Market Blog submits: By David ParkinsonNow, normally we don't go around asking accountants their opinions on stuff. Those are the kinds of conversations you dread getting cornered into at Christmas parties, wondering if you might need to fake a stroke to make your escape.Complete Story »
Roger Nusbaum submits: Apparently the Dubai Brothers may have trouble making their next interest payment and the initial reactions from many world markets has been bad.Ahem.Complete Story »
Prieur du Plessis submits: This post is a guest contribution by Paul Kasriel* of The Northern Trust Company. The best measure of the current condition of the labor market is the state unemployment insurance data. These data are not samples or surveys with guesstimates of how many new jobs were created by new businesses, but the head count of actual people standing in actual unemployment insurance lines. To be sure, because a government entity is doing the counting, the first count is not always the most accurate count. But after four weeks of counting and recounting, the number that emerges is the one that remains for all times. The monthly labor reports from the Establishment and Household surveys get revised over and over, literally, for years.Complete Story »
Dividends4Life submits: As we officially head into the holiday season, many of us in the U.S. did not have to go into work today in observance of the Thanksgiving holiday. Though not much is happening at the office, there are still many working for me today. Not people, but my Dividend Stocks. It is great to know while I am relaxing with family and watching the big game, those stocks are hard at work providing me an additional income stream. Several companies this week provided their investors a Thanksgiving bonus in the form of higher cash dividends:Complete Story »
Prieur du Plessis submits: In his ranking of 40 global stock markets, Robin Griffiths, highly regarded analyst of Cazenove Capital, told CNBC “the Nikkei 225 Index remains resolutely in 40th position as actually the one to avoid relative to the others”. The falling highs and lows of the Nikkei 225 “technically say ‘avoid’”, he said, adding that India, China, and Brazil are the best investments. The interview with Griffiths is lower down, but first a chart of the Nikkei 225. The Index has been in a downtrend since August and is on course to record a fifth consecutive down-week by the close of today, with today alone down by more than 3% so far. The weakness in Japanese stocks coincided with a surge in the price of credit default swaps (CDSs) on Japanese government bonds (JGBs) - under stress of sovereign solvency fears. Also, core consumer prices were down 2.2% in October relative to a year earlier, as deflation remains firmly entrenched in the Japanese economy.Complete Story »
Macro Man submits: Sometimes, those little guys matter. That seems to be the message of the past twenty-four hours where rumours/uncertainty over a possible default by Dubai has created a good-old fashioned panic in asset markets. It's been what...eight and a half months since we've felt remotely like this? Seems like a lifetime ago...In fairness, this isn't quite the same as the post-Lehman (LEHMQ.PK) maelstrom. While Dubai's debts are not inconsiderable, they pale in significance when placed side-by-side with queries over the viability of the entire global banking system. Still, those itching for a good crisis will take what they can get, and the implication for financial market pricing is exacerbated by the fact that the US is on its Black Friday post-Thanksgiving hangover and that Dubai itself (with the rest of the Muslim world) is out 'til Tuesday for the Eid al-Adha holiday.Complete Story »
Dubai debt problem jars world markets... In a move that could hurt some of Europe's biggest banks and dent the global economic recovery, the city-state of Dubai said Wednesday it will restructure its largest corporate entity and told creditors they shouldn't come knocking until at least the end of May. Dubai World accounts for about $60B of the city-state's $80B in liabilities. Analysts estimate some $40B in exposure is held by European banks, which could face a 5% increase in their bad-loan provisions in 2010, or an aggregate hit of about €5B ($7.5B) after tax, if they lost 50% on this exposure. Banks with exposure include Standard Chartered, with 7% of its loan book in the region; HSBC (HBC), with about 2%; and Barclays (BCS), Royal Bank of Scotland (RBS), and Lloyds (LYG), with less than 1%. Other banks with a presence in the region include Citigroup (C), BNP Paribas and Credit Agricole's Calyon. ... and triggers flight to quality. Investors around the world dumped risky assets for the protection of U.S. Treasurys, which rose to a roughly two-week high after Dubai indicated it’s having trouble making debt payments on tens of billions of dollars in debt. Ten-year Treasury yields fell to the lowest level in seven weeks as the yen strengthened to a 14-year high vs. the dollar, fueling further speculation the Bank of Japan will intervene in currency markets. U.S. markets were closed yesterday for the Thanksgiving holiday. But in Asia, Hong Kong's Hang Seng plunged 1.8% Thursday and 4.8% today. ING pays huge discount to cut debt strings. ING Group (ING) priced the eighth-largest rights issue globally (€7.5B, $11.2B) at a sharp discount, indicating just how anxious it is to sever its dependence on state aid; ING's €4.24/share issue price represents a 52.4% discount to Thursday's closing price of €8.916 and a 37.3% discount to the theoretical ex-rights price (TERP). The bank will use the proceeds to repay half of the €10B in help it got last year. The pricing came at a particularly inopportune time given the Dubai crisis that's roiling bank stocks. ING is issuing 1.768B new shares over more than 2B shares already outstanding, and joins a list of European financial institutions that have been issuing shares at a discount for similar reasons. Europe to China: lift yuan. The ECB president and other senior officials in Europe are jetting to China this weekend to try and convince government officials there to let its currency rise against the euro. Europe is worried the euro's strength could hurt Europe's recovery, even though a similar trip two years ago accomplished little; the yuan has risen just 7% against the euro since then. A senior China official said China will keep the yuan "basically stable around reasonable, balanced levels," suggesting that China's unlikely to buy into a faster yuan appreciation, analysts say. Sina secures more money. In a move aimed at making it less dependent on sinking online ad revenues and more competitive with peers, sources say China's largest internet portal, Sina Corp. (SINA) has attracted three investment firms that, along with management, will invest $180M in the company. The group – Sequoia Capital, FountainVest Partners, and Citic Capital Holdings – will back the purchase of new shares and get a 9.4% stake in the company. Sina's management is pitching in about $50M, while the investment firms are coughing up the rest, with each taking roughly equal stakes. Sina was an early mover in China's competitive internet market, but has failed to keep pace with competitors in recent years. In about-face, GM to keep Opel plants open. GM changed its mind and will likely keep its four factories in Germany open – but with heavy job cuts. A company official said in a press interview that GM will slash about 9,000 jobs across Europe, with most in Germany. GM said the German plants play a critical role in its future, although it didn't say for how long. An official said the fate of another Opel plant in Belgium remains unclear; thousands of jobs are on the line there. GM's European unit, comprising the Opel and Vauxhall brands, employs about 50,000 workers, with approximately half in Germany. GM has been working on a revamp after ditching plans to sell Opel to Magna International (MGA) and Russia's OAO Sperbank. Hershey solicits home-town help in Cadbury bid. The charitable trust behind Hershey (HSY) is turning to the Pennsylvania Attorney General in hopes of smoothing any potential blocks in the company's goal to unseat Kraft's (KFT) $16.5B-hostile bid for Britain's Cadbury (CBY) with a $17B-bid, sources say. Under state law, the Attorney General has broad powers to regulate charitable trusts in the state - a law that has been interpreted to allow the AG to block the sale of Hershey or other transactions that would threaten the trust's control of Hershey. The Attorney General needs to see more details before deciding, sources say. Hershey is about half the size of Cadbury, which has a market cap of more than $18B, while Kraft has a market cap greater than $40B. U.S. bank overseers were poor policemen. The inspectors general of the Federal Reserve and Treasury criticized both agencies for being too slow to prevent risky lending at U.S. banks that were brought down by real-estate losses and other problems. Ten of the 12 bank-collapse reviews (I, II) released by the Fed and Treasury inspectors this year fault oversight weaknesses including failure to limit excessive concentration in commercial real-estate loans. Bank examiners also failed to follow up with banks to make sure they were acting on recommended changes. Regulators have closed 124 banks this year, the most since 1992, leaving the FDIC's insurance fund with an $8.2B deficit as of Sept. 30. AIG makes nice with Greenberg. AIG (AIG) ended a four-year legal battle with former legendary head of the firm Maurice "Hank" Greenberg, saying it will withdraw a $1B claim, pay $150M of his legal fees, and hand over a trove of material that could help him write his memoirs. AIG's current CEO said in a statement that the agreement "will remove a significant distraction and expense and allow AIG to better focus its efforts on paying back taxpayers and restoring the value of our franchise." Greenberg left in 2005 amid an accounting investigation by the New York Attorney General's office. Fed draws line with directors and private banks. The Federal Reserve unveiled a new policy that will force governing directors to choose between resigning as a regional Fed board member or sever their ties with a financial institution that moves under the Fed's umbrella; prior rules didn't account for changes in a firm's status. The issue took center-stage earlier this year when Goldman (GS) director Stephen Friedman, then-chairman of the New York Fed's board, ran afoul of Fed rules when Goldman became a Fed-regulated bank holding company. The rule change comes amid intensifying congressional scrutiny of the governance of the 12 regional Fed banks, which, under their 1913 statute, have nine-member boards of directors drawn from the private sector. More affordable mortgages. In a possible sign of better times for the battered housing market, fixed 30-year mortgage rates dropped for a fourth consecutive week, matching a record low set in April. The rate dropped to 4.78% from 4.83% last week, Freddie Mac said. The average 15-year rate was 4.29%. Demand for property has increased as low mortgage costs and a tax credit for first-time homebuyers help boost demand for property. Prices are also getting support as a waning inventory of unsold homes begins to help stabilize prices. Rebuilding California. Single-family home prices in California rose for the eighth straight month in October – suggesting foreclosures there may finally be turning the corner, according to the state's Association of Realtors. The median cost of an existing, detached house gained 0.3% from the previous month to $297,500. Prices dropped about 3.2% from a year earlier, compared with annual declines of 7.3% in September and 17% in August. The state is on track to record 562,400 sales in 2009, while the rate of foreclosures represented 41% of sales, down from a peak of 59% in February, a research company said a few days earlier. U.S. home sales are being helped by a drop in interest rates and a federal tax credit for homebuyers. ETF launched for Poland. For the first time, investors will be able to invest in an ETF that focuses exclusively on Poland. The ETF, launched Wednesday by New York-based Van Eck, is called The Market Vectors Poland ETF (PLND), and will track the 26-company Market Vectors Poland Index and trade on the NYSE Arca Exchange. Some 41% of the underlying index is composed of companies with a market cap greater than $5B, with almost 50% in mid-caps. Jan van Eck, principal of Van Eck Global, said Poland is the "largest and fastest growing economy in Central and Eastern Europe" and recently surpassed Belgium and Sweden. Earnings: Fri. Before Open Frontline (FRO): Q3 EPS of -$0.07 beats by $0.05. Revenue of $233M (-59.6%) vs. $196M. (PR) Today's MarketsAsia markets took a thrashing for a second straight day as concerns about Dubai World's debt load continue to weigh on risk appetite. Europe has rebounded from early losses. Futures indicate U.S. markets will have some catching up to do after sitting out a volatile Thursday.Complete Story »
Dobromir Stoyanov submits:A body in motion tends to stay in motion unless acted on by an outside force. The following dividend payers kept the dividend momentum coming, by raising distributions to shareholders. What is particularly interesting is the fact that most of them have raised distributions consistently for more than one or two decades each. This is essentially what successful dividend growth investing is all about – finding a dividend grower in the early stages that keeps paying increasing amounts of dividends each and every year for years to come.The companies which raised distributions include:Complete Story »
Mark O'Byrne submits:Gold Gold is currently trading near record nominal highs in dollars, euro and sterling at $1,185/oz, £717/oz and €786/oz respectively. New levels of resistance and support in dollars are $1,197/oz and $1,171/oz. In dollar terms gold reached a new record nominal high at $1,195/oz overnight in Asia. News that the Sri Lankan central bank had bought a further 10 metric tonnes from the IMF and Russian intimations that they would further diversify into gold are increasing expectations of further central bank purchases. The Russian central bank increased its gold holdings by 2.6% last month. Their gold bullion reserves rose to 19.5 million ounces in October from 19 million ounces the previous month. Russian central bank Chairman Sergei Ignatiev said that they had in the course of several years replenished their supply of gold with the goal of diversifying their gold and foreign-currency reserves and that gold's share in reserves has increased faster in 2009 than in prior years.Complete Story »
Kelvin Schulle submits:Following President Obama's 17% CO2 cut by 2020, China pledged a 40-45% greenhouse gas cut by 2020, an astonishing number for most analysts. We know China is leading the green way to the future, its wind and solar energy technologies are leading the world. If you are an environmentalist, it is easy to understand why China has committed itself to the green technology. Thousands of people die in China from air pollution related diseases every day, the highest number in the world. Speaking of the $454B green stimulus package, it is even larger than China's first $680B package because it is targeting the green energy sector only. The green stimulus will be used in a similar way to how the government injected the first stimulus money into their economy. Companies with government support will get a big chunk (over 20% of the first stimulus went to State-owned companies reportedly). In the wind energy sector, Goldwind technology is a major player in China, the company is listedin the Shanghai stock exchange, with a revenue of RMB6.5B in 2008, and expected to reach RMB10B in 2009. The newcomer in China's wind energy market is Shengyang's A- Power Energy Generation (APWR); the company has grown exponentially in recent years with support from local government. The company is targeting over 2GW capacity in 2010 to meet Chinese market demand. The company is also expanding overseas, in places such as North America and South America, Africa, the Mid-East and South East Asia. We would expect the two companies to get wind farm contracts of over $50B in the coming years.Complete Story »
The Baseline Scenario submits: By Peter Boone and Simon JohnsonAs legislation on restructuring the banking industry moves forward, attention on Capitol Hill is increasingly drawn to the issue of bank size. Should our biggest banks be made smaller?Complete Story »
Hard Assets Investor submits: Speculators take most of the heat for the recent oil spike, but were they really to blame for last year's high prices? Probably not, says Dr. James Hamilton, who argues that supply and demand, not speculators, were behind oil's 2008 rise. A professor of economics at the University of California, San Diego, Dr. Hamilton co-authors the popular blog, Econbrowser, where he analyzes current economic policy decisions and conditions. He has written dozens of scholarly papers on commodities, as well as testified before a congressional committee on the effects of the 2008 oil shock on the current recession. Before he joined the UCSD economics department, he was a professor at the University of Virginia. Complete Story »
Bill Luby submits: With the S&P 500 and NASDAQ futures both down approximately 3% as I type this on concerns about the ability of Dubai World to repay some $59 billion in debt, today’s half day session is likely to be ugly and volatile. In a vacuum, this type of event would be concerning, but not likely to cause panic. With the emotional scars of the financial crisis still looming large in the memories of investors (i.e., Availability Bias and Disaster Imprinting), I would not be surprised to see an overreaction in the markets today. On average, a 3% drop in the SPX yields a spike of about 12.6% in the VIX. On Wednesday, the Dow Jones STOXX 50 index of European companies fell 3.36%, yet the VSTOXX, (the corresponding volatility index, which is similar to a pan-European VIX) spiked 28.16%.Complete Story »
