Ken Lewis Interested In Repaying TARP A-SAP Bank of Amerillwide chief Ken Lewis told the LA Times last night that he wants to start giving the government its $45 billion after the completion of the firm's stress test, which he expects to pass, though no promises, on either front. Lewis said its possible BAC will pay it all back "as early as the fourth quarter of this year," and also defended the Countrywide and Merrill Lynch acquisitions as "strategically sound in the long run." Source: Dealbreaker | 25 Mar 2009 | 2:05 pm Short Data Shows How Bad Bank Investors Were Bloodied Based on the rise in the short interest in banks at mid-month, it is clear how badly investors betting bank stocks would go down were mauled. As of March 15, shares short in AIG (AIG) were up 17% to 183 million. The short interest in Bank of America was up 54% to 172 million. Shares short in Wells Fargo (WFC) moved up 35% to 156 million. Astonishingly, the short interest in Citigroup (C) rose 391% in the two weeks between the end of February to mid-March, hitting 998 million shares. Short sellers covering those positions would have accounted for a significant portion of the rise in Citi’s stock price. Shorts moved out of car stocks, assuming that there will be some kind of bailout. Short interest in Ford (F) fell 16% to 245 million. Shares short in GM (GM) were off 7% to 110 million. In the tech sector, short sellers are still assuming that sales of both hardware and software will get worse. The short interest in Microsoft (MSFT) rose 17% to 101 million. Shares short in Cisco (CSCO) were up 21% to 69 million. The short interest in Applied Material (AMAT) was up 33% to 51 million. Shares short in Dell (DELL) moved up 40% to 44 million. Shares short in Broadcom (BRCM), Qualcomm (QCOM), and Juniper (JNPR). Data from NYSE and NASDAQ> Douglas A. McIntyre Tagged: AIG, AMAT, BAC, BRCM, C, CSCO, DELL, F, GM, INTC, JNPR, MSFT, QCOM, WFC Source: 247 Wall Street | 25 Mar 2009 | 1:09 pm Durable goods orders rebound in February (Reuters) Reuters - New U.S. orders for long-lasting manufactured goods rose in February for first time in seven months, according to a government report on Wednesday brought some cheer to an economy mired in recession. Source: Yahoo! News: Business | 25 Mar 2009 | 1:06 pm US factory orders up in February Orders for US manufactured goods rose unexpectedly in February after six straight months of falls, official figures show. Source: BBC News | Business | World Edition | 25 Mar 2009 | 1:04 pm Wall St lifted by Obama reassurances and positive data US stocks looked set to build slightly on their gains of the past month after reassuring words from President Barack Obama and better than expected economic data Source: Financial Times - US homepage | 25 Mar 2009 | 12:56 pm Durable goods orders jump 3.4 percent in February WASHINGTON (Reuters) - New U.S. orders for long-lasting manufactured goods unexpectedly rebounded in February, rising for the first time in seven months, according to a government report on Wednesday that could bring some cheer to an economy mired in recession. Source: Reuters: Business News | 25 Mar 2009 | 12:55 pm Stocks poised for modest gains U.S. stocks appeared set for a higher open Wednesday, fueled by an unexpectedly strong economic report, a day after President Obama defended his administration's ability to combat the economic crisis. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 12:55 pm Twitter's potential overlooked by UK technology companies says report Britain's biggest technology companies are failing to capitalise on the benefits of Twitter in contrast to their smaller competitors and US rivals research indicates. Source: Telegraph Finance | 25 Mar 2009 | 12:51 pm Stock futures gain after durable goods data (Reuters) Reuters - Stock index futures added to gains on Wednesday after data showed new U.S. orders for long-lasting manufactured goods unexpectedly rebounded in February. Source: Yahoo! News: Business | 25 Mar 2009 | 12:49 pm Stock futures gain after durable goods data (Reuters) Reuters - Stock index futures added to gains on Wednesday after data showed new U.S. orders for long-lasting manufactured goods unexpectedly rebounded in February. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 12:49 pm Stock futures gain after durable goods data NEW YORK (Reuters) - Stock index futures added to gains on Wednesday after data showed new U.S. orders for long-lasting manufactured goods unexpectedly rebounded in February. Source: Reuters: Business News | 25 Mar 2009 | 12:49 pm Wall Street points higher after factory order rise (AP) AP - Stock futures are moving higher following a report that orders for big-ticket manufactured goods showed an unexpected increase in February. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 12:48 pm U.S. mortgage applications jump; rates at record low (Reuters) Reuters - U.S. mortgage applications jumped last week as record low interest rates spurred a surge in demand for home refinancing loans, data from an industry group showed on Wednesday. Source: Yahoo! News: Business | 25 Mar 2009 | 12:47 pm ICBC says Goldman to extend stake lock-up to 2010 HONG KONG, March 25 (Reuters) - Wall Street bank Goldman Sachs agreed not to sell at least 80 percent of its stake in Industrial and Commercial Bank of China , the world's biggest bank by market value,... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:46 pm Opening Bell: 03.25.09 Hedge Fund Bridgewater Mulls U.S Toxic Asset Plan (Reuters) "In a letter to clients, Bridgewater Associates: "From a macro perspective, this is a big transfer of money from the government to the banks (who are getting the higher prices for their assets) and to the buyers (who are probably going to get a heck of a deal because of the non-recourse loan and the easy access to leverage). "If the government was operating in an economic way, it would not do this deal -- it would deal with the banks' finances separately and sell this insurance (i.e. the implied put arising from the non-recourse loan) for what it's worth," Bridgewater said in the letter. "But, politics being what they are, this route is probably motivating this non-economic behavior. We are eager to see how it is received on the Hill," it said." This would be awesome, if Geithner, Bernanke, Obama et al were subject to Bridgewater's 360 review, wherein subordinates are supposed to tell their bosses what they're doing wrong. Hedge Fund Employee Pay May Drop 25% (Bloomberg) With 70% of the single manager funds down, the industry will have to look at pay cuts across the board. "Chief executive officers earned an average of $2 million last year, while chief investment officers made $1.4 million, according to Alpha's survey. Senior portfolio managers took home $1.1 million and senior traders were paid $790,000." And of course there's this. U.S. Plan Seeking Expanded Power in Seizing Firms (NYT) "It is precisely because of the lack of this authority that the A.I.G. situation has gotten worse," Mr. Obama said, predicting that "there is going to be strong support from the American people and from Congress to provide that authority." Boehner says Geithner nonbank plan a power grab (Reuters) "This is an unprecedented grab of power, and before that occurs, there ought to be a real debate about whether we should give that authority to the Treasury Secretary," Boehner, an Ohio Republican, told reporters. Senator Dodd's Wife Worked As An Outside "Director" For A Bermuda-based Company Affiliated With AIG (NYP) Presented without comment. Dear AIG, I Quit (NYT) Sent Tuesday by Jake DeSantis, an executive vice president of AIG's financial products unit, to Ed Liddy. "DEAR Mr. Liddy, It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context: Source: Dealbreaker | 25 Mar 2009 | 12:45 pm Offer for RMBS Securities Insured by Syncora Guarantee Inc. Extended NEW YORK, March 25 /PRNewswire-FirstCall/ -- The BCP Voyager Master Funds SPC, Ltd., acting on behalf of and for the account of, the Distressed Opportunities Master Segregated... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:45 pm Liberty Property Trust Raises $317 Million Through Secured Financing MALVERN, Pa., March 25 /PRNewswire-FirstCall/ -- Liberty Property Trust (NYSE: LRY) has announced the closing of six mortgage loans totaling $317 million secured through several... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:45 pm Holy Smoke, The Durable Goods Game Continues Durable Goods for the month of February has come in with a massive surprise this morning.  These might get washed over because of revisions, but these are much better on the surface than what was expected.  The reading came in at +3.4% on the headline durable goods, and it was up at +3.9% on an ex-Transportation.  On the headline numbers we had estimates from both Dow Jones and Bloomberg as being an expected -2.0%. January was revised, and the revisions are significantly lower.  The headline durable goods was revised to -7.3% from a prior report of -5.2%; and the ex-Transportation revision was more than doubled to -5.9% from a prior reading of -2.5%. When you adjust for seasonality, this put the total tally at $165.56 billion in long-lasting goods in February.  To show the difference on a raw basis year over year, this was actually a drop of 28.4% on an unadjusted basis.  The portion of unfilled orders also posted another decline, with this one being a drop of -1.3%.  That means that there is a gap ahead rather than pressure building to the upside. As a reminder, Durable Goods is one of the most volatile numbers and the revisions can be sharp.  These numbers can also whip up and down in a manner that is not necessarily in any correlation with the economy because of timing.  It is great we are seeing the positive numbers, but if you smooth this out then you actually get a wash out when you blend the revised lower numbers of January with the higher numbers in February. This is a great number on the surface.  Unfortunately, durable goods might not give the right read on any given month.  The revisions for January should only drive that notion home even further. JON C. OGG March 25, 2009 Source: 247 Wall Street | 25 Mar 2009 | 12:38 pm Romania gets IMF emergency loan The International Monetary Fund and other lenders agree to provide Romania a rescue package worth 20bn euros. Source: BBC News | Business | World Edition | 25 Mar 2009 | 12:38 pm UPDATE 1-Rodman & Renshaw terminates offer to buy Cowen Group March 25 (Reuters) - Tiny U.S. investment bank Rodman & Renshaw Capital Group Inc said it terminated its offer to buy bigger rival Cowen Group Inc citing current market conditions. Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:36 pm Start Your Own Screen-Printing Business Artists, entrepreneurs: Here's the inside look at a fun, lucrative industry SAN BERNARDINO, Calif., March 25 /PRNewswire/ -- Anyone interested in the art,... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:35 pm ICBC plans to make at least $78 bln new loans in '09 BEIJING, March 25 (Reuters) - Industrial and Commercial Bank of China , the world's biggest bank by market value, said on Wednesday it plans to make at least 530 billion yuan ($77.6 billion) in new loans... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:30 pm Budget: Now it's Congress' turn The fight on Capitol Hill over next year's federal budget begins in earnest on Wednesday, when the Senate and House Budget Committees will debate just how much they want to spend and tax in 2010. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 12:30 pm Green Dot Corporation Recognized for Excellence at the Annual Paybefore Awards Industry Leader recognized for Achievement in Prepaid LOS ANGELES, March 25 /PRNewswire/ -- Green Dot Corporation, a leading provider of retail-based financial... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:30 pm Freddie Mac Monthly Volume Summary: February 2009 (unaudited & subject to change) (dollars in millions) MCLEAN, Va., March 25 /PRNewswire-FirstCall/ -- The following is being issued by Freddie Mac... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:30 pm Steve Streit, CEO of Green Dot Corporation, Receives Prepaid Industry Achievement Recognition Innovator Honored at Annual Paybefore Awards LOS ANGELES, March 25 /PRNewswire/ -- Steve Streit, CEO and Founder of Green Dot Corporation, was recognized by... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:30 pm Diebold CFO, Former Employees Receive Wells Notices Krakora stepping down as CFO to serve in non-financial reporting role; Pierce interim CFO NORTH CANTON, Ohio, March 25 /PRNewswire-FirstCall/ -- Diebold,... Source: RSS feed - channel BNewsBusiness | 25 Mar 2009 | 12:30 pm Growth for iPhone-related business Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 12:28 pm Obama sees "signs of progress" on economic crisis WASHINGTON (Reuters) - President Barack Obama said on Tuesday he was seeing signs of progress in his drive to lead the United States out of economic crisis as he sought to reassure recession-weary Americans he was on the right track. Source: Reuters: Business News | 25 Mar 2009 | 12:27 pm CA-CANADA Summary (Reuters) Reuters - Toronto's main stock index may open lower on Wednesday, pressured by weakness in the price of crude and metals. However, Toronto may follow U.S. stocks, where index futures pointed to a higher open. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 12:20 pm TSX seen lower as commodities sag (Reuters) Reuters - Toronto's main stock index may open lower on Wednesday, pressured by weakness in the price of crude and metals. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 12:20 pm Failed gilt auction stokes fears over UK economy The Government has suffered a major blow to its economic stimulus ambitions after an auction of Treasury gilts failed for the first time in more than a decade underlining the market's fears about the state of the nation's finances. Source: Telegraph Finance | 25 Mar 2009 | 12:19 pm European stocks drop after weakness on Wall Street (AP) AP - European stocks fell Wednesday following overnight drops on Wall Street and data showing German business sentiment slid to a 26-year low in March. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 12:19 pm HSBC says 1,200 workers face axe Europe's biggest bank HSBC says 1,200 of its staff in the UK could face redundancy, though unions say the actual number is 2,900. Source: BBC News | Business | World Edition | 25 Mar 2009 | 12:18 pm Australia antitrust body clears Rio-Chinalco deal SYDNEY (Reuters) - Australia's competition watchdog cleared Rio Tinto Ltd's $19.5 billion tie-up with China's state-owned Chinalco, clearing one obstacle to a deal that still needs the approval of the finance minister. Source: Reuters: Business News | 25 Mar 2009 | 12:16 pm Zimbabwe prices 'begin to fall' Prices in Zimbabwe begin to fall after years of galloping inflation, according to figures from the state statistical office. Source: BBC News | Business | World Edition | 25 Mar 2009 | 12:14 pm Buffett's Berkshire may lose "AAA" S&P rating NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc may lose its "AAA" credit rating from Standard & Poor's within a year if the insurance and investment company's capital levels or value of its equity holdings face more downward pressure. Source: Reuters: Business News | 25 Mar 2009 | 12:14 pm Wages fall in private sector for first time but rise for public sector workers Wages in the private sector have fallen for the first time since official records began eight years ago with workers paid nearly £16 less a week than a year ago. Source: Telegraph Finance | 25 Mar 2009 | 12:12 pm Asking for Student Loan Forgiveness (BusinessWeek Online) BusinessWeek Online - In just two short months, Robert Applebaum has become something of a spokesman for a generation of people burdened with student loan debt. Applebaum, a 35-year-old attorney in New York, started a Facebook group in January called "Cancel Student Loan Debt to Stimulate the Economy," fed up with news reports about bank executives spending millions to redecorate their offices and receiving hefty bonuses. "I wanted to rant, so instead of sending an e-mail to a couple of my friends, I decided to start a Facebook group," says Applebaum, who finished law school owing $80,000 in student loans. ... Source: Yahoo! News: Business | 25 Mar 2009 | 12:08 pm Deflation? Not if you're buying food Some grocery prices have almost doubled in the past year despite the Retail Price Index falling to zero. Source: Telegraph Finance | 25 Mar 2009 | 12:08 pm UK economy won't start to recover until 2010 LSE's Goodhart predicts The UK economy won't start to recover until the middle of 2010 lagging the US by six months according to Charles Goodhart of the London School of Economics. Source: Telegraph Finance | 25 Mar 2009 | 12:00 pm Top Pre-Market Analyst Downgrades (AXP, ATML, BX, CHA, CYPB, HPQ, SLAB, UBS, WSM) These are some of the top pre-market analyst downgrades or cautious calls we have seen from Wall Street firms early this Wednesday morning: American Express (AXP) Cut to Underweight at JPMorgan. Atmel (ATML) Cut to Market Perform at FBR. Blackstone (BX) Cut to Market Perform at KBW. China Telecom (CHA) Cut to Sell at Citigroup. Cypress Bioscience (CYPB) Cut to Perform at Oppenheimer. Hewlett-Packard (HPQ) Started as Outperform at RBC. Silicon Laboratories (SLAB) Cut to Market Perform at FBR. UBS (UBS) Cut to Underperform at KBW. Williams-Sonoma (WSM) Cut to Underweight at Barclays. JON C. OGG Tagged: ATML, AXP, BX, CHA, CYPB, HPQ, SLAB, UBS, WSM Source: 247 Wall Street | 25 Mar 2009 | 11:59 am Top Pre-Market Analyst Upgrades (ABMD, ASML, CBG, EMR, LLTC, MATK, NFLX, PEP) These are some of the top pre-market analyst upgrades and positive calls which we have seen early this Wednesday morning: Abiomed (ABMD) Raised to Buy at UBS. ASML (ASML) Raised to Buy at ING. CB Richard Ellis (CBG) Raised to Overweight at JPMorgan; Raised to Outperform at JMP. Emerson Electric (EMR) Cut to Neutral at Goldman Sachs. Linear TEch (LLTC) Raised to Overweight at Thomas Weisel. Martek Biosciences (MATK) Started as Buy at Cantor. Netflix (NFLX) Started as Market Perform at William Blair. Pepsico (PEP) Raised to Buy at UBS. JON C. OGG Tagged: ABMD, ASML, CBG, EMR, LLTC, MATK, NFLX, PEP Source: 247 Wall Street | 25 Mar 2009 | 11:56 am Buffett's Berkshire may lose "AAA" S&P rating (Reuters) Reuters - Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) may lose its "AAA" credit rating from Standard & Poor's within a year if the insurance and investment company's capital levels or value of its equity holdings face more downward pressure. Source: Yahoo! News: Business | 25 Mar 2009 | 11:56 am JP Morgan reinitiates AmEx with underweight (Reuters) - American Express Co may have to set aside a significant amount of money to cover more losses in the next few quarters as U.S. credit card defaults are expected to remain high, analysts at J.P. Morgan Securities said, as they reinitiated the stock with an "underweight" rating. Source: Reuters: Business News | 25 Mar 2009 | 11:54 am Indications: U.S. stock futures advance after surprise rise in orders U.S. stock futures edged higher on Wednesday, as markets found some inspiration from surprisingly positive economic data, with the government reporting that orders for durable goods for the first time in six months. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 11:50 am Obama pledges economic recovery US President Barack Obama tells Americans he sees signs of economic recovery, while urging them to be patient. Source: BBC News | Business | World Edition | 25 Mar 2009 | 11:49 am Economic Report: Durable goods orders jump in February, surprising economists Demand for machinery and other capital goods rose in February, driving orders for durable goods up 3.4%, the Commerce Department reports. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 11:49 am Budvar wins latest European battle over Budweiser name Brewer Anheuser-Busch loses an appeal to a European Union court to use the trademark Budweiser name across Europe. Source: BBC News | Business | World Edition | 25 Mar 2009 | 11:45 am Out of a job and living well If you're worried about getting laid off, there are companies out there dedicated to helping you overcome your spending anxiety. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 11:41 am DryShips Earnings Drag the Anchor (DRYS) DryShips Inc. (NASDAQ: DRYS) posted $0.43 EPS and a 6.6% year over year decline in revenues to $217.9 million.  First Call had estimates at $0.66 EPS and $209.6 million in revenues as the consensus estimates.  This is also the company’s Q4-2008 report, so it is a bit late in the quarter when you consider that this is a December-end report. The shipper said that its net Voyage Revenues came to $117.1 million, and this is down from $223.5 million year over year.  Revenues from drilling contracts following the acquisition of Ocean Rig came to $87.5 million. The company also said that the Operating Loss from both segments was $794.3 million for Q408, as compared to operating income of $211.9 million for the quarter ended December 31, 2007. It also noted that it has previously reported a definitive and a preliminary agreement with lenders over waivers of loan covenant breaches.   It also remains in talks with its other lenders concerning current breaches of loan covenants. Pending the outcome of those discussions, it has reclassified roughly $1.8 billion in debt. It also expects to incur a loss of about $116 million in the current quarter about to end over the disposal of three Capesize newbuildings (ships). Shares had a substantial day yesterday, but the stock is getting clipped early this morning.  Early indications show trades down around the $4.55 to $4.60 level, and that compares to a $5.52 close.  As you probably know, moves of 20% are fairly routine in this.  Its 52-week trading range is $2.72 to $116.43. JON C. OGG Tagged: DRYS Source: 247 Wall Street | 25 Mar 2009 | 11:39 am Wall Street sell-off hits European, Asian shares (AFP) AFP - Global stock markets mostly went down Wednesday as a recent sharp rally on hopes of an economic recovery made way for profit-taking by investors. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 11:39 am More high street pain expected as sales fall High street sales deteriorated sharply in March as consumers reined in their spending, figures from the Confederation of British Industry (CBI) show. Source: Latest Business News from Times Online | 25 Mar 2009 | 11:38 am Before the Bell: Durable-goods orders, Siemens, Constellation Brands in view U.S. stock futures edged higher on Wednesday, helped by data showing surprisingly strong orders for durable goods. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 11:36 am Just get through 2009: Recovery in 2010 The U.S. economy has a good chance of starting to recover in 2010, but the rest of this year is going to be tough, according to a report released Wednesday. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 11:33 am Mortgage applications surge 30% Read full story for latest details. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 11:32 am Zara profits flat as sales rise Spanish retailer Inditex, the parent of the Zara fashion chain, sees flat annual profits in spite of a 10% rise in sales. Source: BBC News | Business | World Edition | 25 Mar 2009 | 11:30 am Ford CEO pay falls, but private travel stays DETROIT (Reuters) - Ford Motor Co Chief Executive Alan Mulally's total compensation fell 37 percent to $13.6 million last year and he received no bonus -- but he won't have to fly commercial. Source: Reuters: Business News | 25 Mar 2009 | 11:30 am China's ICBC says 2008 profit up China's ICBC, the world's biggest bank by market value, says its net profit for 2008 rose by a third to a record for the bank. Source: BBC News | Business | World Edition | 25 Mar 2009 | 11:21 am HSBC axes 1200 British jobs HSBC confirmed plans to cut up to 1200 UK jobs to cut costs to cope with an increasingly challenging market. Source: Telegraph Finance | 25 Mar 2009 | 11:21 am Facing layoffs, staff holds boss hostage Read full story for latest details. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 11:11 am London Markets: Smiths Group stumbles; broader U.K. market turns lower Smiths Group stumbles in a slightly stronger U.K. market on Wednesday, with the maker of medical and security screening equipment reporting a 23% drop in first-half profit. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 11:05 am EU presidency: US and UK economic recovery plans are 'a way to hell' Barack Obama and Gordon Brown's plans to increase spending on economic recovery have been described as "a road to hell" by the European Union presidency. Source: Telegraph Finance | 25 Mar 2009 | 11:01 am L&G to axe 10% of staff and halves dividend Legal & General (L&G) is cutting jobs and its full-year dividend to shareholders as the insurer struggles to preserve its earnings and capital base in the face of plunging share and bond markets. Source: Latest Business News from Times Online | 25 Mar 2009 | 11:00 am Australian regulator OKs Chinalco's bid for Rio Tinto Australia's competition authority said Wednesday it will not oppose the $19.5 billion bid by Aluminum Corp of China, or Chinalco, for a stake in miner Rio Tinto, ruling that the investment wouldn't lead to a substantial lessening of competition in the sector. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:59 am Currencies: Dollar mixed; euro choppy as German Ifo drops The European single currency sees choppy trading action Wednesday, slipping but then quickly rebounding after a closely-watched gauge of German business sentiment falls to another historic low. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:51 am Home of former RBS chief attacked by vandals The Edinburgh home of former Royal Bank of Scotland CEO Fred Goodwin is attacked by vandals in the early hours of the morning Wednesday. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:47 am MUFG and Morgan Stanley to join forces in Japan The two banks are set to merge their securities subsidiaries in Japan to create one of the top three brokerages in the country Source: Financial Times - US homepage | 25 Mar 2009 | 10:36 am China says Coca-Cola could have abused juice deal BEIJING (Reuters) - China rejected Coca-Cola's bid to buy top local juice maker Huiyuan because it feared the U.S. multinational could abuse its position across the whole soft drinks market, an official said in remarks published on Wednesday. Source: Reuters: Business News | 25 Mar 2009 | 10:30 am Stock market: 'Eventually shares will have the mother of all rallies' The stock market is rising but investors thinking of putting their Isa money into shares want to know: is this the start of a sustained recovery or a dead cat bounce? Source: Telegraph Finance | 25 Mar 2009 | 10:29 am Movers & Shakers: Wednesday's biggest gaining and declining stocks Among the companies whose shares are expected to see active trade in Wednesday’s session are the miners as well as Arbitron, DryShips, Ford, Google, Jabil Circuit, and UBS. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:27 am China not fooling in call for review of dollar's status China's calls for a new international reserve currency to replace the U.S. dollar are more than mere bluster and could likely lead the debate over the future of the global foreign exchange system, analysts say. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:24 am Smart house hunting: They saved $55,000 The housing bust is not all bad news; some homebuyers have purchased their dream homes at prices they couldn't even hope for a year or two ago. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 10:23 am New Plan To Buy Bank Toxic Assets Could Ruin Bank Balance Sheets A troubling wrinkle about how the Treasury’s plan to buy toxic asset from banks could cause huge losses and the need for more capital comes from premier bank analyst Richard Bove at Richard Bove. According to the FT, he wrote  “[The plan] will not happen because it would destroy bank capital. It might cause a bank to fail the new stress tests under way. Banks will not take this risk.” His premise is simple. If private equity will only buy assets at prices well below the value that banks have assigned to them on their balance sheets, the financial firms will have to write-off the difference. Douglas A. McIntyre Source: 247 Wall Street | 25 Mar 2009 | 10:19 am Inditex posts 4% drop in fourth-quarter profit Inditex, Europe’s top fashion retailer, reports a 4% drop in fourth-quarter profit, but vows to continue its international expansion this year despite challenging conditions. Source: MarketWatch.com - Top Stories | 25 Mar 2009 | 10:19 am Don't wait to inflation-proof your portfolio With the economy mired in deep recession, inflation isn't exactly a top-of-mind concern for most investors. After all, it's hard to see how prices are going to get pushed up when consumers aren't buying anything. Indeed, for many Wall Street economists, deflation seems to be the more immediate concern. Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 10:12 am Stock Futures Rise on Obama's Reassurance (Market Update) News at a Glance Executive Endorsement: Obama says economy will recover. Pointing North: Stock futures point to early gains. Blockbuster Deal: Pact with TiVo allows rentals online. Demand Surprise: Feb. durable good orders top consensus. The Lowdown President Obama's televised address last night intended to drum up support for his economic agenda and optimism about the recovery appears to have worked on Wall Street. Stocks looked to open higher as traders welcomed the President's remarks ahead of key economic data. Shortly before 9 a.m., Dow, Nasdaq and S&P 500 futures were trading above fair value. Obama pointed to "signs of progress" and said the nation was "moving in the right direction." "We've put in place a comprehensive strategy designed to attack this crisis on all fronts," he said. "It's a strategy to create jobs, to help responsible homeowners, to restart lending, and to grow our economy over the long-term. And we are beginning to see signs of progress." The President also defended his 2009 budget, which calls for a spending hike resulting in a $1.8 trillion deficit this year and a $1.4 trillion shortfall in 2010, according to Congressional Budget Office estimates. "There are no quick fixes and there are no silver bullets," he said. A report released Wednesday seemed to corroborate Obama's schedule for recovery. The UCLA Anderson School of Management's quarterly economic forecast predicts the Gross Domestic Product will fall 6.8% during the first quarter of this year, followed by declines of 4.5% and 1.7% in the second and third quarters. However, the report predicted a turnaround in 2010, when average quarterly growth is projected to reach 2.7%. Treasury Secretary Timothy Geithner is scheduled to discuss the administration's plan further in New York at the Council on Foreign Relations at 9:15 a.m. In energy, oil prices slipped ahead of the crude inventories report. By 8:50 a.m., oil traded down $1.34 at $52.64 a barrel. In world markets, Japan's Nikkei slipped 0.1%, while Hong Kong's Hang Seng climbed 2.1%. In Europe, the U.K.'s FTSE stood down 1.1% in afternoon trading. Corporate News General Electric (GE) scored a $300 million contract with PetroChina to build a natural gas pipeline in China, the Associated Press reported. The line, which will run horizontally across the country through 13 of its provinces, is designed to boost China's natural gas usage to 5% of its primary fuel consumption, up from 3.5%. Blockbuster (BBI) inked a deal with TiVo (TIVO) that will allow the media firm to operate an online rental service that lets users download movies in the firm's catalog, Reuters reported. The deal also levels the playing field with NetFlix (NFLX), which already operates a similar service through TiVo. Dell (DELL) drew back the curtain on a new series of servers aimed at consumers concerned about value. The new devices also perform write functions 91% faster than last comparable generation. The Economy Durable goods orders, a measure of demand, rose 3.4% in February, up from a revised January decrease of 7.3%, the Commerce Department said. The report marked the first increase in orders in seven months. Economists had expected a February decline of 2.5%. REPORT The February reading of the annual rate of new home sales is scheduled to be released at 10 a.m. by the Commerce Department. In January, the annual rate stood at 309,000 sales. For February, economists expect a slight decrease to a rate of 300,000 sales per year. The crude inventories report for last week is scheduled to be released at 10:30 a.m. by the Energy Department. In the prior week, inventories remained above the upper limit of the average range for this point in the year. 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 | 25 Mar 2009 | 10:11 am Dell (DELL) Enters Another Crowded Business Dell (DELL) keeps entering businesses where it might have an edge over competitors IBM (IBM) and HP (HPQ). So far, it has had little success in getting out in front of its larger rivals. It latest plan is not likely to solve that. According to Reuters,  “Dell Inc is introducing new server and storage products aimed at cost-conscious companies, betting that its emphasis on value can help win market share as competition intensifies.” Dell’s plans are based on the audacious assumption that HP, IBM, Sun (JAVA), and Hitachi have not seen the shrinking IT budgets at their customers and moved to market more cost-efficient products to appeal to miserly clients. Since one of the hallmarks of a recession is a cut in business spending, the idea of offering discounted product packages is probably something which occurred to most server companies months ago. Dell may not have gotten that memo. Douglas A. McIntyre Tagged: DELL, HPQ, IBM, JAVA Source: 247 Wall Street | 25 Mar 2009 | 10:09 am Garbage mogul makes millions from trash In a sprawling former suitcase factory in New Jersey, a camera crew is filming entrepreneur Tom Szaky and his company, TerraCycle, for a new reality TV show. Ten of the recycling firm's 46 employees sit around a table awaiting Szaky's next challenge. "So, guys," says Szaky, reaching into the pocket of his corduroy jacket and tossing a used toothbrush onto the table. "What are we going to do with this?" Source: Business and financial news - CNNMoney.com | 25 Mar 2009 | 10:05 am Australia antitrust body clears Rio-Chinalco deal (Reuters) Reuters - Australia's competition watchdog cleared Rio Tinto Ltd's $19.5 billion tie-up with China's state-owned Chinalco, clearing one obstacle to a deal that still needs the approval of the finance minister. Source: Yahoo! News: Business | 25 Mar 2009 | 10:05 am London shares mark time London's leading shares marked time on Wednesday as investors paused for a breath after a good run with the FTSE 100 now 13pc higher than the low it hit on March 9. Source: Telegraph Finance | 25 Mar 2009 | 10:04 am Blockbuster (BBI) Still Losing Foot Race Out Of Hell As the number of people who are willing to drive to a store to pick up a movie dwindles, so does Blockbuster’s (BBI) chances of staying alive. Blockbuster has tried to remedy its problems by getting into the business of offering films on DVDs via mail. Netflix (NFLX) has most of that market locked up. Blockbuster is also in the business of streaming movies over the Internet, but there are a number of firms which have offered similar services for year. The film retail company’s latest program to save itself from insolvency is to send movies to Tivo’s (TIVO)  TV set-top digital recording devices. Tivo has had very limited success competing with cable companies in the digital box space, so Blockbuster is setting up a partnership with an also-ran. Blockbuster will also not have the advantage of being the first movie service on Tivo. According to Reuters, “Blockbuster claimed that its roster of movies on TiVo will outshine that of online choices available at Netflix and Amazon.” That remains to be seen. Even if the Amazon (AMZN) and Netflix (NFLX) libraries are limited, most cable systems offer their own VOD services with recent releases. Blockbuster’s problem is that it still operates thousands of stores that very few customers visit. Unless it can close those outlets faster than consumer demand drops, it can’t stay in business, even with Tivo. Douglas A. McIntyre Tagged: AMZN, NFLX, TIVO Source: 247 Wall Street | 25 Mar 2009 | 9:59 am Rents 'may push retailers under' More retail businesses could be under threat on Wednesday as quarterly rent bills become due, experts warn. Source: BBC News | Business | World Edition | 25 Mar 2009 | 9:48 am Does Japan’s Extraordinary Export Problem Blow Back On China? During February, Japanese exports dropped almost 50%. For a nation with a $4.3 billion GDP, that figure is extraordinary. Exports to the US were down 58%. Japan has been a net exporter to the US for decades. It has to bring in oil and some raw materials, but it economy rests on a foundation of being able to sell its products abroad. The Chinese central government claims that its GDP will grow 8% this year. It points to its $500 billion stimulus package as one of the reasons, but the data from Japan would suggest that China’s forecasts are too high by a significant amount. China would like the world’s economists to believe that its economic machine is unlike any other on earth. That would mean that its exports are so attractive that even in a deepening recession demand could not be undermined by much. It also assume that a measly $500 billion is enough money to cause consumer and business spending in a nation with nearly 1.4 billion citizens to overcome a contraction of its manufacturing sector. That is clearly too good to be true. What if China is misleading the West about its GDP growth prospects? For one thing, budget forecasts in the US and other developed nations should be revised down. If China is in trouble, exports from America to the most populous nation is the world will drop like a stone. That should put further pressure on the US GDP which would almost certain make the revenue assumptions in the current proposed budget too high. Falling exports from China and Japan should also be a leading indicator of a continuing strong contraction of business and consumer demand in the US. That may point to a larger economic contraction in US GDP in March than many analysts are forecasting. Either China is being misleading about it prospects, or the rest of the world operates in an incomprehensible economy universe. Douglas A. McIntyre Source: 247 Wall Street | 25 Mar 2009 | 9:46 am World stocks inch higher; euro falls after Ifo (Reuters) Reuters - The euro slipped against the dollar on Wednesday after a closely-watched survey showed German corporate sentiment fell to a record low, while world stocks inched up after hitting a 5-1/2 week high the previous day. Source: Yahoo! News: Stock Markets News | 25 Mar 2009 | 9:44 am 'British FBI' working with US to investigate Madoff Agency dubbed the British "FBI" is working handinhand with the US Department of Justice to investigate the activities of 65bn fraudster. Source: Telegraph Finance | 25 Mar 2009 | 9:30 am Inditex posts net 2008 profit of 1.25 billion euros (AFP) AFP - Spain's Inditex, Europe's largest clothing retailer and marketer of the Zara brand, reported stable 2008 net earnings of 1.25 billion euros Wednesday but said the fourth quarter showed a 3.6 percent drop to 410 million euros. Source: Yahoo! News: Business | 25 Mar 2009 | 9:25 am Tech Stocks Lose Their Place In The World (GOOG)(MSFT)(CRM)(ORCL)(MSFT)(INTC) Tech stocks are supposed to go down less than the overall market and come back faster. That has been in the Broker 101 handbook for at least two decades. The reasoning is simple. Technology actually becomes more essential to corporations in a recession. It makes enterprises more efficient and productive. A mainframe can do the work of a dozen people. It has no health care or vacation requirements. The theory is not entirely bogus, at least when viewed from 30,000 feet. The PC and server have made businesses around the world substantially more productive. Router companies such as Cisco (CSCO) have streamlined the flow of data and voice over the broadband internet. Wireless systems allow workers to be efficient in almost any part of the world. Products like the RIM (RIMM) Blackberry mimic most of the features of a PC in a package the size of a deck of cards. Over the last several years, tech could make the claim that it had successfully redoubled its effort to give both businesses and consumers the ability to accomplish tasks that were previously complex and time consuming with relative ease. Google (GOOG) has made the collection of information quick and efficient. Software virtualization has allowed a large number of programs to run on a single server. Salesforce.com CRM) and Oracle (ORCL) have made it possible for employees to work in places remote from their offices with the systems that they need operating on servers and not on their PCs or handhelds. That keeps a company’s data more secure and it also keeps applications from taking up memory on portable devices. If tech is the sector of the economy that gives customers the most bang for the least money even in an economic downturn, the trading of shares in large tech companies are not supporting this theory. The stocks in companies like Microsoft (MSFT) and Intel (INTC) have not done any better than the market over the last six months. Some analysts would argue that this makes sense. The two companies are “old line” firms that developed their basic products in the early 1980s. While the shares of Google are down during the same period, they are not down as much. Google (GOOG) has more recently developed technology, so the market should give it a premium. The argument that tech stocks should do much better than the market during a recession is undermined by the fact that the current recession is not like any of those that came before it. Businesses and consumers are willing to abandon nearly all of their spending. Even if products or services make their lives more efficient and their time more effective if there is no more money to spend, it really doesn’t matter. Analysts try to describe why this period is worse than other bad economic periods in the past. To a large extent it is that even the most useful creations of the human imagination can’t find a market when the whole world is Douglas A. McIntyre Tagged: CRM, GOOG, INTC, MSFT, ORCL, RIMM Source: 247 Wall Street | 25 Mar 2009 | 9:11 am HSBC to cut 1,200 British jobs and close sites HSBC is cutting 1,200 British jobs in the bank's third attempt at slashing its costs in the continuing financial services downturn. Source: Latest Business News from Times Online | 25 Mar 2009 | 8:57 am Blockbuster aims beyond stores with TiVo deal NEW YORK (Reuters) - Blockbuster Inc plans to let TiVo Inc subscribers download movies to their home televisions from its online movie library, in the latest deal aimed at broadening the brand to computers and other gadgets. Source: Reuters: Business News | 25 Mar 2009 | 8:47 am News, views and analysis of the G20 London summit which aims to revive the world economy All the news, views and analysis of the G20 London summit that aims to revive the world economy Source: BBC News | Business | World Edition | 25 Mar 2009 | 8:39 am Australian regulator clears Rio-Chinalco deal Australia's competition watchdog cleared Rio Tinto's $19.5bn tie-up with China's state-owned Chinalco, rejecting at least one key argument being considered by the deal's final arbiter Source: Financial Times - US homepage | 25 Mar 2009 | 8:38 am Sir Fred Goodwin's £3m home attacked by vandals The £3 million Edinburgh home of Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland (RBS), was attacked overnight. Source: Latest Business News from Times Online | 25 Mar 2009 | 8:27 am Regulator approves Chinalco's tie-up with Rio The Australian competition regulator has blessed the purchase by Chinalco of shares in Rio Tinto and has ruled that the Chinese aluminium company's acquisition of stakes in the miner's mineral assets would "be unlikely to result in a substantial lessening of competition". Source: Latest Business News from Times Online | 25 Mar 2009 | 8:18 am JJB races to sell gyms as bank deadline expires JJB Sports, the struggling sportswear retailer, today warned investors that the latest extension to the standstill agreement with its lenders has expired, meaning the chain is in danger of running out of cash. Source: Latest Business News from Times Online | 25 Mar 2009 | 7:57 am Aussie dollar closes lower SYDNEY - The Australian dollar closed weaker on Wednesday after an increase in risk aversion during offshore trading pushed the currency to its first losing finish in 10 local trading sessions. At 1700 AEDT, the Australian... Source: New Zealand Herald - Business | 25 Mar 2009 | 7:36 am Sainsbury's soars on cheap food demand Shoppers are trading down and buying cheaper ranges of food, according to Justin King, chief executive of J Sainsbury, which managed to raise sales in the first three months of this year by 6.2 per cent. Source: Latest Business News from Times Online | 25 Mar 2009 | 7:32 am No more stops at the video game store A new service promises to let players buy or rent games online and play in seconds on their computer or television. Shoppers are buying an increasing amount of their music and movies via Web downloads. But video game sales remain firmly rooted in old-fashioned stores because many games require enormous software files that can take hours to download. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am BofA chief Ken Lewis says he plans to repay bailout funds soon The Bank of America CEO, in Times interviews, says he expects the company to pass the government's 'stress test' and start reimbursing the U.S. next month. Bank of America Corp. Chief Executive Kenneth D. Lewis said Tuesday that he wanted to start repaying $45 billion in federal bailout funds next month, after the government's "stress test" of his bank, and to give back the remainder as soon as the nation's wobbly financial system is stabilized. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Health insurers offer shift on premiums A proposal from major companies to stop charging sick people more for coverage comes with conditions. The country's leading health insurers Tuesday offered to end their long-standing practice of charging sick customers higher premiums, a significant concession in the face of mounting criticism of the industry in Washington. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Obama administration uses AIG to make case for more regulatory power Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke appear before a House panel, while Obama goes on TV to push for broad authority to seize firms that pose an economic risk. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am YouTube service is blocked in China The action may be tied to a video on the site that appears to show police fatally beating a Tibetan protester. A unidentified Chinese official says the video is a fake. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Western Asset cuts 10% of workforce The Pasadena-based money management firm has recorded heavy write-offs related to troubled securities in some of its funds. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am New program encourages low-income L.A. residents to open bank accounts The initiative aims to help 10,000 people end their dependence on check-cashing outlets before the end of the year by reducing the cost and simplifying the process of banking. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Expired digital TV converter box coupons can be replaced TELEVISION Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Allergan shares jump 13% on takeover speculation Drug firm GlaxoSmithKline is interested in buying the maker of Botox and weight-loss device Lap-Band. Shares of... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Fisker signs up 32 dealerships to sell Karma sedans The Irvine maker of plug-in hybrids plans to begin production of its $87,900 Karmas late this year. Even the car of the future needs old-fashioned sales technology. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Fisker signs up 32 dealerships to sell Karma sedans The Irvine maker of plug-in hybrids plans to begin production of its $87,900 Karmas late this year. Even the car... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Expired digital TV converter box coupons can be replaced TELEVISION Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am UCLA Anderson Forecast: dark days California's jobless rate will hit 11.9% by mid-2010, the report says, but it notes that it's challenging to make predictions amid the current volatility. Wall Street may be seeing glimmers of a recovery, but UCLA economists are coming out with a new forecast today that offers a grim picture of the year ahead. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Come on, people -- human hunger trumps politics and hassle At a time when record numbers of people are losing their homes, unemployment is rising and a growing number of families are in need, California caterers, hotels and restaurants throw out roughly 1.5 million tons of perfectly good food every year, according to the state Integrated Waste Management Board. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Come on, people -- human hunger trumps politics and hassle At a time when record numbers of people are losing their homes, unemployment is rising and a growing number of families are in need, California caterers, hotels and restaurants throw out roughly 1.5 million... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am No more stops at the video game store A new service promises to let players buy or rent games online and play in seconds on their computer or television. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Airlines worldwide to lose $4.7 billion this year, trade group warns Plunging traffic will offset a deep drop in fuel prices, the International Air Transport Assn. says. But U.S. carriers are better poised to ride out the situation and are likely to earn a profit. ... Source: RSS feed - channel BNPaperBusiness | 25 Mar 2009 | 7:00 am Obama administration uses AIG to make case for more regulatory power Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke appear before a House panel, while Obama goes on TV to push for broad authority to seize firms that pose an economic risk. A congressional hearing intended to put the nation's top economic policymakers on the hot seat over bonuses paid to employees of American International Group Inc. turned instead into a preview of the Obama administration's effort to revamp the powers of federal regulators. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am New program encourages low-income L.A. residents to open bank accounts The initiative aims to help 10,000 people end their dependence on check-cashing outlets before the end of the year by reducing the cost and simplifying the process of banking. Juan Murillo used to spend hundreds of dollars a year at check-cashing outlets because he was too intimidated by the U.S. banking system to open an account and did not speak enough English to write a check himself. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Clock ticking on Warner Bros. succession drama Time Warner CEO Jeff Bewkes must decide how to replace Barry Meyer and Alan Horn, who have jointly presided over the studio and are to step down in 2011. With the heads of Warner Bros. signing only two-year contract extensions, Time Warner Inc. Chief Executive Jeff Bewkes will focus on succession and how the movie and television studio should be managed in the face of tectonic shifts in the entertainment industry and a harsh economic environment. Source: L.A. Times - Business | 25 Mar 2009 | 7:00 am Aust market rises on bank stocks SYDNEY - The Australian share market shunned negative leads from overseas to close higher on Wednesday, led by financial stocks. At the close, the benchmark S&P/ASX200 index was up 29.3 points, or 0.82 per cent, at 3,609.3,... Source: New Zealand Herald - Business | 25 Mar 2009 | 6:59 am NZ sharemarket 'muted' The New Zealand sharemarket meandered along today, moving lower despite some of the newsmakers in recent months making ground. The NZSX-50 index was down 5 points, or 0.19 per cent, to 2630.326 when it closed at 5pm today. Turnover... Source: New Zealand Herald - Business | 25 Mar 2009 | 6:22 am The Highest-Earning Hedge Funders Will Not Be Taking Celebratory Zamboni Joy Rides On One Of Their Own This Year Institutional Investor's Alpha magazine came out with its annual list of the highest paid hedge fund managers today. Here's who made the most in 2008, calculated by "the managers' shares of their firm's performance and management fees, as well as gains on their own capital invested in their funds." Obviously there's a big pink elephant in the room right now, so we might as well acknowledge it by comparing this to 2007's top earners. I honestly feel like I've been slapped in the face with a Twinkie right about now. How did this happen? HOW? I don't ask this to be mean,* I genuinely need to know. We knew things didn't end so great in 2008 (and there was a li'l outburst in the fall) but we didn't know they were this bad. Someone please help us to understand how this came to pass. Last we heard things at CR Intrinsic-- which is, or was, significantly comprised of Cohen's personal capital, kind of a major factor in the rankings-- were a bit tense but we never could have anticipated a blow of this magnitude. In hopefully unrelated news, Alpha will reveal its NBC reality TV-inspired list of Biggest Losers tomorrow, a group of managers who together lost $6.2 billion in personal wealth last year. But delayed gratification is overrated, so, amongst yourselves, please determine now which names will be named. *Though, to that end, and in the interest of full disclosure, there is a selfish element to all this. See, gang, heretofore, we've been able to so guiltlessly rib the big guy because a) we're doing it from a place of love, and not hate and b) he's been insulated from whatever we send his way by a 100 foot radius of estrogen pills, leaf cookies and mega, mega wealth. Now that he's destitute, we might actually feel a little bad and have to momentarily consider laying off him. Or: continue doing what we're doing, but send him a cheesesteak for lunch, on us. It'll be one of these two options, for sure. **PS, condolences to KG, as well, but we think the wife's fund had not too terrible a year, so things can't be TOO bad. If that's not the case, hit us up for some cash later. We know you're good for it. Source: Dealbreaker | 25 Mar 2009 | 6:10 am Japan's exports nearly halve Japan suffered another record drop in exports last month while imports also fell much more than expected, highlighting the damaging impact of the global downturn on the world's second largest economy Source: Financial Times - US homepage | 25 Mar 2009 | 6:02 am Kiwi dollar closes above US56 cents The New Zealand dollar continued to drift lower today, ending up just above the US56 cent mark at the local close. At 8am today the NZD was buying US56.49c and lost nearly half a cent to be worth US56.12c at 5pm. The kiwi was... Source: New Zealand Herald - Business | 25 Mar 2009 | 5:54 am Sky TV agrees to run all TVNZ channels from July All TVNZ channels will now be available to Sky TV viewers after an agreement was signed today. The agreement makes TVNZ6 and 7 available to Sky viewers from July 1, as well as high definition (HD) versions of TV One and TV2 for... Source: New Zealand Herald - Business | 25 Mar 2009 | 4:35 am Attention Seniors: Itemize Those Health-Care Costs (The Tax Guy) For many seniors it's easy to get in the habit of claiming the standard deduction (and forgoing itemization) every time they file their taxes. After all, most seniors pay little or no mortgage interest and tend not to owe much for state and local income and property taxes, so itemized deductions often don't amount to much. Not only that, but folks age 65 and older receive larger standard deductions so it typically makes sense to go the standard deduction route. But there are exceptions. Any senior who had significant health-care costs last year should consider itemizing. It could result in a lower federal income tax bill -- even though medical expenses can only be deducted to the extent they exceed 7.5% of adjusted gross income (AGI). In fact, my very own parents just figured out they should have been itemizing for the last three years. Did they ever ask me before now? Of course not. Here’s how to figure out whether itemizing makes sense for you. STEP 1: IDENTIFY OUTLAYS THAT COUNT AS MEDICAL EXPENSES To figure out if you had enough medical expenses last year to benefit from itemizing, add up all of the following: Premiums for Medicare Parts B, C and D Coverage Seniors enrolled in Medicare can count premiums for Medicare Part B coverage (for medical costs other than hospital bills), Part C coverage (for Medicare Advantage policies), and Part D coverage (for prescription drugs) as medical expenses. Part B premiums for 2008 were usually about $1,150 per covered person (more for some higher-income individuals). Part C premiums depend on the plan. Part D premiums averaged around $300 per covered person for 2008. These premiums are withheld from your Social Security benefit payments. You can find the premium amounts for last year on your 2008 Form SSA-1099 (Social Security Benefit Statement) which you should have received from the government by now. Premiums for Supplemental Medicare Coverage (Medigap Insurance) Seniors can also count premiums paid for private Medicare supplemental insurance policies (often called Medigap coverage) as medical expenses. The cost depends on the plan, but annual premiums can easily amount to $1,000 to $2,000 per covered person. Maybe more. Premiums for Qualified Long-Term-Care Coverage Premiums for qualified long-term care (LTC) insurance policies also count as medical expenses. They are, however, subject to age-based limits. For each covered person, count the lesser of: (1) premiums paid in 2008, or (2) the age-based limit from below.
Age on 12/31/08	Maximum Premium Amount
61 to 70	$ 3,080
Over 70	3,850

Out-of-Pocket Medical Expenses

Many seniors also incur significant out-of-pocket outlays due to insurance co-payments and deductibles and for dental and vision care. Make sure to add these into the mix.

Medical Expenses Paid for Relatives

Did you pay health premiums or medical expenses for a relative last year? If so, you may be able to count those amounts, too.

Qualifying relatives include your adult child, son or daughter-in-law, grandchild, mother or father, stepfather or stepmother, father- or mother-in-law, sibling, stepbrother or stepsister, brother- or sister-in-law, aunt, uncle, niece, or nephew. And you must have paid over half of his or her support in 2008. It doesn’t matter if the relative lived with you. It also doesn’t matter if you can’t claim a dependency exemption deduction for the relative because he or she had over $3,500 of gross income in 2008.

STEP 2: ADD EVERYTHING UP AND SUBTRACT 7.5% OF AGI

Under the familiar rule, you can only claim an itemized medical expense deduction to the extent your total qualified outlays exceed 7.5% of adjusted gross income (AGI). For example, say your 2008 AGI was $80,000, and you had $20,000 of medical expenses. This would not be that unusual given the somewhat expansive list above. The good news: Your itemized medical deduction is a whopping $14,000 ($20,000 minus $6,000, which is 7.5% of your $80,000 AGI).

STEP 3: ADD IN OTHER ITEMIZED DEDUCTION OUTLAYS AND COMPARE TO STANDARD DEDUCTION

Now that you’ve discovered you can claim a significant itemized deduction for medical expenses (even after subtracting 7.5% of AGI), the next step is to identify any other potential itemized deductions for 2008. These can include (among other things):

• State and local income and property taxes (including taxes on cars, boats, and other personal property).
• State and local general sales taxes (but only if you choose to claim them instead of claiming state and local income taxes).
• Home mortgage interest (if any).
• Charitable contributions.

Add these to your medical expense deduction, and see if the total exceeds your 2008 standard deduction amount of:

• $6,800 if you’re unmarried and were age 65 or older as of Dec. 31, 2008.
• $13,000 if you file jointly, and both you and your spouse were 65 or older as of Dec. 31, 2008. ($11,950 if only one of you was).
• $9,350 if you use head-of-household filing status and were over 65 as of Dec. 31, 2008.

Obviously, if your total itemized deductions exceed the applicable standard deduction amount, you should forego the standard deduction and instead fill out Schedule A of Form 1040 to claim your rightful itemized deductions.

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.

7 Stocks for 10-Year Holders (Screens)

Stock screening software is handy for sorting cheap shares from pricey ones and determining which are recently rising. But it can’t tell which companies are neatly aligned with long-term societal trends. That means a search for stocks to hold for the next 10 years strays necessarily from the comfort of cold calculus to the gray of human judgment.

Still, I hope you’ll find the following points noncontroversial. For each, the computer has helped find some promising stocks—modestly priced ones attached to prosperous companies.

1. We’re getting old.

About 13% of Americans are 65 or older. By 2030, more than 20% will be, reckons the Census Bureau. The old spend less than the middle-aged on lots of things, but healthcare isn’t one of them. Four in five seniors have a chronic health condition like high blood pressure and diabetes, and half have two or more such conditions. Pills and prescription plans seem like good bets, but a greater role for government in coming years might crimp the profitability of either or both.

Companies that put paper medical records on computer networks, thereby saving money and improving results, seem more assured of growth. San Francisco-based McKesson (MCK) is North America’s largest drug distributor and a leading provider of information technology to hospitals, insurers and government health-care agencies. Its sales are growing nicely through the current recession, and its shares fetch less than nine times forecast earnings for the company’s fiscal year ending March 31.

2. We’re still fat.

Beyond fat, really: The obese, at 34% of the population, now outnumber the merely overweight, at 33%, according to the National Center for Health Statistics. I suppose that favors purchases of plenty of ordinary things in larger sizes, like pants and airplane seats, but the companies mostly likely to gain from these — Wal-Mart (WMT) and BE Aerospace (BEAV) — are more affected by other trends. Kinetic Concepts (KCI), based in San Antonio, makes vacuum-assisted systems for healing difficult wounds, like skin ulcers associated with diabetes, which is itself associated with obesity. It also makes specialty hospital beds, including ones that accommodate oversized patients.

Optimists might prefer to invest in diet plans and exercise. Companies that offer both are cheap right now; shares of gym chain Life Time Fitness (LTM) and diet programs Weight Watchers (WTW) and NutriSystem (NTRI) trade at 8 to 9 times earnings. Weight Watchers is the best diet plan, according to ConsumerSearch.com, which amalgamated opinions from a variety of sources, including Consumer Reports and The Journal of the American Medical Association. With budgets tight, sales for Weight Watchers are seen declining 9% this year, and those for NutriSystem are seen falling 14%. Life Time is growing sales, mostly because it is opening new clubs, not expanding sales at longstanding ones. NutriSystem, unlike the others, is debt-free, and it offers the plumpest dividend yield: 5.3%.

3. A house bubble has popped, but has left plenty of houses.

Prices are down 27% from their mid-2006 peak, according to S&P’s Case/Shiller index, last reported in February for December. But houses built during the frothy years — from 2000 to 2007 the number of housing units swelled 10% while the population increased less than 7% — remain. Not all are cared for; a record one in nine are vacant. Assuming prices will eventually find a level where buyers will move in, our huge housing stock will need plenty of paint and lawn care in years to come. Sherwin-Williams (SHW) leads the nation in paint sales, makes most of its money from touch-ups on existing houses, and has increased its dividend each year since 1979. Current yield: 3.2%. Shares are 14 times earnings. The Scotts Miracle-Gro Company (SMG), true to its name, is increasing sales in what seems like an unlikely setting. Shares sell for just under 15 times earnings, but those earnings are expected to grow by double-digit percentages this year and next. The dividend yield seems in need of a spritz or two of growth spray, at just 1.5%.

Screen Survivors CompanyTickerPriceP/EYield McKessonMCK36.2791.4 Kinetic ConceptsKCI19.786n/a Lifetime FitnessLTM11.287n/a NutriSystemNTRI14.1495.3 Weight WatchersWTW19.3583.7 Sherwin-WilliamsSHW50.2143.2 The Scotts Miracle-Gro CompanySMG33.97151.5

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Will Lorillard Meet Its Match?

ONE OF THE MOST VALUABLE and lucrative, if controversial, consumer products in the world is Newport cigarettes.

Newport's manufacturer, Lorillard (LO), essentially is a one-product company. It has a market value of more than $10 billion, roughly equal to that of Heinz (HNZ) or Campbell Soup (CPB). While smaller than rivals Reynolds American (RAI) and Altria (MO), Greensboro, N.C.-based Lorillard has the highest profit margins in the U.S. cigarette industry. It also has one of the best growth outlooks, thanks to the strength of the Newport menthol brand, which is popular with black and Hispanic smokers, particularly in the Northeast.

Lorillard's fans in the investment community say that the company is underappreciated on Wall Street -- partly because of its involvement in tobacco -- and that it is the most attractive takeover target in the consolidating global cigarette industry. There lately has been talk that Reynolds, maker of the Camel, Winston and Kool brands, might buy Lorillard for a sizable premium above the recent share price of $61. Reynolds and Lorillard declined to comment.

Deal or no deal, Lorillard looks appealing. Its shares trade at 11 times projected 2009 profit of $5.50 a share and provide a yield of 6%. Lorillard pays out 70% to 75% of its profit in dividends. The company, which was spun off by Loews (L) last year, has a great balance sheet, with more than $1 billion of cash at year end and no debt.

"Lorillard has the best developed-market tobacco business in the world," says David Adelman, the cigarette analyst at Morgan Stanley. Adelman points out that Newport, which has a 10% share of the U.S. tobacco market, is the choice of roughly 17% of new smokers, the most favorable skew among major cigarette makers. He carries an $80 price target.

Newport is the nation's No. 2 brand, trailing only Altria's Marlboro, which commands more than 40% of the domestic market. Newport dominates the menthol category, with a 34% market share, while accounting for 90% of Lorillard's sales volume and nearly all its profit. Lorillard has no international operations.

UBS tobacco analyst Nik Modi recently wrote a note in which he called a purchase of Lorillard by Reynolds "one of the most compelling M&A scenarios from both a financial and strategic perspective," because it would strengthen Reynolds' generally weak portfolio. The combined companies could realize cost savings that some put at more than $400 million a year.

Modi wrote that Lorillard could fetch $85 a share in a deal. If Lorillard does go on the block, there could a bidding war that includes Reynolds, Britain's Imperial Tobacco (ITYBY), Japan Tobacco (2914.Japan) and perhaps even Philip Morris International (PM). Altria's roughly 50% U.S. market share makes it an unlikely bidder, owing to antitrust issues.

At $85, Lorillard would be valued at 15 times estimated 2009 profit and more than nine times pretax cash flow. Cigarette deals historically have been done at 12 times pretax cash flow. With the debt markets receptive to financially strong companies, a Reynolds/Lorillard deal probably could be financed pretty easily if Reynolds offered, say, one share of its own stock, recently at $36, and $50 a share in cash for each Lorillard share.

A Reynolds/Lorillard combination, however, might not pass antitrust scrutiny. The combined companies would have a market share of about 40%, resulting in an effective cigarette duopoly in the U.S., with the combined share for Altria and Reynolds around 90%. Lorillard bulls argue the Miller/Coors deal passed antitrust review, which resulted in just two dominant U.S. beer makers -- Miller/Coors and Anheuser Busch.

It is unclear whether Lorillard is amenable to a takeover. Management, led by Chief Executive Marty Orlowsky, is viewed as shareholder-friendly, although it is believed that Lorillard now wants to maintain its independence.

Reynolds has been losing market share, while Lorillard has been gaining, due to the eroding sales of Reynolds brands like Winston and Salem, which Newport is crushing along with Kool. Lorillard's profit is expected to rise 7% this year from 2008's $5.15 a share, while Reynolds' earnings are seen falling 4%, to $4.38.

Adelman says that, thanks to Newport's strength, Lorillard offers fewer promotions than its rivals do on their major brands. Its share of the menthol market has jumped to 34%, from 28% in 2002. Menthol cigarettes account for about 30% of the overall U.S. market. Lorillard had an estimated operating profit of 76 cents a pack last year, against 59 cents for Philip Morris USA and 45 cents for Reynolds. Lorillard's profitability has risen despite steadily rising prices for cigarettes, which reflect increased federal and state taxes. The federal excise tax recently rose to $1 a pack from 39 cents. Lorillard and its rivals more than compensated by raising prices by 71 cents a pack.

Newport is doing well even in high-tax places like New York City, where the combined state and local tax bite of $4.25 results in a retail price of $10 a pack -- we paid $12 for a pack of Newports at a local Manhattan drugstore.

One of the knocks against the domestic tobacco industry is steadily declining unit volume as Americans quit smoking. Lorillard's volume, however, was up 3% last year, against a 3% drop for the industry.

"Everyone has tried to take on Newport and failed," Adelman says. "Salem has failed, Kool has failed. Marlboro has had some success with Marlboro Menthol, but at a high financial cost." Marlboro Menthol is strong in areas where Marlboro does well, in the center of the country, while Newport maintains its appeal on the East Coast.

One concern for Lorillard is potential regulation of the cigarette industry by the Food and Drug Administration. Legislation that would enable this has been passed by a House committee and may clear the full chamber soon. The bill, however, could stall in the Senate, where tobacco-producing states wield considerable power.

The doomsday scenario for Lorillard would be a ban on menthol cigarettes by a newly empowered FDA. Critics say menthol makes its easier for young smokers to pick up the habit, because menthol masks the harshness of cigarette smoke. The proposed FDA legislation, however, only requires a study of the menthol issue, Adelman notes. He sees almost no chance of a ban, because menthol cigarettes have been proven to be no more harmful than regular cigarettes. No major country in the world now bans menthol. And let's not forget that government at all levels also derives significant tax revenue from cigarettes.

A big investor fear has been litigation, but that danger has receded with a series of court victories by cigarette companies.

Newport's strength and growing earnings power mean Lorillard has no reason to rush into any deal. It might pay for CEO Orlowsky and the Lorillard board to wait until financial markets stabilize and Imperial Tobacco digests a large, debt-financed acquisition in order to broaden the pool of interested buyers. In any case, Lorillard looks like the best bet in the consolidating tobacco industry.

The Bottom Line
Bulls point to Lorillard's dominant Newport brand and its great balance sheet, saying it could fetch 85 share in a merger. The caveats: antitrust issues and the looming FDA.

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.

Big-Ticket Items to Buy at Warehouse Clubs (Deal of the Day)

In some ways, warehouse clubs can be a budgeter’s worst nightmare: Go in for a value pack of three-dozen eggs, and you could end up walking out with a flat-screen TV (not to mention 10 other things that weren't on your shopping list).

The good news is that when you succumb to those big-item buys, you're at least snagging a great deal. Refrigerators, diamond jewelry and even above-ground pools can be found at prices that are just a fraction above wholesale. That can translate into savings of hundreds -- if not thousands -- of dollars, making that $40 or $50 membership fee well worth it.

Here are five big-ticket items that you can buy at the warehouse club and reap significant savings.

1) Cars

Warehouse club auto-buying programs pre-negotiate prices for their members with local dealerships, allowing you to save up to 20% on the sticker price of a new vehicle (and that's before cash rebates and other incentives come into play). The one catch: Because there’s a commission for the club, decent negotiators may be able to get a better deal hitting the dealership on their own. (For more information on how auto-buying programs work, read our story.)

Savings: Through the Sam’s Club Auto Buying Program, pay $18,427 for a 2009 Toyota Camry, which regularly has a sticker price of $19,865. You'll save 7%.

Ready to buy a car? Read our story for five more ways to make sure you’re getting the best deal.

2) Engagement rings

The only real difference between diamond engagement rings at the warehouse club and the offerings at your local jeweler’s is the fifth C -- cost, says Martin Fuller, a master gemologist appraiser with the American Society of Appraisers. So long as the diamond bears a grading report from a reputable association, you can be satisfied that the cut, color, clarity and carat pass muster. Most warehouse-club stones come with reports from the International Gemological Institute, or IGI. Appraisal values tend to be a little less conservative than those of industry standards, the Gemological Institute of America (GIA) or American Gemological Society (AGS), but their assessment of the four C’s isn’t likely to deviate, says Fuller.

Savings: At Costco Wholesale, a one-carat emerald-cut diamond (VS1, F) flanked by two baguettes on a platinum band goes for $6,700. A similar diamond and ring setting on Diamond.com costs $7,850. You’ll save about 15%.

For more tips on how to get the best engagement ring for your buck, read our buyer’s guide here.

3) Major appliances

You’ll find the latest models from your favorite brands, for roughly 10% off other stores' prices. Just keep in mind that many appliances bear different model numbers than you’ll find at say, Home Depot (HD) or Sears (SHLD), so bring the specs on appliances you’ve already priced elsewhere to find their discount counterparts.

Savings: BJ’s Wholesale Club (BJ) has a 22.4 cubic-foot LG stainless steel, bottom-freezer refrigerator for $1,200. Typically, Sears offers it for $1,300. You’ll save 8%.

4) Electronics

Customers may be drawn to the great electronics deals offered at warehouse clubs, but the real eye-catcher may just be the generous warranty and return policies. “They’re unheard of anywhere else,” says Michael Gartenberg, vice president of strategy and analysis for Interpret LLC, a market researcher. Costco (COST), for example, offers a 90-day return policy (triple the length of Best Buy’s (BBY)). While you’re browsing the shelves, bear in mind that you may not see the same model numbers as in electronics stores, but the differences are limited to superficial changes, he says.

Savings: BJ's Wholesale offers a 46-inch Sharp Aquos LCD screen for $1,000. Best Buy has a comparable model with three additional HDMI ports for $1,300. Forego the extra ports and you’ll save 23%.

5) Caskets

Buy a casket at a funeral home and pay a markup of up to 350%, says Lisa Carlson, executive director of the Funeral Ethics Organization, a nonprofit consumer advocate. Warehouse clubs sell the same models as funeral homes and casket retailers, but price them just above wholesale. Prices also include overnight delivery. The funeral home isn't allowed to charge you extra for bringing in your own casket, either. The Federal Trade Commission prohibits charging a handling fee for those who make a purchase elsewhere.

Savings: At Costco, an “In God’s Care” casket from Universal Casket costs $925, including shipping and handling. CasketXPress.com charges $1,680 for the same model. You’ll save 45%.

For more on the best and worst warehouse club buys, read our story.

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.

Barack Obama – recovering from recession will take time

Japan posts first trade surplus in five months

NZ consumers slipping back into pessimism, says new survey

Obama touts signs of economic progress

SAC Opening A Chicago Office?

Earlier tonight someone told us about a one-off SAC Capital hire (Shakeeb Alam, previously a senior executive and partner at Boston-based Highfields Capital where he led the firm's consumer and retail industry investment team, as a PM) that we probably wouldn't have cared about (because we're dismissive assholes), except for this-- supposedly Alam will be working out of SAC's "new Chicago office." When did this happen? We haven't heard or seen anything about the mini-Steves taking off their shoes, unbuckling their belts and making themselves at home in Ken Griffin's house, and we (KG) need to mentally prepare for the upheaval (and start deciding what flavors to put in the welcome wagon deep dish pizzas).

Update: Apparently the Chi-town office has been "just getting started over the past couple weeks." Send your congratulatory Deep D's to the new space (a block and a half from Citadel's 131 South Dearborn Street spread):

1 South Dearborn Street Suite 2108
Chicago, Illinois 60603

Mobile phone termination rates too high, says regulator

Mountain Buggy bought by fellow Kiwi buggy maker

Fisher & Paykel first business to sign for nine-day fortnight

Obama makes case for spending plan

In Brief - Tuesday

After The Close - Tuesday

Commercial Online School Keeps Costs Low For Military Personnel

Business Briefs - Tuesday

Trends & Innovations - Tuesday

Google ups stakes in search engine battle

AIG executives in London 'hold out in bonus assault'

Diamond set to gain on iShares sale

On The Hook?

Paddy Hirsch who does the great Whiteboard explainer videos for Marketplace wrote in with a helpful critique of our toxic asset theater on the podcast last night. He writes:

"The taxpayer is NOT on the hook for the loan that comes from the "government." That loan is guaranteed by the FDIC, which is funded with dues from member companies, not by the taxpayer."

Paddy is right, we blurred a line we shouldn't have in the podcast. The plan that Treasury released yesterday has two parts. One, the Legacy Loan Program, is aimed at buying pools of troubled loans from banks. In the example we gave, a loan sells for $84. To buy it a private investor might put in $6, the government might put in $6, and a loan (yes, a loan to buy a loan) of $72 would cover the rest. Under the plan, that $72 loan would be guaranteed by the FDIC. So for the Legacy Loan program, Paddy is right, the taxpayer should not be on the hook as far as that supporting loan goes.

However, the second part of the plan (called the Legacy Securities Program) does put taxpayers on the hook in this way. It is aimed at buying what we've more typically thought of as toxic assets - mortgage backed securities. And in this case, the plan calls for supporting loans from the Treasury Department, with possible assistance from the Federal Reserve through its TALF program. So in this case, the taxpayer could be on the hook if the toxic assets purchased went downhill and the loan could not be fully repaid.

Also, I should not have said that the taxpayer could be on the hook for 93 cents of a dollar spent to buy these toxic assets. For the Legacy Loan program, it is clearly much less than that. For the Legacy Asset program, we just don't know. It could be more, it could be less, depending on how much the Fed ends up helping out through its TALF program. Those details haven't been determined.

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Write-Offs: 03.24.09

$$$"President Barack Obama plans to meet with about a dozen of the U.S.'s top banking chiefs in an unusual gathering designed to discuss the administration's plans to shore up the financial sector.

Attendees are expected to include Goldman Sachs, J.P. Morgan Chase and Citigroup. The meeting comes as relations between Washington and Wall Street are frayed following last week's furor over bonuses paid to American International Group employees." [WSJ]

$$$ The leading candidate to run the Treasury's $700 billion bailout program has withdrawn his name from consideration. [WSJ]

$$$ Meredith Whitney: Regional Banks Are the Future [Economics Blog]

$$$ Successful bank rescue still far away [FT]

$$$ Wall Streeters Flocking to Rehab [Cityfile]

$$$ The gentleman requires a bailout [Foggy Monocle]

Wall Street slumps after massive rally (AFP)

AFP - Wall Street fell heavily Tuesday as investors retreated from a sizzling stock rally a day earlier fueled by a new US government plan to clean up toxic assets in the banking system.

Wall Street slumps after massive rally (AFP)

AFP - Wall Street fell heavily Tuesday as investors retreated from a sizzling stock rally a day earlier fueled by a new US government plan to clean up toxic assets in the banking system.

Treasury urges new powers to intervene

Presented By:

House Majority Leader: 90% Tax On Bonus Was Just A Scare Tactic That's Worked Out Pretty Well, Wouldn't You Say?

The No. 2 Democrat in the House on Tuesday said hastily-crafted legislation imposing punitive taxes on executive bonuses has accomplished its mission even if it doesn't become law.

Majority Leader Steny Hoyer (Md.) was reacting to an announcement from New York Attorney General Andrew Cuomo that 15 of the top 20 employees at American International Group have agreed to return their bonuses.

"I think, apparently, the House bill had its affect," Hoyer said. "They're giving it back."

[...]

Still, Hoyer defended the House bill as a success and the appropriate response.

"If you'll recall last week, what did I say? They ought to give it back," Hoyer said. "I don't think it was symbolic. It was real if it became law. Now, whether or not it becomes law is another question.

"If the money is returned," he continued, "the legislation may not be necessary."

Hoyer says mission accomplished on AIG bonus bill [The Hill]

The Obama Portfolio: Killin' It Softly

Holding on to those double digits.

The Obama Portfolio (Since Inception): +14.14%

Earlier: The Obama Portfolio

You're Required To Get A Bathroom Pass From Lloyd Blankfein Before Taking A Leak, Aren't You? AREN'T YOU?

In case you missed Mad Max's latest track.

Pay-off to Valeo boss prompts backlash

Fanning The Flames Of The Culture Wars

Liberals do not consider cheating on taxes to be as morally problematic as conservatives do. This presents an obvious moral quandry [sic] of its own, as, putatively less surprisingly, liberals are more likely than conservatives are to favor greater amounts of taxation and wealth redistribution.

Liberals and Tax Cheating [The Audacious Epigone]

Wachter Says Parts of the U.S. Are in Depression

Blocking It Out

Seen in the window of a fashion store in Germany. Maren Schmohl /Planet Money Facebook group

 

Bianco Footwear offers a suggestion on how to deal with the global financial crisis -- ignore it.

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Oil up slightly, dealers await U.S. stocks data (Reuters)

Reuters - Oil rose slightly on Tuesday after U.S. stock markets bounced off their lows amid lingering optimism that the government's plan to unburden banks of soured assets could help shore up the ailing economy.

Indian party appeals to rural voters

Will OnLive Kill the Video Game Console?

OnLive, a new service that replaces video game consoles like the XBox and PS3 with a small online device, was announced at today’s Game Developer Conference. OnLive will offer hi-res video games over your broadband connection, opening doors for video game downloads, multiday online rentals, and other exciting options. InformationWeek reports:

A startup company called OnLive is trying to disrupt the gaming industry by delivering high-end games through the cloud to a computer or Internet-connected television.

For the game publishers, the service could open the door for another revenue stream without the costs of shipping and manufacturing games on disks. The service already has the backing of Atari, Eidos, Electronic Arts (NSDQ: ERTS), Take-Two Interactive Software, THQ, Ubisoft, and Warner Bros. Interactive Entertainment. These companies plan to launch titles on OnLive at the same time as the console and PC counterparts.

OnLive is a spinoff from San Francisco-based Rearden Companies, a multimedia powerhouse that develops products and services for companies in the entertainment, communications, multimedia, and consumer electronics industries. The man behind Rearden is former Apple engineer Steve Perlman, best known as the founder of WebTV.

The product and technology sound groundbreaking. Perlman will reveal more today at the conference, at 7:15 PST. Stay tuned.

Successful bank rescue still far away

Banks Failures Roll In

I've been learning a lot about the Federal Deposit Insurance Corporation lately. That's the agency that insures our bank deposits and takes over our failed banks. I've spent time with some of the 600 new staff they are hiring, and we working away at another This American Life/Planet Money collaboration that looks at what actually happens when the FDIC takes over a failed bank.

Still, no matter how much time I spend learning about this stuff, I am taken aback every time Friday rolls around and a few more banks fail. Yes, at least one bank fails almost every week in our country right now. Last Friday there were 3 banks and 2 credit unions. (Read a strange story about one of those credit unions here.) We are now at 20 failures since the start of 2009.

At a couple banks a weekend, we're not anywhere close to Savings and & Loan Crisis levels -- 747 banks went down. But as one FDIC director pointed out to me, there are significantly less banks now. During the S&L crisis we had about 14,000 banks, today there are about 8,400. The banks we have now are much bigger and much, much more complicated.

They are keeping good watch on bank failures over at Calculated Risk. Banks failures during the Great Depression compared to the S&L crisis.

Click to enlarge. The x axis is years. The y axis is the number of failures. Calculated Risk

 

Bank failures during the S&L crisis compared to now (this was put together last month and does not include the last 7 failures).

Click to enlarge. The x axis is years. The y axis is the number of failures. Calculated Risk

 

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U.S. pensions seen favoring bonds over stocks: study (Reuters)

Live Chat: Toxic Asset Plan

Seeking Alpha is holding a live chat at 2:30pm Eastern time today on the Treasury Department's new plan to clean up bank balance sheets. They've got a great line up of guests: Felix Salmon, James Kwak, Brad DeLong and Mark Thoma. It should be an interesting conversation. Check it out here.

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The Next Bubble to Burst?

By now we're pretty familiar with the concept of securitized debt, particularly mortgages that were packaged and sold as investments. These, of course, became problematic when the housing bubble burst, mortgage defaults spread, and mortgage-backed securities imploded.

But what about other types of consumer debt that are wrapped up with a bow and traded on the market? Could securitized credit card debt be the next crisis in the making?

U.S. consumer revolving credit debt (including credit cards) has risen 20 percent in the past five years from $799.8 billion in 2004 to $960.4 billion in 2008 according to the Federal Reserve. Preliminary numbers for January 2009 show that figure continued to grow to $961.3 billion.

The Nilson Report, a research group that studies consumer payment systems, projects outstanding consumer credit card debt will reach $1.177 trillion by 2010. And with that debt increasing, we could also see credit card payment defaults continue to grow. Reuters reports that U.S. credit card defaults are at a 20-year high.

Banks and credit card companies pay a hefty price for these defaults, and at the end of the day they are often forced to clear from their balance sheets -- or "charge-off" -- loans they deem "unrecoverable." The Fed reports the average charge-off rate for all U.S. banks has risen steadily over three years from 3.13 percent in the first quarter of 2006 to 6.25 percent in the last quarter of 2008, a near-record high. According to Reuters, some analysts are predicting that charge-offs "could climb to between 9 and 10 percent this year from 6 to 7 percent at the end of 2008." If that happens, losses could total $70 billion to $75 billion in 2009.

Why should we care that credit card companies may be suffering? As USA Today economic reporter Kathy Chu told All Things Considered's Melissa Block last fall, about half of all U.S. credit card debt -- around $450 billion -- is securitized.

As credit card defaults and charge-offs climb, returns on credit card debt securities shrink. According to Dr. Christian E. Weller, a Senior Fellow at the Center for American Progress and an Associate Professor of Public Policy at the University of Massachusetts Boston, this could lead to an implosion not unlike what happened with mortgage backed securities. He writes:

When the excess returns on the securitized funds -- earnings for investors -- shrink far enough because of a rise in defaults, the investors can ask for more cash from the credit card lender or, in extreme cases, demand their money back. The term liquidity crunch probably does not aptly describe what this would mean for credit card companies.

Of course this is all still speculation, but it's something we're keeping our eye on.

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Calomiris Sees Another Financial Shock Ahead From Europe

Crumpled clothes foretell financial woes

Letters: No slowdown in your opinions

New office crisis: Boomers won't leave!

Entrepreneur wires electronics in China

Is China's global currency plan viable?

Bank plan will work if the price is right

Housing slowdown is slowing down

Clarida Says Geithner Proposal Should Help Economy

Retsinas Says U.S. Built 1 Million Too Many Homes

Naroff Says U.S. Economic Turnaround May Come Quickly

Cliggott Sees `Tremendously Oversold' U.S. Stock Market

Wheeldon Sees Ford Surviving; GM, Chrysler Face Problems

InterMune Cut to `Sell' at UBS

Trade Expected To Fall 9 Percent

The World Trade Organization is predicting that global trade will drop by 9 percent in 2009 -- the biggest drop since the Second World War.

A report from the WTO specifically points to a drop in demand, tightening of credit, and the increasing presence of global supply chains as factors in the downturn. The global economy is expected to shrink by 1 or 2 percent in 2009, and the WTO says "its impact is magnified in trade."

The report says recovery is dependent on proposed fiscal stimulus plans and repairing world's banking system:

Despite the large size of this expected drop in world trade there are still substantial downside risks to the projection. Further adverse developments in financial markets could prolong the current crisis, as could a surge in protection. Recovery could be slower than expected if household consumption does not return to a more normal growth trend soon.

We recently had a visit from Linnea Ericsson, a reporter for Swedish Public Radio, who says her country is feeling the global slowdown. Linnea told me that forestry, which is a major industry in Sweden, has especially been suffering:

For the first time ever they have just stopped taking down forests. Last week they just decided to not go out there at all. March is the best month for forestry -- it's not too hot nor it is too cold -- so this is their prime month for actually chopping down the trees. For the first time, they just didn't go out at all.

They just chop it down and deliver it, but no one wants it anymore. No one is making anything so they just stopped.

One of the world's largest forest production companies, the Finnish-Swedish company Stora Enso Oyj, is predicting a 20 percent cut in paper and board production capacity and cutting expenditures by $515 million this year.

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Open Thread: Why Not Pay?

We've had a lot of discussion on the blog recently about bonuses. Today Andrew writes to ask: "what's the big deal?"

I feel like either the whole country is nuts, or I am crazy. I see no ethical, moral, or legal reason that the bonus promised to these AIG employees should not be paid. Every justification I have heard expressed is gibberish.

It seems like the entire country has turned into a lynch mob. Instead of providing a voice of reason our legislature is tripping over itself in an effort to use the tax code to affect a kind of frontier vigilante justice. I am wondering where Atticus Finch is. Where is the voice of reason?

To me it seems clear. AIG promised some employees X if they did Y. They did Y and AIG needs to pay up. We should certainly cancel these contracts to prevent future payouts, but I see no way we can morally renege on what has already been fulfilled.

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Baked by Melissa Squeezes Dollars Out of Cupcake Trend

Flickr image: Stacie Joy for CTTC

Baked by Melissa, a nascent New York cupcake store run and masterminded by 25-year-old Melissa Bushell, is evidence that combining a trend with a good price point results in a winning recipe. From The Feedbag:

(My sister and I)…strolled over to Soho and saw a lineup…(of) female tourists and Sex And The City- era locals…in front of a little outpost next to Cafe Bari. The sign said “Baked By Melissa”, a two week old cupcake shop with a twist. The menu photos made these “stuffed cupcakes” look larger than life. We thought, “what a bargain! Only $1 each”! You can imagine our surprise when we were handed something the size of a popcorn kernel. Maybe the cupcake fad is not over after all. Cupcakes are just downsizing like everyone else in New York.

The tiny cupcakes look delectable, but seriously–a silver-dollar-sized piece of cake and frosting for $1? It probably costs $1 to make four batches of the cupcakes.

If Melissa is around long enough for the cupcake trend to die, she could simply miniaturize the next trendy baked good and go from there. Smart.

Geithner Testifies on AIG

Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke are testifying on Capitol Hill today about the government's involvement in AIG. In prepared remarks, Geithner said the government needs to find a way to "unwind a non-bank financial institution like AIG." How does he plan to do that? Take a look:

The proposed resolution authority would allow the government to provide financial assistance to make loans to an institution, purchase its obligations or assets, assume or guarantee its liabilities, and purchase an equity interest.

The U.S. government as a conservator or receiver would have additional powers to sell or transfer the assets or liabilities of the institution in question, renegotiate or repudiate the institution's contracts (including with its employees), and prevent certain financial contracts with the institution from being terminated on account of the conservatorship or receivership.

This proposed legislation would fill a significant void in the current financial services regulatory structure with respect to non-bank financial institutions. Implementation would be modeled on the resolution authority that the FDIC has under current law with respect to banks.

Watch the hearing live.

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Richard Bernstein Follows Own Advice, Leaves Merrill Lynch

Just yesterday, Merrill Lynch heavy hitter Richard Bernstein warned investors to sell bank stocks, because profits will continue to drop despite government action. Today, Bernstein heeded his own counsel and left his post at Merrill Lynch/Bank of America. From MarketWatch:

Bank of America shares fell 7% on Tuesday and were among the financial sector’s biggest decliners after word emerged that two top members of Merrill Lynch’s financial and market research team are leaving the firm in coming months.

It said Bernstein, “has made the decision to pursue new challenges, including potential opportunities on the buy-side, teaching and perhaps authoring another book.”

Bernstein recognizes that there’s no point in being a big player in a losing game. I hope he writes another book.

Angry In Ireland

Robert writes from Dublin:

I am living in Ireland. We are having an unprecedented economic contraction...in 2009, of around 6.5%. Our banks held no U.S. toxic assets, but we have lots of loans to Irish property developers that have soured badly. Our population is 4 million, and we have put 7 billion euro into our 2 main banks, but it looks like we will need to put in more.

Our budget deficit is going to be over 10% in 2009. Luckily we are in the euro and have some stability from that. Unfortunately, our exchequer was too dependent on property related taxes, great in a boom, but crushing when the bubble pops.

Irish people are not blaming the U.S. subprime for our problems. Our problems are all homegrown, just crystallized by the worldwide crisis. We thought we were different, a unique invention of the brains behind the "celtic tiger", and by borrowing and selling houses to one another we could become very wealthy.

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Morici Says Geithner Plan Will Overpay for Toxic Assets

Full Text of Today’s Obama Op-Ed

Below is the full text of today’s Obama op-ed, as published in 30 newspapers worldwide in advance of the April 2 G20 summit:

A time for global action
By Barack Obama
Monday, March 23, 2009

Barack Obama is president of the United States. A Global Viewpoint article distributed by Tribune Media Services.

Knauf Drywall Fiasco “Biggest Home Defect Case in US History”

Knauf drywall, a German brand of drywall manufactured in China, could be releasing toxic gases in tens of thousands of US homes built between 2004-2007. ABC reports:

The Consumer Product Safety Commission is investigating whether (Knauf) drywall…may be emitting toxic gases. Most materials used to build or remodel homes are made in the United States, but the building boom and Hurricanes Katrina and Wilma caused building material shortages. That’s when some builders started buying up Chinese-made drywall. Knauf brand drywall is now at the center of several lawsuits alleging that it emits gases that harm household systems and may be dangerous to your health.

“I think ultimately you will be talking about tens of thousands of homes that will have to be completely redone or demolished,” Alters said.

The article says that black soot on the wires behind your light switch plates, in the coils of your air-conditioning unit, and on the plugs of your washer/dryer could indicate a problem.

The media is putting a China-bashing slant on this piece of news. While it’s true that China has a tendency to produce inferior or toxic products, the Knauf drywall case illustrates a much bigger issue. A western (German) manufacturer has toxic drywall made in China, but avoids taking responsibility for the quality of the product. Money-hungry American builders buy the stuff in bulk and create instant suburbs, but don’t claim responsibility for QAing the materials they buy. Home-hungry Americans flock into reasonably-priced homes without a second thought regarding the safety and integrity of the structures.

This isn’t a China issue, it’s an everyone issue. This is what happens when manufacturers and builders rush their processes in order to squeeze out maximal profits. Once again, we’re paying retroactively for a communal lack of foresight.

Deja Vu: Stocks Dip After Big Gain (Market Update)

News at a Glance

• Geithner on the Hill: Calls for power to take non-banks under wing.
• Not So Fast: Major indexes take a step back after rally.
• Crude Slips: Oil prices drop a dollar as broader market slumps.
• Stepping Down: Several AIG financial execs leaving firm.

The Lowdown

The euphoria on Wall Street was fleeting.

A day after the major indexes surgerd on the Treasury's plan to cleanse banks of as much as $1 trillion of their bad assets, stocks were lower on profit-taking and some questions over the viability of the program. Research from Bespoke Investment Group found that of 15 other 400-plus points gains, 13 were followed by down days. Tuesday that pattern repeated itself. The Dow Jones Industrial Average lost 115 points at 7660. The Nasdaq gave up 39 at 1516, and the S&P 500 dropped 16 at 806.

Most of the losses came in the financial and energy sectors. Air carriers also took a big hit on a trade group report predicting a $4.7 billion loss for the industry this year.

In Washington, Treasury Secretary Timothy Geithner told the House Financial Services Committee the Treasury should have the power to put troubled non-bank firms under government conservatorship and guarantee loans. "As we have seen with AIG, distress at large, interconnected, non-depository financial institutions can pose systemic risks just as distress at banks can," he said. "The administration proposes legislation to give the U.S. government the same basic set of tools for addressing financial distress at non-banks as it has in the bank context."

On Monday, Geithner broke out the details of his plan to help banks shed their toxic holdings in a hybrid sale to the public backed by the government.

Federal Reserve Chairman Ben Bernanke also addressed the committee and renewed his call for tighter regulation. "AIG highlights the urgent need for new resolution procedures for systemically important nonbank financial firms," he said in prepared testimony.

Tonight, President Obama will take his administration's plans for the economy to prime time. White House spokesman Robert Gibbs said the speech was intended to promote transparency with the American people. "They may or may not like all the decisions that he makes, Gibbs said, "but I think he believes it's important that they understand why he's making the decisions that he is."

In energy, oil prices dipped before the open. Crude traded down 26 cents at $53.54 a barrel.

World markets were mixed. In Asia, traders cheered the rally in the U.S. Japan's Nikkei and Hong Kong's Hang Seng each picked up more than 3.3%. In the U.K., the FTSE stood down 1.5% in afternoon trading.

Corporate News

• AIG (AIG) said several senior executives from its financial products division have decided to step down. An AIG spokeswoman called the losses "manageable" and expected more, Reuters reported. Separately, AIG said 15 recipients of the 20 largest bonsus returned the cash to avoid scrutiny and a heavy tax.
• DuPont (DD), Caterpillar (CAT) and Lockheed Martin (LMT) are among the largest firms whose pensions will come up short this year, raising their costs, Bloomberg reported. "The call on their cash is going to be significantly higher, two or three times higher, than they had planned," Judy Schub, managing director of the Committee on Investments of Employee Benefit Assets, said.
• Goldman Sachs (GS) is considering acquiring the iShares unit of Barclays (BCS), Reuters, citing an anonymous source. The firms Hellman & Friedman, Bain Capital and TPG also showed interest.

The Economy

• There are no substantial economic reports scheduled to be released today.

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