FedEx More Upbeat

In another harbinger of an economic upswing, Federal Express boosted its profit outlook for its fiscal first and second quarters. FedEx said profit in the just-ended quarter would come in 50% above the midpoint of its previous forecast, thanks partly to better-than-expected deliveries overseas. The company is seen as a key indicator of the economy’s direction. Investors boosted its shares by nearly 6% as of 2:30 p.m.

Source: Reuters

Delta May Buy into Japan Airlines

Delta Air Lines is in preliminary talks to buy a stake in Japan Airlines, according to a person familiar with the negotiations. A deal would boost the carrier’s presence in the Asia/Pacific region and fill a gap in the SkyTeam alliance headed by Delta. JAL is currently a member of a rival grouping, OneWorld. A Delta spokesman denied the report of deal talks.

Source: Wall Street Journal

Morgan Stanley’s CEO Exiting

Morgan Stanley Chief Executive John Mack will step down in a move that ends a four-year tenure marked by controversy over his strategic decisions and a near-death experience during last year's financial crisis. Mack will stay on as chairman when he leaves the chief executive post in January, 2010. He will be replaced by James Gorman, the bank's co-president in charge of global wealth management, investment management, and operations. Mack has overseen Morgan Stanley during one of the toughest periods in the bank's history. It slashed the assets on its balance sheet by almost a third to $677 billion in June in an attempt to cut its reliance on financial leverage. The firm's average value-at-risk -- a measure of how much the company estimates it might lose in a day's trading -- was $154 million in the second quarter compared to $245 million at rival Goldman Sachs.

Source: Financial Times, Bloomberg

Investors Stick with Equities

The last two years have tested people's confidence in the stock markets. But despite most equities still well below their pre-credit crunch highs, investors have stuck with equities. Indeed, participation in 401(k) plans held steady in 2008, even as the average account lost 28% of its value, according to Hewitt Associates, which tracks retirement plans.

Source: New York Times

Chrysler Resumes Auto Leasing

Struggling U.S. automaker Chrysler is planning to resume auto leasing, according to a dealer briefed on the plans. That comes more than a year after the carmaker was forced out of the business -- and three months after it emerged from bankruptcy. Chrysler will make a decision next week on the timing of the return, though new leases may not be offered until later in the month.

Source: Wall Street Journal

Obamacare Still Lacking Specifics

Despite U.S. President Barack Obama's well-received speech on healthcare, administration officials still struggle to explain how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit. The White House has released few specifics on proposed legislation, including new taxes, changes in malpractice statutes, a new national high-risk insurance pool, and a commission on eliminating Medicare fraud.

Source: Washington Post

Oracle Has Customers Over a Barrel

After spending $30 billion to buy 56 companies, Oracle Chief Executive Lawrence J. Ellison has doubled the software giant's revenues to an estimated $24 billion this fiscal year and sent the company's stock surging. But the Oracle's growing power, coupled with a surge in consolidation by other major players in the technology industry, has frustrated some corporate customers.

Source: BusinessWeek

GM Selling Opel to Magna After All

After mulling over Opel’s fate at length, General Motors confirmed that it will sell 55% of the German carmaker to Canadian car-parts maker Magna International and Russian bank OAO Sperbank. But financing issues remain that won’t be resolved for “the next few weeks.” Under the deal, GM will retain a 35% stake in Opel and sister company Vauxhall, while employees will take a 10% stake. GM, under heavy pressure from the German government to resolve the question before upcoming elections, had pondered other options, including holding on to Opel or selling it to Belgian investment firm RHJ International. The decision was welcomed by Chancellor Angela Merkel. Berlin has provided $2.16 billion in bridge loans to keep Opel going while the deal was being hammered out.

Source: Wall Street Journal

Obama Makes His Case

Declaring that "the time for bickering is over," U.S. President Barack Obama delivered a highly-anticipated address to the U.S. Congress on Sept. 9 laying out his proposals to reform health care and urging lawmakers to move forward on legislation. Over boos and shouts from some Republicans, Obama cast many of his opponents as cynical and called some of the criticisms of reform proposals lies. He pledged to keep reforms from adding to the deficit, and attempted to reassure a worried and confused public with his own determination. In his emotional, sometimes contentious speech, Obama combined tough talk to opponents with olive branches on policy in a bid to break the impasse on revamping the health-care system. The president promised to tackle the problem of medical malpractice insurance and reiterated his backing for a so-called "public option" for healthcare coverage, estimating the cost of the plan at $900 billion over 10 years. Some business groups immediately attacked the proposals.

Sources: Washington Post, BusinessWeek, Wall Street Journal

Brazilian Oil Find Could 'Dwarf' BP's Mexico Strike

The potential for Brazil to become one of the biggest oil producers in the world was highlighted Sept. 9 when BG, the former exploration arm of British Gas, reported a "supergiant" field with up to two billion barrels of recoverable reserves. The Guara discovery builds on a series of other major successes in very deep waters off Brazil and dwarfs rival strikes such as Tiber in the U.S. Gulf, which was announced with great fanfare by BP last week.

Source: Guardian

Kraft Calms Cadbury Bid Speculation

Kraft has played down speculation it will raise its offer for Cadbury after the British chocolate company rejected its $16.7 billion offer. Cadbury shares have climbed 38% on talk the American firm could increase its bid, and that there may be a bidding war with rivals such as Hershey or Nestle.

Source: Reuters

Merger Reshapes British Telco Landscape

France Telecom and Germany's Deutsche Telekom announced plans early Sept. 8 to combine their British Orange and T-Mobile units into a new operator that will take the top spot in Britain's fiercely competitive mobile phone services market, unseating Telefonica's O2 unit and posing a stronger competitive challenge to Vodafone. The companies expect to reap $5.7 billion in savings from the combination.

Sources: Times of London, New York Times, Wall Street Journal

Abu Dhabi Buys Chartered Semiconductor

In a sign of growing consolidation as the chipmaking industry emerges from its worst-ever downturn, Singapore-based contract manufacturer Chartered Semiconductor will be acquired for $1.8 billion by Abu Dhabi-based sovereign wealth fund ATIC.

Source: Reuters

Investors Stick with Equities

The last two years have tested people's confidence in the stock markets. But despite most equities still well below their pre-credit crunch highs, investors have stuck with equities. Indeed, participation in 401(k) plans held steady in 2008, even as the average account lost 28% of its value, according to Hewitt Associates, which tracks retirement plans.

Source: New York Times

Chrysler Resumes Auto Leasing

Struggling U.S. automaker Chrysler is planning to resume auto leasing, according to a dealer briefed on the plans. That comes more than a year after the carmaker was forced out of the business -- and three months after it emerged from bankruptcy. Chrysler will make a decision next week on the timing of the return, though new leases may not be offered until later in the month.

Source: Wall Street Journal

SEC Must Reform, or Else

The much-maligned U.S. Securities and Exchange Commission must "reform itself from within" or Congress will take over, according to Senator Richard Shelby. Speaking at a Senate Banking Committee hearing about improving the SEC's performance, Shelby questioned whether the agency needs more resources to patch the flaws that allowed Bernard Madoff to embezzle cash for 16 years despite numerous tips and investigations.

Source: Financial Times

Obamacare Still Lacking Specifics

Despite U.S. President Barack Obama's well-received speech on healthcare, administration officials still struggle to explain how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit. The White House has released few specifics on proposed legislation, including new taxes, changes in malpractice statutes, a new national high-risk insurance pool, and a commission on eliminating Medicare fraud.

Source: Washington Post

Oracle Has Customers Over a Barrel

After spending $30 billion to buy 56 companies, Oracle Chief Executive Lawrence J. Ellison has doubled the software giant's revenues to an estimated $24 billion this fiscal year and sent the company's stock surging. But the Oracle's growing power, coupled with a surge in consolidation by other major players in the technology industry, has frustrated some corporate customers.

Source: BusinessWeek

Cadbury Investors Eye Big Pay Day

Many Cadbury investors support the logic of Kraft's $16 billion bid for the British candy maker, but are holding out for an increased offer. The takeover bid has pushed Cadbury's share price through the roof. Now, the British company's price tag may reach $21.3 billion, according to the average estimate of six analysts surveyed by Bloomberg.

Source: Bloomberg

Harvard & Yale Endowments Lose $17.8 Billion

Harvard and Yale may be world-class institutions, but their investment strategies during the recession have been anything but stellar. The universities on Sept. 10 said their endowments -- still higher education's two largest -- each lost 30% of their value in the year ending June 30, 2009. Combined, their investment pools shrank by a staggering $17.8 billion.

Source: Wall Street Journal

China's Recovery Could Led to FX Diversification

Chinese strong industrial output and other bullish economic data in August surprised many analysts, and suggest the emerging giant's recovery is on a solid course. Beijing, though, isn't expected to hit the policy brakes anytime soon. The country's fast-paced recovery also underlines why it makes sense for China to diversify its huge stockpile of foreign exchange reserves, according to David Dollar, the U.S. Treasury's economic and financial emissary to China.

Source: Reuters

Google Proposes Micropayment System for News

The Internet giant has proposed a system under which online publishers could charge for content, according to a document posted by Harvard University’s Nieman Journalism Lab. The proposal was made in response to a request for information sent to “qualified providers” by the Newspaper Association of America, as part of an increasingly heated discussion between publishers and online outlets that offer their content for free. Google suggested that publishers could “tag” different articles on its site with different levels of pricing, and that Google’s Checkout service could be used to manage micropayments.

Sources: MarketWatch.com

Preventing the Next Madoff

The Securities & Exchange Commission’s internal watchdog, H. David Kotz, may offer as many as 40 measures to help the agency improve oversight and intercept future Ponzi schemesters. In testimony prepared for the Senate Banking Committee, Kotz says he may propose that staff be require to confirm random samples of trading data to make sure money managers are actually trading. He also said the SEC should assign staff with “appropriate skills and expertise” to investigations of financial firms. .

Sources: MarketWatch.com

Obama Makes His Case

Declaring that "the time for bickering is over," U.S. President Barack Obama delivered a highly-anticipated address to the U.S. Congress on Sept. 9 laying out his proposals to reform health care and urging lawmakers to move forward on legislation. Over boos and shouts from some Republicans, Obama cast many of his opponents as cynical and called some of the criticisms of reform proposals lies. He pledged to keep reforms from adding to the deficit, and attempted to reassure a worried and confused public with his own determination. In his emotional, sometimes contentious speech, Obama combined tough talk to opponents with olive branches on policy in a bid to break the impasse on revamping the health-care system. The president promised to tackle the problem of medical malpractice insurance and reiterated his backing for a so-called "public option" for healthcare coverage, estimating the cost of the plan at $900 billion over 10 years. Some business groups immediately attacked the proposals.

Sources: Washington Post, BusinessWeek, Wall Street Journal

Apple's Jobs Returns to Limelight with New Products

Judging by the response of some Apple fans, the company's Sept. 9 digital music event in San Francisco was disappointing. There was no tablet computer, no Beatles catalog on iTunes. Instead, Apple introduced an update to iTunes, a new iPod Nano with a built-in camera, and price cuts on some models. But the clear high point was the return of charismatic CEO Steve Jobs, who spoke publicly about his recent liver transplant and thanked the donor for saving his life.

Sources: BusinessWeek, New York Times

GM Decision on Opel, Vauxhall Expected Thursday

General Motors confirmed early Sept. 10 that it will announce today a decision in its protracted effort to sell off its German Opel unit. The company's board met Tuesday and Wednesday, and will put an end to months of suspense by revealing whether it will hang onto the business or sell it to either of two bidders. Separately, press reports indicated that GM has decided not to spin off its British Vauxhall unit.

Sources: Wall Street Journal, Reuters, Times of London

U.S. Foreclosures Drop Slightly, But Still Near Record

Figures released Sept. 10 by real estate data firm RealtyTrac showed that U.S. mortgage foreclosure filings dipped less than 1% in August from their all-time high in July but were still 18% above their level a year earlier. RealtyTrac predicted that foreclosures will continue to rise for another year, despite broad efforts to keep borrowers in their homes. Most of the problem remains centered in hard-hit states such as Arizona and Nevada, RealtyTrac said.

Source: Reuters, Washington Post

No Big Fix for Global Finance

World leaders have talked bravely about fixing the global financial system. But as they head into a highly anticipated G-20 summit later this month in Pittsburg, their plans appear to be far less ambitious than what some voices were advocating as recently as last spring. Improvements in the global economy and financial markets have sapped momentum from reformers. But industry insiders such as Goldman Sachs chief Lloyd Blankfein also are talking up self-restraint.

Sources: BusinessWeek, Wall Street Journal

Brazilian Oil Find Could 'Dwarf' BP's Mexico Strike

The potential for Brazil to become one of the biggest oil producers in the world was highlighted Sept. 9 when BG, the former exploration arm of British Gas, reported a "supergiant" field with up to two billion barrels of recoverable reserves. The Guara discovery builds on a series of other major successes in very deep waters off Brazil and dwarfs rival strikes such as Tiber in the U.S. Gulf, which was announced with great fanfare by BP last week.

Source: Guardian

Europeans Reconsider Carbon Tax

Economists have long favored a carbon tax because of its simplicity: Polluters pay at a level that is set by decree. But the idea never caught on in the United States or Europe, which opted instead for the market-based cap-and-trade mechanism. Now, amid signs that progress in meeting greenhouse gas reduction targets has been only modest, carbon tax schemes are making something of a comeback among policymakers.

Source: New York Times

Bharti and MTN Agree to Terms of $24 Billion Merger

Bharti Airtel Ltd., India's biggest mobile-phone company, and South Africa's MTN Group Ltd. reached a $24 billion preliminary accord to buy each other's shares, the first step in a planned merger, three people familiar with the matter said. The world's biggest cross-border deal this year would pave the way for the creation of a mobile-phone carrier with annual sales of $20 billion and 200 million wireless subscribers from Johannesburg to Mumbai.

Source: Bloomberg

Can Motorola Save Itself with Android Smartphones?

After floundering for three years in search of a turnaround, the inventor of cellular phone technology and one-time market leader will unveil a new line of smartphones Sept. 10 based on the Android operating system from Google. Will the new models be enough to revive Moto's fortunes—or too little, too late?

Source: MarketWatch

Apple's Jobs Returns to Limelight with New Products

Judging by the response of some Apple fans, the company's Sept. 9 digital music event in San Francisco was disappointing. There was no tablet computer, no Beatles catalog on iTunes. Instead, Apple introduced an update to iTunes, a new iPod Nano with a built-in camera, and price cuts on some models. But the clear high point was the return of charismatic CEO Steve Jobs, who spoke publicly about his recent liver transplant and thanked the donor for saving his life.

Sources: BusinessWeek, New York Times

GM Decision on Opel, Vauxhall Expected Thursday

General Motors confirmed early Sept. 10 that it will announce today a decision in its protracted effort to sell off its German Opel unit. The company's board met Tuesday and Wednesday, and will put an end to months of suspense by revealing whether it will hang onto the business or sell it to either of two bidders. Separately, press reports indicated that GM has decided not to spin off its British Vauxhall unit.

Sources: Wall Street Journal, Reuters, Times of London

U.S. Foreclosures Drop Slightly, But Still Near Record

Figures released Sept. 10 by real estate data firm RealtyTrac showed that U.S. mortgage foreclosure filings dipped less than 1% in August from their all-time high in July but were still 18% above their level a year earlier. RealtyTrac predicted that foreclosures will continue to rise for another year, despite broad efforts to keep borrowers in their homes. Most of the problem remains centered in hard-hit states such as Arizona and Nevada, RealtyTrac said.

Source: Reuters, Washington Post

No Big Fix for Global Finance

World leaders have talked bravely about fixing the global financial system. But as they head into a highly anticipated G-20 summit later this month in Pittsburg, their plans appear to be far less ambitious than what some voices were advocating as recently as last spring. Improvements in the global economy and financial markets have sapped momentum from reformers. But industry insiders such as Goldman Sachs chief Lloyd Blankfein also are talking up self-restraint.

Sources: BusinessWeek, Wall Street Journal

Suntory in Talks to Buy Orangina from Blackstone, Lion Capital

Japanese beverage conglomerate Suntory, which sells everything from whisky to green tea, is in talks to buy French orange drink maker Orangina from its private equity owners, Blackstone Group and Lion Capital. The firms bought Orangina three years ago from Cadbury for $2.6 billion and are expected to sell it to Osaka-based Suntory for at least $2.7 billion.

Source: Times of London

Brazilian Oil Find Could 'Dwarf' BP's Mexico Strike

The potential for Brazil to become one of the biggest oil producers in the world was highlighted Sept. 9 when BG, the former exploration arm of British Gas, reported a "supergiant" field with up to two billion barrels of recoverable reserves. The Guara discovery builds on a series of other major successes in very deep waters off Brazil and dwarfs rival strikes such as Tiber in the U.S. Gulf, which was announced with great fanfare by BP last week.

Source: Guardian

Europeans Reconsider Carbon Tax

Economists have long favored a carbon tax because of its simplicity: Polluters pay at a level that is set by decree. But the idea never caught on in the United States or Europe, which opted instead for the market-based cap-and-trade mechanism. Now, amid signs that progress in meeting greenhouse gas reduction targets has been only modest, carbon tax schemes are making something of a comeback among policymakers.

Source: New York Times

Bharti and MTN Agree to Terms of $24 Billion Merger

Bharti Airtel Ltd., India's biggest mobile-phone company, and South Africa's MTN Group Ltd. reached a $24 billion preliminary accord to buy each other's shares, the first step in a planned merger, three people familiar with the matter said. The world's biggest cross-border deal this year would pave the way for the creation of a mobile-phone carrier with annual sales of $20 billion and 200 million wireless subscribers from Johannesburg to Mumbai.

Source: Bloomberg

Can Motorola Save Itself with Android Smartphones?

After floundering for three years in search of a turnaround, the inventor of cellular phone technology and one-time market leader will unveil a new line of smartphones Sept. 10 based on the Android operating system from Google. Will the new models be enough to revive Moto's fortunes—or too little, too late?

Source: MarketWatch

Battle of the Comic Books

In the wake of Disney's acquisition of Marvel Entertainment, rival film studio Warner Bros. revealed on Sept. 9 a restructuring of its DC Comics unit that the company hopes will put it under tighter control and boost its competitive positioning in what looks to be a pending race to bring more comic book heroes to the big screen.

Source: Los Angeles Times

Uncle Sam Unlikely to Recoup Full Cost of Auto Bailout

A report published by a Congressional oversight panel says it is “unlikely” the federal government will get back all of the $74 billion it pumped into ailing U.S. carmakers. At risk is a $5.4 billion portion of the $10.5 billion owed by Chrysler. And GM’s stock would have to soar to unprecedented highs in order for the company to be able to repay the full $50 billion it got from Uncle Sam. Yet the panel concluded that the government’s auto bailout may have averted an “economic catastrophe” given that the industry accounts for 6.5% of U.S. manufacturing jobs.

Source: The Washington Post

Banks Step Up Mortgage Modifications

Bank of America and Wells Fargo boosted the pace of mortgage modifications by at least 60% in August. The two banks, which have received a combined $70 billion in federal funds, were some of the worst performers among the banks taking part in the Obama administration’s Making Home Affordable Program. Despite the improvement, BofA and Wells still lag behind Citigroup and JPMorgan Chase in modifications.

Source: Bloomberg

OPEC Expected to Hold Steady on Cuts

OPEC appeared set keep oil production quotas unchanged as the cartel’s Vienna meeting winds down today. Saudi Arabian Oil Minister Ali Naimi told reporters yesterday that the present price of crude, hovering at around $71, “is good for everyone: consumers and producers.” Nonetheless, the group is seeking to boost compliance with the current quotas, which is running at 70%.

Source: Associated Press

CNPC Lands $30 Billion Loan

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, on Sept. 9 said it received a $30 billion loan from a state-owned China Development Bank as the energy company makes a move for overseas resources. CNPC added the five-year loan will be given at a discounted interest rate, which would be used to fund its "go global" strategy.

Source: Financial Times

China's Geely to Bid for Volvo

China's Geely Automotive said on Sept. 9 it wants to bid for Ford's Volvo subsidiary in a move that makes it the latest Chinese automaker to chase a foreign brand. If successful, the acquisition could boost the profile of Geely, a small, home-grown car maker and give it access to the Volvo technology the company needs to upgrade its cars.

Source: Reuters

GM's Plans for Opel Get Complicated

General Motors' new board could soon be in a standoff with the German government. But even if GM is determined to get a more satisfactory disposition of its Opel auto operations in Europe, there aren't any clear-cut paths to success. The company's board of directors met on Sept. 8 and will again on Sept. 9 to discuss Opel's fate. If the board chooses not to accept a bid from Canadian parts maker Magna International and its Russian partner, OAO Sberbank, a very complex drama will unfold.

Source: BusinessWeek

Kraft Calms Cadbury Bid Speculation

Kraft has played down speculation it will raise its offer for Cadbury after the British chocolate company rejected its $16.7 billion offer. Cadbury shares have climbed 38% on talk the American firm could increase its bid, and that there may be a bidding war with rivals such as Hershey or Nestle.

Source: Reuters

Retailers Bend Over Backwards to Win Consumers Over

Tough economic times have caused many consumers to cut spending. But some recent promotions show shoppers will still chase a bargain, particularly one that seems unlikely to be repeated anytime soon. Even big-ticket items costing hundreds or thousands of dollars can be in high demand if they are priced right.

Source: New York Times

New Regulation to Hit Investment Banks

The global financial regulatory crackdown is likely to cut long-term profitability at U.S. and European investment banks by nearly a third, according to a study by JPMorgan. The report paints a pessimistic view of the impact of regulatory changes that include tougher capital rules for trading and a push to trade derivatives on exchanges. Investment banks' return on equity could fall from 15% to under 11% by 2011.

Source: Financial Times

German Bankers Defend Bonuses

On Sept. 9, leading German bankers defended bonuses as a necessary reward for talent and a lesser factor in the global economic crisis than politicians have made out. "Banks can't let star performers slip through their fingers by being tight-fisted," Deutsche Bank Chief Executive Josef Ackermann said.

Source: Wall Street Journal

Madoff Feeder Fund Makes $8 Million Deal

Massachusetts regulators have reached an $8 million settlement with one of Bernard L. Madoff's feeder funds. The deal calls for full restitution for the New England state's victims, and was struck with New York-based Fairfield Greenwich Advisors. The Massachusetts secretary of state had filed a civil complaint against Fairfield on behalf of 10 state investors, saying its executives had not conducted adequate oversight of Madoff.

Source: Associated Press

NYSE Euronext Teams Up with Brokerages

NYSE Euronext has agreed to sell stakes in the options business to seven brokerages including Bank of America and Barclays as the exchange tries to revive the struggling operation. Citadel Investment Group, Goldman Sachs, TD Ameritrade Holding, Citigroup, and UBS also will purchase stakes in NYSE Amex, the company said.

Source: Bloomberg

Obama to Make Healthcare Speech

In a high-stakes speech to the nation, U.S. President Barack Obama will press for a government-run insurance option on Sept. 9in his proposed overhaul of the U.S. health-care system. White House officials say the president will detail what he wants in the health-care overhaul, as well as say he is open to better ideas on a government plan if lawmakers have them.

Source: Wall Street Journal

CNPC Lands $30 Billion Loan

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, on Sept. 9 said it received a $30 billion loan from a state-owned China Development Bank as the energy company makes a move for overseas resources. CNPC added the five-year loan will be given at a discounted interest rate, which would be used to fund its "go global" strategy.

Source: Financial Times

China's Geely to Bid for Volvo

China's Geely Automotive said on Sept. 9 it wants to bid for Ford's Volvo subsidiary in a move that makes it the latest Chinese automaker to chase a foreign brand. If successful, the acquisition could boost the profile of Geely, a small, home-grown car maker and give it access to the Volvo technology the company needs to upgrade its cars.

Source: Reuters

GM's Plans for Opel Get Complicated

General Motors' new board could soon be in a standoff with the German government. But even if GM is determined to get a more satisfactory disposition of its Opel auto operations in Europe, there aren't any clear-cut paths to success. The company's board of directors met on Sept. 8 and will again on Sept. 9 to discuss Opel's fate. If the board chooses not to accept a bid from Canadian parts maker Magna International and its Russian partner, OAO Sberbank, a very complex drama will unfold.

Source: BusinessWeek

Kraft Calms Cadbury Bid Speculation

Kraft has played down speculation it will raise its offer for Cadbury after the British chocolate company rejected its $16.7 billion offer. Cadbury shares have climbed 38% on talk the American firm could increase its bid, and that there may be a bidding war with rivals such as Hershey or Nestle.

Source: Reuters

Retailers Bend Over Backwards to Win Consumers Over

Tough economic times have caused many consumers to cut spending. But some recent promotions show shoppers will still chase a bargain, particularly one that seems unlikely to be repeated anytime soon. Even big-ticket items costing hundreds or thousands of dollars can be in high demand if they are priced right.

Source: New York Times

New Regulation to Hit Investment Banks

The global financial regulatory crackdown is likely to cut long-term profitability at U.S. and European investment banks by nearly a third, according to a study by JPMorgan. The report paints a pessimistic view of the impact of regulatory changes that include tougher capital rules for trading and a push to trade derivatives on exchanges. Investment banks' return on equity could fall from 15% to under 11% by 2011.

Source: Financial Times

German Bankers Defend Bonuses

On Sept. 9, leading German bankers defended bonuses as a necessary reward for talent and a lesser factor in the global economic crisis than politicians have made out. "Banks can't let star performers slip through their fingers by being tight-fisted," Deutsche Bank Chief Executive Josef Ackermann said.

Source: Wall Street Journal

Madoff Feeder Fund Makes $8 Million Deal

Massachusetts regulators have reached an $8 million settlement with one of Bernard L. Madoff's feeder funds. The deal calls for full restitution for the New England state's victims, and was struck with New York-based Fairfield Greenwich Advisors. The Massachusetts secretary of state had filed a civil complaint against Fairfield on behalf of 10 state investors, saying its executives had not conducted adequate oversight of Madoff.

Source: Associated Press

NYSE Euronext Teams Up with Brokerages

NYSE Euronext has agreed to sell stakes in the options business to seven brokerages including Bank of America and Barclays as the exchange tries to revive the struggling operation. Citadel Investment Group, Goldman Sachs, TD Ameritrade Holding, Citigroup, and UBS also will purchase stakes in NYSE Amex, the company said.

Source: Bloomberg

Obama to Make Healthcare Speech

In a high-stakes speech to the nation, U.S. President Barack Obama will press for a government-run insurance option on Sept. 9in his proposed overhaul of the U.S. health-care system. White House officials say the president will detail what he wants in the health-care overhaul, as well as say he is open to better ideas on a government plan if lawmakers have them.

Source: Wall Street Journal

Who’s No. 1 in Competitiveness?

It’s not the U.S. any more. The World Economic Forum released its annual rankings of global competitiveness, and it shows that Switzerland has vaulted ahead of the perennial front-runner to claim the top spot. The U.S. slipped to No. 2. The report blames its fall on “weaker financial markets and less macroeconomic stability.” Some leading emerging markets, such as Brazil, China, and India improved their scores. The rankings are based on 12 measures of a nation’s competitiveness.

Sources: New York Times

Gold Shoots Past $1,000

Gold neared its record high of $1014 an ounce as investors worried about enormous U.S. budget deficits and the resulting weak dollar pushed prices past $1,000. Gold on the New York Mercantile Exchange hit $1,009 before settling back into the $1,006 range. The last time gold went above $1,000 was in February, and the record was set in March of 2008. A U.N. report on Monday criticized the use of the dollar as the world’s reserve currency.

Sources: CNNMoney.com

Cadbury: The Battle Begins

Kraft Foods will likely have to up the ante if it hopes to acquire British confectionery and chocolate maker Cadbury, producer of the iconic Dairy Milk bar and Trident gum. On Sept. 7, Cadbury rejected a surprise $16.7 billion takeover bid from the U.S. food giant on the grounds that it fundamentally undervalues the British company, though Kraft's offer was 31% above Cadbury's closing price on Sept. 4. Cadbury's swift refusal of the offer sets the stage for what could become an expensive and protracted bidding war. Analysts suggest that rivals Hershey or Nestlé could enter the fray. While Kraft wouldn't commit to raising its offer, the second-largest food maker in the U.S. seems determined to stick with its pursuit of the British company.

Sources: BusinessWeek, Wall Street Journal, New York Times

Merger Reshapes British Telco Landscape

France Telecom and Germany's Deutsche Telekom announced plans early Sept. 8 to combine their British Orange and T-Mobile units into a new operator that will take the top spot in Britain's fiercely competitive mobile phone services market, unseating Telefonica's O2 unit and posing a stronger competitive challenge to Vodafone. The companies expect to reap $5.7 billion in savings from the combination.

Sources: Times of London, New York Times, Wall Street Journal

OPEC Likes $70 Oil, Likely to Hold Levels

Oil ministers meeting in Vienna this week are likely to maintain their current production levels, which have helped move the price of oil to around $70 per barrel. Saudi Arabian oil minister Ali Al-Naimi told reporters ahead of the OPEC meeting that the market is in "very good shape" and that the current price of oil "is good for everybody, consumers and producers."

Sources: Reuters, Bloomberg

Japan Sticks to Greenhouse Gas Targets

Yukio Hatoyama, Japan's prime minister-elect, vowed on Monday to go ahead with plans for an aggressive cut in greenhouse gas emissions in spite of opposition from business groups. But business leaders remain concerned that the targets are too tough and cannot be met.

Sources: Financial Times, BusinessWeek

Google Tries to Placate European Critics of Books Plan

After a hearing in Brussels convened by the European Commission, Google said it would limit the out-of-print books it plans to make available online in order to appease European publishers, authors and other copyright holders objecting to a proposed American court settlement allowing Google to sell digital books on the Internet. Despite the concession, France says it still plans to formally oppose the settlement.

Sources: Times of London, New York Times, Financial Times

Swiss Banks Extend Disclosure to Britain

In the wake of Switzerland's landmark agreement last month to disclose to American tax authorities the identities of thousands of secret bank account holders who might be evading U.S. taxes, Swiss and British authorities have now reached a similar agreement. The move marks the latest step by Switzerland to move out of the gray zone of tax havens. But even as the new U.K. deal was being announced, some American experts say that the U.S. agreement still could allow tax cheats to avoid detection.

Sources: New York Times, MarketWatch

Abu Dhabi Buys Chartered Semiconductor

In a sign of growing consolidation as the chipmaking industry emerges from its worst-ever downturn, Singapore-based contract manufacturer Chartered Semiconductor will be acquired for $1.8 billion by Abu Dhabi-based sovereign wealth fund ATIC.

Source: Reuters

Is Big Beer Begging for an Antitrust Probe?

Big Beer looks as if it's testing President Obama's tolerance. Both Anheuser-Busch InBev—purveyor of the president's preferred brew, Bud Light—and MillerCoors, a joint venture between SABMiller and Molson Coors, are raising prices at the same time, during a recession and while beer demand is slumping.

Source: Washington Post

Summer No Breeze for Hollywood

If the year's first four months defied all expectations for what Hollywood could do in a recession, this summer delivered some sobering reality. From May 1 through Aug. 31, attendance was down 2.4% from 2008 and 6% from 2007. Among the lessons for studios: Moviegoers wanted to be amazed and to laugh; Twitter-era audience buzz can doom a movie fast; and A-list stars can't always strike box-office gold.

Source: Los Angeles Times

Merger Reshapes British Telco Landscape

France Telecom and Germany's Deutsche Telekom announced plans early Sept. 8 to combine their British Orange and T-Mobile units into a new operator that will take the top spot in Britain's fiercely competitive mobile phone services market, unseating Telefonica's O2 unit and posing a stronger competitive challenge to Vodafone. The companies expect to reap $5.7 billion in savings from the combination.

Sources: Times of London, New York Times, Wall Street Journal

Obama Rallies Union Support for Healthcare Reform

On the Labor Day holiday in the U.S., President Barack Obama tried to reinvigorate support for his struggling health care agenda by giving a stirring, campaign-style speech to thousands of union members in Ohio. In a departure from the cool, patient tone he adopted over the summer, the president lashed out at the "lies" perpetuated by critics of reform and challenged them to come up with a better solution.

Source: Washington Post

OPEC Likes $70 Oil, Likely to Hold Levels

Oil ministers meeting in Vienna this week are likely to maintain their current production levels, which have helped move the price of oil to around $70 per barrel. Saudi Arabian oil minister Ali Al-Naimi told reporters ahead of the OPEC meeting that the market is in "very good shape" and that the current price of oil "is good for everybody, consumers and producers."

Sources: Reuters, Bloomberg

Japan Sticks to Greenhouse Gas Targets

Yukio Hatoyama, Japan's prime minister-elect, vowed on Monday to go ahead with plans for an aggressive cut in greenhouse gas emissions in spite of opposition from business groups. But business leaders remain concerned that the targets are too tough and cannot be met.

Sources: Financial Times, BusinessWeek

Google Tries to Placate European Critics of Books Plan

After a hearing in Brussels convened by the European Commission, Google said it would limit the out-of-print books it plans to make available online in order to appease European publishers, authors and other copyright holders objecting to a proposed American court settlement allowing Google to sell digital books on the Internet. Despite the concession, France says it still plans to formally oppose the settlement.

Sources: Times of London, New York Times, Financial Times

Swiss Banks Extend Disclosure to Britain

In the wake of Switzerland's landmark agreement last month to disclose to American tax authorities the identities of thousands of secret bank account holders who might be evading U.S. taxes, Swiss and British authorities have now reached a similar agreement. The move marks the latest step by Switzerland to move out of the gray zone of tax havens. But even as the new U.K. deal was being announced, some American experts say that the U.S. agreement still could allow tax cheats to avoid detection.

Sources: New York Times, MarketWatch

Abu Dhabi Buys Chartered Semiconductor

In a sign of growing consolidation as the chipmaking industry emerges from its worst-ever downturn, Singapore-based contract manufacturer Chartered Semiconductor will be acquired for $1.8 billion by Abu Dhabi-based sovereign wealth fund ATIC.

Source: Reuters

Goldman Takes 21% Stake in Eurotunnel

The operator of the "chunnel" connecting Britain and France under the English Channel has obtained its first major institutional investor, as Goldman Sachs agreed to convert its bondholdings in Eurotunnel into a 21.2% ordinary equity stake.

Source: Telegraph

Is Big Beer Begging for an Antitrust Probe?

Big Beer looks as if it's testing President Obama's tolerance. Both Anheuser-Busch InBev—purveyor of the president's preferred brew, Bud Light—and MillerCoors, a joint venture between SABMiller and Molson Coors, are raising prices at the same time, during a recession and while beer demand is slumping.

Source: Washington Post

Summer No Breeze for Hollywood

If the year's first four months defied all expectations for what Hollywood could do in a recession, this summer delivered some sobering reality. From May 1 through Aug. 31, attendance was down 2.4% from 2008 and 6% from 2007. Among the lessons for studios: Moviegoers wanted to be amazed and to laugh; Twitter-era audience buzz can doom a movie fast; and A-list stars can't always strike box-office gold.

Source: Los Angeles Times

Airbus Got Illegal Help, Says the WTO

The international trade body issued a preliminary ruling that the European aerospace consortium received billions in illegal subsidies from European governments. The U.S., which has been involved in a lengthy dispute with Airbus, said it was reviewing the report. Washington filed its complaint with the WTO in 2004.

Source: Wall Street Journal

Google Loses China Chief

Kai Fu Lee, Google’s China chief, is leaving the company to join a new Chinese venture capital fund, four years after a very public departure from Microsoft to Google. Google credited Lee with the growth of Google.cn and other “innovations”, but Google had long lagged behind local search engine Baidu.

Source: New York Times.

Not So Fast, Oracle

European Union regulators announced on Thursday that they are launching an antitrust probe into Oracle’s $7.4 billion takeover of Sun Microsystems. EU competition commissioner Neelie Kroes said that regulators needed to examine the possible consequences of a deal in which "the world's biggest proprietary database company proposes to take over the world's leading open-source database company." At issue is Sun’s open source database software MySQL, which competes with Oracle offerings in certain markets. The European Commission has 90 days before it must make a final decision to approve the deal or block it. U.S. authorities have already greenlighted the transaction. The EU's move seems likely to delay, rather than derail, the acquisition. MySQL represents a relatively small piece of Sun's overall business, accounting for less than 5% of its $11.4 billion in revenues for the fiscal year that ended June 30. Experts believe that Oracle could spin off or sell the business to satisfy regulators if necessary.

Source: Associated Press, BusinessWeek

No Back-to-School Relief for Retailers

The all-important back-to-school shopping season is shaping up to be a disappointing one for U.S. retailers, especially for chains that specialize in clothing for children and teens. The industry as a whole saw sales dip 2.9% in August , marking the 12th consecutive month of declines. Chains such as Abercrombie & Fitch, American Apparel and Wet Seal all logged double-digit drops in same-store sales. One relative bright spot was Gap, where The Gap and Old Navy divisions registered sales declines that were smaller than for the same month last year.

Source: New York Times

Pfizer Pays Up

Announcing the details of an agreement it first revealed in January, Pfizer will pay $2.3 billion to settle a U.S. investigation into illegal marketing of medicines, and a subsidiary will plead guilty to criminal charges. The amount includes $1.3 billion to end the criminal part of the inquiry. Pharmacia & Upjohn, which Pfizer aquired in 2003, will admit to a felony charge of misbranding a pharmaceutical. The settlement is the largest ever in the U.S. involving off-label marketing practices. The criminal case involves the off-label promotion of Bextra, a painkiller that Pfizer withdrew in 2005 because of its connection to a rare skin condition. Federal investigators examined marketing practices involving various other Pfizer drugs, and while the company denied almost all of the civil charges, its $1 billion payment to settle the civil cases includes $503 million involving Bextra, $301 million for the schizophrenia drug Geodon, and $98 million for the antibiotic Zyvox.

Source: Bloomberg

BP’s “Giant” Strike

The British energy giant says it has discovered an enormous field in the Gulf of Mexico. While the company wouldn’t formally estimate the size of the find, BP’s chief of exploration called the exploratory Tiber well “very significant” and said it was even “better” than the Kaskida field nearby, which is thought to contain 4 billion to 6 billion barrels.

Source: BusinessWeek

The Cash-for-Clunkers Effect

Car companies said on Sept. 1 that their August sales soared to an annualized selling rate of about 14 million, thanks to the government's clunkers program, which gave $3,500 to $4,500 to consumers trading in an old gas guzzler for something more efficient. The accelerated sales rate was a boon for carmakers, especially Ford (F), Toyota (TM), Honda (HMC), and Hyundai. But the industry appears to be giving those gains back as the annualized rate has fallen to 8 million vehicles since Aug. 25, when the program stopped. "August was the best month of the year, but it's possible that it could be followed by the worst month this year," predicts Jeremy Anwyl, chief executive officer of Edmunds.com.

Source: BusinessWeek

EBay's Skype Sale Looks Like a Win-Win

In a deal announced Sept. 1, eBay will sell a controlling share of the Internet-calling service to a group of investors led by private equity firm Silver Lake for $1.9 billion in cash and $125 million in short-term debt. The sale values Skype at $2.75 billion, not far below the price eBay paid for the business in 2005, and higher than the value recently placed on Skype by some Wall Street analysts. At the same time, eBay retains a 35% stake in the high-growth business.

Source: BusinessWeek

Brazil’s New Oil Policy

Declaring today an “independence day” for Brazil, President Luiz Inacio Lula da Silva proposed changes that would give the government-owned oil company, Petrobras, a dominant role in developing enormous newly discovered offshore fields. The proposals, if passed by Congress, would relegate foreign oil companies to supporting roles and could reap vast financial returns for Brazil. But they risk alienating the foreign outfits that Brazil may need to develop the technologically challenging fields.

Source: Wall Street Journal

Disney Snares Spidey

Look out, Green Goblin. Spiderman will have some new money behind him now that Walt Disney is buying Marvel Entertainment for $4 billion in cash and stock. It’s Disney’s biggest takeover since it bought Pixar in 2006, and besides Spiderman, it adds such iconic characters as the X-men, Captain America, and the Fantastic Four to the Disney stable. The deal also marks the first major transaction in the media industry since the financial crisis began, and one analyst called it a sign that “confidence is returning to the marketplace.” The price amounts to a 29% premium over Marvel’s Friday closing price. Disney shares were down about 3% on the news.

Source: CNNMoney.com

A Milestone Election in Japan

Japanese voters tossed out the Liberal Democratic Party government, breaking 54 years of almost unbroken one-party rule. In yesterday’s elections, the opposition Democratic Party of Japan won 308 of the 480 seats in the Lower House of the Diet, Japan’s parliament. The LDP won just 119 and for the first time since the party’s founding in 1955 will not be the largest party. Turnout set a record high, with 69% of eligible voters participating. The decisive victory gives the new DPJ government a far stronger mandate than had been previously expected. In addition to a huge majority in the Lower House, the party already controls the Upper House. In practice, the DPJ should therefore be able to enact legislation with relative ease. For years, "Parliament was gridlocked," says Jesper Koll, president and CEO of Tantallon Research Japan. "[Today's result] tells you people are ready for big change."

Source: Nikkei, BusinessWeek

U.S. Payroll May Have Fallen in August, Economists Say

U.S. employers may have cut another 230,000 jobs in August, economists said in advance of the release of closely-watched data on U.S. payroll. Analysts estimated a marginal increase in the unemployment rate to 9.5%, and warned that consumer spending would suffer. The data will be released at 8:30 A.M. in Washington, DC.

Source: Bloomberg.

Google Lose’s China Chief

Kai Fu Lee, Google’s China chief, is leaving the company to join a new Chinese venture capital fund, four years after a very public departure from Microsoft to Google. Google credited Lee with the growth of Google.cn and other “innovations”, but Google had long lagged behind local search engine Baidu.

Source: New York Times.

BP Had Warned U.K. In 2007 About Libyan Deal, Concerned Over Delays in A Prisoner Exchange Program

British Petroleum said that it had spoken to the British Government in 2007 about concerns that its $900 million oil exploration deal with Libya was in jeopardy over delays in finalizing a prison transfer agreement. A Scottish court released the only man convicted in the 1988 bombing of a Pan-Am plane on compassionate grounds because of illnes, but Abdel Al-Megrahi has returned to Libya to a hero’s welcome. Since his release, documents released in the U.K. have cast doubt on the impartiality of the decision, with critics alleging business concerns

Source: Wall Street Journal

Buffet Continues to Dump Moody’s Stock

Warren Buffet dropped another 2% of his holdings in Moody's, lowering his stake to 39.2 million shares. He had dumped Moody’s shares in July too, after admitting that Moody’s had damaged its reputation by failing to recognize flaws in the U.S. housing market.

Source: Bloomberg

NATO Planes Bomb Hijacked Fuel Tanker, Killed close to 60.

NATO struck two fuel tankers it said were hijacked by insurgents, killing “scores.” Villagers near the tankers said the air strike killed family members trying to retrieve fuel from the tanker- NATO insisted it opened fire only after ascertaining that the tanker was surrounded by enemy insurgents. If civilians were killed, anti-U.S. and anti-NATO sentiments in Afghanistan could be further fueled as voters wait for results of an election that some Afghani leaders have attacked as being rigged.

Reuters

U.S. Jobless Claims Up More Than Expected

New jobless claims for the week ended Aug. 28 fell less than expected. The Labor Department said the number of laid-off workers applying for benefits dipped to 570,000—but economist had been expecting claims to fall to 560,000. The government’s employment report, due out tomorrow, is expected to show that while layoffs have slowed, the jobless rate climbed to 9.5% in August, up from 9.4% in July.

Source: Associated Press

No Back-to-School Relief for Retailers

The all-important back-to-school shopping season is shaping up to be a disappointing one for U.S. retailers, especially for chains that specialize in clothing for children and teens. The industry as a whole saw sales dip 2.9% in August , marking the 12th consecutive month of declines. Chains such as Abercrombie & Fitch, American Apparel and Wet Seal all logged double-digit drops in same-store sales. One relative bright spot was Gap, where The Gap and Old Navy divisions registered sales declines that were smaller than for the same month last year.

Source: New York Times

No Recovery Visible in Services Yet

U.S. service industries continued to contract in July, albeit at a slower pace, according to data published by the Institute for Supply Management on Sept. 3. The ISM’s index of non-manufacturing business edged up to 48.4, its highest level in 11 months. Yet any reading below 50 indicates that activity is decelerating.

Source: Bloomberg

Obama’s Big Gamble in Healthcare Debate

President Obama's announcement that he will take his case for revamping healthcare before a joint session of Congress next week reflects a decision to go "all in" politically, laying his prestige on the line for the defining domestic issue of his young presidency. The President is gambling that he can tilt the balance in his favor by spelling out in detail just what he wants from the House and Senate in the coming weeks. Until now, Obama has avoided laying out a blueprint for healthcare, confining himself to statements of broad goals and leaving the particulars to Congress. White House officials said Wednesday that this strategy had helped keep the legislative wheels turning and avoid stalemate.

Source: Los Angeles Times

Twitter snags former Google exec for COO

Microblogging service Twitter has tapped a former Google executive to be its chief operating officer, the latest move by the fledgling but fast-growing company to build out its management team as it seeks to start making money. Dick Costolo will join Twitter next week as COO, company spokeswoman Jenna Sampson said by email.

Source: Reuters

Fed Tries to Prepare Markets for End of Securities Purchases

The Federal Reserve is trying to prepare investors for an end to its housing-debt purchases, while keeping interest rates near zero, reflecting an economy pulling out of a recession with little momentum. Federal Open Market Committee members discussed extending the end date of the agency and mortgage-backed bond programs, minutes of the group’s Aug. 11-12 meeting showed yesterday. The move would be aimed at avoiding disruptions in housing credit.

Source: Bloomberg

China Set to Buy $50 Billion in IMF Notes

China is on track to become the first purchaser of notes issued by the International Monetary Fund, a move that would diversify its foreign asset holdings and could give the IMF's quasi-currency more clout. The IMF on Wednesday said China has signed an agreement to purchase approximately $50 billion in notes from the fund. The notes are denominated in Special Drawing Rights, a quasi-currency issued by the fund and promoted by China as a potential replacement for the dollar as the world's reserve currency.

Source: Wall Street Journal

Pfizer whistleblower's ordeal reaps big rewards

Taking on corporate giants can feel like tilting at windmills, but John Kopchinski's six-year legal battle against Pfizer just made him a rich man. The Gulf War veteran and former Pfizer sales representative will earn more than $51.5 million as a result of his whistleblower lawsuit against the world's biggest drugmaker.

Source: Reuters

Pernod Ricard's Net Rises 12.5%

French spirits company Pernod Ricard warned Thursday that the wines and spirits industry will stagnate during its current fiscal year due to the economic downturn, even after it beat expectations with a 12.5% rise in full-year net profit. The world's second-biggest drinks company by volume saidthat for 2009-10 it anticipates a general economic environment that will remain difficult.

Source: Wall Street Journal

Oil Trades Above $68 on U.S. Stockpile Drop, Rising Fuel Demand

Oil traded above $68 a barrel in New York after inventories declined in the U.S., signaling a recovery in fuel consumption in the world’s largest economy. U.S. gasoline stockpiles fell to an 11-week low even as refinery output increased, according to an Energy Department report yesterday. This was more than three times analysts’ estimates.

Source: Bloomberg

Twitter snags former Google exec for COO

Microblogging service Twitter has tapped a former Google executive to be its chief operating officer, the latest move by the fledgling but fast-growing company to build out its management team as it seeks to start making money. Dick Costolo will join Twitter next week as COO, company spokeswoman Jenna Sampson said by email.

Source: Reuters

Fed Tries to Prepare Markets for End of Securities Purchases

The Federal Reserve is trying to prepare investors for an end to its housing-debt purchases, while keeping interest rates near zero, reflecting an economy pulling out of a recession with little momentum. Federal Open Market Committee members discussed extending the end date of the agency and mortgage-backed bond programs, minutes of the group’s Aug. 11-12 meeting showed yesterday. The move would be aimed at avoiding disruptions in housing credit.

Source: Bloomberg

China Set to Buy $50 Billion in IMF Notes

China is on track to become the first purchaser of notes issued by the International Monetary Fund, a move that would diversify its foreign asset holdings and could give the IMF's quasi-currency more clout. The IMF on Wednesday said China has signed an agreement to purchase approximately $50 billion in notes from the fund. The notes are denominated in Special Drawing Rights, a quasi-currency issued by the fund and promoted by China as a potential replacement for the dollar as the world's reserve currency.

Source: Wall Street Journal

Pfizer whistleblower's ordeal reaps big rewards

Taking on corporate giants can feel like tilting at windmills, but John Kopchinski's six-year legal battle against Pfizer just made him a rich man. The Gulf War veteran and former Pfizer sales representative will earn more than $51.5 million as a result of his whistleblower lawsuit against the world's biggest drugmaker.

Source: Reuters

Chinese Get Angrier About Pollution

China has some of the most polluted cities in the world, a consequence of the country's rapid economic development. More than 320 million people in China drink unsafe water, according to Greenpeace China. Now, after years of silent suffering from the effects of filthy air and dirty water, many Chinese are saying they've had enough. And in some cases, their protests are turning violent.

Source: BusinessWeek

Gold Falls as Biggest Rally Since March Spurs Investors to Sell

Gold declined from a three-month high on speculation the biggest rally in more than five months may spur some investors to sell holdings and lock-in gains. Bullion jumped 2.3% to $978.50 an ounce yesterday, the biggest gain since March 18, as a decline in equities and the dollar helped fan demand for the precious metal as an alternative investment. Gold has rallied 11% this year while the dollar index is down 3.6%.

Source: Bloomberg

Pernod Ricard's Net Rises 12.5%

French spirits company Pernod Ricard warned Thursday that the wines and spirits industry will stagnate during its current fiscal year due to the economic downturn, even after it beat expectations with a 12.5% rise in full-year net profit. The world's second-biggest drinks company by volume saidthat for 2009-10 it anticipates a general economic environment that will remain difficult.

Source: Wall Street Journal

Oil Trades Above $68 on U.S. Stockpile Drop, Rising Fuel Demand

Oil traded above $68 a barrel in New York after inventories declined in the U.S., signaling a recovery in fuel consumption in the world’s largest economy. U.S. gasoline stockpiles fell to an 11-week low even as refinery output increased, according to an Energy Department report yesterday. This was more than three times analysts’ estimates.

Source: Bloomberg

BP’s “Giant” Strike

The British energy giant says it has discovered an enormous field in the Gulf of Mexico. While the company wouldn’t formally estimate the size of the find, BP’s chief of exploration called the exploratory Tiber well “very significant” and said it was even “better” than the Kaskida field nearby, which is thought to contain 4 billion to 6 billion barrels.

Source: BusinessWeek

More Private-Sector Job Losses Than Expected

U.S. companies cut 298,000 jobs in August, more than economists expected, though the number was substantially below the 360,000 cut in July. Partly as a result of laying off so many workers, companies boosted labor productivity in the second quarter at a 6.6% annual rate, the fastest pace in almost six years. The government’s August labor report, which includes public-sector jobs, will be released on Friday.

Source: Bloomberg

The SEC: We Goofed

In a 22-page summary of a 450-page report due to be released on Friday, the Securities & Exchange Commission’s inspector general says that the agency ignored ”numerous and credible complaints” and failed to perform a “thorough and competent” investigation of Bernard Madoff. The complaints, notes the report, date back to 1992, and agency staff also ignored two critical media reports. The agency even caught Madoff in lies but overlooked them. “Even when Madoff’s statements were seemingly implausible, the SEC examiners accepted them at face value,” says the report.

Source: CNNMoney.com

The Cash-for-Clunkers Effect

Car companies said on Sept. 1 that their August sales soared to an annualized selling rate of about 14 million, thanks to the government's clunkers program, which gave $3,500 to $4,500 to consumers trading in an old gas guzzler for something more efficient. The accelerated sales rate was a boon for carmakers, especially Ford (F), Toyota (TM), Honda (HMC), and Hyundai.

But the industry appears to be giving those gains back as the annualized rate has fallen to 8 million vehicles since Aug. 25, when the program stopped. "August was the best month of the year, but it's possible that it could be followed by the worst month this year," predicts Jeremy Anwyl, chief executive officer of Edmunds.com.

Source: BusinessWeek

World Economy Signals Improvement

Manufacturing gains in the U.S., Europe and Asia suggest the world economy will grow faster than expected. In the U.S. a purchasing managers’ index showed factory output grew for the first time since Jan. 2008 and China, France, and Australia also saw manufacturing expand in August. The International Monetary fund is now set to revise its 2010 global growth estimate upwards to just under 3%.

Source: Wall Street Journal

Labor Groups Target Wal-Mart

Labor groups led by the United Food and Commercial Workers union have launched a new campaign against Wal-Mart, pressuring the world’s largest retailer to improve wages, health care and environmental and labor policy. A key issue is Wal-Mart’s continuing opposition to the Employee Free Choice Act, a bill that would allow workers to more easily form unions.

Source: Washington Post

Khosla Raises $1.1 Billion for Green Energy

Silicon Valley venture capital firm Khosla Ventures has raised $1.1 billion to develop renewable energy technologies. This follows a disappointing first half of the year where green tech investment fell to $513 million, or just over one quarter of the $2 billion raised in the first six months of 2008, says PricewaterhouseCoopers.

Source: Los Angeles Times

Wells Fargo to Repay TARP Funds

Wells Fargo announced Tuesday it plans to repay TARP, or Troubled Asset Relief Program funds. Wells Fargo will be able to return the funds without raising new equity capital and diluting current investors, the San Francisco, Ca.-based bank said.

Source: Market Watch, Bloomberg

EBay's Skype Sale Looks Like a Win-Win

In a deal announced Sept. 1, eBay will sell a controlling share of the Internet-calling service to a group of investors led by private equity firm Silver Lake for $1.9 billion in cash and $125 million in short-term debt. The sale values Skype at $2.75 billion, not far below the price eBay paid for the business in 2005, and higher than the value recently placed on Skype by some Wall Street analysts. At the same time, eBay retains a 35% stake in the high-growth business.

Source: BusinessWeek

Murky Media Advertising Outlook

The outlook for the $500 billion global advertising market is murky with ad executives and analysts divided on the possibility of a recovery. While a recent UBS report predicts a rebound in the beleaguered sector next year, others are less sanguine. “People feel better about life,” said WPP Group chief executive Martin Sorrell, “but that hasn’t extended, as we said at the end of the first quarter, to the checkbook or investment in branding.”

Source: New York Times

World Economy Signals Improvement

Manufacturing gains in the U.S., Europe and Asia suggest the world economy will grow faster than expected. In the U.S. a purchasing managers’ index showed factory output grew for the first time since Jan. 2008 and China, France, and Australia also saw manufacturing expand in August. The International Monetary fund is now set to revise its 2010 global growth estimate upwards to just under 3%.

Source: Wall Street Journal

Chinese Workers Protest Before National Day Celebrations

China’s plans to celebrate its 60th anniversary on October 1 are being marred by massive worker protests against pollution and job losses. Over 10,000 villagers protested industrial pollution in Fujian province on Aug. 31 while last week 5,000 coal workers struck as their state-run company prepared to privatize. “There is serious concern about stability on the eve of the 60th anniversary,” said Brookings Institution scholar Cheng Li.

Source: Bloomberg

Labor Groups Target Wal-Mart

Labor groups led by the United Food and Commercial Workers union have launched a new campaign against Wal-Mart, pressuring the world’s largest retailer to improve wages, health care and environmental and labor policy. A key issue is Wal-Mart’s continuing opposition to the Employee Free Choice Act, a bill that would allow workers to more easily form unions.

Source: Washington Post

Khosla Raises $1.1 Billion for Green Energy

Silicon Valley venture capital firm Khosla Ventures has raised $1.1 billion to develop renewable energy technologies. This follows a disappointing first half of the year where green tech investment fell to $513 million, or just over one quarter of the $2 billion raised in the first six months of 2008, says PricewaterhouseCoopers.

Source: Los Angeles Times

Wells Fargo to Repay TARP Funds

Wells Fargo announced Tuesday it plans to repay TARP, or Troubled Asset Relief Program funds. Wells Fargo will be able to return the funds without raising new equity capital and diluting current investors, the San Francisco, Ca.-based bank said.

Source: Market Watch, Bloomberg

EBay's Skype Sale Looks Like a Win-Win

In a deal announced Sept. 1, eBay will sell a controlling share of the Internet-calling service to a group of investors led by private equity firm Silver Lake for $1.9 billion in cash and $125 million in short-term debt. The sale values Skype at $2.75 billion, not far below the price eBay paid for the business in 2005, and higher than the value recently placed on Skype by some Wall Street analysts. At the same time, eBay retains a 35% stake in the high-growth business.

Source: BusinessWeek

Murky Media Advertising Outlook

The outlook for the $500 billion global advertising market is murky with ad executives and analysts divided on the possibility of a recovery. While a recent UBS report predicts a rebound in the beleaguered sector next year, others are less sanguine. “People feel better about life,” said WPP Group chief executive Martin Sorrell, “but that hasn’t extended, as we said at the end of the first quarter, to the checkbook or investment in branding.”

Source: New York Times

Australian Economy Shows Strength

Australia’s economy grew a better-than-expected 0.6% in the second quarter over the previous three months. Government fiscal stimulus plus consumer and business spending helped boost growth and kept Australia’s recent record as one of the best performing developed economies during the global economic downturn.

Source: Financial Times