Editors: Bloomberg News moves a combined business/general news budget at 13:30 New York time each business day. Graphics and photos can be found at www.bloomberg.com/photos or www.bloomberg.com/newsfeed.
Stories identified with the prefix PUBLISH in the slug have been shaped for newspaper use, and the suffix -TRIM indicates the original version has been shortened. All move times are New York time. Inquiries should be directed to Jon Bixby in content syndication, email@example.com or 1-212-617-5392. The main number for the department is 1-212-617-4300.
TOP BUSINESS NEWS
Major companies due to report earnings after the 16:00 close of regular trading in New York: Marriott International Inc. (MAR)
U.S. Stocks Advance on Speculation Europe Will Act on Crisis 9
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second straight day, as investors speculated European leaders will act to contain the region’s debt crisis. Developing. US-STOCKS-FINAL to move by 17:00. By Rita Nazareth. Also see GLOBAL-MARKETS-WRAP, US-OIL-MARKETS.
Merkel Signals Greek Investor Losses, Bank Capital Boost
German Chancellor Angela Merkel said that Europe’s rescue fund will only be used as a last resort to save banks and that investors may have to take deeper losses as part of a Greek rescue.
Merkel’s comments, her most explicit on banks’ role in fighting the debt crisis since the spillover from Greece began to threaten France and Italy, followed talks with European Commission President Jose Barroso in Brussels today. Financial shares rose amid speculation that euro-area policy makers are working on plans to boost bank capital to contain the crisis. 1070. Moved at 13:00. By Tony Czuczka and Rebecca Christie. Also see DEXIA-BAD-BANK-PLANS.
Death of Euro Seen Exaggerated Amid Non-Pimco Political Will
Investors betting against the euro-area surviving its debt crisis in one piece may be overlooking one thing: the will of politicians to hold it together.
German Chancellor Angela Merkel is intensifying her defense of the currency. French President Nicolas Sarkozy says there’s no alternative to channeling aid to Greece without risking the kind of cataclysm set off by the 2008 collapse of Lehman Brothers Holdings Inc. Greek Premier George Papandreou this week proposed 6.6 billion euros ($8.7 billion) of fresh austerity measures in a recession headed into a fourth year.
The euro is “a political project,” said Erik Nielsen, global chief economist at UniCredit Group in London. “The market may not have believed them, but leaders have repeatedly said they will do whatever it takes to keep it together.” 1280. Moved at 12:45. By Simon Kennedy.
BofA May Face HUD Fraud Claims for Soured Countrywide Loans
Bank of America Corp. should face fraud proceedings after its Countrywide unit submitted faulty data to back up claims for reimbursement on federally insured mortgages, according to an audit by a U.S. watchdog.
Half of 14 loans reviewed had “material underwriting deficiencies” concerning borrowers that resulted in more than $720,000 in losses, according to a Sept. 30 report from the Department of Housing and Urban Development’s inspector general. Kelly Anderson, a HUD regional inspector general, recommended the agency pursue legal remedies against Charlotte, North Carolina-based Bank of America, the biggest U.S. lender. 1010. Moved at 11:05. By Hugh Son, Dawn Kopecki and Donal Griffin.
Dividends at Three-Year Low Mean Pressure Builds as Cash Rises
Pressure is building for higher dividends as U.S. companies from Google Inc. to Valero Energy Corp. sit on record cash stockpiles and payouts remain at three-year lows.
Standard & Poor’s 500 Index companies paid 27 percent of earnings in dividends in the second quarter, down from 30 percent in 2008 and below a 30-year average of 41 percent, according to Wells Fargo & Co. Company cash, equivalents and short-term marketable securities jumped 63 percent to $2.77 trillion in the same period, according to Bloomberg data. 1560. Moved at midnight. By Thomas Black.
Tech Stocks Outperform as Excess Cash Beats U.S. Cyclical Risk
Technology companies are outperforming the U.S. stock market as excess cash and cheap valuations attract investors amid rising concerns that the two-year recovery may be ending.
The Standard & Poor’s 500 Information Technology Index, which includes International Business Machines Corp. and Microsoft Corp., has fallen 3.4 percent since June 20, compared with with a 12.1 decline in the S&P 500 Index. 800. Moved at midnight. By Anna-Louise Jackson and Anthony Feld.
RIM Executives Resisting Buying Stock Make Investors Fret: Tech
Executives at Research In Motion Ltd. have refrained from buying the company’s shares for the longest period in at least six years. Now investors are wondering if the mobile-device maker famous for its ubiquitous BlackBerry phones is skittish about its own prospects.
RIM insiders haven’t reported buying shares on the open market since July 2010 as its stock fell more than 60 percent, according to data compiled by Bloomberg. Instead, they sold stock at least 11 times over that span. At least 55 of the other 59 companies in the S&P/TSX 60 index of Canada’s largest and most-traded stocks have had insider purchases since July 2010.
“If they don’t see value in it at these levels, how am I supposed to see value, given all the uncertainty RIM faces?” said Richard J. Moroney, chief investment officer at Horizon Investment Services LLC in Hammond, Indiana. The firm manages about $150 million and sold its last RIM shares in April. “If you look at the earnings and cash flow, the stock is still very cheap.” 1000. Moved at 12:10. By Hugo Miller and Matt Walcoff.
RIM Shares Advance Most Since 2009 on Takeover Speculation
Research In Motion Ltd., maker of the BlackBerry smartphone, advanced the most in 2 1/2 years on continuing speculation the company may be a takeover target. RIM rose $2.86, or 14 percent, to $23.86 at 11:31 a.m. New York time on the Nasdaq Stock Market, after climbing as much as 15 percent for the biggest intraday gain since April 2009. Developing. Will update with closing share price by 17:00. By Hugo Miller.
Apple’s Cook to Woo Shoppers Without Pizazz of IPhone 5
Apple Inc. this holiday season will have to prove it’s what’s on the inside that matters most.
With its latest iPhone 4S, Apple didn’t tinker with the outside of the device, focusing instead on improving the processor, camera and software interface. The challenge will be persuading shoppers to upgrade to a new product that looks exactly like their old one.
Chief Executive Officer Tim Cook, in his first major product release since taking over for Steve Jobs, is counting on faster speed, voice recognition and the iCloud storage service to make the iPhone a success. The device, Apple’s best-selling product, will face off against an army of fresh smartphones running Google Inc.’s Android, including Samsung Electronics Co.’s Galaxy S II and LG Electronics Inc.’s Thrill 4G. 940. Moved at 9:30. By Adam Satariano and Peter Burrows.
AT&T May Be ‘Big Winner’ With New IPhone in Battle With Verizon
AT&T Inc., the second-largest U.S. wireless operator, may gain an edge against its rivals with Apple Inc.’s latest iPhone announcements.
AT&T will get a version of the iPhone 4S, the model unveiled yesterday, that can handle data traffic at as much as twice the speed of the models Verizon Wireless and Sprint Nextel Corp. will offer, according to Apple. AT&T will also have an exclusive on the cheaper iPhone 3GS, which the company will give away with a two-year service contract. 380. Moved at 12:20. By Scott Moritz and Sarah Frier. Also see SPRINT-IPHONE.
Apple Beats HTC as Nokia Customer Loyalty Has First Decline
IPhone users are most likely to buy their next handset again from Apple Inc. as Nokia Oyj’s customer loyalty dropped for the first time, a survey shows.
About 93 percent of iPhone owners in the U.S. and 88 percent in the U.K., Germany and France said they would probably or definitely go for another Apple handset, said Paul Brown, an analyst at Strategy Analytics, citing a poll. Nokia’s brand loyalty was 63 percent in Europe, compared with 74 percent a year earlier, while only one in two Nokia users in the U.S. plans to buy the next handset from the Finnish manufacturer. 620. Moved at 7:55. By Diana ben-Aaron.
Friendly Ice Cream Chain Files for Bankruptcy After 76 Years
Friendly Ice Cream Corp., the 76-year-old restaurant chain known for its ice cream and burgers, sought bankruptcy protection from creditors four years after being bought by private-equity firm Sun Capital Partners Inc.
The company, which opened at the height of the Great Depression with one shop in Springfield, Massachusetts, plans to sell itself at an auction with a Sun Capital affiliate as the lead bidder, according to papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware. 620. Moved at 12:15. By Tiffany Kary and Dawn McCarty.
New York Beats London as Top Spot for Real-Estate Investment
New York overtook London as the No. 1 destination for real- estate investment for the first time since 2007 after improved access to financing spurred more U.S. deals, Cushman & Wakefield Inc. said in a report today.
Investments grew 166 percent to $29.7 billion in the New York area in the 12 months through August, compared with a year earlier. Investment in greater London increased 2.4 percent to $27.2 billion, according to the report based on data compiled by the New York-based broker and Real Capital Analytics Inc. 350. Moved at 3:45. By Neil Callanan.
Office Rents in U.S. Rise to Highest Since 2009 as Leasing Gains
U.S. office rents climbed in the third quarter as leasing extended a rebound following almost three years of declines, Reis Inc. said.
The average effective rent, or what tenants paid after any landlord concessions, rose to $22.39 per square foot, the highest since 2009’s fourth quarter, the New York-based real estate research company said in a report today. It was up from $22.04 a year earlier and $22.25 in the second quarter. Landlords had a net increase in occupied space of 6.19 million square feet (575,000 square meters), the fourth straight gain. 320. Moved at midnight. By Hui-yong Yu.
Service Industries in U.S. Grew at Slower Pace in September
U.S. service industries expanded in September at a slower pace than a month earlier, a sign the recovery is struggling to gain speed.
The Institute for Supply Management’s non-manufacturing index fell to 53 from 53.3 in August. The median forecast of 75 economists surveyed by Bloomberg News was for a drop to 52.8. A reading of 50 is the dividing line between expansion and contraction in services, which cover about 90 percent of the economy. Orders picked up, the report showed. 630. Moved at 10:20. By Shobhana Chandra.
Costco Will Boost Membership Fees as Profit Margin Narrows
Costco Wholesale Corp., the largest U.S. warehouse-club chain, increased membership fees 10 percent after rising costs hurt profit margins in the fourth quarter.
Costco will boost annual membership fees to $55 from $50 effective Nov. 1 for U.S. Goldstar or individual members, as well as business and Canada Business members, the retailer said today in a statement. U.S. and Canada executive fees will rise to $110 from $100. The increases will affect about 22 million members, half of them in the executive program, Costco said. 390. Moved at 9:55. By Matt Townsend.
Monsanto Profit Forecast Beats Estimates as Brazil Demand Rises
Monsanto Co., the world’s largest seed company, forecast higher-than-expected fiscal first-quarter profit as Latin American farmers increase demand for genetically modified crops. 580. Moved at 9:30. By Jack Kaskey.
TOP GENERAL NEWS
Greeks Strike Against Papandreou Cuts, March to Parliament
Greeks walked off their jobs across the nation and as many as 20,000 marched through Athens’ central square to protest Prime Minister George Papandreou’s 6.6 billion-euro ($8.7 billion) austerity plan, challenging a government seeking European bailout funds to stave off default.
The 24-hour strike shut the Athens International Airport, causing 448 flight cancelations, and shuttered schools and archaeological sites to protest Papandreou’s plans to put 30,000 public workers on reduced pay, raise property taxes and cut pensions and wages. 1000. Moved at 10:45. By Tom Stoukas.
Anti-Wall Street Protests Grow in New York as Other Cities Join
Protesters who began demonstrating in New York three weeks ago as Occupy Wall Street plan to march alongside labor and environmental groups today as the movement spreads to cities including Boston, Chicago, Denver and Seattle.
The groups will join those already gathered downtown for a march beginning at City Hall and heading to Wall Street, Dan Cantor, executive director of the Working Families Party, said in an e-mail. The party is a coalition of more than 60 community organizations and labor unions that advocates affordable housing and universal health care. Developing. By Esmé E. Deprez. Also see TRUMKA-PROTESTS, ANONYMOUS-THREATENS-NYSE.
Panetta Softens Gates NATO Plea With Libya, Afghanistan Role
U.S. Defense Secretary Leon Panetta drew on the achievements of NATO’s operation in Libya to call for a greater commitment to the alliance even in times of budget cuts, softening a message his predecessor, Robert Gates, delivered with a rhetorical bang just four months ago.
“With the fall of the Qaddafi regime, our nations saw an example of why NATO matters and why NATO remains indispensable in confronting the security challenges of today,” Panetta told an audience of the Carnegie Europe policy group in Brussels today. “We need to use this moment to make the case for the need to invest in this alliance, to ensure it remains relevant to the security challenges of the future.” 1170. Moved at 12:15. By Viola Gienger.
Shechtman Wins Nobel in Chemistry for Quasicrystals Discovery
An Israeli scientist won the Nobel Prize in Chemistry for changing the prevailing views about the atomic structure of matter with his discovery of quasicrystals.
Dan Shechtman, 70, of the Technion-Israel Institute of Technology in Haifa, will get the 10 million-kronor ($1.4 million) award, the Royal Swedish Academy of Sciences said at a press conference in Stockholm today.
Shechtman persevered in the face of doubt and ridicule in describing a form of crystal whose patterns are regular but never repeat, a notion that shattered scientists’ belief that all crystals consist of recurring patterns. The structure endows quasicrystals with unique properties that may lead to better frying pans, LED lights and diesel engines, the academy said. 800. Moved at 10:15. By Andrea Gerlin.
Emanuel Shuns Transparency After Promising New Day: Muni Credit
Chicago Mayor Rahm Emanuel, a former investment banker who promised to end “business as usual,” is maintaining predecessor Richard M. Daley’s two-decade tradition of shunning competitive bids in his first bond sale.
Emanuel’s proposed issue of up to $500 million of general obligation bonds and $250 million of sales-tax revenue debt is scheduled to be presented to the Chicago City Council today. The mayor took office in May, and his administration is searching for ways to eliminate a projected $635.7 million budget deficit in the third-largest U.S. city.
Municipal borrowers from Buffalo, New York, to the Dallas Independent School District, are breaking a pattern of negotiation to cut borrowing costs by selling securities at public auction. So far this year, almost one-fourth of the $171.8 billion of U.S. municipal-bond sales have been sold through competitive bidding, which compares with 19 percent in the first nine months of 2010, according to data compiled by Bloomberg. 1550. Moved at 1:00. By Tim Jones and Darrell Preston.
BUSINSES NEWS FEATURES
Pakistan Terror No Bar as Unilever Converges With Nestle: Retail
Unilever and Nestle SA are defying turmoil in Pakistan, where terror attacks have killed at least 35,000 people since 2006, to sell more soap, beauty products and milk to farmers enriched by higher cotton and wheat prices.
Unilever and Colgate-Palmolive Co. are sending salespeople into rural areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers and Colgate toothpaste has boosted local units’ revenue at least 15 percent.
“The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.” 1330. Moved at 8:30. By Khurrum Anis.
Morgan Stanley Bet the Farm in Ukraine Before Taxpayers’ Bailout
Iowa native Justin Bruch marveled at the opportunity when Morgan Stanley called in late 2007 to recruit him for an unusual assignment.
The New York bank, flush with $7.5 billion in fiscal 2006 profit -- the biggest in its history -- was going to be farming 11 parcels on the steppes of Ukraine. The commodities team wanted Bruch, a redhead with meaty hands who’d been farming all his life, to manage one of them.
Bruch saw a chance to dig into some famous dirt, Bloomberg Markets magazine reports in its November issue. The former Soviet republic has 30 percent of the world’s black soil, earth so fertile Adolf Hitler had Nazi troops cart some back to Germany during World War II. Wheat, corn, rapeseed and sunflowers thrive there.
Things began to fall apart within months. The locals stole fertilizer and insecticide, Bruch says, and he suspected that harvested wheat was disappearing too. He wound up fighting with tax, immigration, fire and police inspectors and trying to satisfy officials who wanted him to build roads, not just till fields. He left the farm, called Golden Fields, in June 2009 to manage a Ukrainian farm owned by another foreign investor. 830. Moved at 10:50. By Alan Katz and Peter Robison.
Volvo Auto-Braking Means Deer in Headlights Miss Collision: Cars
Volvo Car Corp. wants to bring to an end the sight of slaughtered animal carcasses on the side of the road, as the safety-focused luxury brand seeks to gain a technological edge over Bayerische Motoren Werke AG.
In development is a system that uses a radar sensor and an infra-red camera to alert the driver to nearby critters and brake if a collision is unavoidable. That technology is due to be rolled out in a few years in cars like the XC90 sport-utility vehicle, priced at $38,400, after employees studied the movement of moose and deer in southern Sweden.
“It’d be good because it’d allow the driver to avoid a lot of unnecessary animal killings,” said David Cain, who runs an annual roadkill cooking contest in West Virginia. “He could still choose to run over something that’s good for eating.” 880. Moved at 13:40. By Ola Kinnander and Alex Webb.
-0- Oct/05/2011 17:50 GMT