WASHINGTON (AP) -- Bank of America Corp. has agreed to pay a $33 million penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives, regulators said Monday.
In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But the Securities and Exchange Commission said Bank of America had authorized New York-based Merrill to pay up to $5.8 billion in bonuses.
That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC said in a statement.
Bank of America agreed to pay $33 million to settle the charges without admitting or denying the allegations. The settlement is subject to court approval.
"Bank of America believes that the settlement ... represents a constructive conclusion to this issue," company spokesman Scott Silvestri said in an e-mailed statement.
New York Attorney General Andrew Cuomo, who referred the case to the SEC in April, said his investigation is continuing. The SEC said its probe also is ongoing.
Bank of America, along with Citigroup Inc. and insurance giant American International Group, is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program.
Charlotte, N.C.-based Bank of America agreed to purchase Merrill in a deal that was hastily arranged Sept. 13-14, 2008, the same weekend that Lehman Brothers collapsed. Bank of America CEO Ken Lewis and Merrill Lynch CEO John Thain announced the deal Sept. 15.
The acquisition came as Lehman's collapse caused panic in the financial markets and investment banks such as Merrill faced billions of losses on soured mortgage investments.
Merrill ended up paying $3.6 billion in bonuses in 2008, the SEC said, even though it lost $27.6 billion that year, a record for the firm.
Bank of America included a copy of the merger agreement with the proxy statement that it mailed to shareholders of both firms in November. That agreement said Merrill would not pay discretionary bonuses prior to the deal's closing, the SEC said.
A separate agreement authorizing the bonuses wasn't mailed to shareholders, the SEC said.
Shareholders in both companies voted to approve the acquisition Dec. 5, which then closed Jan. 1. The SEC said the bonuses were paid Dec. 31.
"Companies must give shareholders all material information about corporate transactions they are asked to approve," said Robert Khuzami, director of the SEC's enforcement division. "Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty.
"The bonuses amount to nearly 12 percent of the $50 billion that Bank of America paid for Merrill.
Separately, Bank of America announced that Sallie Krawcheck, Citigroup's former chief executive of global wealth management, will join the company to run its global wealth and investment management operations.
Krawcheck, 44, also has served as chief financial officer of Citigroup, as chairman and CEO of Sanford C. Bernstein & Co. Inc., and an executive vice president of Bernstein's parent company, Alliance Capital Management LP.
Shares of Bank of America added 53 cents, or 3.6 percent, to $15.32 Monday. The company's stock has traded between $2.53 and $39.50 in the last year
Tuesday, August 4, 2009
Monday, August 3, 2009
Roubini Says Commodity Prices May Rise in 2010
By Rebecca Keenan and Jason Scott
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis."
As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year," Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. "There is now potentially light at the end of the tunnel.
"Roubini, chairman of Roubini Global Economics and a professor at NYU's Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
"The things he was saying provide good indicators for our business," Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada's biggest engineering and construction company, said at the conference. "The commodities that we're involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.
"Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world's biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world's second-largest stock market by value on July 16 after the nation's 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China's official Purchasing Managers' Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is "bullish" on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation's economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the "huge amount of excess capacity," which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
"That recovery will continue slowly, slowly over time," Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world's biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that "the worst is over".
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world's biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent "trend," Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a "catastrophic" meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a "sharp drop" in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=aUZbo8LjO3kw
Aug. 3 (Bloomberg) -- Commodity prices may extend their rally in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis."
As the global economy goes toward growth as opposed to a recession, you are going to see further increases in commodity prices especially next year," Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. "There is now potentially light at the end of the tunnel.
"Roubini, chairman of Roubini Global Economics and a professor at NYU's Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Commodity prices gained the most in more than four months on July 30 as investors speculated that the worst of the global recession has passed and consumption of crops, metals and fuel will rebound.
"The things he was saying provide good indicators for our business," Martin McDermott, a manager for metals project development at SNC-Lavalin Group Inc., Canada's biggest engineering and construction company, said at the conference. "The commodities that we're involved with, being copper, nickel, gold, iron ore, all seem to have positive signs and we hope to take advantage of that.
"Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee. Oil has jumped 56 percent in 2009 and copper has surged 86 percent.
China Growth Target
Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009, before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
Economic growth in China, the world's biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier. China, the biggest contributor to global growth, overtook Japan as the world's second-largest stock market by value on July 16 after the nation's 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.
China will meet its target of 8 percent growth in gross domestic product this year, Roubini said. Manufacturing in China climbed for a fifth month in July as stimulus spending and subsidies for consumer purchases countered a collapse in exports, and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.
China's official Purchasing Managers' Index rose to a seasonally adjusted 53.3 in July from 53.2 in June. A reading above 50 indicates an expansion. The manufacturing index has climbed from a record low of 38.8 in November.
Aussie Dollar, Aluminum
A rise in commodity prices may help the Australian dollar, Roubini said today, adding he is "bullish" on the currency. Countries including Australia, New Zealand and Canada have so- called commodity currencies because raw materials generate more than 50 percent of their export revenues.
The Australian dollar today rose to the highest since September before retail sales and house price data tomorrow that may add to evidence the nation's economy will rebound faster than the central bank forecast six months ago.
The price of aluminum, used in beverage cans and airplane parts, has declined by a third in the past year as the global recession crimped demand. A recovery in demand may be offset by the "huge amount of excess capacity," which could be a risk to the price, Roubini said.
The Reuters/Jefferies CRB Index of 19 commodities has risen 12 percent this year. It jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.
Slow Recovery
"That recovery will continue slowly, slowly over time," Roubini said today. The global economy may contract 2 percent this year and swing to growth of 2.3 percent next year, he said.
Vale SA, the world's biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that "the worst is over".
The price of oil may rise more than other commodities because of an expected rebound in demand, Roubini said separately in an interview with Bloomberg News. It may average between $70 and $75 a barrel next year, he said.
Oil Prices
Crude oil traded above $70 a barrel today for the first time in a month on speculation fuel demand will increase, amid signs the global economy is recovering from recession.
The U.S. economy, the world's biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent "trend," Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
In July 2006 Roubini predicted the financial crisis. In February of last year he forecast a "catastrophic" meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a "sharp drop" in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=aUZbo8LjO3kw
Sunday, August 2, 2009
Kim Eng Indonesia Equity Daily, 3 Aug 09
OurComment
Mitra Adiperkasa posted abetter-than- expected result with bottom line increased 54% YoY to Rp118b in1H09.
The result was driven by 18% sales growth and Rp131b gain on foreign exchange.
Even excluding the gain on foreign exchange, the result came above expectation.
On quarterly basis, gross margin showed improvement, increased to 37.7% in 2Q 09 from 37.2% in 2Q 08 and 35..6% in1Q 09.
Greater contribution from high-margin specialty stores (45% in 1H 09 vs.42% in 1H 08) was the driver for the margin improvement.
BUY, TP is under review as the result came above expectation.
Medco announced poor 1H 09 result with 85% lower net profit YoY. Sales dropped by 59% to US$311m, not ably on lower sales of oil & gas and petrochemical products.
YoY, sales of oil & gas dropped by more than a half to US$227.2m in 1H 09, while that of petrochemical product fell to US$15m from US$125.1m in 1H 08.
Operating profit shrunk to 10.1% from 25.6% in 1H 08.
We see earnings to remain poorin 2H09. and expect a negative sentiment for the counter due to the disappointing result.
Maintain HOLD, TP is Rp3,000.
KatarinaSetiawan
Highlights
o Mitra Adiperkasa (BUY): Strong results
o MedcoEnergi (HOLD): Poor 1H09 result
o AnekaTambang (UNDER REVIEW): Sales down 16% YoY in 1H09
o Elnusa :Obtained US$126m new contracts in 1H09
From our chartist desk
o IDX: The index has limited upside until to 2427, and near-term target of 2246 level. The main triggers are coming from regional market, and Rupiah appreciation. Daily TD sequential is in buy countdown 12th day. Today´s trading range is between 2249-2284-2303(support) and 2337-2352-2386(resistance) .
o TLKM:Candlestick signal appeared on 29 July 2009, it is significant for a continued upside. TRADING BUY
o PGAS: We maintain our target price of Rp4100 (medium term). The stock has a very strong uptrend. TRADING BUY
Mitra Adiperkasa posted abetter-than- expected result with bottom line increased 54% YoY to Rp118b in1H09.
The result was driven by 18% sales growth and Rp131b gain on foreign exchange.
Even excluding the gain on foreign exchange, the result came above expectation.
On quarterly basis, gross margin showed improvement, increased to 37.7% in 2Q 09 from 37.2% in 2Q 08 and 35..6% in1Q 09.
Greater contribution from high-margin specialty stores (45% in 1H 09 vs.42% in 1H 08) was the driver for the margin improvement.
BUY, TP is under review as the result came above expectation.
Medco announced poor 1H 09 result with 85% lower net profit YoY. Sales dropped by 59% to US$311m, not ably on lower sales of oil & gas and petrochemical products.
YoY, sales of oil & gas dropped by more than a half to US$227.2m in 1H 09, while that of petrochemical product fell to US$15m from US$125.1m in 1H 08.
Operating profit shrunk to 10.1% from 25.6% in 1H 08.
We see earnings to remain poorin 2H09. and expect a negative sentiment for the counter due to the disappointing result.
Maintain HOLD, TP is Rp3,000.
KatarinaSetiawan
Highlights
o Mitra Adiperkasa (BUY): Strong results
o MedcoEnergi (HOLD): Poor 1H09 result
o AnekaTambang (UNDER REVIEW): Sales down 16% YoY in 1H09
o Elnusa :Obtained US$126m new contracts in 1H09
From our chartist desk
o IDX: The index has limited upside until to 2427, and near-term target of 2246 level. The main triggers are coming from regional market, and Rupiah appreciation. Daily TD sequential is in buy countdown 12th day. Today´s trading range is between 2249-2284-2303(support) and 2337-2352-2386(resistance) .
o TLKM:Candlestick signal appeared on 29 July 2009, it is significant for a continued upside. TRADING BUY
o PGAS: We maintain our target price of Rp4100 (medium term). The stock has a very strong uptrend. TRADING BUY
Wednesday, July 29, 2009
Kim Eng Indonesia Equity Daily, 30 Jul 09
Our Comment
Results are streaming in this morning.
A number of counter posted above-expected results:
Bank Mandiri (BUY), Gudang Garam (BUY), Indocement (BUY),and Unilever, (Under Review).
Other companies´ results are in line with expectations: Bank Central Asia (Under Review), Budi Acid(HOLD), Total (BUY) and Wijaya Karya (BUY).
China market was down 5% yesterday due to concerns over weakening loan growth, which will hurt the economy.
The selloff sent negative impacts to other markets in the region. This morning, regional stocks are still slightly down. Prices of most commodities tumbled this morning as oil price was down almost 4%as US oil stock rose.
We see the Indonesia market to continue its correction today.
Katarina Setiawan
Highlights
o Bank Mandiri (BUY): Offsetting effect of provision and tax movement
o Gudang Garam (BUY): Result beats expectation
o Wijaya Karya (BUY): Strong 2Q09 net profit
o Wijaya Karya (BUY): Awarded US$103m contract from Pertamina
o Indocement(BUY): Above expectation 1H09 net profit
o Total Bangun Persada (BUY): 1H09 net profit in line
o Budi Acid (HOLD): 1H09 net profit above expectation
o Unilever(UND. REVIEW): Result beats expectation
o BankBCA: Flat QoQ performance
o HMSampoerna: 1H09 results
o Elnusa:1H09 results
o MustikaRatu: 1H09 results
o JasaMarga: 1H09 results
o UtrajayaMilk Industry: 1H09 results
o Indomobil Sukses Makmur: 1H09 results
From our chartist desk
o IDX : We upgrade the lower target for the index from 2145 to 2180. Many stocks are overbought on stochastic signals. We prefer small caps with strong signal fromTD sequential buy. Today´s trading range is between 2116-2168-2196 (support)and 2248-2270-2321 (resistance) .
o TURI : Daily TD sequential indicated buy countdown 4th day, and we upgrade target price from Rp1700 of Rp2050. TRADING BUY
o SMRA: This stock included bullish cycle on property. We set our target of Rp600, referring to trend line. TRADING BUY
Results are streaming in this morning.
A number of counter posted above-expected results:
Bank Mandiri (BUY), Gudang Garam (BUY), Indocement (BUY),and Unilever, (Under Review).
Other companies´ results are in line with expectations: Bank Central Asia (Under Review), Budi Acid(HOLD), Total (BUY) and Wijaya Karya (BUY).
China market was down 5% yesterday due to concerns over weakening loan growth, which will hurt the economy.
The selloff sent negative impacts to other markets in the region. This morning, regional stocks are still slightly down. Prices of most commodities tumbled this morning as oil price was down almost 4%as US oil stock rose.
We see the Indonesia market to continue its correction today.
Katarina Setiawan
Highlights
o Bank Mandiri (BUY): Offsetting effect of provision and tax movement
o Gudang Garam (BUY): Result beats expectation
o Wijaya Karya (BUY): Strong 2Q09 net profit
o Wijaya Karya (BUY): Awarded US$103m contract from Pertamina
o Indocement(BUY): Above expectation 1H09 net profit
o Total Bangun Persada (BUY): 1H09 net profit in line
o Budi Acid (HOLD): 1H09 net profit above expectation
o Unilever(UND. REVIEW): Result beats expectation
o BankBCA: Flat QoQ performance
o HMSampoerna: 1H09 results
o Elnusa:1H09 results
o MustikaRatu: 1H09 results
o JasaMarga: 1H09 results
o UtrajayaMilk Industry: 1H09 results
o Indomobil Sukses Makmur: 1H09 results
From our chartist desk
o IDX : We upgrade the lower target for the index from 2145 to 2180. Many stocks are overbought on stochastic signals. We prefer small caps with strong signal fromTD sequential buy. Today´s trading range is between 2116-2168-2196 (support)and 2248-2270-2321 (resistance) .
o TURI : Daily TD sequential indicated buy countdown 4th day, and we upgrade target price from Rp1700 of Rp2050. TRADING BUY
o SMRA: This stock included bullish cycle on property. We set our target of Rp600, referring to trend line. TRADING BUY
Dow Sends Buy Signal That’s Worked Since 1921
By Eric Martin and Michael Patterson
July 29 (Bloomberg) -- The Dow Jones Industrial Average is sending a buy signal that has foreshadowed gains of 18 percent during the past nine decades.
The 30-stock gauge climbed to more than 10 percent above its mean level from the previous 200 days, rebounding from 34 percent below the so-called 200-day moving average in November, according to data compiled by Bloomberg. Eighteen of the last 21 times the Dow rallied from at least 10 percent below the 200-day level to 10 percent above, it posted gains during the next 12 months, Bloomberg data since 1921 show.
The CHART OF THE DAY tracks the difference between the Dow's last price and its 200-day average since 1989. The lower panel displays the measure's price, along with the buy signals it sent near the start of rallies in 1991, 1999 and 2003.
"This rally, while it will have its fits and starts, is the beginning of a new trend, not just a bounce," said Michael Williams, managing director of New York-based Genesis Asset Management, which oversees about $2 billion. "It is a significant opportunity.
"The Dow posted an average advance of 18 percent during the 12-month period following buy signals since 1921, Bloomberg data show. In the six-month period, there were 17 advances for an average gain of 8.2 percent. In three months, it climbed 18 times, averaging an increase of 5.7 percent.
http://www.bloomber g.com/apps/ news?pid= 20601109& sid=aCbacdLSWjCs
July 29 (Bloomberg) -- The Dow Jones Industrial Average is sending a buy signal that has foreshadowed gains of 18 percent during the past nine decades.
The 30-stock gauge climbed to more than 10 percent above its mean level from the previous 200 days, rebounding from 34 percent below the so-called 200-day moving average in November, according to data compiled by Bloomberg. Eighteen of the last 21 times the Dow rallied from at least 10 percent below the 200-day level to 10 percent above, it posted gains during the next 12 months, Bloomberg data since 1921 show.
The CHART OF THE DAY tracks the difference between the Dow's last price and its 200-day average since 1989. The lower panel displays the measure's price, along with the buy signals it sent near the start of rallies in 1991, 1999 and 2003.
"This rally, while it will have its fits and starts, is the beginning of a new trend, not just a bounce," said Michael Williams, managing director of New York-based Genesis Asset Management, which oversees about $2 billion. "It is a significant opportunity.
"The Dow posted an average advance of 18 percent during the 12-month period following buy signals since 1921, Bloomberg data show. In the six-month period, there were 17 advances for an average gain of 8.2 percent. In three months, it climbed 18 times, averaging an increase of 5.7 percent.
http://www.bloomber g.com/apps/ news?pid= 20601109& sid=aCbacdLSWjCs
China Stocks Plunge Most in 13 Months; Jiangxi Copper Falls
By Bloomberg News
July 29 (Bloomberg) -- China's stocks plunged the most in 13 months, led by commodities companies, as speculation recent gains have outpaced earnings prospects overshadowed China State Construction Engineering Corp.'s surge in debut trading.
Jiangxi Copper Co. dropped 6.9 percent, paring its annual advance to 336 percent, after saying first-half profit fell. China Cosco Holdings Co. the world's largest operator of dry- bulk ships, slid 6.7 percent as it forecast a loss. State Construction jumped 60 percent from its offer price in the world's largest initial public offering in 16 months.
The Shanghai Composite Index lost 235.17, or 6.8 percent, to 3,203.2 as of 2:26 p.m., set for its biggest decline since Juen 10, 2008 and snapping a five-day, 7 percent winning streak. The gauge has almost doubled from last year's low as government stimulus spending, record bank lending and an economic rebound spurred demand for equities. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 6.9 percent to 3,496.88
"Metals shares have moved ahead of fundamentals and the whole market is facing increasing risks as valuations are getting more expensive," said Yan Ji, who helps oversee about $850 million of investments at HSBC Jintrust Fund Management Co. in Shanghai.
--Zhang Shidong. With assistance from Chua Kong Ho in Shanghai. Editors: Richard Frost, Linus Chua
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104- 7014 or szhang5@bloomberg. net
July 29 (Bloomberg) -- China's stocks plunged the most in 13 months, led by commodities companies, as speculation recent gains have outpaced earnings prospects overshadowed China State Construction Engineering Corp.'s surge in debut trading.
Jiangxi Copper Co. dropped 6.9 percent, paring its annual advance to 336 percent, after saying first-half profit fell. China Cosco Holdings Co. the world's largest operator of dry- bulk ships, slid 6.7 percent as it forecast a loss. State Construction jumped 60 percent from its offer price in the world's largest initial public offering in 16 months.
The Shanghai Composite Index lost 235.17, or 6.8 percent, to 3,203.2 as of 2:26 p.m., set for its biggest decline since Juen 10, 2008 and snapping a five-day, 7 percent winning streak. The gauge has almost doubled from last year's low as government stimulus spending, record bank lending and an economic rebound spurred demand for equities. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 6.9 percent to 3,496.88
"Metals shares have moved ahead of fundamentals and the whole market is facing increasing risks as valuations are getting more expensive," said Yan Ji, who helps oversee about $850 million of investments at HSBC Jintrust Fund Management Co. in Shanghai.
--Zhang Shidong. With assistance from Chua Kong Ho in Shanghai. Editors: Richard Frost, Linus Chua
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104- 7014 or szhang5@bloomberg. net
Monday, July 27, 2009
U.S. Economy: New-Home Sales Up 11%, Most Since 2000
By Courtney Schlisserman and Bob Willis
July 27 (Bloomberg) -- Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.
Sales increased to a 384,000 annual pace, higher than every forecast in a Bloomberg News survey and the most since November, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in more than a decade.
Deutsche Bank Securities Inc. and Goldman Sachs Group Inc. economists said today's figures signal an end to the slide in home construction and sales. While that means the drag on economic growth will turn to a stimulus in the second half of the year, property values are likely to continue falling and rising unemployment will temper the recovery, analysts said.
"We're barely past the housing bottom, this thing is still fragile," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. "It's not premature to talk about home prices bottoming -- it's somewhere in the next three to six months. There is light at the end of the tunnel.
"Builders' stocks jumped, with the Standard and Poor's Supercomposite Homebuilding Index gaining 4.4 percent. The broader S&P 500 Stock Index was up 0.3 percent to close at 982.18. Treasuries, which fell earlier in the day, remained lower, with benchmark 10-year note yields rising to 3.72 percent at 4:37 p.m. in New York from 3.66 percent at last week's close.
Construction Recovers
The Commerce Department earlier this month reported that builders began work on 582,000 residential properties at an annual rate in June, the most since November. Home construction has subtracted from U.S. gross domestic product every quarter since the start of 2006.
The jump in sales signals the U.S. economy is on the way to recovery, said Rebecca Blank, under secretary for economic affairs at the Commerce Department.
"Across the board this is good news," Blank, formerly a fellow at the Brookings Institution in Washington, said in an interview. "It's what you would expect to see at the beginning of a recovery.
"Standard Pacific Corp., the U.S. homebuilder that gets most of its revenue from California, is among companies seeing stabilization. It's net loss, the 11th consecutive drop, narrowed to $23.1 million in the second quarter from $249 million a year earlier, the Irvine, California-based company said last week. Revenue fell 29 percent.
Smaller Losses
"While we still obviously have not achieved the level of profitability that we ultimately need, we are a lot closer than we were a couple of quarters ago and believe that we are in pretty good shape in the short run," Chief Executive Officer Ken Campbell said in a July 22 statement.
While prices continue to fall, the pace of the decline is easing. The S&P/Case Shiller index of 20 major metropolitan areas tomorrow may show property values fell 17.9 percent in May from a year earlier, according to the median forecast in a Bloomberg survey. The measure was down 18.1 percent in the 12 months ended April.
"In terms of residential investment and home sales and housing starts, I think it has" bottomed, said Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, referring to the housing slump. "We still have a period of declines ahead of us" in prices, he also said.
The decline in prices and a drop in mortgage rates have started to lure buyers even amid the surge in unemployment, which reached a quarter-century high of 9.5 percent in June.
Economists' Forecasts
Economists had forecast new home sales would rise to a 352,000, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from 335,000 to 377,000. Commerce revised May's reading up to a 346,000 rate from a previously reported 342,000.
The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month's value compares with $219,000 in May.
Builders had 281,000 houses on the market last month, down 4.1 percent from May and the fewest since February 1998. The number of unsold properties fell a record 36 percent from June 2008. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.
Foreclosure filings reached a record in the first half of the year, providing competition for homebuilders and pushing down the value of all houses. Also, rising unemployment, which economists forecast will top 10 percent by early 2010, threatens to restrain any recovery in housing.
Fed Efforts
Federal Reserve policy makers have committed to a $1.25 trillion program to purchase securities backed by home loans in an effort to put a floor under the housing market and lower borrowing costs. Those purchases, as well as direct government purchases of Treasuries, drove the rate on 30-year mortgages to a record-low 4.78 percent in April, according to figures from Freddie Mac. Rates have since hovered around 5 percent.
Fed Chairman Bernanke said July 21 that the economy is showing "tentative signs of stabilization" and the "decline in housing activity appears to have moderated.
"Another incentive is the $8,000 tax credit for first-time buyers that is part of the Obama administration' s economic stimulus plan. Purchases have to be completed before Dec. 1.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=awkCLJRdSc9g
July 27 (Bloomberg) -- Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.
Sales increased to a 384,000 annual pace, higher than every forecast in a Bloomberg News survey and the most since November, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in more than a decade.
Deutsche Bank Securities Inc. and Goldman Sachs Group Inc. economists said today's figures signal an end to the slide in home construction and sales. While that means the drag on economic growth will turn to a stimulus in the second half of the year, property values are likely to continue falling and rising unemployment will temper the recovery, analysts said.
"We're barely past the housing bottom, this thing is still fragile," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. "It's not premature to talk about home prices bottoming -- it's somewhere in the next three to six months. There is light at the end of the tunnel.
"Builders' stocks jumped, with the Standard and Poor's Supercomposite Homebuilding Index gaining 4.4 percent. The broader S&P 500 Stock Index was up 0.3 percent to close at 982.18. Treasuries, which fell earlier in the day, remained lower, with benchmark 10-year note yields rising to 3.72 percent at 4:37 p.m. in New York from 3.66 percent at last week's close.
Construction Recovers
The Commerce Department earlier this month reported that builders began work on 582,000 residential properties at an annual rate in June, the most since November. Home construction has subtracted from U.S. gross domestic product every quarter since the start of 2006.
The jump in sales signals the U.S. economy is on the way to recovery, said Rebecca Blank, under secretary for economic affairs at the Commerce Department.
"Across the board this is good news," Blank, formerly a fellow at the Brookings Institution in Washington, said in an interview. "It's what you would expect to see at the beginning of a recovery.
"Standard Pacific Corp., the U.S. homebuilder that gets most of its revenue from California, is among companies seeing stabilization. It's net loss, the 11th consecutive drop, narrowed to $23.1 million in the second quarter from $249 million a year earlier, the Irvine, California-based company said last week. Revenue fell 29 percent.
Smaller Losses
"While we still obviously have not achieved the level of profitability that we ultimately need, we are a lot closer than we were a couple of quarters ago and believe that we are in pretty good shape in the short run," Chief Executive Officer Ken Campbell said in a July 22 statement.
While prices continue to fall, the pace of the decline is easing. The S&P/Case Shiller index of 20 major metropolitan areas tomorrow may show property values fell 17.9 percent in May from a year earlier, according to the median forecast in a Bloomberg survey. The measure was down 18.1 percent in the 12 months ended April.
"In terms of residential investment and home sales and housing starts, I think it has" bottomed, said Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, referring to the housing slump. "We still have a period of declines ahead of us" in prices, he also said.
The decline in prices and a drop in mortgage rates have started to lure buyers even amid the surge in unemployment, which reached a quarter-century high of 9.5 percent in June.
Economists' Forecasts
Economists had forecast new home sales would rise to a 352,000, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from 335,000 to 377,000. Commerce revised May's reading up to a 346,000 rate from a previously reported 342,000.
The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month's value compares with $219,000 in May.
Builders had 281,000 houses on the market last month, down 4.1 percent from May and the fewest since February 1998. The number of unsold properties fell a record 36 percent from June 2008. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.
Foreclosure filings reached a record in the first half of the year, providing competition for homebuilders and pushing down the value of all houses. Also, rising unemployment, which economists forecast will top 10 percent by early 2010, threatens to restrain any recovery in housing.
Fed Efforts
Federal Reserve policy makers have committed to a $1.25 trillion program to purchase securities backed by home loans in an effort to put a floor under the housing market and lower borrowing costs. Those purchases, as well as direct government purchases of Treasuries, drove the rate on 30-year mortgages to a record-low 4.78 percent in April, according to figures from Freddie Mac. Rates have since hovered around 5 percent.
Fed Chairman Bernanke said July 21 that the economy is showing "tentative signs of stabilization" and the "decline in housing activity appears to have moderated.
"Another incentive is the $8,000 tax credit for first-time buyers that is part of the Obama administration' s economic stimulus plan. Purchases have to be completed before Dec. 1.
http://www.bloomber g.com/apps/ news?pid= 20601087& sid=awkCLJRdSc9g
SEC rule on 'naked' short-selling now permanent
By Marcy Gordon, AP Business Writer
On Monday July 27, 2009, 7:54 pm EDT
WASHINGTON (AP) -- Federal regulators on Monday made permanent an emergency rule put in at the height of last fall's market turmoil that aims to reduce abusive short-selling.
The Securities and Exchange Commission announced that it took the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday.
Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender -- pocketing the difference in price.
"Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime after the sale.
The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.
Brokers acting for short sellers must find a party believed to be able to deliver the shares within three days after the short-sale trade. If the shares aren't delivered within that time, there is deemed to be a "failure to deliver." Brokers can be subject to penalties if the failure to deliver isn't resolved by the start of trading on the following day.
At the same time, the SEC has been considering several new approaches to reining in rushes of regular short-selling that also can cause dramatic plunges in stock prices.
Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market's downturn starting last fall. SEC Chairman Mary Schapiro has said she is making the issue a priority.
Some securities industry officials, however, have maintained that the SEC's emergency order on "naked" short-selling brought unintended negative consequences, such as wilder price swings and turbulence in the market.
The five SEC commissioners voted in April to put forward for public comment five alternative short-selling plans. One option is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves -- actions that battered the stocks of banks and other companies over the last year.
Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.
Schapiro said last week the SEC could decide on a final course of action in "the next several weeks or several months.
"Sen. Ted Kaufman, D-Del., one of a bipartisan group of seven senators who have been pushing the SEC to rein in short-selling overall or face legislative action, said Monday that "investors need to see concrete steps."
"Instead of proposing action today to deal with the problem, the SEC apparently is content to let potential solutions sit on the shelf for another two months," Kaufman said in a statement. "... If the market were to decline precipitously again and the banks propped up by taxpayer funds were to become vulnerable again, that is not an insignificant risk.
"In addition to making the "naked" short-selling rule permanent, the SEC and its staff are working with major stock exchanges to make data on short-sale transactions and volumes publicly available through the exchanges' Web sites, the SEC announcement said. It will result in "a substantial increase" over the amount of information currently required, the agency said.
"Today's actions demonstrate the (SEC's) determination to address short-selling abuses while at the same time increasing public disclosure of short-selling activities that affect our markets," Schapiro said in a statement.
The SEC also said it will hold a public hearing on Sept. 30 to address stock lending for short-selling and possible new disclosures related to short-selling that could be required.
The actions were announced the same day a new advisory committee, established to advise the SEC on regulatory issues, financial disclosure, trading fees and other matters, held its first public meeting at the agency's Washington headquarters.
Schapiro, who took the helm of the agency in January, created the committee to gather views from parties outside Wall Street and Washington -- one of a number of measures designed to strengthen the SEC at a time when it has been called on to help restore investor confidence shattered by the worst financial crisis in more than 70 years.
Separately Monday, Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee, said he has asked Schapiro to ban the practice of so-called "flash trading," which enables some big Wall Street banks and hedge funds to get an advance look at investors' stock orders before they hit the market.
The use of super-fast computers by those participants to spy on orders gives them an unfair advantage, Schumer wrote in a letter Schapiro. If the SEC fails to act, Schumer said he would consider proposing legislation to ban flash trading.
"This kind of unfair access seriously compromises the integrity of our markets and creates a two-tiered system where a privileged group of insiders receive preferential treatment, depriving others of a fair price for their transactions, " Schumer told Schapiro.
On Monday July 27, 2009, 7:54 pm EDT
WASHINGTON (AP) -- Federal regulators on Monday made permanent an emergency rule put in at the height of last fall's market turmoil that aims to reduce abusive short-selling.
The Securities and Exchange Commission announced that it took the action on the rule targeting so-called "naked" short-selling, which was due to expire Friday.
Short-sellers bet against a stock. They generally borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender -- pocketing the difference in price.
"Naked" short-selling occurs when sellers don't even borrow the shares before selling them, and then look to cover positions sometime after the sale.
The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.
Brokers acting for short sellers must find a party believed to be able to deliver the shares within three days after the short-sale trade. If the shares aren't delivered within that time, there is deemed to be a "failure to deliver." Brokers can be subject to penalties if the failure to deliver isn't resolved by the start of trading on the following day.
At the same time, the SEC has been considering several new approaches to reining in rushes of regular short-selling that also can cause dramatic plunges in stock prices.
Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market's downturn starting last fall. SEC Chairman Mary Schapiro has said she is making the issue a priority.
Some securities industry officials, however, have maintained that the SEC's emergency order on "naked" short-selling brought unintended negative consequences, such as wilder price swings and turbulence in the market.
The five SEC commissioners voted in April to put forward for public comment five alternative short-selling plans. One option is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves -- actions that battered the stocks of banks and other companies over the last year.
Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.
Schapiro said last week the SEC could decide on a final course of action in "the next several weeks or several months.
"Sen. Ted Kaufman, D-Del., one of a bipartisan group of seven senators who have been pushing the SEC to rein in short-selling overall or face legislative action, said Monday that "investors need to see concrete steps."
"Instead of proposing action today to deal with the problem, the SEC apparently is content to let potential solutions sit on the shelf for another two months," Kaufman said in a statement. "... If the market were to decline precipitously again and the banks propped up by taxpayer funds were to become vulnerable again, that is not an insignificant risk.
"In addition to making the "naked" short-selling rule permanent, the SEC and its staff are working with major stock exchanges to make data on short-sale transactions and volumes publicly available through the exchanges' Web sites, the SEC announcement said. It will result in "a substantial increase" over the amount of information currently required, the agency said.
"Today's actions demonstrate the (SEC's) determination to address short-selling abuses while at the same time increasing public disclosure of short-selling activities that affect our markets," Schapiro said in a statement.
The SEC also said it will hold a public hearing on Sept. 30 to address stock lending for short-selling and possible new disclosures related to short-selling that could be required.
The actions were announced the same day a new advisory committee, established to advise the SEC on regulatory issues, financial disclosure, trading fees and other matters, held its first public meeting at the agency's Washington headquarters.
Schapiro, who took the helm of the agency in January, created the committee to gather views from parties outside Wall Street and Washington -- one of a number of measures designed to strengthen the SEC at a time when it has been called on to help restore investor confidence shattered by the worst financial crisis in more than 70 years.
Separately Monday, Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee, said he has asked Schapiro to ban the practice of so-called "flash trading," which enables some big Wall Street banks and hedge funds to get an advance look at investors' stock orders before they hit the market.
The use of super-fast computers by those participants to spy on orders gives them an unfair advantage, Schumer wrote in a letter Schapiro. If the SEC fails to act, Schumer said he would consider proposing legislation to ban flash trading.
"This kind of unfair access seriously compromises the integrity of our markets and creates a two-tiered system where a privileged group of insiders receive preferential treatment, depriving others of a fair price for their transactions, " Schumer told Schapiro.
Friday, July 24, 2009
Marc Faber says S&P-500 Index looking too expensive
Published: Friday, 24 Jul 2009 http://arabianmoney .net/2009/ 07/22/marc- faber-says- sp-looking- too-expensive/
Legendary Swiss investment advisor Dr Marc Faber told Arabianmoney. net that the S&P was looking overvalued and was vulnerable to a correction, speaking on the margins of the Agora Financial Decade of Reckoning™ conference in Vancouver, Canada today.
In a powerful presentation Dr Faber blamed low interest rates at the US Federal reserve for the bubbles recently created in all major asset global classes, except in Zimbabwe. But now the reversal had brought asset price destruction across the world.
Light at the end of the tunnel
His presentation entitled Yes, there is light at the end of the tunnel™ came with two important caveats: first, he did not know how long the tunnel would be; and secondly, the light depended on investment in the right asset class to beat hyperinflation.
Dr Faber gave a strong evocation of his hyperinflation thesis which essentially turns of Fed chairman Ben Bernankes often repeated and never denied reputation as a money printer who would drop dollars from a helicopter if that would help the US economy.
There could well be a second or third stimulus package, and as much quantitative easing as necessary, in the view of this famous contrarian. He thinks the alternative scenario of allowing a debt deflationary spiral to develop is simply not on the policy agenda.
The investment implications are profound. Dr Faber is telling his newsletter subscribers to make their dollar escape plans and buy gold and silver. He regards last autums precious metal correction as somewhat similar to what happened in 1975-6 before gold prices advanced eight-fold by 1980, although a correction to $850-an-ounce is still possible.
Confident predictionsPinning the Swiss super-analyst down after his speech Arabianmoney. net found him very confident in his predictions which have tended to face in both directions since the crisis began.
What is less sure is whether stock prices will move sideways and then enjoy an inflationary advance, or suffer a correction on the scale of last year before heading back upwards. In any event Dr Faber thinks precious metals are the better investment in a highly volatile period.
For the Middle East he advised Arabianmoney. net that a revival in oil prices would be forthcoming and that actually set the region up for a much better recovery than appeared evident from current data on real estate and auto imports
Legendary Swiss investment advisor Dr Marc Faber told Arabianmoney. net that the S&P was looking overvalued and was vulnerable to a correction, speaking on the margins of the Agora Financial Decade of Reckoning™ conference in Vancouver, Canada today.
In a powerful presentation Dr Faber blamed low interest rates at the US Federal reserve for the bubbles recently created in all major asset global classes, except in Zimbabwe. But now the reversal had brought asset price destruction across the world.
Light at the end of the tunnel
His presentation entitled Yes, there is light at the end of the tunnel™ came with two important caveats: first, he did not know how long the tunnel would be; and secondly, the light depended on investment in the right asset class to beat hyperinflation.
Dr Faber gave a strong evocation of his hyperinflation thesis which essentially turns of Fed chairman Ben Bernankes often repeated and never denied reputation as a money printer who would drop dollars from a helicopter if that would help the US economy.
There could well be a second or third stimulus package, and as much quantitative easing as necessary, in the view of this famous contrarian. He thinks the alternative scenario of allowing a debt deflationary spiral to develop is simply not on the policy agenda.
The investment implications are profound. Dr Faber is telling his newsletter subscribers to make their dollar escape plans and buy gold and silver. He regards last autums precious metal correction as somewhat similar to what happened in 1975-6 before gold prices advanced eight-fold by 1980, although a correction to $850-an-ounce is still possible.
Confident predictionsPinning the Swiss super-analyst down after his speech Arabianmoney. net found him very confident in his predictions which have tended to face in both directions since the crisis began.
What is less sure is whether stock prices will move sideways and then enjoy an inflationary advance, or suffer a correction on the scale of last year before heading back upwards. In any event Dr Faber thinks precious metals are the better investment in a highly volatile period.
For the Middle East he advised Arabianmoney. net that a revival in oil prices would be forthcoming and that actually set the region up for a much better recovery than appeared evident from current data on real estate and auto imports
Thursday, July 23, 2009
Warren Buffett Cuts Stake in Moody's By Almost 17%
Published: Wednesday, 22 Jul 2009 5:54 PM ET - CNBC.COMhttp://www.cnbc. com/id/32090379
Warren Buffett's Berkshire Hathaway has cut its stake in Moody's by 16.6 percent, reducing its exposure to the beleaguered credit rating agency by selling almost eight million shares over three days.
In a filing with the SEC late today (Wednesday), Berkshire says it held 40,013,700 shares as of July 21. That's 16.98 percent of Moody's shares outstanding.
Berkshire reported holding 48 million shares as of March 31. That would be a stake of just over 20 percent.
Moody's shares fell sharply in after-hours trading on the news. They closed today at $26.52 and were trading at $24.35 just after 6p ET.
Current price: [MCO 26.52 -0.28 (-1.04%) Berkshire's National Indemnity sold the shares on the open market over a three-day period starting Monday. The selling prices ranged from $28.73 to $26.64, with an average of $27.25. The sales raised $217.6 million for Berkshire.
Warren Buffett's Berkshire Hathaway has cut its stake in Moody's by 16.6 percent, reducing its exposure to the beleaguered credit rating agency by selling almost eight million shares over three days.
In a filing with the SEC late today (Wednesday), Berkshire says it held 40,013,700 shares as of July 21. That's 16.98 percent of Moody's shares outstanding.
Berkshire reported holding 48 million shares as of March 31. That would be a stake of just over 20 percent.
Moody's shares fell sharply in after-hours trading on the news. They closed today at $26.52 and were trading at $24.35 just after 6p ET.
Current price: [MCO 26.52 -0.28 (-1.04%) Berkshire's National Indemnity sold the shares on the open market over a three-day period starting Monday. The selling prices ranged from $28.73 to $26.64, with an average of $27.25. The sales raised $217.6 million for Berkshire.
Thursday, July 16, 2009
Kim Eng Indonesia Equity Daily, 17 Jul 09
OurComment
Bank Danamon announced 1H09 results with overall net profit stood lower than consensus, covering 45% of the Rp1.9t full year projection.
We see an increase in Net Interest Income on the back of higher asset yield (18,1% in 1H09 vs. 16,1% in 1H08), which is supported by high-lending- rate period and bigger portion of mass-market loan (51% in 1H09vs. 46% in 1H08).
Improvement in yield was sufficient to offset Cost of Fundthat rises 1.5% YoY to 7.5% in 1H09. However, total deposit continue toshow negative growth, of 10.2% YTD from Rp75.4t by end 2008.
It was then followed by a further contraction in loan, by 7.9% YTD from Rp66.9t in December2008. The bank indicated a full year loan growth target of less than 10% in2009.
Bank Negara Indonesia posted Rp1.2t profit in1H09. Overall, the QoQ figures are less attractive than the YoY development.Never the less, supported by strong result in 1Q09, the overall net profit in1H09 is still 10% above consensus estimates of Rp1.1t after being adjusted for a six months period forecast.
Loan growth target for 2009 is set at 14%-16%, but the bank has indicated the possibility of growth to reach only 10%due to delays in 10,000MW crash program.
BNI as part of bank syndication estimated only 50% of the total Rp10t fund allocated for the project will be disbursed in 2009.
We think the bottom end of the loan growth target is still achievable since in 1H09 alone, BNI managed to reach 7% loan growth.
This morning there have been 2 explosions at the Ritz Carlton hotel and JW Marriott hotel in Kuningan, a business district in Jakarta. The cause ofexplosions is still unclear.
A few years ago JW Marriott hotel, right in front of Ritz Carlton and belong to the same owner, experienced a terrorism act in the form of bomb explosion.
We expect a selling pressure in Jakarta today.
KatarinaSetiawan
Highlights
o BankDanamon: High provision put a weight on profit
o BankNegara Indonesia: 1H09 Result remain strong, backed by 1Q performance
o SummareconAgung: 1H09 sales at Rp570b Fromour chartist desk
o IDX: Wesaw doji shooting star, daily TD sequential buy countdown 12th day(near complete) and Bollinger band 20 day indicated strong signs for correction. We set the lowest target at 1985.
Today´s trading range is between 2044-2086-2102 (support) and 2144-2170-2212(resistance) .
o BBKP: Thestock price moved up above EMA 20 and 50 day. We set support level of Rp320. BUYON WEAKNESS.
o BBNI: GMMAand MA 20 day are still up. But in the near term, stochastic is in overboughtcondition. BUY ON WEAKNESS.
Bank Danamon announced 1H09 results with overall net profit stood lower than consensus, covering 45% of the Rp1.9t full year projection.
We see an increase in Net Interest Income on the back of higher asset yield (18,1% in 1H09 vs. 16,1% in 1H08), which is supported by high-lending- rate period and bigger portion of mass-market loan (51% in 1H09vs. 46% in 1H08).
Improvement in yield was sufficient to offset Cost of Fundthat rises 1.5% YoY to 7.5% in 1H09. However, total deposit continue toshow negative growth, of 10.2% YTD from Rp75.4t by end 2008.
It was then followed by a further contraction in loan, by 7.9% YTD from Rp66.9t in December2008. The bank indicated a full year loan growth target of less than 10% in2009.
Bank Negara Indonesia posted Rp1.2t profit in1H09. Overall, the QoQ figures are less attractive than the YoY development.Never the less, supported by strong result in 1Q09, the overall net profit in1H09 is still 10% above consensus estimates of Rp1.1t after being adjusted for a six months period forecast.
Loan growth target for 2009 is set at 14%-16%, but the bank has indicated the possibility of growth to reach only 10%due to delays in 10,000MW crash program.
BNI as part of bank syndication estimated only 50% of the total Rp10t fund allocated for the project will be disbursed in 2009.
We think the bottom end of the loan growth target is still achievable since in 1H09 alone, BNI managed to reach 7% loan growth.
This morning there have been 2 explosions at the Ritz Carlton hotel and JW Marriott hotel in Kuningan, a business district in Jakarta. The cause ofexplosions is still unclear.
A few years ago JW Marriott hotel, right in front of Ritz Carlton and belong to the same owner, experienced a terrorism act in the form of bomb explosion.
We expect a selling pressure in Jakarta today.
KatarinaSetiawan
Highlights
o BankDanamon: High provision put a weight on profit
o BankNegara Indonesia: 1H09 Result remain strong, backed by 1Q performance
o SummareconAgung: 1H09 sales at Rp570b Fromour chartist desk
o IDX: Wesaw doji shooting star, daily TD sequential buy countdown 12th day(near complete) and Bollinger band 20 day indicated strong signs for correction. We set the lowest target at 1985.
Today´s trading range is between 2044-2086-2102 (support) and 2144-2170-2212(resistance) .
o BBKP: Thestock price moved up above EMA 20 and 50 day. We set support level of Rp320. BUYON WEAKNESS.
o BBNI: GMMAand MA 20 day are still up. But in the near term, stochastic is in overboughtcondition. BUY ON WEAKNESS.
Tuesday, July 14, 2009
Barclays Knapp Drops Bearish Call, Sees S&P 500 Rising in 2009
By Jeff Kearns and Elizabeth Stanton
July 14 (Bloomberg) -- Barry Knapp, previously Wall Street's most bearish stock strategist, now says the Standard & Poor's 500 Index may eke out a 3 percent gain in 2009 as industrial production recovers and credit markets improve.
Knapp, the head of U.S. equity strategy at Barclays Plc in New York, raised his S&P 500 target to 930 from 757, citing forecasts for a rebound in U.S. growth. Economists estimate gross domestic product will expand 0.95 percent in the third quarter and 1.9 percent in the fourth after contracting in five out of the preceding seven quarters, according to data compiled by Bloomberg.
Rallies such as the 33 percent advance in the S&P 500 over the last four months tend to continue after a "correction" of about 10 percent, Knapp wrote in a note to clients. The 47-year- old analyst said he failed to foresee the size of the gain since the index fell to a 12-year low on March 9 of 676.53.
"The magnitude of the advance took us by surprise -- it was double what we were expecting in half the time," Knapp wrote. "History suggests you get a 5 percent to 10 percent correction after the initial advance before witnessing another push higher.
"Previously, Knapp said slumping profits at banks and companies that depend on consumer spending would push the gauge down 17 percent this year. He said valuations were too high relative to sales, with the S&P 500 trading at 0.92 times annual revenue, compared with a low of 0.34 times in 1982, according to his data.
Biggest Bears
Knapp's new estimate compares with a mean projection of 985 for the U.S. stock benchmark among the 10 forecasts tracked by Bloomberg. His increase leaves Kevin Gardiner of HSBC Holdings Plc and Jason Todd of Morgan Stanley tied for the lowest S&P 500 projection at 900.
Knapp was alone among the biggest Wall Street firms in predicting at the start of the year that the S&P 500 would decline to its lowest level in more than a decade. He also called the March rebound in the S&P 500.
Government efforts to repair credit markets will help the S&P 500 gain 27 points from last year's close of 903.25, Knapp said. The Treasury Department is financing as much as $1 trillion in purchases of banks' distressed assets and the Federal Reserve pledged to buy more than $1 trillion of bonds.
The Libor-OIS spread, which measures banks' reluctance to lend, has narrowed to 31 basis points, or 0.31 percentage point, the lowest level in almost 18 months. It widened to a record 364 basis points in October, following the collapse of New York- based Lehman Brothers Holdings Inc.
Trading Desk
Promoted to chief stock strategist four months before Lehman's collapse, Knapp moved to Barclays when the London-based bank bought his unit and put him in charge of U.S. equity strategy. Before the appointment, he was a trader on Lehman's so-called prop desk where he bet the fourth-largest U.S. securities firm's capital on stocks and bonds.
Married with three children, Knapp is the son of an electrical engineering professor at the University of Connecticut in Storrs and a schoolteacher. He attended the University of Rhode Island on a soccer scholarship and aimed at a professional career in the sport -- until the North American Soccer League collapsed in 1984, the year he graduated.
The midfielder fell back on his economics and finance degree, landing jobs at Merrill Lynch & Co. in New York and Boston-based Fidelity Investments while pursuing a Master of Business Administration from Fordham University at night. He joined Lehman in 1989 to sell equity derivatives.
`Alive'
"The key point is that the capital markets have normalized," Knapp wrote. "The broad improvement in capital markets implies that the recovery is very much alive.
"No other analyst came as close to predicting how far the S&P 500 would fall as Knapp, who said the gauge would drop as much as 29 percent from the Dec. 31 level to 639. The index sank 25 percent through March 9, its worst annual start.
David Kostin, U.S. investment strategist at New York-based Goldman Sachs Group Inc., said the S&P 500 might dip 17 percent to 750 during the first quarter before moving higher. Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co. in New York, said high borrowing costs would prevent gains during the first half of the year. Tobias Levkovich, chief U.S. equity strategist at New York-based Citigroup Inc., said any advance in stocks early in the year in response to economic stimulus measures "will likely fade.
"Forecasting Gains"
Levkovich expects the S&P 500 to end 2009 at 1,000, Lee at 1,100 and Kostin at 940.
The S&P 500 rallied the most in seven decades from its March 9 low to gain 40 percent to this year's peak of 946.21 last month. Knapp said the speed of the increase helped convince him to change his old forecast.
"To be frank, our previous target has been stale for a while since it was based, in part, on the probability that the S&P fell to a level we considered a valuation floor," he wrote. "Since we last revised our target, we wrote that the timing and the nature of the rally in equities made it look like the `real thing' to us."
http://www.bloomber g.com/apps/ news?pid= 20601213& sid=aVqZyonk01iU
July 14 (Bloomberg) -- Barry Knapp, previously Wall Street's most bearish stock strategist, now says the Standard & Poor's 500 Index may eke out a 3 percent gain in 2009 as industrial production recovers and credit markets improve.
Knapp, the head of U.S. equity strategy at Barclays Plc in New York, raised his S&P 500 target to 930 from 757, citing forecasts for a rebound in U.S. growth. Economists estimate gross domestic product will expand 0.95 percent in the third quarter and 1.9 percent in the fourth after contracting in five out of the preceding seven quarters, according to data compiled by Bloomberg.
Rallies such as the 33 percent advance in the S&P 500 over the last four months tend to continue after a "correction" of about 10 percent, Knapp wrote in a note to clients. The 47-year- old analyst said he failed to foresee the size of the gain since the index fell to a 12-year low on March 9 of 676.53.
"The magnitude of the advance took us by surprise -- it was double what we were expecting in half the time," Knapp wrote. "History suggests you get a 5 percent to 10 percent correction after the initial advance before witnessing another push higher.
"Previously, Knapp said slumping profits at banks and companies that depend on consumer spending would push the gauge down 17 percent this year. He said valuations were too high relative to sales, with the S&P 500 trading at 0.92 times annual revenue, compared with a low of 0.34 times in 1982, according to his data.
Biggest Bears
Knapp's new estimate compares with a mean projection of 985 for the U.S. stock benchmark among the 10 forecasts tracked by Bloomberg. His increase leaves Kevin Gardiner of HSBC Holdings Plc and Jason Todd of Morgan Stanley tied for the lowest S&P 500 projection at 900.
Knapp was alone among the biggest Wall Street firms in predicting at the start of the year that the S&P 500 would decline to its lowest level in more than a decade. He also called the March rebound in the S&P 500.
Government efforts to repair credit markets will help the S&P 500 gain 27 points from last year's close of 903.25, Knapp said. The Treasury Department is financing as much as $1 trillion in purchases of banks' distressed assets and the Federal Reserve pledged to buy more than $1 trillion of bonds.
The Libor-OIS spread, which measures banks' reluctance to lend, has narrowed to 31 basis points, or 0.31 percentage point, the lowest level in almost 18 months. It widened to a record 364 basis points in October, following the collapse of New York- based Lehman Brothers Holdings Inc.
Trading Desk
Promoted to chief stock strategist four months before Lehman's collapse, Knapp moved to Barclays when the London-based bank bought his unit and put him in charge of U.S. equity strategy. Before the appointment, he was a trader on Lehman's so-called prop desk where he bet the fourth-largest U.S. securities firm's capital on stocks and bonds.
Married with three children, Knapp is the son of an electrical engineering professor at the University of Connecticut in Storrs and a schoolteacher. He attended the University of Rhode Island on a soccer scholarship and aimed at a professional career in the sport -- until the North American Soccer League collapsed in 1984, the year he graduated.
The midfielder fell back on his economics and finance degree, landing jobs at Merrill Lynch & Co. in New York and Boston-based Fidelity Investments while pursuing a Master of Business Administration from Fordham University at night. He joined Lehman in 1989 to sell equity derivatives.
`Alive'
"The key point is that the capital markets have normalized," Knapp wrote. "The broad improvement in capital markets implies that the recovery is very much alive.
"No other analyst came as close to predicting how far the S&P 500 would fall as Knapp, who said the gauge would drop as much as 29 percent from the Dec. 31 level to 639. The index sank 25 percent through March 9, its worst annual start.
David Kostin, U.S. investment strategist at New York-based Goldman Sachs Group Inc., said the S&P 500 might dip 17 percent to 750 during the first quarter before moving higher. Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co. in New York, said high borrowing costs would prevent gains during the first half of the year. Tobias Levkovich, chief U.S. equity strategist at New York-based Citigroup Inc., said any advance in stocks early in the year in response to economic stimulus measures "will likely fade.
"Forecasting Gains"
Levkovich expects the S&P 500 to end 2009 at 1,000, Lee at 1,100 and Kostin at 940.
The S&P 500 rallied the most in seven decades from its March 9 low to gain 40 percent to this year's peak of 946.21 last month. Knapp said the speed of the increase helped convince him to change his old forecast.
"To be frank, our previous target has been stale for a while since it was based, in part, on the probability that the S&P fell to a level we considered a valuation floor," he wrote. "Since we last revised our target, we wrote that the timing and the nature of the rally in equities made it look like the `real thing' to us."
http://www.bloomber g.com/apps/ news?pid= 20601213& sid=aVqZyonk01iU
AFP: Oil & pessimism
Singapore, July 14, 2009 (AFP) - Oil recovered in Asian trade Tuesday but continued pessimism on the weak global economy will keep a lid on further price gains, analysts said.
New York's main contract, light sweet crude for August delivery, advanced 38 cents to 60.07 dollars a barrel.
Brent North Sea crude for August delivery gained 39 cents to 61.08 dollars.
Both contracts closed weaker Monday on concerns over the pace of recovery in the global economy, especially in the United States.
Analysts said any gains were likely to be capped due to caution over US energy demand and would be short-term in nature. The United States is the world's biggest economy and its largest energy consumer.
"Oil markets remain concerned that economic recovery in the main developed economies is likely to be a slow grind," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
Weak energy demand in the United States has been a dominant theme since recent data suggested its economy remained fragile despite a massive stimulus spending plan of 787 billion dollars by President Barack Obama's administration.
"The global energy market is lost in the fog as the economic outlook seems to be getting a bit murkier," said Phil Flynn of Alaron Research.
Data released last week by the Department of Energy showed a bigger-than- expected rise in gasoline reserves, indicating that Americans were cutting back at a time when they should be travelling for summer holidays.
"The bigger picture is that final demand is set to remain weak for years," analysts from London-based Capital Economics said in a report.
burs-bh/mba/ pst
New York's main contract, light sweet crude for August delivery, advanced 38 cents to 60.07 dollars a barrel.
Brent North Sea crude for August delivery gained 39 cents to 61.08 dollars.
Both contracts closed weaker Monday on concerns over the pace of recovery in the global economy, especially in the United States.
Analysts said any gains were likely to be capped due to caution over US energy demand and would be short-term in nature. The United States is the world's biggest economy and its largest energy consumer.
"Oil markets remain concerned that economic recovery in the main developed economies is likely to be a slow grind," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
Weak energy demand in the United States has been a dominant theme since recent data suggested its economy remained fragile despite a massive stimulus spending plan of 787 billion dollars by President Barack Obama's administration.
"The global energy market is lost in the fog as the economic outlook seems to be getting a bit murkier," said Phil Flynn of Alaron Research.
Data released last week by the Department of Energy showed a bigger-than- expected rise in gasoline reserves, indicating that Americans were cutting back at a time when they should be travelling for summer holidays.
"The bigger picture is that final demand is set to remain weak for years," analysts from London-based Capital Economics said in a report.
burs-bh/mba/ pst
Monday, July 13, 2009
Singapore Raises GDP Forecast as Nation Emerges From Recession
By - Shamim Adam
July 14 (Bloomberg) -- Singapore's government raised its economic forecast for 2009 as the economy emerged from the deepest recession since its 1965 independence a mid a rebound in manufacturing and exports.
Gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said in a statement today. The economy rose an annualized 20.4 percent last quarter from the previous three months, after shrinking a revised 12.7 percent between January and March, it said.
The revised forecast "reflects the less severe contraction in the first half of the year, while the underlying economic conditions remain weak," the ministry said. The expansion last quarter was better than the median estimate for a 13.4 percent gain in a Bloomberg survey of 12 economists.
Governments worldwide have pledged about $2 trillion in stimulus to counter the global recession, helping stabilize sales by exporters including Japan's Nissan Motor Co. and South Korea's Samsung Electronics Co. The region's stocks are among the world's best performers this year and the International Monetary Fund has raised its growth forecast for emerging Asia.
"If the Singapore economy can report improvement in export and production, it certainly suggests that elsewhere in Asia we will also see some sequential improvement in underlying demand," said Song Seng-Wun, regional economist at CIMB-GK Securities Pte in Singapore.
Bouncing Back
Singapore's $161 billion economy contracted 3.7 percent last quarter from a year earlier, better than the median estimate for a 5.4 percent decline in a Bloomberg survey.
Manufacturing, which accounts for a quarter of the economy, fell 1.5 percent from a year earlier, after sliding a revised 24.3 percent in the three months ended March. Industrial production has gained as pharmaceutical companies boosted output and exports.
"Asia is bouncing back in a V-shaped fashion," said David Carbon, head of economic and currency research at DBS Group Holdings Ltd. in Singapore. "Industrial production is 65 percent back to pre-crisis levels and exports have recovered about one-third of their lost territory.
" India's industrial production increased at the fastest pace in eight months in May, while Malaysia's declined the least in six months. South Korea's output rose more than estimated and China's accelerated. China will release gross domestic product data on July 16.
The Japanese government said yesterday the economy is "picking up," and upgraded its view of exports, business sentiment and consumer spending.
'Peter Out'
Asian policy makers have slashed borrowing costs and pledged more than $950 billion of stimulus plans to boost local consumer and business spending and offset the trade slowdown. The IMF said this month emerging Asian economies will probably expand 5.5 percent this year, more than a 4.8 percent estimate in April.
The faster-than- expected growth "owes to improved prospects in China and India, in part reflecting substantial macroeconomic stimulus and a faster-than- expected turnaround in capital flows," the fund said July 8. "However, the recent acceleration in growth is likely to peter out unless there is a recovery in advanced economies.
" The "volatile" pharmaceutical industry is helping shore up Singapore's economy, said Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore.
"If you look at the underlying economy such as the manufacturing of electronics, as well as the services sector, it does seem like the growth momentum has yet to fully recover," the economist said.
Las Vegas Sands
Singapore's services industry declined 5.1 percent last quarter, after shrinking by a similar pace in the first three months of the year. The construction industry gained 18.3 percent last quarter as Las Vegas Sands Corp. and other developers worked to complete hotels, office towers and condominiums.
"Singapore's recovery will be more pronounced than others in the region because pharmaceuticals swung the industrial production numbers a lot more than it did in other countries," said Vishnu Varathan, a regional economist at Forecast Singapore Pte. "We'll really be getting ahead of ourselves to say the recession is in the rear view mirror. Output levels are still well off where we were before the crisis."
July 14 (Bloomberg) -- Singapore's government raised its economic forecast for 2009 as the economy emerged from the deepest recession since its 1965 independence a mid a rebound in manufacturing and exports.
Gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said in a statement today. The economy rose an annualized 20.4 percent last quarter from the previous three months, after shrinking a revised 12.7 percent between January and March, it said.
The revised forecast "reflects the less severe contraction in the first half of the year, while the underlying economic conditions remain weak," the ministry said. The expansion last quarter was better than the median estimate for a 13.4 percent gain in a Bloomberg survey of 12 economists.
Governments worldwide have pledged about $2 trillion in stimulus to counter the global recession, helping stabilize sales by exporters including Japan's Nissan Motor Co. and South Korea's Samsung Electronics Co. The region's stocks are among the world's best performers this year and the International Monetary Fund has raised its growth forecast for emerging Asia.
"If the Singapore economy can report improvement in export and production, it certainly suggests that elsewhere in Asia we will also see some sequential improvement in underlying demand," said Song Seng-Wun, regional economist at CIMB-GK Securities Pte in Singapore.
Bouncing Back
Singapore's $161 billion economy contracted 3.7 percent last quarter from a year earlier, better than the median estimate for a 5.4 percent decline in a Bloomberg survey.
Manufacturing, which accounts for a quarter of the economy, fell 1.5 percent from a year earlier, after sliding a revised 24.3 percent in the three months ended March. Industrial production has gained as pharmaceutical companies boosted output and exports.
"Asia is bouncing back in a V-shaped fashion," said David Carbon, head of economic and currency research at DBS Group Holdings Ltd. in Singapore. "Industrial production is 65 percent back to pre-crisis levels and exports have recovered about one-third of their lost territory.
" India's industrial production increased at the fastest pace in eight months in May, while Malaysia's declined the least in six months. South Korea's output rose more than estimated and China's accelerated. China will release gross domestic product data on July 16.
The Japanese government said yesterday the economy is "picking up," and upgraded its view of exports, business sentiment and consumer spending.
'Peter Out'
Asian policy makers have slashed borrowing costs and pledged more than $950 billion of stimulus plans to boost local consumer and business spending and offset the trade slowdown. The IMF said this month emerging Asian economies will probably expand 5.5 percent this year, more than a 4.8 percent estimate in April.
The faster-than- expected growth "owes to improved prospects in China and India, in part reflecting substantial macroeconomic stimulus and a faster-than- expected turnaround in capital flows," the fund said July 8. "However, the recent acceleration in growth is likely to peter out unless there is a recovery in advanced economies.
" The "volatile" pharmaceutical industry is helping shore up Singapore's economy, said Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore.
"If you look at the underlying economy such as the manufacturing of electronics, as well as the services sector, it does seem like the growth momentum has yet to fully recover," the economist said.
Las Vegas Sands
Singapore's services industry declined 5.1 percent last quarter, after shrinking by a similar pace in the first three months of the year. The construction industry gained 18.3 percent last quarter as Las Vegas Sands Corp. and other developers worked to complete hotels, office towers and condominiums.
"Singapore's recovery will be more pronounced than others in the region because pharmaceuticals swung the industrial production numbers a lot more than it did in other countries," said Vishnu Varathan, a regional economist at Forecast Singapore Pte. "We'll really be getting ahead of ourselves to say the recession is in the rear view mirror. Output levels are still well off where we were before the crisis."
Thursday, July 2, 2009
U.S. Stocks, Commodities Retreat After Job Losses Top Estimates
July 2 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index to a third straight weekly drop, as a worse-than-projected decrease in jobs added to concern that rising unemployment will prolong the recession. Treasuries rose, while oil retreated to a five-week low.
Home Depot Inc., Alcoa Inc. and Travelers Cos. lost more than 3 percent after the Labor Department said payrolls shrank by 467,000 jobs last month, 102,000 more than the average economist estimate. Lear Corp., the second-biggest maker of automotive seats, sank on plans to file for bankruptcy. Europe’s Dow Jones Stoxx 600 Index plunged 2.4 percent, the most in almost two weeks, following the jobs report.
“It’s ugly out there,” Jack Ablin, who oversees $60 billion as chief investment officer at Harris Private Bank in Chicago, told Bloomberg Television. “We were trying to gain a little bit of traction on the jobs front, to get less bad numbers on a monthly basis. Clearly this month’s report is a setback.
” The S&P 500 tumbled 2.4 percent to 901.92 at 1:40 p.m. in New York, extending its slump since June 12 to 4.7 percent and erasing its 2009 gain. The Dow Jones Industrial Average retreated 176.54 points, or 2.1 percent, to 8,327.52. Thirteen stocks fell for each that rose on the New York Stock Exchange, the broadest decline since April 20.
The stock market’s three-week slump has been spurred by concern the S&P 500’s 40 percent surge since March outpaced prospects for a recovery in the economy and corporate profits. The U.S. equity benchmark is poised to cap its longest stretch of weekly losses since March. U.S. markets will be closed tomorrow for the Independence Day holiday.
Sector Divergence
A divergence of Dow Jones’s industrial, transportation and utility stock indexes suggests a rally in the U.S. market may stay stalled near current levels, according to Andrew Burkly, a technical analyst at Brown Brothers Harriman.
The Dow Jones Industrial Average last month rose to the highest reading since January before retreating to a level that’s still above the average of the past 50 days. The Dow Jones Utilities Average, on the other hand, extended its June rally into this month, hitting a five-month high yesterday. The Dow Jones Transportation Average, while also staying above its 50-day moving average, generated the least bullish pattern by failing to exceed a May high, according to Burkly.
Earnings Season
The second-quarter earnings season will kick off next week with Alcoa, the largest U.S. aluminum producer, reporting results on July 8. Analysts estimate profits in the S&P 500 declined 34 percent in the second quarter and will slump 21 percent on average in the third before rebounding 61 percent in the final three months of the year, according to Bloomberg data.
“I have a hard time imagining we’re going to go into a new raging bull market from here,” said Randy Frederick, director of trading and derivatives at Charles Schwab & Co. in Austin, Texas. “People can’t spend if their comfort level is low and they’re worried about their jobs.
” Home Depot, the biggest home-improvement retailer, lost 3.9 percent to $22.79. Alcoa, the nation’s largest aluminum producer, retreated 3.7 percent to $9.97. Travelers, the insurer that stayed profitable through the credit crisis, slumped 3.5 percent to $39.69.
Lear plunged 28 percent to 35 cents. The company, after reaching an agreement with representatives of lenders and bondholders, said it will “commence shortly” with a Chapter 11 reorganization.
GM IPO
General Motors Corp., the bankrupt automaker selling most of its assets to the U.S. government, may file for an initial public offering of its stock in 2010, according to an adviser to President Barack Obama. GM was in bankruptcy court yesterday seeking approval to sell most of its assets to the Treasury, which is paying for the company with the more than $27 billion in loans it has made to the automaker.
Johnson Controls Inc. posted the S&P 500’s second-steepest loss, sliding 7.4 percent to $21.07. The maker of car interiors and batteries was downgraded to “hold” from “buy” at Deutsche Bank AG on concern the stock price already reflects the company’s ability to navigate the auto industry slump.
The stock’s decline in the index was exceeded only by an 8.9 percent tumble in shares of Monster Worldwide Inc., the world’s largest online recruiting company, following the jobs report. The Labor Department figures showed the jobless rate rose to 9.5 percent, the highest since August 1983, from 9.4 percent.
‘Clearly Disappointing’
“It’s clearly disappointing,” Hugh Johnson, who manages more than $1.5 billion as chairman of Albany, New York-based Johnson Illington, said of the employment data. “I would argue that we’ll have a correction between 5 and 15 percent” in the stock market.
Oil retreated 3.5 percent to $66.89 a barrel, Treasuries rose and the dollar climbed against the euro on speculation a weak labor market will prolong the recession. The Reuters/Jefferies CRB Index of 19 raw materials fell 1.9 percent, led by lower gasoline and crude prices.
All 40 stocks in the S&P 500 Energy Index tumbled. Halliburton Co. and Hess Corp. lost more than 5.5 percent, leading the measure of oil drillers, explorers and equipment suppliers to a 3.1 percent slump.
Elan Corp. surged 13 percent to $7.88. Johnson & Johnson agreed to develop its medicines against Alzheimer’s disease and pay $1 billion for an 18.4 percent stake in the Irish drugmaker.
Benchmark indexes advanced yesterday, adding to gains from the S&P 500’s best quarter since 1998, as improving gauges of manufacturing and home sales added to optimism the worst of the recession is over.
Worrisome Rally
The steepest quarterly rally in value stocks is a bearish sign to some of the largest money managers, who say it shows the equity market has relied on companies with the worst finances to fuel its rebound.
Money-losing companies in the MSCI World Value Index with the most debt climbed an average of 38 percent last quarter, compared with a 20 percent gain for the MSCI World Index, according to data compiled by Bloomberg. That pushed value stocks, or those trading at the lowest level relative to their earnings or assets, in the index up 22 percent, the biggest increase since at least 1995.
Gains will be harder to come by as investors search for profit growth to justify the 41 percent rally in the MSCI World from March 9 through yesterday, according to James Dunigan of PNC Financial Services Group Inc.
Stock investors will monitor the Treasury’s auctions next week to see if demand holds up as Obama pushes the nation’s marketable debt to an unprecedented $6.45 trillion. The Treasury will hold four auctions next week for the first time to sell $73 billion of notes, bonds and inflation-protected securities as the U.S. accelerates debt sales to finance a record budget deficit.
Home Depot Inc., Alcoa Inc. and Travelers Cos. lost more than 3 percent after the Labor Department said payrolls shrank by 467,000 jobs last month, 102,000 more than the average economist estimate. Lear Corp., the second-biggest maker of automotive seats, sank on plans to file for bankruptcy. Europe’s Dow Jones Stoxx 600 Index plunged 2.4 percent, the most in almost two weeks, following the jobs report.
“It’s ugly out there,” Jack Ablin, who oversees $60 billion as chief investment officer at Harris Private Bank in Chicago, told Bloomberg Television. “We were trying to gain a little bit of traction on the jobs front, to get less bad numbers on a monthly basis. Clearly this month’s report is a setback.
” The S&P 500 tumbled 2.4 percent to 901.92 at 1:40 p.m. in New York, extending its slump since June 12 to 4.7 percent and erasing its 2009 gain. The Dow Jones Industrial Average retreated 176.54 points, or 2.1 percent, to 8,327.52. Thirteen stocks fell for each that rose on the New York Stock Exchange, the broadest decline since April 20.
The stock market’s three-week slump has been spurred by concern the S&P 500’s 40 percent surge since March outpaced prospects for a recovery in the economy and corporate profits. The U.S. equity benchmark is poised to cap its longest stretch of weekly losses since March. U.S. markets will be closed tomorrow for the Independence Day holiday.
Sector Divergence
A divergence of Dow Jones’s industrial, transportation and utility stock indexes suggests a rally in the U.S. market may stay stalled near current levels, according to Andrew Burkly, a technical analyst at Brown Brothers Harriman.
The Dow Jones Industrial Average last month rose to the highest reading since January before retreating to a level that’s still above the average of the past 50 days. The Dow Jones Utilities Average, on the other hand, extended its June rally into this month, hitting a five-month high yesterday. The Dow Jones Transportation Average, while also staying above its 50-day moving average, generated the least bullish pattern by failing to exceed a May high, according to Burkly.
Earnings Season
The second-quarter earnings season will kick off next week with Alcoa, the largest U.S. aluminum producer, reporting results on July 8. Analysts estimate profits in the S&P 500 declined 34 percent in the second quarter and will slump 21 percent on average in the third before rebounding 61 percent in the final three months of the year, according to Bloomberg data.
“I have a hard time imagining we’re going to go into a new raging bull market from here,” said Randy Frederick, director of trading and derivatives at Charles Schwab & Co. in Austin, Texas. “People can’t spend if their comfort level is low and they’re worried about their jobs.
” Home Depot, the biggest home-improvement retailer, lost 3.9 percent to $22.79. Alcoa, the nation’s largest aluminum producer, retreated 3.7 percent to $9.97. Travelers, the insurer that stayed profitable through the credit crisis, slumped 3.5 percent to $39.69.
Lear plunged 28 percent to 35 cents. The company, after reaching an agreement with representatives of lenders and bondholders, said it will “commence shortly” with a Chapter 11 reorganization.
GM IPO
General Motors Corp., the bankrupt automaker selling most of its assets to the U.S. government, may file for an initial public offering of its stock in 2010, according to an adviser to President Barack Obama. GM was in bankruptcy court yesterday seeking approval to sell most of its assets to the Treasury, which is paying for the company with the more than $27 billion in loans it has made to the automaker.
Johnson Controls Inc. posted the S&P 500’s second-steepest loss, sliding 7.4 percent to $21.07. The maker of car interiors and batteries was downgraded to “hold” from “buy” at Deutsche Bank AG on concern the stock price already reflects the company’s ability to navigate the auto industry slump.
The stock’s decline in the index was exceeded only by an 8.9 percent tumble in shares of Monster Worldwide Inc., the world’s largest online recruiting company, following the jobs report. The Labor Department figures showed the jobless rate rose to 9.5 percent, the highest since August 1983, from 9.4 percent.
‘Clearly Disappointing’
“It’s clearly disappointing,” Hugh Johnson, who manages more than $1.5 billion as chairman of Albany, New York-based Johnson Illington, said of the employment data. “I would argue that we’ll have a correction between 5 and 15 percent” in the stock market.
Oil retreated 3.5 percent to $66.89 a barrel, Treasuries rose and the dollar climbed against the euro on speculation a weak labor market will prolong the recession. The Reuters/Jefferies CRB Index of 19 raw materials fell 1.9 percent, led by lower gasoline and crude prices.
All 40 stocks in the S&P 500 Energy Index tumbled. Halliburton Co. and Hess Corp. lost more than 5.5 percent, leading the measure of oil drillers, explorers and equipment suppliers to a 3.1 percent slump.
Elan Corp. surged 13 percent to $7.88. Johnson & Johnson agreed to develop its medicines against Alzheimer’s disease and pay $1 billion for an 18.4 percent stake in the Irish drugmaker.
Benchmark indexes advanced yesterday, adding to gains from the S&P 500’s best quarter since 1998, as improving gauges of manufacturing and home sales added to optimism the worst of the recession is over.
Worrisome Rally
The steepest quarterly rally in value stocks is a bearish sign to some of the largest money managers, who say it shows the equity market has relied on companies with the worst finances to fuel its rebound.
Money-losing companies in the MSCI World Value Index with the most debt climbed an average of 38 percent last quarter, compared with a 20 percent gain for the MSCI World Index, according to data compiled by Bloomberg. That pushed value stocks, or those trading at the lowest level relative to their earnings or assets, in the index up 22 percent, the biggest increase since at least 1995.
Gains will be harder to come by as investors search for profit growth to justify the 41 percent rally in the MSCI World from March 9 through yesterday, according to James Dunigan of PNC Financial Services Group Inc.
Stock investors will monitor the Treasury’s auctions next week to see if demand holds up as Obama pushes the nation’s marketable debt to an unprecedented $6.45 trillion. The Treasury will hold four auctions next week for the first time to sell $73 billion of notes, bonds and inflation-protected securities as the U.S. accelerates debt sales to finance a record budget deficit.
Monday, June 29, 2009
Militants Hit Oil Supplies in Nigeria
By WILL CONNORS and MICHAEL ALLENWARRI,
Nigeria -- Militants attacked two installations operated by Anglo-Dutch oil giant Royal Dutch Shell PLC in the Niger Delta on Monday, sending world oil prices higher and complicating government efforts to bring peace to the region.
Two oil-well clusters supplying Shell's Forcados oil-export terminal in Delta State were bombed by militants, spokesmen from Shell and the Nigerian military confirmed, just days after Nigerian President Umaru Yar'Adua unveiled an amnesty offer to militants.
"Some production has been shut in as a precautionary measure, while we investigate to determine what really happened," a Shell spokesman said. He didn't specify the amount affected by the bombings.
Another oil-company manager based in the region said the effect was severe, closing down at least 100,000 barrels a day in exports in Shell's western Delta region and further crimping Nigeria's oil output.
"We can't produce because we don't know what it did to the infrastructure, " the manager said. "It's pretty catastrophic, both financially and environmentally.
"On Monday, crude oil closed at the highest point in 2½ weeks, as traders reacted to supply threats. Light sweet crude for August delivery settled at $71.49 a barrel, up 3.4% on the New York Mercantile Exchange
Nigeria -- Militants attacked two installations operated by Anglo-Dutch oil giant Royal Dutch Shell PLC in the Niger Delta on Monday, sending world oil prices higher and complicating government efforts to bring peace to the region.
Two oil-well clusters supplying Shell's Forcados oil-export terminal in Delta State were bombed by militants, spokesmen from Shell and the Nigerian military confirmed, just days after Nigerian President Umaru Yar'Adua unveiled an amnesty offer to militants.
"Some production has been shut in as a precautionary measure, while we investigate to determine what really happened," a Shell spokesman said. He didn't specify the amount affected by the bombings.
Another oil-company manager based in the region said the effect was severe, closing down at least 100,000 barrels a day in exports in Shell's western Delta region and further crimping Nigeria's oil output.
"We can't produce because we don't know what it did to the infrastructure, " the manager said. "It's pretty catastrophic, both financially and environmentally.
"On Monday, crude oil closed at the highest point in 2½ weeks, as traders reacted to supply threats. Light sweet crude for August delivery settled at $71.49 a barrel, up 3.4% on the New York Mercantile Exchange
Sunday, June 28, 2009
Kim Eng Indonesia Equity Daily, 29 Jun 09
Our Comment
The new President Director of IndonesiaStock Exchange Ito Warsito proposes to require all bank debtors with loan morethan Rp500b to list its shares in the bourse. He views the move will increase transparency and supervisory towards the debtors. Mr Warsito plans to discuss the plan with Bank Indonesia .
After a long meeting last Friday, Bumi´s shareholders approved management´s plan to pledge its assets as collateral, including shares inKPC and Arutmin. We highlight the risks of losing KPC and Arutmin, if thingsare not going in line with the management´s plan.
Farallon Capital Management sold its remaining 4.05% stake (986m shares) in BCA last Friday at Rp3,425/share or total Rp3.38t. The media reported Farallon soldits shares to some institutional investors, but not to Alaerka Investment Ltd,its partner in Farallon Indonesia (Farindo) Investment. Alaerka is a fund controlled by Djarum Group, which currently owns approximately 47% stake in BCA.
By - Ricardo Silaen
Highlights
o BumiResources (HOLD): AGM result
o SemenGresik (HOLD): Rp215 DPS (Yield=4.1%)
o Bakrie& Brothers: Consider to divestmetal units
o BCA: Farallon divested 4.05% ownership
o BankEksekutif: In a potential acquisition
From our chartist desk
o IDX: We see IDX still shows positive histogram on MaCD12-26 day, and reversal on middle line of Bollinger band 20-day. In terms of volatility, we should expect a wide swing trading opportunity. Today´s tradingrange is between 1965-2004-2022 (support) and 2062-2083-2123(resistance) .
o PTBA: The stock price shows a strong buying volume. We think the price would to continue rally, according to positive crossover momentum signal. TRADING BUY
o TLKM: We decide to pick TLKM because the price was successfully above MA 14, 20 and 25 day. We set target price of Rp7750 in near term. TRADING BUY
The new President Director of IndonesiaStock Exchange Ito Warsito proposes to require all bank debtors with loan morethan Rp500b to list its shares in the bourse. He views the move will increase transparency and supervisory towards the debtors. Mr Warsito plans to discuss the plan with Bank Indonesia .
After a long meeting last Friday, Bumi´s shareholders approved management´s plan to pledge its assets as collateral, including shares inKPC and Arutmin. We highlight the risks of losing KPC and Arutmin, if thingsare not going in line with the management´s plan.
Farallon Capital Management sold its remaining 4.05% stake (986m shares) in BCA last Friday at Rp3,425/share or total Rp3.38t. The media reported Farallon soldits shares to some institutional investors, but not to Alaerka Investment Ltd,its partner in Farallon Indonesia (Farindo) Investment. Alaerka is a fund controlled by Djarum Group, which currently owns approximately 47% stake in BCA.
By - Ricardo Silaen
Highlights
o BumiResources (HOLD): AGM result
o SemenGresik (HOLD): Rp215 DPS (Yield=4.1%)
o Bakrie& Brothers: Consider to divestmetal units
o BCA: Farallon divested 4.05% ownership
o BankEksekutif: In a potential acquisition
From our chartist desk
o IDX: We see IDX still shows positive histogram on MaCD12-26 day, and reversal on middle line of Bollinger band 20-day. In terms of volatility, we should expect a wide swing trading opportunity. Today´s tradingrange is between 1965-2004-2022 (support) and 2062-2083-2123(resistance) .
o PTBA: The stock price shows a strong buying volume. We think the price would to continue rally, according to positive crossover momentum signal. TRADING BUY
o TLKM: We decide to pick TLKM because the price was successfully above MA 14, 20 and 25 day. We set target price of Rp7750 in near term. TRADING BUY
Monday, June 22, 2009
Blavatnik to sue JPMorgan over investment losses
June 22 (Reuters) - U.S. billionaire Len Blavatnik is planning to file a lawsuit against JPMorgan Chase (JPM.N) on Monday, accusing the bank of mismanaging an investment account that held $1 billion in assets owned by Blavatnik's industrial holding company, Access Industries, the New York Times said.
In the proposed lawsuit, Blavatnik's lawyers blame Ted Ufferfilge, a JPMorgan banker advising Access, for losing $98 million of the company's money betting on risky subprime mortgage securities, according to the paper.
The proposed lawsuit contends that Ufferfilge told Access that its funds were being invested in conservative instruments, not securities that wound up at the center of the American mortgage crisis, the paper said, citing a draft of the complaint prepared by the law firm Quinn Emanuel Urquhart Oliver & Hedges.
An Access spokesman told the paper that JPMorgan bought the subprime securities for Access "at a time when the bank itself was unwinding its positions in similar investments. "JPMorgan intends "to defend this matter vigorously", a spokeswoman for the bank told the paper. "We believe this lawsuit is meritless and a transparent attempt to recover losses resulting from the unprecedented market downturn," she told the paper.
The bank has hired the law firm Paul, Weiss, Rifkind, Wharton & Garrison to represent it in the case, the paper added. JPMorgan and Access Industries could not be immediately reached for comment by Reuters. (Reporting by Chakradhar Adusumilli in Bangalore; Editing by Muralikumar Anantharaman)
© Thomson Reuters 2009 All rights reserved
In the proposed lawsuit, Blavatnik's lawyers blame Ted Ufferfilge, a JPMorgan banker advising Access, for losing $98 million of the company's money betting on risky subprime mortgage securities, according to the paper.
The proposed lawsuit contends that Ufferfilge told Access that its funds were being invested in conservative instruments, not securities that wound up at the center of the American mortgage crisis, the paper said, citing a draft of the complaint prepared by the law firm Quinn Emanuel Urquhart Oliver & Hedges.
An Access spokesman told the paper that JPMorgan bought the subprime securities for Access "at a time when the bank itself was unwinding its positions in similar investments. "JPMorgan intends "to defend this matter vigorously", a spokeswoman for the bank told the paper. "We believe this lawsuit is meritless and a transparent attempt to recover losses resulting from the unprecedented market downturn," she told the paper.
The bank has hired the law firm Paul, Weiss, Rifkind, Wharton & Garrison to represent it in the case, the paper added. JPMorgan and Access Industries could not be immediately reached for comment by Reuters. (Reporting by Chakradhar Adusumilli in Bangalore; Editing by Muralikumar Anantharaman)
© Thomson Reuters 2009 All rights reserved
Soros: Worst of global crisis is over
Published: 2009/06/22
BILLIONAIRE hedge fund manager George Soros said the worst of the global financial crisis is over, and called for new international regulations to maintain open markets.
"Definitely, the worst is behind us," Hungarian-born Soros said in an interview yesterday with Polish television station TVN24.
He called the crisis the most serious in his lifetime, adding, "This is the end of an era. The question is what's going to come out of it in the future.
"Without new international regulations, "globalisation will fall apart," possibly spawning a system of "state capitalism" like the one that exists in China, he said.
Soros, who recently returned from China, said the world's third-largest economy is "growing in strength" because the country was relatively unaffected by the crisis. -- Bloomberg
BILLIONAIRE hedge fund manager George Soros said the worst of the global financial crisis is over, and called for new international regulations to maintain open markets.
"Definitely, the worst is behind us," Hungarian-born Soros said in an interview yesterday with Polish television station TVN24.
He called the crisis the most serious in his lifetime, adding, "This is the end of an era. The question is what's going to come out of it in the future.
"Without new international regulations, "globalisation will fall apart," possibly spawning a system of "state capitalism" like the one that exists in China, he said.
Soros, who recently returned from China, said the world's third-largest economy is "growing in strength" because the country was relatively unaffected by the crisis. -- Bloomberg
Roubini: There will be a SIGNIFICANT market correction
The price of oil, which is rising too fast, and long-term interest rates that are beginning to creep up are likely to suppress a budding recovery, famous economist Nouriel Roubini, also dubbed "Dr. Doom," told CNBC Monday.
"I see even the risk of a double-dip, W-shaped recessionÂ… towards of the end of next year," Roubini told "Squawk Box Europe."
"Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy," he said, adding that other dangers come from long-term interest rates and big budget deficits.
In the next few months, unemployment may reach 11 percent in the US and around 10 percent in Europe.
"There will be a significant market correction" in the coming months, as economic data will offer negative surprises, he said.
In Europe, the dangers came both from its weak economy and from exposure of Western European banks to Eastern European economies, he said. But protectionism is not an answer, Roubini warned.
"The reality is that too much protection would be dangerous," he said.
"In Europe there is a risk that even the single market is breaking down because of protectionism, let alone the rest of the world," Roubini added.
With reporting by Stephane Pedrazzi in Paris.
"I see even the risk of a double-dip, W-shaped recessionÂ… towards of the end of next year," Roubini told "Squawk Box Europe."
"Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy," he said, adding that other dangers come from long-term interest rates and big budget deficits.
In the next few months, unemployment may reach 11 percent in the US and around 10 percent in Europe.
"There will be a significant market correction" in the coming months, as economic data will offer negative surprises, he said.
In Europe, the dangers came both from its weak economy and from exposure of Western European banks to Eastern European economies, he said. But protectionism is not an answer, Roubini warned.
"The reality is that too much protection would be dangerous," he said.
"In Europe there is a risk that even the single market is breaking down because of protectionism, let alone the rest of the world," Roubini added.
With reporting by Stephane Pedrazzi in Paris.
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