Recovery still distant as GM turns a corner

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Recovery still distant as GM turns a corner
General Motors profits move past $1 billion
Thursday, August 12, 2010

••• General Motors said on Thursday its profits hit $1.3 billion in the second quarter, as the car company prepared to break free of U.S. government ownership by relisting on the stock exchange.

‘I am pleased with our progress on achieving our business objectives,’ said chief financial officer Chris Liddell, announcing the second consecutive quarter of growth.

The company erased a loss of $13 billion in the same period last year, as sales and revenues increased.

The firm saw stronger sales in North America in the quarter, even as sales in Europe floundered and market share around the world sank.

GM captured 15.4 percent of the U.S. market for cars versus 17.5 percent in the second quarter of last year, but elsewhere faired poorly.

GM’s executives have said that a public offering will come soon, a process that will help the U.S. government unwind its majority stake in the firm.

The U.S. Treasury Department still owns 61 percent of GM, which received $50 billion of U.S. government financing for its bankruptcy restructuring that led to mass layoffs, plant closures and billions of dollars in debt wiped out.

GM’s drive for an IPO will be boosted by news that the firm’s revenues swelled to $33 billion in the second quarter, a third more than the same period last year.

GM as well as its U.S. competitors Ford and Chrysler were hard hit by the recession which struck the United States in December 2007, caused by a home mortgage meltdown.

Of the so-called Detroit Three car makers, Ford was the only one to avoid bankruptcy, managing to stay afloat thanks to massive loans it had obtained prior to the credit crunch and because it moved more quickly to revitalise its product portfolio.
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Fed Effort to Aid Recovery Fails to Calm Investors

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Fed Effort to Aid Recovery Fails to Calm Investors
Thursday, August 12, 2010

••• More worried about the recovery, the U.S. Federal Reserve has taken a small step to bolster the U.S. economy.

Wrapping up a one-day meeting, the Fed said it will use money from its investments in mortgage securities to buy government debt on a small scale. That could help nudge down long-term rates on mortgages and corporate debt, but wouldn’t have a dramatic impact on stimulating economic growth, economists say.

Perhaps more importantly, the largely symbolic action sends a signal that the Fed sees the recovery weakening and that it stands ready to take more aggressive action, if needed, to keep it on track.

Delivering a more downbeat assessment, the Fed now believes economic growth will be ‘more modest’ than it had anticipated at its late June meeting.

The Fed, citing ‘subdued’ inflation, said it would keep its target for a key interest rate at zero to 0.25 percent for an ‘extended period’.
Investors reacted positively to the statement. Stocks that were down sharply before the announcement made up some lost ground. The Dow Jones industrial average, down about 100 points just before the Fed decision, was down about 40 a short time later. However, the market was likely to fluctuate, as it usually does while investors pore over the Fed’s statement.

Treasury prices rose slightly as investors were pleased by the Fed’s plan to buy government debt, which would reduce the amount of Treasury securities in the market. The yield on the Treasury’s 10-year note, which moves in the opposite direction from its price, fell to 2.77 percent from 2.82 percent just before the announcement.

Economists doubt the Fed can turn around the economy on its own. Some believe additional help from Congress is needed. Others are sceptical that easier credit or even more government aid will persuade Americans to shop more and hire more. Yet others think some jobs – like in construction – will never return to pre-recession levels, as the economy makes a structural shift.
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News Corp. Posts $875 Million Profit as Ad Sales Rise

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News Corp. Posts $875 Million Profit as Ad Sales Rise
Wednesday, August 04, 2010

••• Media and entertainment giant News Corp. reported, Wednesday, that it has swung to profit in the fiscal fourth quarter on the back of strong performance from its television networks division which posted impressive ad sales.

News Corp. said its net profit in June quarter was $875 million or $0.33 per share as against loss of $203 million or $0.08 per share in the year ago period.

The company said its revenue moved up 5.7 percent to $8.11 billion.

Analysts, on average, had expected News Corp. to report profit of $0.20 per share on revenue on $7.87 billion.

However, operating profit, or sales minus the cost of goods sold and administrative expenses, slipped 1.7 percent year-on-year in June quarter to $932 million from $948 million.

The media conglomerate said its earnings were driven by strong performance put up by its television networks division, which accounted for more than half of its operating income.

Profits at domestic channels surged by 30 percent while international channels improved 40 percent. Overall, operating profit at cable television networks division, which include channels such as Fox News Channel and FX, surged 31 percent to $563 million on the back of advertising revenue which jumped 11 percent. The division also saw double-digit growth in revenue from fees paid by cable, satellite and fiber video providers.

Operating profit at News Corp.’s broadcast television division also surged 13 percent to $113 million on improved ad sales offsetting higher programming expenses at the company’s national broadcast network – Fox Broadcasting.

The group’s filmed entertainment division also did well but could not beat third quarter performance. Operating income in June quarter dropped 32 percent year-on-year to $137 million. In March quarter, profit stood at $497 million. At the time of announcing third quarter earnings, News Corp. had warned that one should not expect stellar performance from this division in the fourth quarter, largely due to an expected year-over-year decline in the film business due to the timing of releases.

The newspapers and information services division, which include the Wall Street Journal, Barron’s, MarketWatch and Dow Jones, also reported 20 percent surge in profit to $115 million on higher ad revenue, though it was below Street estimates.

The company’s digital media division, which include social networking site MySpace, however, disappointed, reporting an operating loss of $174 million in the June quarter on lower search and advertising revenue. News Corp. said MySpace is set for a “major overhaul.”

News Corp.’s satellite TV division also disappointed, reporting a 37 percent slide in operating income to $97 million on the back of continued weakness at Sky Italia.

To reduce dependence on the economically sensitive advertisement-based revenue, News Corp. said it is beefing up its portfolio of subscription-based assets. In June, it said it has made a bid for the 61 percent stake of pay-TV operator British Sky Broadcasting Group Plc (BSkyB) it doesn’t already own.

“The opportunity for us to expand the scale of our franchises is significant, including through taking advantage of the continual technological advances that will broaden the reach of our core content and distribution businesses,” News Corp. CEO Rupert Murdoch said in a statement.

The company’s full-year results were more impressive.

News Corp. said its net profit in fiscal year 2010 was $2.5 billion, helped primarily by blockbuster movie “Avatar.” DVD sales of other films like “Ice Age: Dawn of the Dinosaurs,” “X-Men Origins: Wolverine” and “Night at the Museum: Battle of the Smithsonian” also bumped up its profits. In the prior year, News Corp. incurred a net loss of $3.4 billion, which included a one-time pre-tax impairment and other charges of $9.2 billion.

“These results underscore just how well positioned we are – fiscally, operationally and strategically – for further growth across all of our markets,” Murdoch said.

Shares of News Corp., which owns Dow Jones, Wall Street Journal, New York Post, MySpace and 20th Century Fox among other things, closed up 1.61 percent at $13.85. Following the financial results announcement, the company’s shares were up 3.25 percent in the after-market hours.
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• Source(s): News Corporation

MasterCard 2Q profit jumps 31 percent, tops view

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MasterCard 2Q profit jumps 31 percent, tops view
Wednesday, August 04, 2010

••• Anaemic consumer spending in the U.S. was offset by strong international growth to help boost MasterCard Inc’s second-quarter profit by 31 percent.

The gain topped Wall Street profit expectations, but fell short of the 38 percent leap in operating income posted by the company’s larger rival, Visa Inc., last week.

MasterCard shares slipped $1.76, to $200.70 in midday trading as the broader market sputtered.

MasterCard’s gains showed the Purchase, NY-based payment processor’s reliance on overseas use of its cards and networks. Worldwide purchasing volume rose eight per cent, while U.S. purchasing volume eked out a gain of less than 1 percent.

Worldwide, credit card use rose 10 percent, while debit card use leaped 29 percent.

Chief Financial Officer Martina Hund-Mejean said in an interview that card use was particularly strong in Latin America and Asia Pacific, which both saw double-digit growth rates.

‘Even in Europe,’ she said, alluding to the economic turmoil on the Continent in recent months. ‘We do not see any significant impact on our numbers in terms of the Europeans not spending.’

U.S. credit card use edged down 1.5 percent, continuing a two-year decline, but showing the smallest drop since the third quarter of 2008.

Debit card use edged up less than 1 percent. That reflects more frequent use of debit cards, but was held down by MasterCard’s loss of several debit card deals with banks, most notably the former Washington Mutual, which was bought by JPMorgan Chase in 2008. Hund-Mejean said US debit growth was closer to 20 percent if the banks winding down their MasterCard programs are stripped out.

U.S. spending, particularly with credit cards, picked up in April but was less robust later in the quarter, Hund-Mejean said. ‘People still feel a little careful and cautious, and I think that’s what we saw in May and June,’ she said.

Analysts noted the growth compared with a weak quarter last year. Thomas McCrohan from Janney Capital Marketssaid it is hard to read into the results to say whether they indicate any real improvement in the economy. But there was ‘nothing alarming’ in the results.

‘There’s nothing that would support a double dip’ of the recession, McCrohan said.

The number of transactions MasterCard handled was basically flat at 5.6 billion. Cross-border volume jumped 15.2 percent.

Net income rose to $458 million, or $3.49 per share, compared with $349 million, or $2.67 per share, a year ago.

Revenue rose 7 percent to $1.37 billion from $1.28 billion in the 2009 second quarter. MasterCard said the revenue increase reflected the higher cross-border volumes, higher gross dollar volume of the transactions it processed and the impact of price increases of 4 percent.

Wall Street expected earnings of $3.33 per share on revenue of $1.38 billion.

Total operating expences dropped 10 percent to $648 million. The decrease was led by a drop in severance and compensation costs as a result of layoffs in 2009.

President and CEO Ajay Banga said it is too early to tell what results MasterCard will feel from the limits on debit card fees included in the financial overhaul bill signed by President Barack Obama last month.

‘I know that everybody is eager to fully understand the impact on our business, but the truth is we just have to wait for the (Federal Reserve) to develop the regulations, and for our customers to react, before we will know the full implications both for the industry and for our company,’ he said during a conference call.

Banga noted there are a number of options for implementing the new rules, and quipped that MasterCard benefits in this case from having a smaller market share of U.S. debit than Visa.

Regardless of the new regulations, Banga said he doesn’t see the shift from cash and checks to electronic payments slowing down. He spoke enthusiastically about a number of pilot projects and overseas ventures MasterCard has to expand its network beyond card payments. Deals the company struck on mobile payments in Latin America, money transfer services in China and contactless payments in the U.S. position MasterCard for continued growth as the payments market evolves, he said.

David Parker, an analyst with Lazard Capital Markets, said it will be a few years before ‘electronic wallets’ are a reality, and there are some challenges in terms of customer and merchant adoption, but it is clear the market is moving in that direction.

MasterCard’s investments in this area could help it overcome its disadvantage in debit cards.

‘I think there is an opportunity there with mobile commerce,’ he said.
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BP Agrees to Sell Colombian Business to Ecopetrol and Talisman

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BP Agrees to Sell Colombian Business to Ecopetrol and Talisman
Tuesday, August 03, 2010

••• British oil giant BP says it will sell its Colombian business for a total of $1.9 billion.

The divestment is part of BP’s recently announced plans to sell off up to $30 billion of assets, as it struggles with the soaring cost of the Gulf of Mexico oil spill disaster.

‘BP today announced that it has agreed to sell its oil and gas exploration, production and transportation business in Colombia to a consortium of Ecopetrol, Colombia’s national oil company (51 percent), and Talisman of Canada (49 percent),’ it said in a statement.
‘The two companies will pay BP a total of 1.9 billion dollars in cash… for 100 percent of the shares in BP Exploration Company (Colombia) Limited (BPXC), the wholly-owned BP subsidiary company that holds BP’s oil and gas exploration, production and transportation interests in Colombia.’

The transaction, which is subject to regulatory and other approvals, is expected to complete by the end of 2010.

News of the sell-off comes one week after BP’s vilified chief executive Tony Hayward resigned in the wake of a record second-quarter loss of $16.9 billion – the biggest quarterly loss in British corporate history.

Hayward will step down in October and hand over the reigns to American executive Bob Dudley.
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• Source(s): BP PLC

Nokia Q2 profit falls 40 percent to $290 million

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Nokia Q2 profit falls 40 percent to $290 million
Friday, July 23, 2010

••• The world’s top mobile phone maker Nokia has reported a 40 percent plunge in second-quarter net profit to 227 million euros ($290 million) but maintained its earnings forecast for its key devices and services unit.

The Finnish company had slashed its second-quarter and full-year forecasts for its key devices and services unit last month, citing fierce competition.

From April to June, Nokia posted a net profit of 227 million euros ($290 million), down 40 percent from 380 million euros ($485.46 million) for the same quarter a year earlier.
Analyst expected a profit drop of 30 percent, according to estimates published in the Finnish press.

Nokia said its net sales were up 1.0 percent on a year-to-year basis to 10.0 billion euros ($2.77 billion), and that the sales in its devices and services unit were up 3.0 percent on a year-to-year basis, but down 2.0 year-to-year in constant currency.

Shares in company, which had recently plunged to their lowest level in 12 years, were up 1.43 percent to 7.09 euros on a Helsinki Stock Exchange up 0.9 percent shortly after the announcement.
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Storm forces Gulf oil spill ships back to port

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Storm forces Gulf oil spill ships back to port
Oil cap in Gulf to remain despite approaching storm
Thursday, July 22, 2010

••• The U.S. government has ordered certain ships working on the Gulf of Mexico oil spill back to port amid fears that a brewing storm could force a mass evacuation and derail efforts to plug BP’s runaway well.

A full-scale evacuation could delay by up to two weeks the final operation to plug BP’s runaway well, which has unleashed millions of barrels of crude on Gulf Coast shorelines in one of America’s worst ever environmental disasters.

‘Activities that are under way for storm preparedness include evacuating specialized vessels from the path of any severe weather to prevent damage and ensure that oil recovery operations can resume as soon as possible after a storm,’ a Coast Guard statement said on Thursday.

With no crews on site to monitor pressure inside the well, top U.S. official Admiral Thad Allen has warned that the cap that has prevented any toxic crude from entering the sea for the past week may have to be opened up again or even removed.

Storm warnings have been extended from the Caribbean around the Florida Keys to the Gulf Coast, but there has been no immediate order from BP or the U.S. government to suspend operations entirely and pull staff back to shore.

If the depression developing near the Bahamas, expected to become Tropical Storm Bonnie lateron Thursday, takes aim at Louisiana it will delay a so-called ‘static kill’ to seal the well with cement originally planned for this weekend.

Officials have warned it will take up to five days to get some of the biggest vessels, in particular the massive drilling platforms working on relief wells, back to port.

‘We’ve always said we need 120 hours in advance to be able to start redeploying them and then the total time off-scene would be anywhere between 10 and 14 days,’ Allen said on Wednesday.

As for what to do with the cap, this would be ‘a judgment call based on the risks,’ he said.

The first relief well was expected to intercept the damaged well as early as next week but if the storm hits that could be more like mid-August and any final operation to seal the well with cement might be delayed until September.

The storm threat was already delaying progress as work on the final casing of the relief well was suspended so a ‘storm packer’ plug could be fitted to stabilize it.

A full evacuation would be a huge blow for local residents. Tourism is in tatters and a vast swath of the Gulf has been closed to commercial and sport fishing since the BP-leased Deep water Horizon rig sank on April 22, two days after an explosion that killed 11 workers.

As millions of barrels of crude spewed into the sea, the region was further hit by President Barack Obama’s decision to impose a moratorium on new deep sea drilling – a move fiercely opposed by local leaders and the oil industry.

Four of the world’s oil giants say they will create a $1 billion system to capture oil in case of another catastrophic spill.

Exxon Mobil, Chevron, Conoco Phillips and Royal Dutch Shell will each contribute $250 million to create a non-profit group, the Marine Well Containment Company.

The new venture would design, build and operate a flexible system that could mobilise within 24 hours to siphon and contain 100,000 barrels of oil per day in depths of up to 1.86 miles, the companies said.

It’s main goal would be to prevent a spill as large as the one unleashed by BP’s busted Macondo well, which sits 1 mile below the surface and was estimated to have spewed up to 60,000 bpd into the sea.

The companies said the system could be up and running within 18 months.

If an upper estimate of over four million barrels is confirmed, the BP disaster would be the biggest accidental oil spill ever.
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Oil’s not well in Gulf as BP shares sink again

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Oil’s not well in Gulf as BP shares sink again
Tuesday, July 20, 2010

••• Shares of BP fell after it said the tab for the Gulf of Mexico oil spill is nearing $4.05 billion while it monitors oil seeping near the ruptured well.

BP PLC’s shares lost $1.61, or 4.3 percent, at $35.49 in midday trading.

Investors remain worried about the mounting costs and whether the latest fix will hold until a relief well is in place, Argus Research analyst Phil Weiss said.

“If the well integrity is compromised, it makes the process more complicated,” he said.

The cost of dealing with the oil spill – almost $4 billion – equals about two-thirds of BP’s profit in the first three months of the year.
BP placed a cap on the well on Thursday, shutting off oil that had been gushing from it since the Deepwater Horizon rig exploded April 20 and then sank.

A seep detected in the sea floor near the well prompted new concern about whether the fix would hold.

The government is allowing BP to continue monitoring the site for new leaks, at least for now.

Key questions remain about BP’s liability, Credit Suisse analyst Kim Fustier said.

In a research note to clients on Monday, Fustier said yet to be determined is the total cost for liability and compensatory claims and how the liability costs will be distributed between BP and its partners.

If negligence is proven, another issue could be punitive damages, the analyst said.
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Goldman Sachs’s Fabrice Tourre Disputes SEC’s Fraud Allegations in Filing

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Goldman Sachs’s Fabrice Tourre Disputes SEC’s Fraud Allegations in Filing
Tuesday, July 20, 2010

••• Fabrice Tourre, the Goldman Sachs Group Inc. executive and co-defendant in the U.S. Securities and Exchange Commission’s charges that the bank defrauded investors, on Monday asked the court to dismiss the case filed against him by the U.S. Regulators.

Tourre, whose emails about a collateralized debt obligation were at the heart of the Securities and Exchange Commission or SEC’s complaint, denied that he made any materially misleading statements or omissions, or behaved wrongly in connection to complex mortgage-linked securities called collateralized debt obligations or CDO.

In a filing with the U.S. District Court in the Southern District of New York Tourre “specifically denies he made any materially misleading statements or omissions or otherwise engaged in any actionable or wrongful conduct” stemming from the CDO known as Abacus.
Tourre also argued that neither he nor his employer had a “duty to disclose any allegedly omitted information” in the marketing and sale of the CDO.

In April, the Securities and Exchange Commission accused the investment bank that it did not reveal that one of its clients, Paulson & Co, played a significant role in the selection of securities contained in the Abacus mortgage portfolio and which was later sold to investors.

Following the collapse of the housing market, the securities in that mortgage portfolio – Abacus – lost more than $1 billion.
Goldman said it was a “mistake” to state that the loans contained in the CDO had been selected by a third party without mentioning the role of Paulson & Co, a hedge fund that bet against the security.

Last week, in a settlement, Goldman agreed to pay $550 million to settle civil fraud charges brought in by the SEC. This is reportedly the largest ever for a financial institution and is less than the $1 billion fraud that the Commission alleged.

Tourre, who is the only Goldman Sachs executive named as a defendant in the SEC’s fraud lawsuit, has yet to settle with the regulator. Goldman also agreed to co-operate with the SEC in its case against Tourre.

Goldman Sachs declined $0.49 or 0.34 percent and closed Monday’s regular trading at $145.68. After hours, Goldman Sachs declined further $1.68 or 1.15 percent and traded at $144.00
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Stocks end higher for second week

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Stocks end higher for second week
Saturday, June 19, 2010

••• U.S. stocks ended the week more than two per cent higher amid optimism over the global economic recovery, but as Wall Street braced for a volatile week with a heavy dose of U.S. economic data.

The blue-chip Dow Jones Industrial Average advanced 2.3 percent over the week to end Friday at 10,450.64 as traders digested a week of mixed economic data. Some stability in debt-stricken Europe buoyed confidence.

The tech-rich Nasdaq index climbed three per cent to 2,309.80 and the broad-market SP 500 index gained 2.4 percent at 1,117.51.

Trade was notably slower than the roller coaster session of previous weeks, analysts said.

‘Whether the slower action is the result of market participants taking a breather following the volatile activity over the last two months or the beginning of a summer lull remains to be seen,’ said analysts at Briefing.com.

One notable exception was New York-listed shares in British oil giant BP, which were hit hard following the company’s massive oil spill in the gulf and as its credit rating was slashed by top rating agencies.

BP’s shares fell 6.5 percent for the week, after trading close to 52-week lows in the middle of the week.

The focus of next week’s trade is sure to be a meeting of the Federal Reserve’s policy-making body on Tuesday and Wednesday.

The Fed board is expected to vote to keep interest rates unchanged at virtually zero per cent as the economy continues to be dogged by unemployment concerns.

While no interest rate changes were expected, ‘the status of the extra measures the Fed has taken to address liquidity and the cost of capital will continue to be monitored,’ analysts at Charles Schwab Co said.

And other data will be scrutinised.

In the coming week, the market will grapple with existing home sales for May that are expected to show a jump as well as new home sales for the same month that many believe would slump.

The government will provide a final revision of the 2010 first quarter gross domestic product (GDP) growth, which is expected to remain unchanged at 3.0 percent.

‘All of those data releases have the potential to move the markets,’ analysts at Briefing.com cautioned clients in a note.

Traders are expected to remain cautious even though stocks climbed nearly all of last week.

The stock market is expected to ‘continue to drift going into second quarter earnings season (July), moving up and down in tandem with the movement of the euro and headline news coming out of Europe and the Gulf of Mexico,’ said Frederic Dickson, chief market strategist with DA Davidson Co.
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Microsoft Office 2010 goes on sale worldwide

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Microsoft Office 2010 goes on sale worldwide
Friday, June 11, 2010

••• Microsoft Corp. on Tuesday announced that the latest version of its Office software is now available for consumers worldwide.

Starting from Tuesday, consumers can purchase Microsoft Office 2010 at more than 35,000 retail stores across the globe, through online retailers or from Microsoft website.

Office 2010 can also be purchased with desktops and laptops from leading personal computer (PC) makers including Acer, Asus, Dell, HP, Lenovo, Samsung and Sony, Microsoft said in a press release.

The software giant predicted that in the next year, more than 100 million PCs will ship with Office 2010 preloaded.

Microsoft said it has made considerable enhancements to Office 2010, a suite of applications including the popular Word, Excel, Outlook and PowerPoint.

For example, improvements to Word 2010 can help users add extensive text effects and table formatting options.

Microsoft also announced that a free, Web-based version of the Office programs is becoming available to consumers.

The Office Web Apps, which includes Web-based versions of Word, Excel, PowerPoint and OneNote that enable users to edit and share documents online, is seen as Microsoft’s answer to Google Inc.’s Web-based applications.
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• Source(s): Microsoft Corporation

BP Woes Spill into Markets

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BP Woes Spill into Markets
Saturday, June 12, 2010

••• BP shares rallied on Friday on bargain-hunting after recent sharp losses.

The gains came as British Prime Minister David Cameron threw his support behind a ‘financially strong’ BP in talks with its chairman, Carl-Henric Svanberg, while voicing frustration over the oil spill, his office said.

At the close of trade, the company’s share price soared 7.22 percent to 391.9 pence on London’s FTSE 100 shares index, which was 0.61 percent higher.

Despite the gains, the British oil giant’s share price has plunged by as much as 49 per cent, wiping tens of billions of dollars off its market value since the BP-operated Deepwater Horizon rig sank on April 22.

The accident, following a explosion that killed 11 people two days earlier, sparked an enormous oil spill from a leaking well head on the sea bed.

The disaster has seen huge amounts of oil wash up on the U.S. Gulf coastline, threatening precious wildlife and local communities, and provoking the wrath of U.S. President Barack Obama, who has demanded BP scrap its shareholder dividend.

‘We are considering all options on the dividend. But no decision has been made,’ BP chief executive Tony Hayward said on Friday.

The group is preparing to defer the payment of its next dividend, according to the BBC and The Times newspaper.

The Times, which cited people familiar with the situation, reported that the money would be held in an escrow account, held by a third party, until its liabilities from the disaster become clear.

The BBC said it understood BP was planning to suspend the dividend, with BP directors due to meet on Monday to discuss the payments.

The meeting ‘will be about when to suspend the payments, how long to suspend the payments, and what to do with the billions of dollars that would be saved and not paid to shareholders,’ BBC business editor Robert Peston said.

A BP spokesman declined to comment on the stories, but stressed that the company was considering all its options.

The company’s share price was meanwhile boosted after U.S. bank Goldman Sachs issued an upbeat outlook for embattled BP.

‘BP shares now have as much upside potential as the rest of the European integrated oil sector,’ Goldman said in a research note.

The stock had plunged on Thursday, striking a low of 330 pence, as investors fretted about the financial impact of the oil spill and the possible loss of the group’s shareholder dividend.

CMC Markets analyst James Hughes described Friday’s gains as an ‘inevitable bounce after the moves of the last few days’ but warned that the share price has further to fall.

Cameron will discuss BP’s handling of the Gulf of Mexico oil spill with Obama over the weekend amid fears of an anti-British backlash in the United States.

BP chairman Svanberg has been summoned to meet Obama at the White House next week, as several US media reported the Swede was being lined up as a ‘fall guy’ for the disaster.

Cameron, who is visiting Afghanistan and the United Arab Emirates, had a ‘constructive’ telephone conversation with Svanberg, a Downing Street spokesman said.

‘The prime minister explained that he was frustrated and concerned about the environmental damage caused by the leak but made clear his view that BP is an economically important company in the UK, US and other countries,’ he said.

Cameron said: ‘It is in everyone’s interests that BP continues to be a financially strong and stable company.’

Svanberg met with finance minister George Osborne and other senior officials in Downing Street on Friday.

After the talks, the Swede told ITN television: ‘I think we have done everything we can to try to fill the well, and we have said we would do everything expected from us in cleaning up the beach, taking care of all the claims and learn from this incident and make deepsea drilling an even safer place.’
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Goldman Sachs Crime watch – SEC Launches 2nd Major Investigation

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Goldman Sachs Crime watch – SEC Launches 2nd Major Investigation
Saturday, June 12, 2010

••• US securities regulators are hunting for fresh dirt on Goldman Sachs Group, hoping to bolster their lawsuit against the bank and perhaps force it to settle on terms more to the regulators’ liking.

Two months ago the Securities and Exchange Commission charged Wall Street’s most powerful bank with civil fraud in connection with a subprime mortgage-linked security.

The case hinges on whether Goldman misled investors when it marketed Abacus 2007, a mortgage-linked security that turned toxic during the mortgage crisis.

Now, the SEC is also looking at other collateralized debt obligations that turned toxic, including Hudson Mezzanine Funding, a source familiar with the investigation said on Thursday.

“You put a number of things together and then it becomes harder to defend against all of them,” said Annemarie McAvoy, a Fordham University School of Law professor and a former federal prosecutor

“So you finally cry uncle and say, ‘Fine, I’ll settle.'”

The expanding investigation of Goldman’s CDOs comes as federal prosecutors probe some of the complex mortgage-linked transactions that Wall Street firms cobbled together and which helped spark the worst financial crisis in decades.

Even the Financial Industry Regulatory Authority is getting into the act.

Reuters has learned the securities industry’s self-regulatory agency recently began its own investigation into whether Wall Street banks violated customary sales practices in hawking CDOs to institutional investors.

A document reviewed by Reuters reveals FINRA is looking into potential improprieties in the structuring of the deals and the relationship between the CDO underwriters and mortgage lenders.

Former Goldman customers also are putting pressure on the bank and its chief executive, Lloyd Blankfein.

Reuters previously reported that SEC lawyers had looked at the $1 billion Timberwolf deal before filing the Abacus lawsuit in April.

The SEC’s interest in the $2 billion Hudson CDO was first reported by the Financial Times.

U.S. Senator Carl Levin, during a hearing in April of the Senate’s Permanent Subcommittee on Investigations, raised Abacus, Timberwolf and Hudson while questioning a cast of past and present Goldman employees, including Blankfein.

In a Senate floor speech in May introducing legislation to curb conflicts of interest in Wall Street deals, Levin zeroed in on Hudson Mezzanine 2006-1.

“When Goldman first sold the securities to its clients, more than 70 percent of Hudson Mezzanine had AAA ratings,” he said. “But … within 18 months Hudson was downgraded to junk status, and Goldman cashed in at the expense of its clients.”

The Hudson deal closed in November 2006 and went into liquidation in May 2008.

The myriad investigations, coupled with the Timberwolf litigation, could create a tipping point at which Blankfein and other Goldman executives decide they have no choice but to reach some sort of comprehensive settlement, according to legal experts.

“Will there be more stuff? At this point, it certainly wouldn’t surprise me,” said White.

At the least, the SEC could be looking to bolster its Abacus case, which some saw as weak. SEC commissioners voted to bring the lawsuit in a split decision.

Fordham’s McAvoy said the SEC’s strategy could be to strengthen the initial case by adding new material from other deals.

“A lot of folks don’t think the initial case is as strong as the SEC made it out to be,” McAvoy said.

Goldman shares are down more than 25 percent since the SEC filed its lawsuit on April 16. The shares were off 2.4 percent to $133.49 in Thursday morning trading.
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U.S. stocks recover from heavy losses

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U.S. stocks recover from heavy losses
Saturday, June 12, 2010

••• U.S. stocks have clawed back from losses to close with modest gains as reports on consumers’ outlook and retail spending sent mixed signals about the health of the economic recovery.

The Dow Jones Industrial Average rose 38.62 points (0.38 percent) to 10,211.15 in closing trades.

The Nasdaq index climbed 24.89 points (1.12 percent) to 2,243.60 and the broad-market SP 500 index advanced 4.76 points (0.44 percent) to a provisional 1,091.60.

Stocks initially opened lower after a disappointing May retail sales report but clawed back losses after a private survey showed a stronger-than-expected rise in consumer sentiment in June helping to allay recovery concerns.
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Stocks show small gains

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Stocks show small gains
Thursday, June 3, 2010

••• U.S. stocks eked out minor gains on Thursday as investors mulled mixed signals on the U.S. economic recovery ahead of a highly awaited May jobs report.

After opening with modest gains, the major indices slid lower but clawed their way back to close in positive territory.

The Dow Jones Industrial Average rose a scant 4.99 points (0.05 percent) to 10,254.07 at the market close, extending Wednesday’s sharp rally.

The tech-rich Nasdaq index outperformed, up 21.96 points (0.96 percent) at 2,303.03, while the broad-market SP 500 index advanced 4.37 points (0.40 percent) to a provisional 1,102.75.

‘Investors appear cautious ahead of tomorrow’s key jobs report,’ said Scott Marcouiller at Wells Fargo Advisors.

Most analysts expected the Labor Department on Friday would report 500,000 nonfarm jobs were created last month, up from 290,000 in April, and the unemployment rate slipped a notch to 9.8 percent from 9.9 percent.
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Shell Buys U.S. Gas Assets From East Resources for $4.7 Billion

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Shell Buys U.S. Gas Assets From East Resources for $4.7 Billion
Saturday, May 29, 2010

••• Royal Dutch Shell, the energy major, has almost doubled its reserves of shale gas with the $4.7 Billion in cash acquisition of East Resources.

East Resources owns and operates more than 2,500 producing oil and gas wells in New York, Pennsylvania, West Virginia, and Colorado and is actively exploring drilling programs in Wyoming, according to its website. It has been operating in the Marcellus Shale Area for 25 years.

Companies from India’s Reliance Industries Ltd to Japan’s Mitsui & Co are spending billions of dollars on drilling to dislodge natural gas from shale – sedimentary rock composed of mud, quartz and calcite. Shell expects its share of gas in total output to rise to 52 percent in 2012.
“They’ve seen others take material positions in U.S. gas, and this is one way they can also play a part in that business,” said Jason Kenney, head of oil and gas research at ING Commercial Banking in Edinburgh.

The acquisition is the second-biggest oil and gas deal this year, after BP Plc’s acquisition of deepwater assets from Devon Energy Corp for $7 billion in March, according to Bloomberg data.

“We are enhancing our world-wide upstream portfolio for profitable growth, through exploration and focused acquisitions, and through divestment of non-core positions,” Chief Executive Officer Peter Voser said in a statement today.

Exxon Mobil Corp, the biggest U.S. oil company, agreed in December to buy XTO Energy Inc, the country’s largest natural gas producer, for $31 billion to gain control of shale-gas assets.
• Source(s): Royal Dutch Shell PLC and Bloomberg L.P.

Fannie Mae asks for $8.4 billion in aid

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Fannie Mae asks for $8.4 billion in aid
Monday, May 10, 2010

••• U.S. mortgage finance company Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion.

The company, which was rescued by Washington in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.

Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, a year ago.

The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae’s total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.

Fannie and Freddie play a vital role in the U.S. mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.

The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.

With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.

But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.

Stocks turn negative for 2010

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Stocks turn negative for 2010
Friday, May 7, 2010

••• U.S. stocks continued to fall in early trading on Friday, with the Dow Jones industrial average and Standard & Poor’s 500 turning negative for the year as traders preferred to stay on the sidelines after Thursday’s unprecedented market plunge.

U.S. stocks saw a 10 percent correction in ten minutes on Thursday, sending investors in great panic. The Dow Jones industrial average experienced its largest-ever point decline in intraday trading, plummeting almost 1,000 points before recovering to close down about 348 points.

Speculation of bad trades emerged in the market as many traders suspected a glitch in the trading of Dow component Procter & Gambles played a role in the heavy selling.

Investors preferred to stay on the sidelines after the unprecedented plunge, even after payrolls data came in better than expected, as uncertainties over European debt problems were still haunting in the market.

According to the Labor Department, non-farm payrolls expanded by 290,000 in April, the most in four years as more confident employers stepped up hiring. The unemployment rate rose from 9.7 percent in March to 9.9 percent, mainly because 805,000 jobseekers resumed their searches for work as the economy showed more signs of recovery.

The Dow Jones industrial average dropped 112.75, or 1.07 percent, to 10,407.57. The Standard & Poor’s 500 index fell 13.14, or 1.16 percent, to 1,115.01 and the Nasdaq was down 36.41, or 1. 57 percent, to 2,283.23.
President Barack Obama says U.S. authorities are probing ‘unusual’ stock market activity which triggered a slump in the value of securities, and will act to protect investors.

Obama diverted from a statement at the White House on Friday on a sharp increase in job creation, saying he wanted to ‘speak to the unusual market activity’ that took place on Wall Street on Thursday.

‘The regulatory authorities are evaluating this closely with a concern for protecting investors and preventing this from happening again and they will make findings of their review public along with recommendations for appropriate action,’ he said.

Record 998.5 point drop for Dow Jones before recovery

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Record 998.5 point drop for Dow Jones before recovery
Thursday, May 6, 2010

••• Panic selling swept U.S. markets on Thursday as the Dow Jones plunged a record of almost 1000 points before recouping more than half those losses.

It was unclear whether the sudden sell-off, the Dow’s biggest ever intra-day drop, was the result of fears over the Greek debt crisis, a mistaken trade or technical error.

The crash began shortly before 2.25 pm EDT, when in a white-knuckle 20 minutes America’s top 30 firms saw their share prices dive 998.5 points, almost nine per cent, wiping out billions in market value.

The drop eclipsed even the crashes seen when markets reopened after September 11, 2001 and in the wake of the Lehman Brothers collapse.

The Dow later recovered, closing nearly four per cent down, but spooked traders were left wondering whether a technical glitch had caused the blue-chip index to erode three months of solid gains.

Rumours swirled that a Citigroup trader had mistakenly sold 16 billion rather than 16 million stocks in Procter and Gamble shares, forcing the Dow down.

Shares in the consumer goods giant lost more than seven U.S. dollars, falling in a similar pattern to the Dow, trading at a low of $55 a share.

‘At this point, we have no evidence that Citi was involved in any erroneous transaction,’ said company spokesman Stephen Cohen.

A spokesperson for the New York Stock Exchange said the cause was still not known.

‘We don’t know, right now we’re looking into it,’ said Christian Braakman, ‘it’s all speculation.’

But after three days in which stocks have suffered triple-digit intra-day losses because of concern about Greece’s debt crisis, it was clear that the sell-off was real for some investors.

At the close, the Dow had recovered to 10,520.32, down 347.80 (3.20 percent), while the Nasdaq was down 82.65 points (3.44 percent) at 2,319.64. The Standard Poors 500 Index was down 37.72 points (3.24 percent) to 1,128.15.

Images of rioting as the Greek parliament passed unpopular austerity measures did little to ease market panic.

The parliament approved billions of euros of spending cuts pledged in exchange for a 110 billion euros ($138.55 billion) E.U.-IMF bailout just one day after three bank workers died in a firebomb attack during a huge protest.

On Thursday, police charged to scatter hundreds of youths at the tail-end of a new protest outside parliament that drew more than 10,000 people.

In Lisbon, European Central Bank chief Jean-Claude Trichet battled to reassure financial markets that Greece’s debt crisis would not end in default, but could not prevent the euro from falling to a 14-month low against the dollar.

Pleas for patience from the White House also had little impact.

The White House said that reforms in Greece were ‘important’ but would take time and that the U.S. Treasury was monitoring the situation.

‘The president has heard regularly from his economic team,’ said White House spokesman Robert Gibbs, adding that President Barack Obama’s top economic officials were closely communicating with their European counterparts.
• Source(s): Associated Press

Freddie Mac seeks $10.6 billion in aid after 1Q loss

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Freddie Mac seeks $10.6 billion in aid after 1Q loss
Wednesday, May 5, 2010

••• Freddie Mac is asking for $10.6 billion in additional U.S. federal aid after posting a big loss in the first three months of the year.

The McLean, Virginia-based mortgage finance company has been effectively owned by the government after nearly collapsing in September 2008. The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion.

But the company’s CEO Charles Haldeman said, ‘We are seeing some signs of stabilisation in the housing market, including house prices and sales in some key geographic areas’.

Freddie Mac set aside $5.4 billion to cover credit losses from bad mortgages, down from $7 billion in the final three months of last year.

Haldeman cautioned, however, that the housing market ‘remains fragile with historically high delinquency and foreclosure levels’ and high unemployment.

Created by Congress, Freddie Mac and sibling company Fannie Mae buy mortgages from lenders and package them into bonds that are resold to global investors. As the housing bubble burst, they were unable to raise enough money to stay afloat, and the government effectively nationalised them.

Since then, Uncle Sam’s share of the mortgage business has kept getting bigger. Government institutions – mainly Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Administration – backed nearly 97 percent of home loans in the first quarter of 2010, according to trade publication Inside Mortgage Finance.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie. Freddie’s new request will bring the total taxpayer tab for both companies to about $136.5 billion.

Fannie Mae is expected to release earnings soon and may also request additional financial aid.

With the housing market still on shaky ground, Obama administration officials argue that it is still too early to draft any proposals to reform the two companies or the broader housing finance system.

But Republicans argue that the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. Senate Republicans propose transforming Fannie and Freddie into private companies with no government subsidies, or to shut them down completely.

‘The events of the past two years have made it clear that never again can we allow the taxpayer to be responsible for poorly managed financial entities who gambled away billions of dollars,’ Senator John McCain said in a statement. ‘The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field.’

But Barry Zigas, director of housing policy at the Consumer Federation of America and a former Fannie Mae executive, said Obama officials are right to take their time.

‘They are providing most of the mortgage credit that’s making it possible for Americans to buy homes and refinance their mortgages,’ Zigas said. ‘They’re vital to the housing recovery that everyone is hoping is getting started.’

But the hangover from bad loans made in during the boom years still hurts.

Freddie Mac said on Wednesday it lost $8 billion, or $2.45 a share, in the January-March period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with a loss of $10.4 billion, or $3.18 a share, in the first quarter last year.

The company, however, cautioned that new accounting standards make it difficult to compare the most recent quarter with the year-ago period. In the first quarter of this year, Freddie Mac was forced to bring $1.5 trillion in assets and liabilities onto its balance sheet, causing the company’s net worth to plunge by $11.7 billion.