AIG refuses to say who got $165 million of bonuses as Obama denounces 'greed'$

AIG refused to hand over to the New York Attorney General the identities of workers who received $165 million ($£117 million) in bonuses, despite stinging criticism from President Barack Obama over the payments.
Source: Latest Business News from Times Online | 17 Mar 2009 | 9:54 pm

AIG Employees: 165 Million Treasury: 0

So much for the idea of lifting the bonuses from AIG employees. Tim "The Safecracker" Geithner has reported to Obama that there is no legal way to reclaim the bonuses already paid to AIG employees, and that any attempt to do so would likely result in lawsuits and awards that exceeded the total cost of the bonuses. This wasn't hard to calculate (we speculated on it yesterday) since most claimants would be entitled to treble damages in recovery. The case for wanton, malicious interference with contract here is pretty strong, given that the government was pretty public about the way it targeted AIG employees, and considering the clear anger with which it did so. This was a bit immature of the Administration. Presidents aren't supposed to get choked up with anger unless Americans die. "Unfair bonus payments" that amount to a tiny fraction of the dollars at stake shouldn't be worthy of Presidential rage.

This result isn't surprising, except insofar as there wasn't a more direct extralegal power grab once Geithner delivered the bad news. Though it is popular to try and claim all manner of power over a firm 80% owned by "the taxpayers," the reality is that nothing in that relationship gives the government the power to freeze payments like the ones AIG made to its employees. Much as armchair legal theorists would like to find a way to introduce "mob rule" here, it isn't that simple. Even our good friend Andrew Ross Sorkin seems to admit that this battle might have been won and lost already.

You have to give some credit here to Liddy, the new AIG CEO installed after the present debacle. In the face of all the pressure Geithner could bring to bear, Liddy simply explained to Geithner that he intended to pay the bonuses, and did. That Liddy is still sitting in the executive suite is case enough that the administration is a lot more powerless than it would like to be.

All this aside, the government is pissed now. And a pissed off government does stupid things. Brace yourself for stupid.

Political Heat Sears AIG [The Wall Street Journal]

Source: Dealbreaker | 17 Mar 2009 | 4:07 pm

Life In The B In BRIC

William writes from Brazil:

I am an American and loyal listener in Porto Alegre, Brazil. The B in the BRIC. Porto Alegre is one of the strongest cities in Brazil economically, and our location, which is closer to Buenos Aires than to Rio, means that we are deeply tied into the Mercosur. Just in case you were curious what things were like here, I thought I would let you know. High-rent stores in the fancier shopping malls are all liquidating. I mean ALL the retail stores. It is incredible. Orders from manufacturers are collapsing and people are starting to get laid off.

In good news, Brazil understands financial crisis a lot better than Americans do. They have lived through hyper-inflation, dictatorships, and (Bush notwithstanding) some incredibly corrupt politics.They have yet to have an oil-garchy, but they have had a lot of other dodgy leaders.

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Source: NPR Blogs: Planet Money | 17 Mar 2009 | 3:50 pm

Presented By:

Source: Dealbreaker | 17 Mar 2009 | 3:45 pm

IRS In The Can For Madoff?

Probably not, though they are offering incentives for investors who promise not to sue Ponzi-Boy, which seems rather neighborly of them. Per the NYDN:

The IRS is set to announce today that it's giving Bernie Madoff's victims a bigger break on the losses they suffered in the $65 billion scheme.

We hear that in a hearing this morning called by Sen. Chuck Schumer, among others, IRS Commissioner Doug Shulman is expected to announce that the taxman will let Madoff's victims take a 95% theft loss deduction, going back five years.

The deduction will allow people to claim "phantom profits" as losses -- not just the investments they put in -- helping them recover the taxes they paid on those non-existent earnings. And those deductions will be allowed to carry forward for 20 years, giving victims plenty of time to get some money back.

Folks who sue Madoff will have to settle for 75% of what they invested.

Source: Dealbreaker | 17 Mar 2009 | 3:45 pm

Breaking: WSJ Reports GM CEO Reports Bankruptcy Could Work, But Risky.

"GM CEO says bankruptcy 'could work' but would be too risky," is the exact ticker line.

"That, Mr. Wagoner, is the sound of inevitability."

The situation is fluid.

Source: Dealbreaker | 17 Mar 2009 | 3:35 pm

They Are Conspiring To Conspire

So here's the scoop:

A "whistleblower" says that Barclehs is planning to "dodge taxes." Maybe it is the reporting style in the International Herald Tribune, or the fact that Her Majesty's Revenue and Customs representative doesn't know the difference between tax evasion and tax avoidance (one might explain this away by pointing out that the distinction and usage of the two terms is less clear in the United Kingdom) or, perhaps, we have actually gotten to the point where an allegation of tax planning is enough to fire up the investigative machine.

"We have received papers relating to allegations of tax avoidance in the banking industry which we are studying carefully," HM Revenue & Customs said.

The Guardian newspaper reported on the weekend that the documents reveal the existence of a scheme codenamed Project Knight, which appeared to be an attempt to obtain tax relief in different countries.

The newspaper said the 2007 plan was created by a team within Barclays Capital, a subsidiary of the bank, to legally avoid tax.

Barclays said that the project was voluntarily and fully disclosed to the tax office.

Lesson #1: In this environment, do not give your legal tax avoidance plans secret sounding codenames like "Project Knight."

Barclays investigated for alleged tax dodging [The International Herald Tribune]

Source: Dealbreaker | 17 Mar 2009 | 3:26 pm

Wall Street seesaws in morning trading (AP)

AP - Wall Street fluctuated in a narrow range Tuesday as a mix of economic and corporate news made for an indecisive session.

Source: Yahoo! News: Stock Markets News | 17 Mar 2009 | 3:14 pm

Agriculture futures gain on the CBOT

Agriculture futures gained in midday trading Tuesday on the Chicago Board of Trade. Wheat for May delivery jumped 2.75 cents to $5.47 a bushel, while May corn added 0.75 cent to $3.9225...
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 3:11 pm

Wall Street reverses course in choppy trade

NEW YORK (Reuters) - The Nasdaq stock index rose more than 1 percent while the S&P 500 turned positive in choppy trade on Tuesday, with a slide in materials stocks offset by a recovery in technology shares after Monday's sell-off.
Source: Reuters: Business News | 17 Mar 2009 | 3:08 pm

Canadian Solar Dims (CSIQ)

Source: 247 Wall Street | 17 Mar 2009 | 3:07 pm

Survey finds changes under way in executive pay

A growing number of companies are freezing salaries, reducing bonus pools and making other major changes to their executive pay programs, a consulting firm reported Tuesday. Of 145...
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 3:05 pm

Stocks in early struggle

Stocks were mixed Tuesday morning as better-than-expected reports on housing and inflation were tempered by weakness in bank stocks and Alcoa, which slashed its dividend.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 3:03 pm

UPDATE 3-Shell says production to grow, reserves flat

LONDON, March 17 (Reuters) - Royal Dutch Shell Plc said it would increase production by a healthy 2 to 3 percent annually over the next four years but said the outlook for the industry was too uncertain...
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 3:01 pm

Oil rises above $48, eyes inventory data

LONDON (Reuters) - Oil rose above $48 a barrel on Tuesday, testing the top end of a trading range it has held so far this month, ahead of United States inventory data expected to show a build in crude oil stocks.
Source: Reuters: Business News | 17 Mar 2009 | 3:00 pm

U.S. housing starts surge, inflation slower

WASHINGTON (Reuters) - New U.S. housing starts and permits unexpectedly rebounded in February, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market.
Source: Reuters: Business News | 17 Mar 2009 | 2:59 pm

UPDATE 1-AstraZeneca looks to cut 9 pct of German staff

* Suggests cutting 120 jobs from German workforce of 1,300
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:59 pm

Garmin Rated `Sell' In New Coverage at Morgan Joseph

Source: Bloomberg - All Podcasts | 17 Mar 2009 | 2:56 pm

Wall Street seesaws in morning trading

NEW YORK -- Wall Street fluctuated in a narrow range today as a mix of economic and corporate news made for an indecisive session.

Source: L.A. Times - Business | 17 Mar 2009 | 2:56 pm

Plains Pipeline Offers Common Units (PAA)

Source: 247 Wall Street | 17 Mar 2009 | 2:55 pm

UPDATE 1-U.S. FDA staff question safety of Bayer-J&J drug

* Bleeding, liver risk seen with Bayer, J&J drug-FDA staff
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:55 pm

An 'Even Stronger' China

Also, while we're talking about China, take a look at this from the New York Times: "In Downturn, China Sees Path to Growth." The Times reports:

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.

Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

And while American leaders struggle to revive lending -- in the latest effort with a $15 billion program to help small businesses -- Chinese banks lent more in the last three months than in the preceding 12 months.

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Source: NPR Blogs: Planet Money | 17 Mar 2009 | 2:55 pm

Josh's journey: Surviving a layoff

A year ago, Josh Hager was in despair.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:54 pm

Natural Gas Price to Consumers Drops Off the Table (NST)

Source: 247 Wall Street | 17 Mar 2009 | 2:54 pm

Nokia to cut 1,700 jobs in sinking phone market

HELSINKI (Reuters) - Nokia Oyj will slash 1,700 jobs globally over the coming few months because of falling demand, the world's top cellphone maker said on Tuesday.
Source: Reuters: Business News | 17 Mar 2009 | 2:53 pm

Caterpillar lays off 2,454 workers in 3 states

Caterpillar Inc. is laying off more than 2,400 employees at five plants in Illinois, Indiana and Georgia as the heavy equipment maker continues to cut costs amid the global economic...
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:51 pm

Getting 10% return on 401(k)

Q. I'm over 50, and I've taken a beating in the market. I'm maxing out my 401(k) and IRA. How can I get the 10% annual return I need to achieve a secure retirement without too much risk? - Matt, St. Louis A.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:49 pm

IRS giving relief to some Madoff investors

The Internal Revenue Service is allowing tax relief and refunds for some investors who paid taxes on earnings from their investments with Bernard Madoff that turned out to be nonexistent.
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:49 pm

UPDATE 1-Valero says more time needed to fix OK refinery FCC

For refinery outages in the new Reuters Oil Fundamentals Database see http://bond.views.session.rservices.com/CE/ or go to <OFD/INFO>. (Adds quotes, background)
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:46 pm

Abbott CEO sees compensation drop on stock options

Abbott Laboratories Inc. Chairman and Chief Executive Miles White saw a 14.7 percent reduction in his total compensation in 2008 to $25.1 million, mainly because he received less in stock...
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:45 pm

Don't give up on the 401(k)

Question: I'm trying to decide whether to participate in my company's 401(k) plan. I'd like to start contributing to it, but given what's going on in the markets and economy, I'm afraid this is just not the right time. Or is it? --Rudy H., Pearland, TX
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:42 pm

Here comes iPhone 3.0: What to expect

Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:40 pm

US housing starts show surprise surge

US residential building showed renewed signs of life last month, as falling construction costs lured builders to break ground, offering a glimmer of hope that the real estate slump could be near a bottom
Source: Financial Times - US homepage | 17 Mar 2009 | 2:38 pm

Innerscope Research(R) Uses Same-Day Results From Biometric Study to Identify Key Themes, Styles Behind Effective, Engaging Speaker Presentations

CEO Dr. Carl Marci to discuss results March 19 during 12 p.m. Advertising Research Foundation webcast BOSTON, March 17 /PRNewswire/ --
Source: RSS feed - channel BNewsBusiness | 17 Mar 2009 | 2:38 pm

Thomas Friedman: "I Picked A Bad Morning To Stop Sniffing Glue"

...requests "some of those drugs" Bernanke apparently had to have been smoking to say the recession could end this year year, suggests the creation of a "BoJ" (Bank of Junk).

Source: Dealbreaker | 17 Mar 2009 | 2:32 pm

Silvia Sees Fed Buying `Modest' Amount of Treasuries

Source: Bloomberg - All Podcasts | 17 Mar 2009 | 2:31 pm

Madagascar's president steps down

Madagascar's President Marc Ravalomanana handed power to the armed forces after a months-long power struggle with the opposition on the Indian Ocean island, officials said
Source: Financial Times - US homepage | 17 Mar 2009 | 2:30 pm

US housing starts, permits post unexpected jump (AFP)

AFP - US home construction starts and permits saw a surprise jump in February from 50-year low levels in a positive sign for the moribund home market at the epicenter of global financial crisis.

Source: Yahoo! News: Business | 17 Mar 2009 | 2:29 pm

Saut Sees U.S. Condominium Market Picking Up

Source: Bloomberg - All Podcasts | 17 Mar 2009 | 2:28 pm

Investec's Page Sees `Positive Sentiment' From Banking Industry

Source: Bloomberg - All Podcasts | 17 Mar 2009 | 2:23 pm

The axman comes to Google

In retrospect, Google investors should have realized last June that the search giant's era of hypergrowth was over. That's when the company announced that Patrick Pichette, the top operations executive at BCE, parent of Canada's biggest phone company, would be Google's new chief financial officer.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:19 pm

Gartman Says U.S. Housing Most Affordable in 20 Years

Source: Bloomberg - All Podcasts | 17 Mar 2009 | 2:17 pm

Credit Crunch (”CC”) is Now Officially Office Jargon in UK

You’ve heard it at least a thousand times in the media. Now, it’s time to listen to the word “credit crunch” used in office situations, too. The Daily Telegraph reports on new jargon in the UK:

Reflecting travel, favourites include “clocking real mileage”, meaning a really strong idea, “reaching the blue ocean of success”, or reaching a goal, and “get a helicopter view by turning 360 and then circling back to your colleagues”, or taking a step back.

Other jargon includes “Down to that level of granularity” which means attention to detail, while feeling “stressurised” is a combination of being under pressure and stress at the same time.

A list of new office jargon:

The two CC’s (credit crunch and current climate)
Clocking real mileage (a really strong idea)
A high altitude view (taking a step back)
Reaching the blue ocean of success (reaching a goal)
Get a helicopter view by turning 360° and then circling back to your colleagues (taking a step back)
Let’s run that idea up the flag pole and see if it flies (try out an idea)
Picking the low-lying fruit (a quick win)
Down to that level of granularity (detail)
Let’s touch base about that offline (have a chat face-to-face)
Feeling stressurised (under pressure and stress)
Strategic staircase (a plan for the future)
Better not let the grass grow too long on this one (act quickly).

I’m stressurised about my strategic staircase, so I’d better not let the grass grow too long on this one. Ugh.

Source: Business Pundit | 17 Mar 2009 | 2:15 pm

U.S. housing starts surge, inflation slower (Reuters)

Reuters - New U.S. housing starts and permits unexpectedly rebounded in February, according to data on Tuesday that provided a rare dose of good news for the recession-hit economy and fractured housing market.
Source: Yahoo! News: Business | 17 Mar 2009 | 2:15 pm

Ackman's Pershing nominates five to Target board

NEW YORK (Reuters) - Activist hedge fund manager William Ackman's Pershing Square Capital Management said on Tuesday it will nominate five candidates, including Ackman himself, to discount retailer Target Corp's board.
Source: Reuters: Business News | 17 Mar 2009 | 2:12 pm

Ackman's Pershing nominates five to Target board (Reuters)

Reuters - Activist hedge fund manager William Ackman's Pershing Square Capital Management said on Tuesday it will nominate five candidates, including Ackman himself, to discount retailer Target Corp's board.
Source: Yahoo! News: Business | 17 Mar 2009 | 2:12 pm

Inventor's killer sounds scatter pirates

Woody Norris has little passion for business. When it comes to technology, the 71-year-old founder of American Technology Corp. (ATC), a San Diego acoustic engineering firm, talks with the air of an enthusiastic teenager, telling you how "psyched" he is about his latest "cool" prototype. But ask Norris questions about corporate finance, and he'll shrug.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 2:11 pm

Wall Street reverses course in choppy trade (Reuters)

Reuters - The Nasdaq stock index rose more than 1 percent while the S&P 500 turned positive in choppy trade on Tuesday, with a slide in materials stocks offset by a recovery in technology shares after Monday's sell-off.

Source: Yahoo! News: Stock Markets News | 17 Mar 2009 | 2:11 pm

Wall Street reverses course in choppy trade (Reuters)

Reuters - The Nasdaq stock index rose more than 1 percent while the S&P 500 turned positive in choppy trade on Tuesday, with a slide in materials stocks offset by a recovery in technology shares after Monday's sell-off.

Source: Yahoo! News: Business | 17 Mar 2009 | 2:11 pm

US home construction accelerates

The rate of construction of new homes in the US soared by almost a quarter in February, figures show, surprising analysts.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 2:08 pm

Lehman puts two bank units on market: source

NEW YORK (Reuters) - Bankrupt Lehman Brothers Holdings Inc is auctioning a thrift and an industrial bank it owns, and the process is in the early stages, a source familiar with the matter said on Monday.
Source: Reuters: Business News | 17 Mar 2009 | 2:07 pm

Lehman puts two bank units on market: source (Reuters)

Reuters - Bankrupt Lehman Brothers Holdings Inc is auctioning a thrift and an industrial bank it owns, and the process is in the early stages, a source familiar with the matter said on Monday.
Source: Yahoo! News: Business | 17 Mar 2009 | 2:07 pm

Wall Street is narrowly mixed in early trading

NEW YORK -- Investors unimpressed with better-than-expected reports on housing and inflation today sent stocks mostly lower in early trading.
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 2:06 pm

Grassley to AIG execs: Resign or commit suicide

NEW YORK (Reuters) - A prominent U.S. senator has intimated that executives of the troubled insurer American International Group Inc might consider suicide, adopting what he called a Japanese approach to taking responsibility for their actions.
Source: Reuters: Business News | 17 Mar 2009 | 2:04 pm

Post Post-Lehman, Now

Ian Shepherdson of High Frequency Economics notes this morning that January housing starts jumped by 22 percent. The 583,000 starts far outpaced economists' expectation of 450,000. Shepherdson's not over the moon about it, but still writes:

The leap in starts was propelled by an 82.3% surge in activity in the multi-family sector, reversing almost all the drop in starts over the previous three months. We see no specific factor that might explain this jump; multi-family starts are always noisy but this is exceptional.

Single-family starts and permits both rose too, by 1.1% and 11.0% respectively, after a run of double-digit declines in recent months. With new home sales still falling and the months supply at a record there is no reason for homebuilding to rise. This is a temporary rebound, not a recovery, though it likely means the post-Lehman crash is over.

Emphasis mine. I like the idea that some part, any part, of the crash might be behind us now.

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Source: NPR Blogs: Planet Money | 17 Mar 2009 | 2:02 pm

Obama to find money to help carmakers

President Barack Obama will make use of resources available to the US Government to save the carmakers from bankruptcy, the top adviser to the Treasury's cars taskforce said.
Source: Latest Business News from Times Online | 17 Mar 2009 | 2:02 pm

Shell to pay $10 bln of dividends; production not replaced

Royal Dutch Shell on Tuesday says it didn’t replace last year’s production with new reserves, as The Hague-based oil giant says it will distribute $10 billion worth of dividends this year.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 2:00 pm

Financial Stocks: Housing data lift bank shares as investors eye Fed meeting

The U.S. financial sector gains in early action as investors put Monday’s pause in the rally behind them and find a bright spot in data that shows housing starts staged an unexpected bounce in February.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:59 pm

Shareholders Of Least F'ed Up Bank On Street To Vote On Performance-Based Bonuses

So, this is all well and good, if you're into accountability and things of that nature, but wouldn't it be a bit more useful at a place like, say, Citi, or BAC, where the question isn't "will they fuck up again" but "when" and "how hard"?

JPMorgan Chase & Co must allow shareholders to vote on measures that would tie executive bonuses to the bank's long-term stock performance, U.S. regulators have ruled.

The AFL-CIO Reserve Fund, a union investment fund, had sought a shareholder vote to add the measures to JPMorgan's bylaws. The bank tried to prevent a vote from happening, citing logistical difficulties the move would create for shares already issued, but the SEC said in a letter dated March 9 that the vote should go ahead.

The fund is proposing that the bank's most senior executives keep 75 percent of their shares for two years after leaving the company. The fund is also proposing that JPMorgan's board of directors should prohibit these executives from hedging their shares to offset losses.

Source: Dealbreaker | 17 Mar 2009 | 1:57 pm

Fed may hold off on buying Treasurys as mortgage rates fall

Meeting this week to discuss the economy and interest rates, the Fed's likely to hold off on using one of its last weapons to get credit flowing -- buying back Treasury securities from the open market -- because it has already made progress driving down rates in markets that would benefit from such a step, investors and strategists say.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:57 pm

Biotech Stocks: Biotech issues make early gains as pharma stocks lie flat

Biotechnology issues including Cephalon and Genzyme make early gains as pharmaceutical stocks trade in a tight range.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:56 pm

Metals Stocks: Gold falls for second day as U.S. data show housing starts surge

Gold futures fall for a second straight day, moving below $920 an ounce after the government data showing an unexpected surge in U.S housing starts reduce the metal’s safe-haven appeal.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:54 pm

ArcelorMittal denies -- in part -- talk of $6.5 bln share sale

ArcelorMittal, the world’s top steelmaker, calls a newspaper report that it was considering a 5 billion euro ($6.5 billion) share sale “without foundation and speculation” -- while conceding that it may choose such an option in time.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:52 pm

Rio Tinto’s Chinese Investment Getting Some Pushback (RTP, BHP, CEO)

Source: 247 Wall Street | 17 Mar 2009 | 1:43 pm

7 new rules of financial security

In a world turned upside down, you must re-examine some basic assumptions. A good place to start: understanding the true nature of risk.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 1:43 pm

Movers & Shakers: Tuesday's biggest gaining and declining stocks

Among the companies whose shares are expected to see active trade in Tuesday's session are Alcoa, American Apparel, AIG, Apple, Nokia and Target.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:42 pm

Housing starts surge; wholesale prices edge up

WASHINGTON -- Housing construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West.

Source: L.A. Times - Business | 17 Mar 2009 | 1:41 pm

Housing starts surge; wholesale prices edge up

WASHINGTON -- Housing construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West.
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 1:41 pm

Wynn Resorts Raises Cash (WYNN)

Source: 247 Wall Street | 17 Mar 2009 | 1:38 pm

Alcoa shares fall sharply after dividend cut

Alcoa shares drop more than 10% in early activity after the aluminum giant announces that it will slash its dividend and cut back on capital spending in an effort to position the company to withstand a "prolonged" downturn.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:37 pm

Retail Stocks: Retail sector trades higher; Target faces potential proxy fight

Retail stocks head higher as Target faces a likely proxy fight with hedge fund Pershing Square Capital Management, lifting the discounter's shares. Home-improvement retailers play off an upturn in housing starts and building permits for February..

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:34 pm

Barclays wins injunction against publication of 'tax dodge' memos

Barclays today obtained a court order forcing a newspaper to remove from its website documents that allegedly show how the bank avoided hundreds of millions of pounds in tax.
Source: Latest Business News from Times Online | 17 Mar 2009 | 1:33 pm

Housing starts unexpectedly surge

Initial construction of U.S. homes unexpectedly surged in February, after falling for eight months, according to a government report released Tuesday.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 1:33 pm

Cisco's server pitch

John Chambers is known for delivering Cisco's sales pitch like a revival preacher - and he summoned plenty of true believers Monday as he outlined Cisco's plans to bust into the $55 billion server market.
Source: Business and financial news - CNNMoney.com | 17 Mar 2009 | 1:32 pm

Tech Stocks: Gains from Apple and Dell lead early advance

Technology stocks put in a strong early trading performance, as gains from Apple Inc. and Dell Inc. give a slight lift to the sector that was trying to come back from the previous session’s losses.

Source: MarketWatch.com - Top Stories | 17 Mar 2009 | 1:32 pm

Whitney Replacement Taking Gentler Approach

As previously mentioned, Chris Kotowski, the analyst staffed with Meredith Whitney's old beat at Oppenheimer, has some big spiked heels to fill. When it came to the Dollar Dom's baby, would he attempt to imitate his predecessor's style, working the Big C over with a spreader and truss bar, while telling the Street, "This dump is less than a quarter away from being consigned to the scrap heap of corporate history, GET OUT NOW"? Or would he attempt to step out of her shadow, proclaiming the place "a goldmine," and enclosing choice photos of himself in a scantily clad Leprechaun suit? Save for the suit, none of the above. Kotowski seems to be taking the dry humor approach (you can almost feel the smirk on his face while banging this one out, sitting there going to himself "Citi: Perhaps Not A Complete Lost Cause," chuckling, and going, "No, no, that's not it." "Citi: I Could Go Either Way...In A Moment Of Weakness, I'd Probably Fuck It." "Hah, no, Chris, I don't think the Street's ready for this kind of genius...but save it for later." "Citi: When Will It Go To Zero? We'll Put The Under/Over At 4 Days, And Take The Under").

Source: Dealbreaker | 17 Mar 2009 | 1:28 pm

Housing starts surge; wholesale prices edge up (AP)

AP - Housing construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West.
Source: Yahoo! News: Business | 17 Mar 2009 | 1:24 pm

Jobless in Henley: Part 16

This week our recession diarist Julie Salt looks at how others are coping with the downturn around the globe.
Source: Telegraph Finance | 17 Mar 2009 | 1:13 pm

Rio names new chairman as Chinalco row escalates

CANBERRA/MELBOURNE (Reuters) - Rio Tinto named a new chairman to help get a planned $19.5 billion tie-up with China's Chinalco approved, as Australian politicians opposed to the deal raised their level of protest on Tuesday.
Source: Reuters: Business News | 17 Mar 2009 | 1:13 pm

Cisco, Goldman Sachs, Conviction Buy (CSCO)

Source: 247 Wall Street | 17 Mar 2009 | 1:09 pm

Airlines attacked over lost bags

No-frills airlines can be among the slowest to pay up when they lose or damage baggage, a report says.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 1:06 pm

Dreaded ‘Going Concern’ Notes Head To Alternative Energy (AVR, BCON, EPG, VRNM)

Source: 247 Wall Street | 17 Mar 2009 | 1:02 pm

Meredith Whitney Opines On Banks & The Credit Markets

Source: 247 Wall Street | 17 Mar 2009 | 12:58 pm

Costco Makes it to Australia

Some brands are so embedded in the American psyche that reading about them from a fresh perspective is almost shocking. Take Costco, which is getting ready to open its very first Australian store. The Australian reports:

US bulk retailer Costco will open its first Australian store in July. It will introduce low-price, high-volume retailing at a time when shoppers are most in need of ways to save money.

“Our whole concept is upsizing to save more, and I think that’s pretty attractive to people in this market,” said (Costco’s managing director). Costco sells groceries in bulk - Mars bars are sold in boxes of 24 and toilet rolls in packs of 36. Accordingly, Costco’s shopping trolleys are the size of small cars.

“In the US, we’ve seen discretionary spending dry up and push into more commodity or basics business, and at Costco we sell groceries and fresh foods at a discount price, but we also sell diamond rings and electronics, so we’re able to capitalise on both parts of the business,” Mr Noone said.

The Melbourne store will include photo-processing, optical and tyre outlets as well as groceries, fresh food, clothing, hardware, furniture, jewellery and sporting goods. (Company officials do) not expect any resistance to the company’s membership model, which required shoppers to pay a $60 annual fee before they could make a purchase.

As a longtime shopper, I’ve become so accustomed to Costco that I forget exactly what it contains. It’s a large wearhouse that satisfies my shopping needs in a primal, hunter-gatherer kind of way, with palettes, forklifts, and large boxes always deliciously in sight. Costco just is. In a few years, if the concept digs into the Australian market, Aussies may feel the same way.

Its recipe is old, but Costco has always been a winner.

Source: Business Pundit | 17 Mar 2009 | 12:57 pm

Opening Bell: 03.17.09

Goldman Offers Loans To Stretched Employees (NYT)
The offer is set up to address the investments employees have in certain in house funds, which can make calls for further capital. Those employees that are unable to meet the calls are at risk of losing their jobs (via contractual obligation - though those may have very little to no value going forward depending on political whim).

"A spokesman for Goldman Sachs confirmed the existence of the loan program but declined to elaborate. The funds that are the most troubled were raised right before the financial crisis. Goldman raised $20 billion in its most recent private equity fund and some $9 billion in the Whitehall real estate funds in 2007 and 2008.

About a third of the money in the funds typically comes from Goldman and its employees, and since 1991, the bank and its employees have accounted for $7.5 billion of the $26 billion in the Whitehall funds."

Citi And Morgan Stanley Look To Sidestep Bonus Cap (Reuters)
In what can only be defined as "expected", the banks are starting to try to work their way out of the cap imposed by the President and Congress, though I think they're moving a little quick on this one. Traditionally, the words "be patient" are of value; it wouldn't hurt anything to appear to be toeing the line for a little while.

"Executives at these banks and other financial institutions that received government aid are discussing increasing base salaries for some executives and other top-producing employees, the paper said, citing people familiar with the situation.

[...]

Citigroup officials have considered designating which 25 executives will be subject to bonus limits, the paper said, citing people familiar with the discussions.

In that scenario, the new rules might not apply to lower-ranking yet still highly lucrative traders and investment bankers, the people told the paper.

"We will comply with the restrictions, in addition to the substantial changes we have already made to our compensation structure," a Citigroup spokeswoman told the paper."

Swiss Playing "Old Man" At Tax Laws (FT)
You have to really appreciate Swiss methodology. "Oh sure we'll help! Now, where did I put my glasses.."

"Switzerland has warned countries against expecting swift results from its decision last week to water down bank secrecy laws, saying it could take years for the necessary legislation to come into action.

Hans-Rudolf Merz, Switzerland's finance minister, said renegotiating the country's more than 70 double taxation treaties "won't be so fast" as each would have to be approved individually by the country's parliament."

UBS In more Hot Water (Reuters)
"Luxembourg financial regulator CSSF, which is looking into the case, said [UBS] had to ensure at all times that the money invested in the products was actually there and has given Switzerland's largest bank three months to make changes to UBS' custodian bank in the wake of Madoff's arrest.

UBS has rejected the calls to reform its Luxembourg operations and said it would defend itself vigorously as it did not believe that the CSSF was correct."

Larger US Companies Stepping Up Against President's Proposals (Bloomberg)
"Not in this economy.

That's Intel Corp.'s argument against new taxes on overseas income. It's Overstock.com Inc.'s objection to making unions easier to form. Ditto Lockheed Martin Corp.'s case against scrapping production of the F-22 jet.

U.S. companies are stepping up their fight against President Barack Obama's proposals not aimed squarely at reviving the economy. They say Obama is trying to do too much, taking the focus off fixing credit markets and proposing ideas that may hurt rather than help."

Source: Dealbreaker | 17 Mar 2009 | 12:46 pm

European stocks fall despite rallies in Asia (AP)

AP - World stock markets were mixed Tuesday as investors in Europe booked profits from recent rallies, while Asian indexes were boosted by banking stocks as fears about the world's hard-hit financial system eased.

Source: Yahoo! News: Stock Markets News | 17 Mar 2009 | 12:45 pm

New-home construction logs unexpected gain

WASHINGTON -- The government says construction of new homes rose sharply in February, defying economists' forecasts for yet another drop in activity.
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 12:38 pm

Government to crack down on credit card firms

The Government is planning to introduce tougher laws for credit card firms to reduce the temptation to get into debt.
Source: Telegraph Finance | 17 Mar 2009 | 12:37 pm

February PPI Tamer

Source: 247 Wall Street | 17 Mar 2009 | 12:35 pm

Rio Tinto names Jan du Plessis as chairman

Rio Tinto has appointed Jan du Plessis, the chairman of British American Tobacco (BAT), to head its board amid controversy over the mining group's proposed $19.5 billion capitalraising.$
Source: Latest Business News from Times Online | 17 Mar 2009 | 12:33 pm

'No decision' on Debenhams issue

Shares in Debenhams fall 9% after the department store group said it had "made no decisions" about a possible stock issue to raise funds.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 12:28 pm

GM bondholders: Our plan best chance for automaker

DETROIT (Reuters) - Advisers to bondholders of General Motors Corp said on Monday they have presented a framework plan to U.S. President Barack Obama's autos task force and the ailing No. 1 U.S. automaker that provides the company's best chance for an out-of-court restructuring.
Source: Reuters: Business News | 17 Mar 2009 | 12:26 pm

Market report

Do recent rallies mean the bear market is over?
Source: BBC News | Business | World Edition | 17 Mar 2009 | 12:26 pm

Citi, Morgan Stanley look to sidestep bonus caps: report

(Reuters) - Anticipating restrictions on bonuses, officials at Citigroup Inc and Morgan Stanley are exploring ways to sidestep tough new federal caps on compensation, the Wall Street Journal said.
Source: Reuters: Business News | 17 Mar 2009 | 12:25 pm

Financial tips for mums for Mother's Day

Follow our ABC guide on how to avoid the most common financial mistakes of parenthood
Source: Telegraph Finance | 17 Mar 2009 | 12:22 pm

Alcoa down after cutting dividend (Reuters)

Reuters - Shares of Alcoa Inc fell 12.1 percent to $5.38 in premarket trade on Tuesday after the aluminum company cut its quarterly dividend to 3 cents from 17 cents late Monday.
Source: Yahoo! News: Stock Markets News | 17 Mar 2009 | 12:00 pm

Banks & Brokers Covering Each Other (BAC, C, JPM, GS, MS, HBC)

Source: 247 Wall Street | 17 Mar 2009 | 11:48 am

RBS board devised 'ruse' over Goodwin pension

The board of Royal Bank of Scotland (RBS) concocted "an elaborate ruse" to conceal the scale of former chief executive Sir Fred Goodwin's pension terms, Parliament heard today.
Source: Latest Business News from Times Online | 17 Mar 2009 | 11:48 am

Income funds in focus

Incomeseekers should consider sharebased funds now that the FTSE 100 is yielding more than 5pc net of basicrate tax.
Source: Telegraph Finance | 17 Mar 2009 | 11:45 am

Lord Myners: Royal Bank of Scotland 'failed to warn of Sir Fred Goodwin's pension'

Directors of Royal Bank of Scotland did not warn ministers of Sir Fred Goodwin's £700000 pension Lord Myners has told MPs.
Source: Telegraph Finance | 17 Mar 2009 | 11:34 am

Nokia to cut 1700 jobs as consumers stop buying mobiles

Nokia the world's largest mobile phone maker will axe a further 1700 jobs in the next couple of months as it grapples with a collapse in demand for new mobile phones.
Source: Telegraph Finance | 17 Mar 2009 | 11:32 am

Friends Provident says it's in shape to weather downturn

Friends Provident fell further into the red last year but insists it is now in better shape to weather the economic crisis.
Source: Telegraph Finance | 17 Mar 2009 | 11:25 am

Nokia to cut 1,700 jobs worldwide

Mobile phone giant Nokia announces plans to shed 1,700 jobs worldwide as part of a major cost-cutting drive.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 11:24 am

Nokia to cut 1,700 jobs in sinking phone market (Reuters)

Reuters - Nokia Oyj will slash 1,700 jobs globally over the coming few months because of falling demand, the world's top cellphone maker said on Tuesday.
Source: Yahoo! News: Business | 17 Mar 2009 | 11:16 am

Cash rich tech companies could be bargains

Source: Telegraph Finance | 17 Mar 2009 | 11:15 am

Outlook for Swiss economy worsens

Switzerland's economy will contract by 2.2% this year, its government says, a much deeper recession than forecast.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 11:10 am

How to unlock the equity in your home

With interest rates at an alltime low many pensioners are feeling the pinch but can an equity release loan help?
Source: Telegraph Finance | 17 Mar 2009 | 11:06 am

Collins Stewart plunges to £15.2m loss

Collins Stewart, the stockbroker, has swung into an annual loss, hit by a lack of corporate activity and a writedown on the value of its US business.
Source: Latest Business News from Times Online | 17 Mar 2009 | 11:04 am

Google in court over Vuitton row

LVMH, the company behind Louis Vuitton luggage, accuses Google of selling search words such as "vuitton" to the highest bidder.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 10:54 am

Shell investigated by SEC over bribery claims

Shell is under investigation by authorities in the US for potential breaches of overseas bribery rules.
Source: Latest Business News from Times Online | 17 Mar 2009 | 10:29 am

Sri Lanka plays hardball with IMF

Sri Lanka will not accept any conditions on a loan from the International Monetary Fund, the island's president says.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 10:12 am

TV ads turn up pressure on Chinalco-Rio deal

Australian politicians turned up the heat against Rio Tinto's planned $19.5bn tie-up with China's Chinalco, with one taking out television ads to push for the deal to be blocked
Source: Financial Times - US homepage | 17 Mar 2009 | 8:53 am

London shares down in early trade (AFP)

AFP - Stocks in London slipped in early trade on Tuesday after advancing the day before on positive sentiments from the financial sector and investor confidence.

Source: Yahoo! News: Stock Markets News | 17 Mar 2009 | 8:30 am

Debenhams brings some cheer to the high street

Department store chain said it expects firsthalf profits to be ahead of last year as its focus on cost control pays off.
Source: Telegraph Finance | 17 Mar 2009 | 8:29 am

Guardian Media opposes Channel 4-BBC deal

A rescue of Channel 4 through a tie-up with the BBC's commercial arm will have a "damaging effect" on rival media groups, the publisher of The Guardian warned today.
Source: Latest Business News from Times Online | 17 Mar 2009 | 7:33 am

US chasing Stanford for tax bill

The US government is chasing at least $226.6m in taxes, penalties and interest it says billionaire US financier Sir Allen Stanford owes.
Source: BBC News | Business | World Edition | 17 Mar 2009 | 7:21 am

Australian stocks: Market continues climb

SYDNEY - Financial stocks drove Australian shares to a positive close for a third consecutive trading day after gains in financials overseas showed some confidence in the troubled sector was returning. The benchmark S&P/ASX200...
Source: New Zealand Herald - Business | 17 Mar 2009 | 7:18 am

California Assembly defeats bill to extend unemployment benefits

The measure would have authorized spending more than $2.5 billion in federal stimulus money to provide 20 weeks of extra jobless benefits. ...
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

Charter Communications posts wider loss

It says a unit won't make a debt payment because of a pending bankruptcy filing. Charter Communications Inc.,...
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

Obama acts to boost small-business lending

The president says the Treasury will invest as much as $15 billion to boost lending in an effort to create jobs. ...
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

Obama acts to boost small-business lending

The president says the Treasury will invest as much as $15 billion to boost lending in an effort to create jobs.

Working to restart the economy's engine of job creation, President Obama announced Monday that the Treasury Department would invest as much as $15 billion to boost lending to credit-hungry small businesses.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Start-ups are racing to get electric motorbikes to market

Following in the path of Vectrix, firms including Mission Motor, Zero and Brammo expect zooming growth for plug-ins on two wheels.

When it comes to electric vehicles, the Tesla Roadster and Chevrolet Volt get all the love. But there are other EVs rolling around, and they're balancing on two wheels.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Hybrid car sales go from 60 to 0 at breakneck speed

The gas-electric vehicles are piling up on dealers' lots as anxiety over gasoline prices evaporates. But more hybrid models are on the way.

The Ford and Honda hybrids due out this month are among dozens planned for the coming years as automakers try to meet new fuel-efficiency standards and please politicians overseeing the industry's multibillion-dollar bailout.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Stocks pull back after 4-day rally

Some see the modest drop in major indexes as a 'healthy,' positive event. The Dow loses 7 points. Oil prices climb. ...
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

Rate of mortgage fraud falls in California

The state falls to eighth place in '08 from fourth in the U.S. amid a crackdown, according to a report. In some cases, schemers are moving elsewhere.

Stepped-up law enforcement and increased banking scrutiny appear to be curbing the rate of mortgage fraud in some areas of the country, including California and Nevada, prompting determined schemers to take their business to other states.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Jack in the Box feeds the social media beast

Jack has risen, hallelujah.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Bonuses won t be easy to recover

Though the U.S. owns 80% of AIG, it faces legal hurdles in getting its $165 million back.

Reflecting rising public outrage, President Obama ordered his aides Monday to "pursue every legal avenue" to challenge $165 million in bonuses paid to employees of bailed-out American International Group Inc. But trying to get the money back could lead to a legal quagmire.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Weekend box-office sales

Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

California Assembly defeats bill to extend unemployment benefits

The measure would have authorized spending more than $2.5 billion in federal stimulus money to provide 20 weeks of extra jobless benefits.

After an hours-long partisan debate, Republicans in the state Assembly on Monday defeated a bill that would have authorized spending more than $2.5 billion in federal stimulus money to provide 20 weeks of extra unemployment benefits.

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Top 10 states for mortgage fraud in 2008

How they rank
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

Top 10 states for mortgage fraud in 2008

How they rank

Source: L.A. Times - Business | 17 Mar 2009 | 7:00 am

Jack in the Box feeds the social media beast

Jack has risen, hallelujah.
Source: RSS feed - channel BNPaperBusiness | 17 Mar 2009 | 7:00 am

NZ stocks: Share's make small gain

The sharemarket matched yesterday's small gains as bargain hunters brought some activity back to the market. The benchmark NZSX-50 index closed up 20.4 points, or 0.8 per cent, at 2564.72, after rising 20.9 points yesterday. Turnover...
Source: New Zealand Herald - Business | 17 Mar 2009 | 6:12 am

Citi, Morgan Stanley look to sidestep bonus caps: report (Reuters)

Reuters - Anticipating restrictions on bonuses, officials at Citigroup Inc and Morgan Stanley are exploring ways to sidestep tough new federal caps on compensation, the Wall Street Journal said.

Source: Yahoo! News: Business | 17 Mar 2009 | 5:57 am

Currency: Dollar bounces up over US53c

The New Zealand dollar recovered some of the ground lost earlier today on continued risk appetite and hopes that the Reserve Bank of Australia would continue holding rates steady. By 5pm, the kiwi was at US53.12c from US52.36c...
Source: New Zealand Herald - Business | 17 Mar 2009 | 5:39 am

New rules for foreign investment easier, quicker: English

A review of the overseas investment regime is intended to make the process quicker and less complex, Finance Minister Bill English said today. The Government confirmed today it would be reviewing the Overseas Investment Act and...
Source: New Zealand Herald - Business | 17 Mar 2009 | 5:28 am

N Korea-US distrust halts food aid

North Korea has ordered international food aid workers to leave the country this month over a dispute with the US that comes amid rising tensions as Pyongyang prepares to launch a long-range missile
Source: Financial Times - US homepage | 17 Mar 2009 | 4:30 am

How to Play the Dollar

What¹s a few trillion among friends? Add up the Obama administration¹s plans to save the economy, from the stimulus package to the bank bailouts, and you¹re talking in excess of $3 trillion to shore up the country¹s financial system and create more jobs. But even if all that money works its magic and gets the economy growing again, there could be a long-term casualty of issuing so much debt: the U.S. dollar.

Even before the latest bailout plans were unveiled, confidence in the dollar was slipping as America¹s budget deficits and national debt<now $10.7 trillion<ballooned. Since last summer, the buck has staged a bit of a comeback, rising 21 percent against a basket of major currencies as investors bought Treasurys in a flight to safety. But now that the markets have a handle on the government¹s stimulus plans, pressure on the buck could resume, says Eugenio Aleman, senior economist with Wells Fargo. Investors tend to dump currencies of countries that issue so much debt. ³And the dollar could get pounded,² he says, if foreign investors lose faith in America¹s ability to repay the trillions it now owes.

One way to profit off a weakening buck is to buy U.S. companies that get the bulk of their revenue abroad. A weakening dollar helps multinationals like Procter & Gamble (PG, $48), since their foreign earnings are worth more when converted back to dollars. Foreign stocks can also be a good option; their earnings get a boost when their currency gains against the dollar. David Darst, chief investment strategist of global wealth management for Morgan Stanley, recommends a 14 percent allocation to foreign stocks. Companies such as Novartis, British American Tobacco and Nestlé generate much of their earnings in foreign currencies, he says, and the dollar¹s slide would benefit shareholders.

Other pros see bargains in developing economies whose currencies and stock markets have plunged. The Brazilian real, for instance, is down 30 percent against the dollar since last summer. It may not rebound until the global economy stabilizes, but it¹s helped make Brazilian stocks cheap, says Audrey Kaplan, lead manager of the Federated InterContinental fund. Kaplan likes big exporters like the mining giant Vale (RIO, $14). ³This is the best opportunity to get into these shares in five years,² she says. And if the real drifts down? At least a vacation in Rio will get cheaper.

Still, trying to profit off any currency is never easy, and some experts think the dollar may even strengthen in the near term. It remains the top reserve currency for the world¹s central banks, which hold more than $2.7 trillion in dollar reserves. And other countries may be in worse economic shape and have to launch their own massive stimulus packages, which could keep their currencies down too, says Aleman. That¹s why it may be best to avoid betting directly against the buck with an exchange-traded fund based on a single currency. Instead, international funds or foreign stocks are an option. Global firms with rising foreign sales will likely see shares rise when the economy stabilizes, and they could get a tailwind if the dollar resumes its losing ways.

Unilever (UL)
Market value: $56 billion
2008 sales: $59.3 billion
2009 price/earnings: 10
This Anglo-Dutch consumer-goods giant has 12 brands with more than $1 billion in annual sales, including household names like Lipton tea, Dove soap and Hellmann¹s mayonnaise. Much of its growth is in emerging markets, which could take a hit this year, says Jefferies International analyst Simon Marshall-Lockyer. But the stock trades at a discount to its peers and has a
5.3 percent dividend yield.

Qiagen (QGEN)
Market value: $3 billion
2008 sales: $893 million
2009 price/earnings: 17
Drug companies, labs and academic institutions use this Dutch firm¹s molecular diagnostic tools, test kits and research instruments. The firm makes the only FDA-approved DNA test for HPV, the leading cause of cervical cancer. Qiagen is also developing new technologies in molecular diagnostics and gene therapy. And sales to customers in academia and government labs have historically been recession-resistant, notes Robert W. Baird analyst Quintin Lai.

Companhia Vale do Rzo Doce (RIO)
Market value: $69 billion
2008 sales: $39.1 billion
2009 price/earnings: 10
The commodities bust has taken its toll on this Brazilian mining giant, the world¹s largest producer of iron ore. Shares are down 59 percent over the past year, and analysts expect 2009 earnings to fall 26 percent, to $10.8 billion. But the company has cut back production at its highest-cost mines, and the stock should rebound when the global economy recovers, says Audrey Kaplan, lead manager of the Federated InterContinental fund.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Source: SmartMoney.com | 17 Mar 2009 | 4:00 am

Resurrection on Wall Street

YES, VIRGINIA, THERE STILL IS LIFE ON WALL STREET.

After a year that saw the bankruptcy of Lehman Brothers and forced mergers involving Bear Stearns and Merrill Lynch, Goldman Sachs and Morgan Stanley seem on course for a profitable first quarter and full year, despite a terrible economy and depressed global stock markets. The investment community is warming to the financial giants after bashing their shares last year. Morgan Stanley (MS) is up 58%, to 25, in 2009, making it the top-performing big financial, while Goldman Sachs (GS) has risen 17%, to $98. In contrast, shares of Bank of America (BAC) and Wells Fargo (WFC) have tumbled more than 50%.

Goldman and Morgan Stanley aren't burdened by the hefty consumer-debt and commercial-loan portfolios that are hurting their banking rivals. And both have bolstered their relationships with institutional traders in the important bond, equity, commodity and foreign-exchange markets, as formerly formidable rivals have perished, stumbled or become preoccupied with boosting their capital to remain going concerns.

DESPITE THE GLOOM ENVELOPING MUCH of the credit market, debt underwriting has surged this year. Financially healthy companies have rushed to take advantage of historically low rates and to finance takeovers. And more companies are employing Goldman and Morgan Stanley, whose standing has risen among investors, in part because both value virtually all their assets at market prices, leaving them less vulnerable to write-downs than banks, which carry most of their assets at face value.

"Capital-market activity is a bright spot...while consumer credit appears to be deteriorating by the day," wrote Goldman Sachs equity analyst Richard Ramsden in a client note last week, in which he put Morgan Stanley on the firm's Conviction Buy List.

"The competitive landscape has changed," Goldman's chief financial officer, David Viniar, said last month. "Some of our competitors are no longer there. Others are very inward-focused because they are having their own problems. So there are just opportunities every day in the franchise doing stuff for our clients -- taking risk, distributing risk." Goldman and Morgan Stanley executives declined to comment for this article.

Look at what has happened on Wall Street. Lehman is gone. Bear Stearns is part of JPMorgan (JPM). Merrill Lynch merged into Bank of America, which bought Merrill for its retail brokerage network, not its institutional business. Citigroup (C) is wounded. Most European banks are on the ropes, including UBS (UBS), which has been scorched by enormous U.S. mortgage losses. A year ago, about a dozen financial heavyweights were scrapping for U.S. debt, equity and advisory business. Now there may be just three committed and deep-pocketed rivals: Goldman, Morgan Stanley and JPMorgan.

Don't be misled, however: While they are doing better than their competitors, not everything is rosy for Goldman and Morgan Stanley.

"Basically every company...every industrial company in every industry in every country in the world is doing badly," Viniar said last month. Institutional and retail-client activity is down, formerly profitable areas like merger-advisory work and initial public offerings are off sharply or moribund. Once-lucrative asset-management arms are getting stung by market declines. The value of real-estate, mortgage and private-equity holdings continues to deteriorate.

There also is continued talk of a potential brain drain, as key people quit to join investment-banking boutiques or hedge funds now that big firms are trimming compensation, partly in response to criticism from Washington over pre-2008 Wall Street's noxious combination of enormous bonuses and excessive risk. However, it is hard to have sympathy for big financial firms, particularly Goldman. The average compensation for its 30,000 employees last year was still $360,000, although that is down from about $660,000 in 2007, when CEO Lloyd Blankfein took home $70 million.

The firms dislike acknowledging the benefits they derive from various government liquidity programs, including $10 billion each from the Troubled Asset Relief Program (TARP) and a less-publicized bond-guarantee program from the Federal Deposit Insurance Corp. that has produced more than $20 billion of cheap financing for both Morgan Stanley and Goldman since it began in October. The two are among a handful of large financial outfits that Washington probably has deemed too big to fail. At the same time, both firms are hunkering down, reducing risk and maintaining liquidity, with the aim of surviving a tough first half. That would position them to take advantage of an economic and market recovery in late 2009 or 2010.

ALL THIS REASSURES JITTERY INVESTORS. Amid a broad rally in financial stocks last week, Morgan Stanley jumped 48% and Goldman, 30%. There could be additional upside this year, with Morgan Stanley topping $30 and Goldman hitting $110 or more. And the stocks could go a lot higher if business conditions and earnings rebound (although the deeply depressed shares of banks and life insurers could rally even more in any recovery).

Morgan Stanley now trades at 10 times projected 2009 earnings of $2.48 a share, and Goldman fetches 12 times estimated 2009 net of about $8. But getting a precise fix on results is tough in this market.

Many investors now value financial companies based on shareholder equity, or book value. Morgan Stanley trades for 83% of its $30 book value and 92% of its tangible book value of $27. (Tangible book excludes acquisition-related goodwill and other intangible assets.) Goldman trades for 100% of book value of $98 and 1.1 times tangible book of $88.

Both stocks are up sharply from their lows but way below their highs. Morgan Stanley bottomed at $6 this past October before a $9 billion investment from Japan's Mitsubishi UFJ Financial eased concerns about its capital adequacy, while Goldman bottomed at $47 in November. Morgan's 52-week high was near 52, while Goldman's was 203.

Roger Freeman, a Barclays analyst, has targets of $30 on Morgan Stanley and $100 on Goldman. Freeman, who sees the firms taking bigger write-downs than most of Wall Street does, expects Morgan to earn 25 cents a share in the current quarter, rather than the consensus forecast of 36 cents. Similarly, he predicts that Goldman will earn 80 cents, not the consensus figure of $1.35.

Both firms switched to calendar-year reporting after they became commercial banks last year; previously, their fiscal years ended in November. As a result, next month they will report profits for both the March quarter and for just December 2008. Wall Street suspects they may paint the December numbers in as red a hue as possible, to set the stage for a stronger 2009 that would let the firms pay employees better.

How much can each firm be expected to earn when the markets return to a more normal state? The days of 20%-plus return on equity probably are over, as regulators and the markets force lower levels of financial leverage and risk. Morgan Stanley wants to generate a 12%-to-15% return on equity over the current cycle. This year's return could be 10% or lower. Investors probably would be happy to see 10%, which would translate into $3 a share in profit. Goldman had a 32% ROE in 2007, when it earned a record $24.73 a share, but the figure fell to 5% in 2008, as profit slid to $4.47.

Goldman lately has commanded a higher valuation, relative to book value, than Morgan Stanley because it is one of the Street's few firms that largely avoided the mortgage and real-estate disasters that buried Bear Stearns, Lehman and Merrill Lynch. Goldman's brass, led by CEO Blankfein, is considered sharper than Morgan's. Its trading and investment-banking franchises also are considered stronger. Some call Goldman "Wall Street's A Team".

Goldman's investment-management arm, once a poor cousin to Morgan Stanley Asset Management, now is much larger and more profitable than its rival, which has been battered by neglect and weak performance. Reviving the asset-management business is an important priority of Morgan Stanley CEO John Mack.

As they scramble to revive, the longtime rivals are employing dramatically different strategies.

Morgan wants to slash risk by virtually abandoning proprietary trading (in which the firm's own money is used) and reducing "principal transactions" -- investments in real estate and private equity. Instead, it will focus on trading for clients and bolstering fee-based businesses; it took a step toward that recently, when it agreed to merge its retail brokerage unit with Smith Barney, Citi's larger retail network. The goal is to get at least 50% of revenue from noninstitutional businesses.

The firm hopes a lower risk profile and more stable earnings will garner a higher valuation. One investor familiar with Morgan Stanley's top managers says that CEO Mack, having been burned by the firm's mortgage and trading troubles in 2007 and 2008, is shifting gears.

"He's reformed. It's almost an AA [Alcoholics Anonymous] kind of thing. He wants to have the best balance sheet in financial services and to reduce proprietary trading. He wants more predictable earnings and doesn't want to run a de facto hedge fund," this investor says. Call it the revenge of ex-CEO Phil Purcell, who advocated that approach, to the dismay of Morgan Stanley veterans, when he ran the firm from 1997 to 2005.

GOLDMAN SACHS, IN CONTRAST, believes it has the talent to prudently do proprietary trading and make real-estate, private-equity and other investments.

Investors are pleased that both Goldman and Morgan significantly shrank their balance sheets in late 2008, while boosting capital. Goldman's assets fell to $885 billion from more than $1 trillion in its fourth quarter while Morgan Stanley's slid to $658 billion from $987 billion.

Key capital ratios, including tangible common equity and Tier 1, look good, relative to those of major banks, especially because Goldman and Morgan Stanley value almost all their assets at market prices each quarter, reducing the possibility of nasty surprises. Goldman's tangible common equity ratio was 4.8% on Nov. 30, and Morgan Stanley's was 4.4%, above those of the major commercial banks, which average around 3%.

Morgan Stanley, for instance, has taken some big write-downs already, valuing senior commercial mortgage-backed bonds at less than 50 cents on the dollar and alt-A home mortgages, which are a notch above subprime, at below 40 cents on the dollar.

Both companies are benefiting from government initiatives to pump liquidity into the markets, including a program that lets many financial companies sell debt with maturities as long as three years and backed by the FDIC. Morgan Stanley has issued $23 billion of such debt; Goldman, $25 billion. Although banks pay a fee of as much as 1% for it, the FDIC guarantees amounts to a subsidy. Without it, the companies likely would have to offer interest rates two to three percentage points higher to attract buyers. So, the two may be getting a subsidy of $500 million or $750 million a year.

The aim of the program, which began in October, is to trim bank-funding costs and encourage consumer and business lending. Goldman and Morgan Stanley, however, make few loans, save for the kind that many in Washington detest -- those for job-killing mergers like the pending Pfizer/Wyeth combination.

As part of their comeback plans, both firms are reining in costs, sometimes rather comically. Morgan Stanley, which is seeking $2 billion in cost cuts this year, now charges employees at its Manhattan headquarters a monthly fee of $40 to use an on-site, state-of-the-art gym that had been free.

Employees now must fly coach on domestic airline flights, although John Mack still flies on a corporate jet -- for security reasons, the firm says. Mack will be making one concession this year: He'll have to pay for personal trips on the corporate jet. Morgan has cancelled 75% of its conferences for the year and says the others will be "100% content" -- no golf or tennis outings and no big-name entertainment.

Goldman wants employees visiting New York to stay at the Embassy Suites it owns next to the new headquarters it is building in lower Manhattan. Bye-bye, Ritz-Carlton.

Surrendering free tee times and plush sheets won't do much for Wall Street's ugly image on Main Street. But it shows that Morgan Stanley and Goldman are at least making attempts to adapt to the new financial realities. Combined with the decline of their competitors, that makes them good bets for investors now.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Source: SmartMoney.com | 17 Mar 2009 | 4:00 am

5 Ways to Save on Furniture (Deal of the Day)

Furniture retailers are feeling their own version of "the Big Freeze" these days.

The housing market is stalled, so people aren't moving into new homes that they want to furnish, and consumer spending is in a similar standstill, especially when it comes to big-ticket items like a dining room table or a couch, says Jeff Green, president of Mill Valley, Calif.-based Jeff Green Partners, a retail consulting firm.

This spending paralysis has already claimed a few big-names in furniture industry. Last month, after filing for bankruptcy protection, Fortunoff started liquidating its stores. In January, Home Depot (HD) announced it would close its high-end retail division, Expo Design Center, which also sells furniture.

Such desperation can breed great deals for consumers -- and that's definitely the case now. Furniture stores are slashing prices by as much as 60% in hopes of unloading excess inventory, says Jerry Alderman, a senior director at the National Home Furnishings Association, which represents more than 10,000 furniture retailers in the U.S. and abroad. Macy’s (M), for example, is selling a French-style bedroom chest for $400, a 73% discount off the $1,500 sticker price. Want the matching mirror and bench? You can get them for $69 apiece, down from $450 and $400, respectively. Over at Pier 1 Imports (PIR) you can snag a wrought iron and glass coffee table for $30 (down from $90) and hand-carved wooden dining chairs for $80 each (down from $150).

Just be warned: Once the excess inventory is unloaded, expect these deep discounts to disappear, says Green. Here's how to find the best furniture deals before it's too late.

Comparing Prices Could Save You Hundreds

Fall in love with a midcentury Danish end table? Compare prices among at least five stores before whipping out your credit card, says Lenny Kharitonov, an executive board member with the Greater New York Home Furnishings Association, which represents local furniture retailers, manufacturers and suppliers. In some cases, one store may have ordered a lot more of a particular piece of furniture than another, making them especially desperate to move the inventory. And that desperation could mean the difference of a few hundred dollars.

Don't Be Fooled by Liquidation Sales

When it comes to savings, liquidation sales aren't always a sure thing.

To get the most money out of remaining inventory, liquidation companies -- which take over the sale of the faltering store's goods for a percentage of the sales -- will often jack up original sticker prices by as much as 50% and then mark the item down from that price, says Green. To make sure you're getting the best deal from a liquidation sale, wait until two or three weeks before the store closes (liquidations often last 60 to 90 days) since that’s when the liquidators start offering discounts below the original pricing, says Green. Just don't wait too long or the selection will be pretty thin.

For more on shopping the liquidation sales, click here.

Find More Price Flexibility at Independent Stores

Typically, there’s more room for negotiating at a mom-and-pop shop, says Green. In a chain store, the manager often doesn’t have the authority to change the price even by a small amount since prices are set by higher-ups.

Feel Like Haggling? Shop at the End of the Month

Depending on the store, salespeople may be more willing to negotiate on price during the last week of the month in order to boost their commission, says Green. While this is more often the case at an independent retailer, it may also work at a larger chain, he says.

Take a Trip to North Carolina

With today's cheap airfare and comparatively low gas prices, it may make sense to pay a visit to High Point, N.C., home of most U.S. furniture manufacturers and furniture outlets.

These manufacturers sell their furniture for 10% to 20% less than most retailers and warranties are often included, says Green. Consumers who’ve been eyeing furniture at a local retailer or chain can jot down the item number (often found on the price tag or in the furniture catalogs) and ask for its price in the manufacturer’s store. The one drawback: delivery fees. While some manufacturers offer free delivery, others charge. And depending on your home’s location, those fees can be several hundred dollars.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Source: SmartMoney.com | 17 Mar 2009 | 4:00 am

7 Soaring School Stocks

The Dow Jones Industrial Average has jumped 670 points in a week. Another 1,820 and it will be back to its close on the first trading day of the year. But while most stocks are paring losses, many for-profit schools are adding to gains.

Shares of ITT Educational Services (ESI), Career Education (CECO) and Corinthian Colleges (COCO) have advanced by double-digit percentages this year. Apollo Group (APOL), DeVry (DV), Strayer Education (STRA) and Capella Education (CPLA) are down year to date, but have gained 23% to 80% over three years, while the Dow has lost 34%. All seven are expected to produce stellar earnings-per-share gains in their current fiscal years, ranging from 23% to 63%. Over the past year all seven have beaten Wall Street’s earnings forecasts.

Credit the results and bright outlook to joblessness and taxpayer subsidies. Demand for college courses, especially for ones with two-year and vocational programs, tends to be countercyclical, as laid-off workers sign up for school. Ability to pay tuition falls, of course, but students are shielded from the true cost of courses by public subsidies, private grants, low-interest loans and so on. America’s giant stimulus act signed in February increased government grants and provided new tax credits and work-study programs.

The lousy economy has borne other benefits for profit-seeking schools. A collapse of ad spending by car makers and mortgage sellers has left well-trafficked web sites with less pricing power. Schools are using the banner opportunity to lure new students on the cheap.

Stock buyers must ask themselves whether these companies’ recent prosperity is the start of a long-term rise in the prestige of online and vocational schools among students and employers, or a temporary surge in enrollment by students who are flush with government funds and have few other options. With colleges, success begets success. That is, the more students these schools graduate now, and the more of those alumni who work their way up to hiring positions, the more jobs future students at the same schools are likely to win.

Shares of these schools also look pricey at the moment. The average of them goes for 19 times forecast earnings in their current fiscal year. The S&P 500 index trades at about 12 times this year’s earnings forecast. None of the school stocks have dividends worth going after. Strayer, the high-yielder of the group, pays 1.2%.

Then again, potential rewards for these companies are large. Most are still small in terms of both their yearly sales and stock market values. Sales for even the biggest ones are growing by more than 20% a year. Online schools have an obvious ability to expand their class sizes quickly, and less of a disincentive to do so. That is, Yale must be far more cautious than Capella about diluting its brand by expanding online. Moreover, online schools don’t pay for football fields, cafeterias and campus cops. Each new student brings larger profits than the one before.