedge-fund industry will move towards Asia- Pacific over decades to come,” Limbrick said. “We may yet be a year or two away, but we like Singapore’s attitude to encouraging new business.” To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net Singapore is vying with Hong Kong for a slice of the global $1.7 trillion hedge-fund industry as the region’s growth leads the world. Photographer: Charles Pertwee/Bloomberg //<![CDATA[ $(document).ready(function () { $(".view_story #story_content .attachments img.small_img").each(function(){ var self = $(this); if (self.width() != 190){ self.width(190); } }); }); //]]> |
2024-08-18 | Bloomberg | Love Your Job? Thank Your Country | It is widely assumed that people in economically “advanced” countries do not differ significantly in how satisfied they are with their jobs. Because they are about equally productive, the reasoning is, they must produce things the same way, and so their work experience must be the same, too. In fact, there are striking differences in job satisfaction within the West. The U.K., with very low wages relative to the country’s wealth, reports a pretty decent level of job satisfaction. Yet Germany , with its fairly high wages relative to wealth, reports an undistinguished level of job satisfaction -- below Italy and Spain. The waves of data on reported job satisfaction that have washed up in recent decades have led to misuses and misinterpretation. Some observers, pointing to Sweden ’s high score, take this to be evidence that the Swedish economic system -- a unique mixture of capitalism and welfarism with little dynamism -- is “best.” Others, pointing out that Denmark scored even higher, conclude that the Danish system -- with its flexicurity or some other attraction -- is the best. That way of using the data is absurd. It’s a schoolboy error in Statistics 101 to draw inferences from outliers rather than from the data as a whole. Job Pride The plausibility of the job-satisfaction levels reported in surveys receives a big boost from the way people assess the pride they take in their work and the importance they place on their job. The rankings of countries by these two measures are very similar to their ranking by job satisfaction. Among the Group of Seven, the U.S., one of the top countries in mean job satisfaction, scored highest in both pride and importance. A contrarian interpretation argues that a country’s low score on reported job satisfaction may be more about how demanding the respondents are than how unstimulating their jobs are. They may suffer low satisfaction because, as in Italy and France , they are spoiled by their wealth. But the U.S. and Canada have not lacked for wealth, especially in 2001, after the dot-com boom, and they continually rank high in job satisfaction. And when Ireland went from being poor to rich in a decade, it remained near the top among advanced countries in job satisfaction. In recent decades, comparative studies of Western European economies have implicitly assumed that their basic economic system -- a corporatist system that lets big business, big labor and big government have a veto over market outcomes -- is about as effective as the modern capitalist system in meeting a variety of goals. Some have argued that European countries tripped up by injecting one or more impediments and hindrances in the market -- unemployment insurance benefits, high taxes and so on -- apparently in the belief that their cost was negligible or modest enough to be worth paying. This view, pronounced by academic economists from the University of Chicago to the Massachusetts Institute of Technology , is a tenet of neoliberalism, which holds that, to succeed, a country has only to prohibit the government and the market from overturning competitive prices and wages. Yet a country cannot do well without high economic dynamism. And it cannot have much dynamism without institutions and an economic culture that support conceivers of new commercial ideas, facilitate entrepreneurs to develop these new ideas, allow employees to contract to work long and hard, and protect against fraud. Business Law An institution that is basic to the operation of modern capitalism is company law: protection from creditors through bankruptcy, protection from self-dealing by managers, protection from employees who do not perform, limits on what employees may be asked to do, and so forth. Law is needed to set limits on the resolution of conflicts. Without it, an entrepreneur or an investor might hesitate to embark on new creations. A country’s economic policy may also induce or thwart entrepreneurship. Relying on scant data, conservatives leap to the conclusion that every element of economic policy that provides a role for the government has a cost exceeding the benefit. But while, in the pastoral economies of mercantile capitalism, there may have been a presumption that this or that intervention by the state in the business sector -- more corn and less cloth -- would be harmful, there is no presumption that, say, more money for education or less money for education would disturb innovation. We do not know whether this or that concrete governmental activity would be constructive or detrimental for the dynamism of the economy and thus for job satisfaction. There is evidence that countries with high levels of state spending on medical care, retirement benefits and education do not tend to have depressed levels of job satisfaction. Regulatory institutions appear to be a significant depressant on job satisfaction, particularly credit-market regulations (such as interest-rate controls) and goods-market regulations. The institutions of collective bargaining and regulations on hiring and firing are also estimated to depress mean job satisfaction. An economy consists of an economic culture as well as a set of institutions. Prevailing attitudes and beliefs have consequences for one’s efforts at work and for the effectiveness with which one can collaborate with others. The French businessman Philippe Bourguignon, whose working life has been divided about evenly between the U.S. and Europe , has portrayed the two regions as having quite distinct cultures. In his analysis, the differences originate in the very different upbringings of children. French mothers, he observed, watch their children closely in the playground, warning them to be careful. American mothers, on the other hand, pay little attention and do not teach caution. As a result, Americans grow up taking failures in stride. Workplace Attitudes Many values play a part in a country’s generation of high economic performance, affecting people’s capacity and desire to conceive novel ideas, develop these ideas into new products and try out the new products. Other values may affect economic conditions that support or damage the commercial prospects for innovation. Consider, for example, the West’s culture of problem-solving, curiosity, experimentation and exploration. A research program at Columbia University ’s Center on Capitalism and Society has found that several of the workplace attitudes in the World Values Surveys are significantly associated with a country’s high economic performance. How much people in a given country value the “interestingness of a job” is significantly related to how well the country scores in several dimensions of economic performance. So are people’s scores on acceptance of new ideas and the desire to have some initiative. On the other hand, a low willingness to take orders, which is conspicuous in some European nations, is associated with lower economic performance. A readiness to accept change and a willingness to accept competition are also quite helpful. But a desire to achieve matters little: It is not some object people want; it is the experience -- the life. ( Edmund Phelps , the director of the Center on Capitalism and Society at Columbia University and dean of the New Huadu Business School at Minjiang University, received the Nobel Memorial Prize in Economic Sciences in 2006. This is an excerpt from his new book, “ Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change ,” which will be published Aug. 25 by Princeton University Press .) To contact the writer of this article: Edmund Phelps at mail@wylieagency.com. To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net . |
2024-09-12 | Bloomberg | Gold Futures Fall Most in Nine Weeks on Fed Stimulus Bets | Gold futures tumbled the most in nine weeks after a report showed U.S. jobless claims last week dropped to the lowest since April 2006, boosting speculation that the Federal Reserve will scale back fiscal stimulus soon. First-time claims for unemployment insurance fell to 292,000 in the week ended Sept. 7, government data showed. Analysts forecast 330,000. A Bloomberg survey on Sept. 6 showed that the Fed will reduce bond purchases by $10 billion this month. Gold rose to a three-month high on Aug. 28 on concern that the U.S. would launch an attack against Syria. Prices fell 0.7 percent last week as fears of a strike diminished. “The momentum has been about the economy improving, and today’s job data was another reason why people think the tapering may happen,” Frank McGhee , the head dealer at Integrated Brokerage Services LLC in Chicago , said in a telephone interview. “The war premium is also coming off.” Gold futures for December delivery fell 2.4 percent to settle at $1,330.60 an ounce at 1:45 p.m. on the Comex in New York , the biggest drop for a most-active contract since July 5. Earlier, the metal touched $1,325.60, the lowest since Aug. 15. Prices have dropped 21 percent this year as an equity rally and low inflation eroded demand for the metal as a store of value. Syria Tension Last month, gold gained 6.3 percent on escalating Syrian tensions. The U.S. and Russia met today to discuss a plan for the Middle Eastern nation to surrender its chemical weapons, potentially averting a military strike from the U.S. On the New York Mercantile Exchange , platinum futures for October delivery dropped 2.1 percent to $1,442.70 an ounce. The price fell for the fourth straight day, the longest slump since mid-March. Trading was 39 percent above the average in the past 100 days, according to Bloomberg data. Palladium futures for December delivery rose 0.2 percent to $692.80 an ounce, advancing for the second time in three days. To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net ; Whitney McFerron in London at wmcferron1@bloomberg.net To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net |
2024-01-26 | Bloomberg | Germany’s Job Engine Remains Intact for 2012, Unicredit Says | German payrolls growth will continue this year and unemployment will decline even as economic growth cools, according to Unicredit Group. “Although the pace of job creation will soften in coming months, strong momentum is still in the pipeline,” said Andreas Rees , chief German economist at Unicredit in Munich. “As a result, purchasing power of private households will rise further and bolster consumer expenditures.” Data next week may show German unemployment fell by 5,000 people in January, according to a Bloomberg News survey, extending a trend that has seen the number of jobless drop to a two-decade low. The International Monetary Fund cut its 2012 growth forecast for Germany to 0.3 percent. Still, that compares with a 0.5 percent contraction projected for the euro area. Rees also said labor demand may create bottlenecks in the next few years as the supply of workers dwindles. Labor Minister Ursula von der Leyen said on Jan. 25 that companies may struggle to find workers amid a shrinking population. “Paradoxically, the German labor market’s whopping success story seems to entail some risks going forward,” Rees said. “Highly qualified personnel becoming increasingly scarce may cause companies to move their businesses abroad or lose market shares instead.” To contact the reporter on this story: Fergal O’Brien in London at fobrien@bloomberg.net To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net |
2024-08-24 | Bloomberg | U.S. Deficit Estimated at $1.3 Trillion This Year, CBO Says | The U.S. budget deficit is projected to be $1.3 trillion in the year ending Sept. 30, down from $1.4 trillion forecast in April, because of curbs on federal spending and increased income-tax collections, the Congressional Budget Office said. The nonpartisan CBO, in its semiannual look at the nation’s fiscal health , projected the deficit for the subsequent 12-month period through Sept. 30, 2012, at $973 billion, rather than the $1.1 trillion forecast in April. “The economy remains in a severe slump,” CBO Director Douglas Elmendorf wrote on the agency’s website. “CBO expects that the recovery will continue” while the inflation-adjusted gross domestic product “will stay well below the economy’s potential” for several years, he said. The CBO cited cuts in unemployment insurance, less spending by Fannie Mae and Freddie Mac , and smaller-than-usual increases in Medicare as it lowered this year’s projected deficit. In addition, it said income-tax collections exceeded earlier projections by $74 billion. “The report validates the progress that’s been made and validates the president’s assessment” that more needs to be done to cut the nation’s long-term deficit, Josh Earnest , a White House spokesman, told reporters at a briefing on Martha’s Vineyard, Massachusetts. Super Committee President Barack Obama next month plans to propose ideas to a so-called super congressional committee on the deficit that would go beyond the panel’s mandate to cut $1.5 trillion from the long-term deficit. The CBO said deficits will continue to shrink as the economy improves, albeit slowly. It projected an 8.9 percent unemployment rate in the fourth quarter and an 8.5 percent rate in fourth quarter of 2012, when Obama will face re-election. The CBO said unemployment will remain above 8 percent until 2014. The office also forecast a consumer price index rise of 1.5 percent from 2013 through 2016. The inflation-adjusted gross domestic product is projected to increase by 2.5 percent in the next fiscal year and 2 percent in fiscal 2013 before increasing to 3.4 percent in 2014 and 5.3 percent in 2015, the CBO said. “A great deal of the pain of this economic downturn still lies ahead of us,” Elmendorf told reporters today at a news conference in Washington. Bush Tax Cuts Elmendorf said cuts in federal spending and the scheduled expiration of President George W. Bush’s tax cuts will slow the economy. The challenge to Congress will be to reduce the deficit in the long term while not hurting the economic recovery now, he said. For example, extending the Bush tax cuts would add trillions of dollars to the deficit, the director said. “Reductions in government spending or increases in taxes will slow economic growth and reduce employment relative to what would otherwise occur,” Elmendorf said. “It’s possible to structure deficit reduction in a way that does not have as large a dampening effect on output and unemployment in the near term while still achieving deficit reduction .” This year’s deficit would be the third straight year of trillion-dollar shortfalls. Debt-Limit Increase Earlier this month, the U.S. avoided default when Congress voted to raise the debt ceiling. Congressional Republicans refused to increase the borrowing authority unless it was accompanied by cuts in federal spending. The measure would make $1.2 trillion in automatic reductions unless the 12-member bipartisan congressional committee creates a deficit-cutting proposal that Congress accepts. The CBO projected that the measure will reduce projected deficits by $2.1 trillion between 2012 and 2021. Representative Chris Van Hollen , a Maryland Democrat and a member of the committee, said the report “underscores the need” for the panel to do its work. “I look forward to working with my colleagues to develop a plan focused on boosting economic growth now and cutting the long-term deficit in a balanced way that addresses both the expenditure and revenue side of the budget equation,” Van Hollen said in a statement. House Speaker John Boehner , an Ohio Republican, said in a statement, “A slight decrease in the projected deficit is nothing to celebrate, particularly when it is accompanied by the grim news that CBO expects the national unemployment rate to continue to exceed 8 percent well past next year.” To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net ; Heidi Przybyla in Washington at hprzybyla@bloomberg.net. To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net . |
2024-08-09 | Bloomberg | Taiwan, South Korea Stock Slump Prompts State Buying, Increased Scrutiny | A stock-market slump that dragged Taiwan and South Korea ’s benchmark indexes 20 percent below their highs prompted state-run funds to buy equities and Korean regulators to bolster scrutiny of trading activities. Benchmark indexes narrowed earlier declines. Taiwan's government bought equities yesterday and this morning through four funds it controls, Philip Yang, a Cabinet spokesman, said. Korea Teachers Pension, the nation’s second- largest public pension fund, said it purchased about 70 billion won ($64 million) of stocks during the recent selloff. South Korea’s Financial Supervisory Service said it will monitor short selling and whether brokerages are following trading rules. “The big concern here is wealth destruction, that is investors capitulate and sell, triggering a snowball effect,” said Gavin Parry , managing director of Parry International Trading Ltd. in Hong Kong. “If this continues, governments in the region will most probably step in.” Taiwan’s Taiex Index completed its biggest six-day drop since September 2001 today, while the Kospi Index was headed for its largest six-day slump since October 2008 in Seoul. Stocks worldwide have tumbled this week after Standard & Poor’s reduction of the U.S.’s debt rating fueled concern the global economy will slow. Federal Reserve policy makers will hold a one-day meeting today as the downgrade fueled speculation America is headed for a recession. Bear Market “Once investors opt to reduce their emerging-market assets, countries such as Korea could be the first market they would consider divesting because it has many large-cap stocks and has relatively more liquidity,” said Chung Yun Sik, chief investment officer for equities at ING Investment Management Korea Ltd., which oversees about $16 billion. The Taiex closed 0.8 percent lower at 7,493.12, after dropping 5.4 percent. The index is down 18 percent from a Jan. 28 high, having fallen as much as 22 percent. A decline of 20 percent or more signals a bear market to some investors. The Taiex has tumbled 14 percent in the past six days, while the Kospi has lost 17 percent. The South Korean gauge has plunged 19 percent from its May 2 record, having lost as much as 24 percent. It slumped 3.2 percent to 1,810.51 as of 2:48 p.m. in Seoul, having tumbled 9.9 percent earlier. “We have taken actions yesterday and this morning,” Taiwan’s Yang said by phone from Taipei today. The four funds controlled by the government are the labor insurance fund, labor pension fund, civil-servant pension fund and postal fund. ‘Largest Hit’ Yang declined to comment whether the government bought equities using the NT$500 billion ($17.2 billion) National Stabilization Fund, which was created in March 2000 to support markets when threatened by non-economic factors. Taiwan will be “suffering the largest hit” from a U.S. and Euro-zone demand shock, Credit Suisse Group AG said in a July 28 report. Citigroup Inc. cut the year-end target for the Taiex to 8,770 from 10,000 based on the “de-rating” the market is undergoing, Peter Kurz , an analyst at the brokerage, said in a report today. South Korea ’s Finance Minister Bahk Jae Wan asked other ministers in a meeting today to bolster the market monitoring system, the ministry said in a statement today. The government should try to restore market confidence, Bahk said. The Financial Supervisory Service asked pension funds, brokerages and asset-management companies to step up efforts to stabilize the market, according to an e-mailed statement today. Korea Teachers Korea Teachers Pension, which manages about 9.5 trillion won, plans to buy more stocks if prices fall further, Chief Investment Officer Lee Yun Kyu said by phone today. Korea Teachers has room to invest 300 billion won for the rest of the year, he said. “I think we’re now at a bottom,” Lee said. “It was really a broad-based sell-off so that we plan to add evenly across sectors.” Program trading on Kospi shares was stopped for five minutes today and yesterday after Kospi 200 Index (KOSPI2) futures fell more than 5 percent for more than a minute, Korea Exchange Inc. said. Trading of shares on the Kosdaq Index, which has more than 1,000 stocks, was also halted today and yesterday after the index tumbled in excess of 10 percent for more than a minute, triggering automatic curbs. The exchange operator will keep a close eye on short selling and arbitrage transactions, Korea Exchange said in an e- mailed statement yesterday before markets opened, after an emergency meeting by Chairman Kim Bong Soo and other officials. Investors typically use short sales to capitalize on an expected decline in the security’s price. It is the practice of selling a security that the seller does not own but is committed to repurchase eventually. To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net ; Weiyi Lim in Singapore at wlim26@bloomberg.net ; Saeromi Shin in Seoul at sshin15@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net |
2024-07-14 | Bloomberg | Sony Financial Seeks Asia Expansion as Japan's Population Ages, Ihara Says | Sony Financial Holdings Inc. , the insurance and banking unit of Sony Corp., plans to expand its business in Asia, possibly through mergers and acquisitions, as an aging population constrains growth at home. “When you look at the long-term growth prospects of our business, overseas expansion is inevitable given the demographic problems Japan faces,” said Katsumi Ihara , 59, who became the chief executive officer last month after more than two decades of working for the parent firm, in an interview in Tokyo. “Asia is where we see the biggest growth potential, both economically and population-wise.” Sony Financial, 60 percent-owned by the maker of Bravia televisions and PlayStation 3 consoles, has already opened offices in Taipei and Beijing, Ihara said. Alliances and merger and acquisitions will be “very possible means” for expansion, he said, declining to elaborate. Sony Financial, which derives almost 90 percent of revenue from its life insurance unit, has built its business by coming up with new strategies such as selling auto insurance online. While the Tokyo-based company has grown its market share domestically through its own business strategy, it is now confronted with a declining population and an aging society, forcing it and peers to seek growth abroad. Ihara said he aims to get Sony Financial’s three main businesses -- life insurance, casualty insurance and banking -- to work more closely together as part of efforts to boost profitability. Sony Brand Sony Financial estimates profit will decline 17 percent to 40 billion yen ($450 million) in the year through March 2011, it said in May. Losses on investments and an increase in policy payments may weigh on earnings, it said. In March, the insurer said it will change its asset allocation policy for some products to make “stable investments” in bonds from April 1, 2010, replacing equity and risky assets. The change will let Sony Financial boost policyholder returns and raise embedded value, a life insurer’s worth based on net assets and current sales. Sony Financial shares have gained 31 percent this year, compared with a 4.1 percent decline by the benchmark Topix index. The stock closed down 0.2 percent at 316,500 yen on the Tokyo Stock Exchange yesterday. Ihara said he hopes his experience at Sony, where he headed the firm’s consumer electronics business, will be useful in expanding the business overseas. “Sony has a very strong brand image abroad, and I’m hoping that will be our strength in expanding,” he said. “We started with this Sony spirit to change something that’s already become a norm by offering new products such as internet sales of insurance, so we must continue to cherish that spirit to grow further.” To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net ; Komaki Ito in Tokyo at kito@bloomberg.net Katsumi Ihara, chief executive officer of Sony Financial Holdings Inc.. Photographer: Tomohiro Ohsumi/Bloomberg //<![CDATA[ $(document).ready(function () { $(".view_story #story_content .attachments img.small_img").each(function(){ var self = $(this); if (self.width() != 190){ self.width(190); } }); }); //]]> |
2024-11-04 | Bloomberg | Tea Party Test in Virginia Harbinger for 2014 Senate Race | Call it a test case for the 2014 congressional elections. Tomorrow’s contest for Virginia’s next governor is drawing attention as a national harbinger, and it’s giving Republicans plenty to worry about. Polls show Democrat Terry McAuliffe , the former national party chairman and fundraiser, ahead of Republican rival, state Attorney General Ken Cuccinelli. If that’s the outcome of the race, McAuliffe would become the first candidate of a sitting president’s party in almost four decades to win election in the Old Dominion, a state that voted twice for both former President George W. Bush and President Barack Obama. “As Republicans, we have to ask, is there a business model issue here?” said former Virginia Republican Representative Thomas M. Davis III , director of federal affairs for Deloitte Consulting LP. “We have a Republican who’s opted to go the Tea Party route, and it’s absolutely clear it’s a losing strategy -- that’s going to be the message of this” election. The contest has taken on national significance in its closing days, with each candidate working to portray his opponent as a poster boy for all that is wrong with his party. McAuliffe, 56, who campaigned with Obama yesterday and appears with Vice President Joe Biden today, is painting Cuccinelli as an ally of the small-government Tea Party movement that orchestrated last month’s 16-day federal government shutdown. Tea-Party Test “Ken Cuccinelli has spent his career creating gridlock from the political fringe,” McAuliffe said during his appearance with the president in Arlington. “The question in this election is simple: Will the mainstream, bipartisan majority in Virginia be drowned out by the Tea Party?” Obama said “this election is going to say a lot about Virginia’s future and about the country’s future.” Cuccinelli, 45, who filed suit against the 2010 Affordable Care Act the day Obama signed it, is casting the race as a proxy fight over the health-care law. He’s banking on the president’s appearance with McAuliffe amid headlines about the botched Obamacare rollout to give him a late boost. The Republican told reporters in a Nov. 1 conference call that the election “has quickly turned into at least in part a referendum on Obamacare, and it’s a very clear line between me, the first person in the country who fought it, and Terry McAuliffe, who didn’t think it went far enough.” Running Behind His bid to gain momentum by making an issue of the health-care law may come too late. A Quinnipiac University poll released today shows Cuccinelli trailing McAuliffe with support from 40 percent of likely voters, compared with 46 percent backing the Democrat. Cuccinelli’s campaign has suffered a financial disadvantage relative to McAuliffe’s. He raised just under $20 million for the race, compared with the Democrat’s $34 million, according to the Virginia Public Access Project. And Cuccinelli’s ties to the Tea Party movement, once considered an asset, carry risks after the shutdown drove the Republican favorability rating to a historic low of 28 percent, according to an Oct. 3-6 Gallup poll. He has appeared alongside a who’s-who of Tea Party-aligned Republicans, attending a fundraiser with Senator Ted Cruz of Texas, the architect of the federal shutdown strategy, as well as stumping with Republican Senators Rand Paul of Kentucky and Marco Rubio Florida, both elected with the small-government activists’ backing. New Jersey Race Polling experts and political strategists caution against over-interpreting the narrative of the race, particularly given that the other gubernatorial contest tomorrow in New Jersey -- in which a blowout re-election of Republican Governor Chris Christie in a Democratic-dominated state is expected -- may tell a different story. The Virginia race features two flawed candidates, both have faced ethics charges, and a third-party contender, Libertarian Robert Sarvis, who draws as much as 10 percent support in public polls. It’s also a contest that will be driven by turnout in a state with Republican, predominantly white exurbs and rural areas; Democratic, heavily African-American cities; and an ethnically diverse set of suburbs that can tip the results either way. “It’s unlikely that in 2014 you’ll see this kind of environment in many other states,” said Peter A. Brown , who has tracked the race as assistant vice president of the Hamden, Connecticut-based Quinnipiac University Polling Institute. “Any impact of the government shutdown, and the perception that voters blame Republicans more than Democrats for it, is magnified because such a large proportion of the federal workforce lives in Virginia.” Federal Workforce Virginia’s population includes more than 172,000 federal civilian workers, according to the U.S. Census Bureau, among the highest concentration per capita in the country. Next year, the shutdown will be a distant memory for voters living in such states as Louisiana and North Carolina, where two of the nation’s most competitive Senate races will take place and the federal government isn’t a major employer, Brown added. Yet Davis, a former chairman of Republicans’ House campaign committee, said the expected New Jersey win drives home the same lesson being learned in the likely Virginia defeat, that his party must run candidates with appeal beyond the Tea Party to attract independent voters. “It’s not the Republican brand versus the Democratic brand,” he said. “It’s what kind of Republican are you.” Conflicting Goals Geoff Garin , McAuliffe’s polling adviser, said the race highlights a challenge facing Republicans in next year’s campaigns: to energize their core activists while simultaneously appealing to voters in the middle who typically determine the outcome of competitive races. “Cuccinelli is emblematic of the Republican dilemma. It is impossible for them to do both of those things at the same time,” Garin said. “You cannot be the candidate of the Tea Party wing of the Republican Party, and get those people excited, and still be the candidate of the center.” That dynamic could be on display in U.S. Senate races in Georgia and North Carolina next year, where Tea Party-aligned Republicans are vying to take on Democrats who are receiving some backing from the business community. Some strategists say the Virginia experience demonstrates a need for Republicans to do more to differentiate themselves from their party, a lesson that Democrats must also learn at a time when both sides are suffering from basement-level approval ratings. While an Oct. 7-9 NBC-Wall Street Journal Poll found congressional Republicans the worse off of the two parties with a 70-percent disapproval rating, Democrats were also unpopular, with 59 percent viewing them negatively. Own Identity “Christie has built his own identity, his own brand, and I don’t know that Cuccinelli has been able to carve out a set of issues or a general persona that leads people to see him as distinct and unique from the Republican Party,” said Brock McCleary, president of the Harrisburg, Pennsylvania-based Harper Polling and a former strategist for the Republican House’s campaign arm. That doesn’t mean the health law’s failures can’t be a winning theme for Republicans in the midterm contests, he said. “It will look different a year from now,” when higher costs and canceled insurance plans replace website failures as day-to-day realities for voters, McCleary said. “It will be the defining issue, and I don’t think this should lead Republicans to conclude that Obamacare won’t be a salient, vote-determinative issue” next year. Dysfunctional Republicans Whatever policy themes dominate congressional campaigns, Democrats argue that Virginia illustrates how they continue to benefit from a dysfunctional Republican nominating process driven by activists that yields candidates who can’t prevail in general elections. “The Tea Party and extreme right-wing elements have a very strong voice, and what it shows is that Republicans can’t win if they nominate extreme candidates,” said former Democratic Representative Martin Frost of Texas, who led his party’s House campaign committee from 1995 to 1999. Republicans could improve their chances by choosing more centrist candidates, he added, yet they “seem hell-bent on making the same mistakes over and over again.” To contact the reporter on this story: Julie Hirschfeld Davis in Washington at jdavis159@bloomberg.net To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net |
2024-11-15 | Bloomberg | Amlin Says 10-Month Revenue Rose 11%, ‘Well Paced’ for Sandy | Amlin Plc (AML) , the second-biggest Lloyd’s of London insurer by market value, said revenue rose 11 percent and said it’s “well placed” to absorb claims from Hurricane Sandy. Revenue in the 10 months to Oct. 31 climbed to 2.28 billion pounds ($3.6 billion) from 2.05 billion pounds, London-based Amlin said today in a statement. Hurricane Sandy slammed into New York and New Jersey Oct. 29, barreling through the most populous region of the U.S. Sandy caused as much as $50 billion in economic damage, according to Eqecat Inc., a provider of catastrophic risk models. The storm killed more than 100 people, displaced thousands and knocked out power to millions. “While the complexity surrounding Hurricane Sandy means that it will take time to establish a meaningful estimate of loss, we believe it will be readily absorbed and that it will help continue the improvement in U.S. property insurance rates that has been evident so far this year,” Chief Executive Officer Charles Philipps said in the statement. To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net |
2024-04-20 | Bloomberg | Qantas A380 to Fly Again 18 Months After Engine Explosion | The Qantas Airways Ltd. (QAN) A380 that suffered a mid-air engine explosion about 18 months ago will return to the skies tomorrow after repairs costing A$139 million ($144 million). The Nancy-Bird Walton will fly back to Sydney from Singapore following the work, which was covered by insurance, said Thomas Woodward, a Qantas spokesman. The Airbus SAS plane made an emergency landing in the city-state in November 2010 after one of its four Rolls-Royce Holdings Plc engines exploded over Indonesia. All parts of the A380 damaged in the explosion were replaced, rather than repaired, in preparation for the resumption of commercial services with a flight to Hong Kong on April 28. The plane has also gone through a testing schedule usually reserved for brand-new aircraft, including a more than four-hour-long test flight. “Throughout it all, the airplane behaved superbly,” Ben Holland , an Airbus technical pilot, said at a press briefing in Singapore today. The plane went as high as 43,000 feet, its maximum altitude, he said. Another flight was also made to test cabin equipment, such as lighting and microwaves. Qantas won A$95 million in compensation from Rolls-Royce for disruptions caused by the incident, which prompted the carrier to ground its entire A380 fleet for more than three weeks. The costs associated with the accident are thus equivalent to at least $242 million, more than the $228 million list price of a Boeing Co. (BA) 787-9 Dreamliner. The A380 has an average list price of $389.9 million, according to Airbus. Airlines usually get discounts for large orders. Long Wait Work on the Nancy-Bird Walton, which included rebuilding the engine and part of the plane’s skin, took about eight months, Woodward said. The rest of the time, the aircraft, named after one of Australia ’s first female pilots , was sitting at Singapore’s Changi airport waiting for access to maintenance hangars, he said. The plane couldn’t be fixed earlier as only Singapore Airlines Ltd. had facilities big enough for an A380 at the airport and it needed them for its own fleet. The carrier was eventually able to free up time for the Australian airline. “You don’t invest in an A380 hangar and not use it,” said Alan Milne, the head of Qantas’ integrated operations center. “For them to rearrange their maintenance schedule to allow us to have it for so long was just a wonderful piece of cooperation.” Rib-Feet Cracks The months the plane spent in storage added to the challenge of fixing it following the explosion, said Andrew Daws, an Airbus flight-test engineer. During the repairs, hairline cracks were also found in rib-feet used to support the plane’s wings that were unrelated to the explosion. That helped prompt inspections and tighter checks on A380s worldwide. The Nancy-Bird Walton’s return to service will raise Qantas’s active fleet of the 450-seat aircraft to 12. The carrier has another eight on order. The plane will also help the carrier with plans to speed up the retirement of less fuel- efficient 747s. “The older the aircraft are, the more you have to spend to keep them going,” said Mark Williams , an analyst at Royal Bank of Scotland Group Plc in Sydney. “It’s not just fuel costs, it’s maintenance as well.” In the Nov. 4, 2010, incident, part of the Nancy-Bird Walton’s Rolls-Royce (RR/) Trent 900 engine casing blew off shortly after takeoff from Singapore, sending shrapnel through a wing and fuselage, according to a preliminary report by the Australian Transport Safety Bureau. None of the 469 people on board were injured. Engine Fire The incident was caused by an oil leak and subsequent fire within the engine, according to the safety regulator. London- based Rolls-Royce subsequently revised procedures including ones for assessing new parts, it said. Rolls-Royce has taken “appropriate remedial action to make sure that such events cannot happen again,” said David Mair of Republic Consulting Pty. in Sydney, which represents the engine- maker. The failure was confined to a single part, he said. Qantas Chief Executive Officer Alan Joyce said in February that the airline will retire two more 747s in addition to four being phased out this month. The carrier, which has never had a fatal jetliner crash, had 20 747s as of June. Deliveries of 50 on-order 787s also due to start next year. Replacing the older aircraft will help pare fuel usage, after prices jumped more than 40 percent in Singapore trading in two years. The airline still expects fuel costs to increase by A$300 million in the six months through June from a year earlier because of higher prices and increased flying. To contact the reporters on this story: David Fickling in Sydney at dfickling@bloomberg.net ; Yudith Ho in Singapore at yho35@bloomberg.net. To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net |
2024-09-20 | Bloomberg | Deutsche Bank Wins Ruling Overturning $49 Million Award | Deutsche Bank AG (DBK) won an appeal overturning a Singapore ruling ordering it to pay former client Chang Tse Wen $49 million for negligence in advising him on his investments. Singapore Chief Justice Sundaresh Menon, writing for a three-judge panel of the city state’s top court, said in yesterday’s judgment that the bank can recover $1.79 million it originally sought from Chang in a 2009 lawsuit. Chang, a Taiwanese scientist who invented the Xolair asthma drug, had won the lower court case last year after countersuing Deutsche Bank over his losses on bets on companies like Citigroup Inc. The bank didn’t have a duty in advising him on managing his portfolio, the court said in yesterday’s ruling. “DB was dealing with a customer who had considerable means and an evident understanding of what he was doing and why,” the three-judge panel said. The bank didn’t make misrepresentations to Chang, it said. Chang had said he “entrusted” the bank with part of the $118 million he made from selling his company, Tanox Inc., to Genentech Inc. in 2007. The scientist was a “sophisticated man” who ignored the advice of his banker to diversify his investments, Deutsche Bank’s lawyer, Ang Cheng Hock, had argued. Chang’s lawyer Muralidharan Pillai declined to comment. “Deutsche Bank is pleased with the judgment and that this matter is now resolved,” said Michael West , a Hong Kong-based spokesman at the German lender. BNP Paribas SA’s wealth management unit last year won dismissal of a Singapore lawsuit filed by a former client, claiming the bank was negligent in advising him. The former client had signed agreements with the bank stating he had sufficient financial knowledge and wouldn’t rely on it for advice. The appeal case is Deutsche Bank AG v Chang Tse Wen, CA164/2012. Singapore Court of Appeal. To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net |
2024-03-13 | Bloomberg | California One of 2 States to Force Health Insurer Bids | California and Vermont are the only states set to require medical insurers to bid for the chance to sell coverage through new exchanges being set up this year under the Obama administration’s health-care overhaul. The 2010 Affordable Care Act gives states the power to impose a bidding system for insurers to join the exchanges as an option to help drive down costs. A survey of the 16 states that will run their own systems starting in October found that 12 won’t require such a system and at least one other is undecided. “It’s a missed opportunity if the exchanges don’t use their bargaining power to force insurance companies to compete on price,” said Jay Angoff, a partner at Mehri & Skalet in Washington who once served as Missouri’s insurance commissioner and later worked for President Barack Obama ’s administration. With about 7 million people projected to seek insurance through exchanges next year, and 27 million by 2018, states could have leveraged that customer base to ensure lower prices. Market competition will hold down premiums, said America’s Health Insurance Plans, the lobbying group for insurers. “We’ve always believed that exchanges need to maximize choice and competition,” Robert Zirkelbach , a spokesman for the Washington-based organization, said in a telephone interview. “Efforts to exclude plans from participating in exchanges would have the opposite effect.” Undecided States Two of the 16 states -- Minnesota and Massachusetts -- are at least considering attaching some strings. Massachusetts is holding a limited auction, restricted to insurers that want to sell to low-income people who will receive extra subsidies from the state. Five plans will win the right to sell to those customers, said Jean Yang, the executive director of the Massachusetts Health Connector. People who earn too much for state subsidies will have a wider choice of plans, she said. “Competitive bidding obviously is an attractive concept because it pushes price points down and everyone benefits,” she said in a phone interview. Minnesota’s legislature is now debating whether to authorize an exchange and hasn’t decided to require bids, said John Pollard, a spokesman for the state budget office. “We’re exactly smack dab in the middle of that debate,” he said. Vermont’s Options Vermont is making insurers bid, yet with only two carriers in the state, the government is unlikely to exclude either of them, said Lindsey Tucker, the exchange’s deputy commissioner. That’s driven decisions in many states, where officials say that without knowing how many people will enroll in the exchanges, they hesitate to drive hard bargains with insurers. “It’s kind of like saying, ’I’m going to negotiate with the car dealer but I don’t know what model I want, what features I want, I don’t know if I want automatic or stick shift -- but I’d like to negotiate price with you,’” said Kevin Counihan, the executive director of the Connecticut exchange. “It’s hard to negotiate with no market share.” In the absence of leverage, broader choice can be effective, Counihan said in a telephone interview. “This is music to the ears of the insurers,” said Joel Ario, a former Obama administration health official who is now managing director at Manatt Health Solutions, a consulting firm in Washington that is advising insurers on exchange rules. Broad Choice Insurers say the best way for states to secure affordable premiums as well as a wide choice of plans is to allow any carrier into the exchange that qualifies under federal rules. “Our position has been: let everyone who’s qualified play,” said Kim Holland, a former Oklahoma insurance commissioner who manages state affairs for the Blue Cross Blue Shield Association, a federation of 38 local plans, including some owned by WellPoint Inc. (WLP) “Already, there are carriers saying we’re going to limit the number of exchanges we participate in,” Holland said in a phone interview. “To further limit that doesn’t make a lot of sense.” In California, which expects as many as 2.4 million people to be shopping in its exchange by the end of January, 33 insurers have said they will bid to sell plans, said Dana Howard, a spokesman for the exchange, called Covered California. “They will not all be in,” said Peter Lee, the executive director of Covered California, in a Feb. 13 conference call with reporters. “We will select the plans that will be best for California’s consumers.” Rate Shock The federal government is building and running exchanges in 26 states and doing most of the work in seven others. The Obama administration has told insurers they won’t have to bid to get into the federal exchanges for at least three years. “If the rates for a proposed plan are determined to be unreasonable or inappropriate,” the marketplaces may exclude the plan, Alicia Hartinger, a spokeswoman for the U.S. health agency’s Center for Consumer Information and Insurance Oversight, which is building the federal exchanges, said in an e-mail. It’s not yet known what exchange plans will cost. Insurers will begin filing plan designs and their rates for 2014 to states in the spring. The industry has warned of “rate shock” as people shop in the exchanges for plans that must pay new fees and taxes; are limited in how much they can charge older people compared with younger ones; and must offer generous benefits. Kevin Galvin, who owns a maintenance company in Connecticut, said he worries that the decision to let all insurers into his state’s exchange will mean prohibitively high premiums for him and his four employees. Galvin and other consumer advocates in the state had lobbied to hold a bid. The board supervising the exchange, which has members who used to work for insurers, rejected the idea at a meeting in November. Gavin said he’s never before been able to afford coverage for his workers. “I don’t know a small-business man or woman who does not want their people to be insured and healthy,” Galvin said in a telephone interview. “The concern around the exchange, or around what is going to be in the exchange, is affordability.” To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net |
2024-03-07 | Bloomberg | Standard Life Investments CEO Says FTSE 100 Index Set for Record | The FTSE 100 Index is set to follow U.S. stocks to a record after its best start to a year since 1998, according to Edinburgh’s largest money manager. “Equities have had a very strong start to the year and I think the level is sustainable,” Keith Skeoch, chief executive officer of Standard Life Investments , said on a conference call with reporters today. “The FTSE will break its all-time record within the next 12 months. The timing is very uncertain.” The U.K. benchmark has risen 9.3 percent this year and is 7 percent below its high of Dec. 31, 1999. The index has gained less this year than those in France , Germany , Japan and the U.S., where the Dow Jones Industrial Average yesterday reached a record, surpassing its previous peak of Oct. 9, 2007. Equity benchmarks in the 45 largest markets are an average 27 percent below their peaks, data compiled by Bloomberg show. Skeoch was speaking after Standard Life Investments posted a 15 percent increase in earnings before interest and tax last year as external customers added money at a faster rate. Earnings rose to 145 million pounds ($217.7 million) from 126 million pounds a year earlier, insurance parent Standard Life Plc (SL/) said in a statement today. Funds under management rose 8 percent to 167.7 billion pounds as third-party net inflows accelerated 42 percent to 6.1 billion pounds. External clients now account for 49 percent of assets, or 83 billion pounds, up from 46 percent at the end of 2011. Most inflows came into multiasset and bond products, with smaller flows into equities and real estate, Skeoch said. To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net. To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net . |
2024-10-31 | Bloomberg | Christie Right to Praise Obama, Greenberg Says | Chris Christie , New Jersey’s Republican governor, was right to praise President Barack Obama’s response to superstorm Sandy a week before Election Day, said Maurice “Hank” Greenberg, a supporter of Mitt Romney. “The president is doing what he should be doing,” Greenberg, the former chairman of American International Group Inc. (AIG) , told Bloomberg Television’s Betty Liu on the “In the Loop” program today. “He’s supposed to be leading this charge. You wouldn’t denounce him for that. Why would you do that?” Obama has done “as far as I’m concerned, a great job for New Jersey,” Christie said on the Fox News Channel yesterday, a day after Sandy struck the state. The president, a Democrat, scheduled a visit to New Jersey today to survey damage with Christie. Romney returns to the campaign trail with events in Florida. Christie has campaigned on Romney’s behalf and was the keynote speaker at the Republican nominating convention. Greenberg said Christie was “being himself” in crediting Obama’s efforts this week. “He has to be honest,” said Greenberg, who now runs insurance company Starr International Co. To contact the reporters on this story: Susanna Pak in New York at spak10@bloomberg.net ; Noah Buhayar in New York at nbuhayar@bloomberg.net. To contact the editor responsible for this story: Dan Kraut at dkraut@bloomberg.net |
2024-04-15 | Bloomberg | New Zealand’s Inflation Won’t Be a ‘Problem,’ Bill English Says | New Zealand Finance Minister Bill English said that while the nation’s inflation rate may have approached 5 percent in the first quarter, it won’t be a problem in coming years. “We’re not greatly concerned about it,” English said in an interview with Bloomberg Television yesterday at the Boao Forum for Asia in southern China’s Hainan province. “There will be some pressures there as the economy picks up, but we’re in pretty good shape on inflation.” English is preparing the May 19 budget against a background of weaker economic growth and one-time costs including an estimated NZ$8.5 billion ($6.8 billion) from earthquakes in the southern city of Christchurch. Consumer prices rose 2.3 percent in the fourth quarter from the third, the most since 1989, after the government increased the sales tax on goods and services. Prices increased a further 1 percent in the first quarter from the previous three-month period, according to the median of 12 estimates in a Bloomberg News survey of economists. The annual inflation rate rose to 4.6 percent from 4 percent, the survey shows. The inflation report is due at 10:45 a.m. local time on April 18. “We’re getting a spike in the headline number now, but underlying inflation in New Zealand has been 2 percent to 3 percent now for the best part of a decade,” English said. New Zealand’s dollar has gained about 9 percent against its U.S. counterpart in the past month, the best performer among 16 major currencies tracked by Bloomberg. Reserve Bank Governor Alan Bollard on April 12 said the exchange rate is being buoyed by record-high prices for the nation’s commodity exports and he expects that to continue. Quake Impact Bollard on March 10 slashed his 2011 growth forecast to 1.3 percent from 2.7 percent and cut the official cash rate to 2.5 percent to bolster confidence after a magnitude 6.3 quake struck Christchurch on Feb. 22, killing at least 170 people and wrecking homes, roads and central-city offices. “New Zealand has high rates of insurance, most of the damage people have seen will be covered by insurance and reinsurance, so we see it as a driver of growth next year,” English said. “I think we might surprise ourselves with the resilience of the economy bouncing back, and confidence bouncing back after the earthquake.” International demand for the government’s bond issuance, which is rising to fund the cash costs of the earthquake, is “quite strong,” he said. The finance minister is seeking to curb spending, outline a track to surplus and avoid a ratings cut after Standard & Poor’s lowered the outlook on New Zealand’s AA+ long-term rating to negative in November. Bond Issuance “In the budget in May we’ll be outlining the track back to surplus over the next three or four years, which we believe will be quite credible,” English said. “So the issuance could be up a bit over the next couple of years, but then it will flatten off as we get to surplus.” The budget deficit will be more than NZ$16 billion in the year ending June 30, the finance minister said this week, reiterating earlier forecasts. The government estimates a return to a surplus by 2016. The administration on April 12 increased planned bond sales for the year ending June 30 to NZ$16.5 billion and said it will review borrowing in the budget. On China , English said direct flights between the nation and New Zealand will be the start of a “big upswing” in tourism from the world’s fastest-growing major economy. Bilateral trade between the two countries has grown about 40 percent in the last couple of years, aided by their “very successful” free-trade agreement, he said. To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net |
2024-10-12 | Bloomberg | Johnson Controls Advances on Forecast for 2012 Auto-Supply Sales, Profit | Johnson Controls Inc. (JCI) , the largest U.S. auto supplier, rose as much as 6.6 percent after forecasting per-share profit and revenue growth for the 2012 fiscal year. Johnson Controls rose 5.7 percent to $31.86 at 11:08 a.m. in New York after earlier reaching $32.13. The shares dropped 21 percent this year before today. Profit in the year that ends Sept. 30, 2012, will be $2.85 a share to $3 a share, including 9 cents to fund pensions and consolidate a lithium-ion battery joint venture, a gain of as much as 23 percent from fiscal year 2011. The average estimate of 22 analysts surveyed by Bloomberg is for a profit of $3.11 a share, excluding the one-time items. “The guidance of at least 20 percent earnings growth is much better than what is priced into the stock,” David Leiker , an analyst with Robert W. Baird & Co. in Milwaukee , said in an e-mail. Sales will be about $44.2 billion, compared with $44.6 billion, the average estimate of 20 analysts, Johnson Controls said today before its investor day conference in New York. Profit in the quarter that ended Sept. 30 increased to 75 cents a share, excluding some costs, compared with 60 cents a year earlier, Milwaukee-based Johnson Controls said today in a preliminary earnings statement. The average estimate of 21 analysts surveyed by Bloomberg was for a profit of 78 cents a share. Sales in the quarter were $10.7 billion, compared with an average estimate of $10.5 billion. Improving Margins The company said sales and margins will improve in its three business units, and it forecast higher auto production in North America and China , while Europe mostly will be unchanged. Johnson Controls received 48 percent of its $34.3 billion in revenue in its fiscal 2010 from its auto parts unit, which makes seats and instrument panels. Johnson Controls also makes car batteries and systems to manage building climate and security. The company said it plans $1.7 billion in capital investments this year. “The company’s long-term growth story is intact,” Chief Executive Officer Stephen Roell said in the statement. Johnson Controls will release full fourth-quarter results Oct. 27. To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net |
2024-12-12 | Bloomberg | Corporate Credit Swaps in U.S. Fall to Two-Month Low on Stimulus | A gauge of U.S. corporate credit risk dropped for a third day, reaching the lowest level in almost two months after the Federal Reserve boosted stimulus and as budget talks continued in Washington. The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, fell 0.4 basis point to a mid-price of 93.3 basis points at 4:31 p.m. in New York, according to prices compiled by Bloomberg. The measure earlier fell to 91.4, the lowest intraday level since Oct. 19, and was poised for the lowest close since Oct. 18. The Fed said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and it linked the outlook for its main interest rate to unemployment and inflation targets. Further stimulus measures may ease investor concern that an economic slowdown will hinder companies’ ability to repay debt. “People have been wanting the Fed to insert more hardline targets, so that probably is good news for some, that they are tying it more to the economy,” Noel Hebert, who oversees about $250 million as chief investment officer at Bethlehem, Pennsylvania-based Concannon Wealth Management LLC, said in a telephone interview. Fed Purchases Chairman Ben S. Bernanke is using his unlimited authority to buy Treasuries in an unprecedented effort to stoke growth. The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The credit-default swaps gauge pared its drop as Bernanke said the Fed can’t offset the full effect of the fiscal cliff. President Barack Obama reduced his demand for tax increases as he and House Speaker John Boehner inched toward a budget deal to prevent more than $600 billion of automatic tax increases and spending cuts from taking effect next year. Boehner told reporters that the sides have “serious differences” on the plan. The credit-swaps index typically falls as investor confidence improves and rises as it deteriorates. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt. The risk premium on the Markit CDX North American High Yield Index rose 1.4 basis points to 469.3 basis points, Bloomberg data show. Chesapeake Swaps Access Midstream Partners LP (ACMP) , the natural gas company acquiring assets from Chesapeake Energy Corp. (CHK) , is planning to sell $1.4 billion of bonds to help fund the purchase. The Oklahoma City-based company is offering notes due in 2023, it said today in a statement. Moody’s Investors Service will grade the new bonds Ba3, the ratings company said today in a statement. Chesapeake, which in May said it was facing a cash crunch in 2013, has since been plugging a $22 billion shortfall with asset sales. Credit swaps protecting against losses on the debt of Chesapeake dropped 8.7 basis points to 472.5 basis points as of 3:28 p.m. in New York, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. That’s the lowest level since April 5. Swaps on Bausch & Lomb Inc. plunged 72.5 basis points to 75 basis points as of 3:30 p.m. in New York , according to CMA. Warburg Pincus LLC, which bought the eye-care company for $3.7 billion in September 2007, hired Goldman Sachs Group Inc. to explore the sale of firm, said to two people with knowledge of the matter. To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net |
2024-12-06 | Bloomberg | Deutsche Bank Accused by Ex-Employee of Hiding Securities Losses | Eric Ben-Artzi, a former quantitative risk analyst for Deutsche Bank AG (DBK) , alleged that Europe ’s biggest lender engaged in a multibillion-dollar securities violation. Deutsche Bank denied the allegation. Ben-Artzi, who is suing the company for wrongful dismissal, told the U.S. Securities and Exchange Commission that from 2007 to 2010 the bank misrepresented the value of a portfolio with a notional value of as much as $130 billion, Labaton Sucharow LLP, the New York-based law firm representing Ben-Artzi, said on its website yesterday. “The valuations and financial reporting were proper, and a significant portion of these positions were subsequently unwound in an orderly sale,” Renee Calabro , a spokeswoman for Deutsche Bank in New York , said in a statement. The claims were false, and the bank will continue to cooperate with the SEC’s investigation, she said. Deutsche Bank may have lost $12 billion from the collateralized insurance agreements, known as leveraged super senior (LSS) credit derivatives, should they have been valued properly, the Financial Times reported earlier. It cited estimates derived from comments by three former employees who testified to the SEC, including Ben-Artzi. Formerly of Goldman Sachs Group Inc (GS) , he joined the bank in 2010, the FT said. John Nester , an SEC spokesman, declined to comment on the investigation, as did Ben Fischer , a spokesman for German financial markets regulator BaFin. Deutsche Bank dropped as much as 2.2 percent in Frankfurt. The share fell 0.8 percent to 34.7 euros at 1:20 p.m., valuing the firm at 32.2 billion euros ($42 billion). The 28-company Euro Stoxx Bank Index (SX7P) rose 0.2 percent. Public Image Deutsche Bank failed to properly value a “gap option component” in the LSS portfolio between mid-2007 and 2010, Ben- Artzi said. The lender would have “substantially missed” earnings estimates even if it used conservative assumptions to properly value the instruments, according to the law firm. “Deutsche Bank was the largest holder of LSS trades in the marketplace and by not correctly valuing it the bank was able to maintain its carefully crafted public image that it was weathering the financial crisis better than its peers,” the law firm said. Deutsche Bank has navigated the financial crisis sparked by the 2007 meltdown of the U.S. housing market without direct state aid. Ben-Artzi, who has a doctorate in mathematics from New York University , sought to resolve his concerns internally before seeking legal representation and reporting the possible violations to the SEC whistle-blower program, Labaton Sucharow said. He “was subject to severe hostility, denied access to records” and was fired in November 2011 despite favorable performance reviews, it said. ‘Wholly Unfounded’ “The allegations of financial misstatements, which are more than 2 1/2 years-old and were publicly reported in June 2011, have been the subject of a careful and thorough investigation, and they are wholly unfounded,” Calabro, the Deutsche Bank spokeswoman, said. “Moreover, the investigation revealed that these allegations stem from people without personal knowledge of, or responsibility for, key facts and information.” In June 2011, Reuters news wire reported that a whistleblower action had been filed against Deutsche Bank for improper valuation of the derivatives. The SEC opened an inquiry, and Deutsche Bank settled the case with trader Matthew Simpson in January of that year, it said. Deutsche Bank wound down and allowed its high-risk credit portfolio to mature at an “insignificant” cost, it said in a presentation posted on its website in June last year. The portfolio was reduced to 39 percent of its 2009 level in May last year and will amount to zero in 2018, the bank said. To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net |
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