Posts Tagged ‘NYSE

12
Aug
10

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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23
Jul
10

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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22
Jul
10

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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20
Jul
10

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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19
Jun
10

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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12
Jun
10

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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12
Jun
10

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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03
Jun
10

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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29
May
10

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.
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10
May
10

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.

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07
May
10

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.
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06
May
10

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
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05
May
10

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.

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29
Apr
10

Google ranked world’s most valuable brand

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Google ranked world’s most valuable brand

Thursday, April 29, 2010

Google was crowned the world’s most valuable brand on Wednesday by a research firm that found technology firms dominate when it comes to how much a name is worth in today’s markets.

Google, IBM, Apple and Microsoft topped global stalwarts Coca-Cola, McDonald’s, and Marlboro in a Top Ten brand value list packed with seven technology companies.

Google’s brand was worth more than $114 billion, a 14 percent climb from 2009, according to the annual Millward Brown Optimor ‘BrandZ Top 100 Most Valuable Global Brands’ report.
U.S. technology titan IBM saw its ‘brand value’ surge 30 percent to $86 billion while the worth of Apple’s name climbed 32 percent to $83 billion, according to the report.

Factors taken into consideration in the ranking include customer loyalty and opinions regarding brands and how they influence earnings.

Microsoft ranked fourth with its brand valued at slightly more than $76 billion, just ahead of the nearly $68 billion that Coca-Cola’s brand was said to be worth.

China Mobile, General Electric, and Vodafone claimed the eighth through tenth spots respectively.

Social-networking powerhouse Facebook made it onto a separate Top Twenty technology brands list for the first time with its company name value at $5.5 billion.

Electronics powerhouse Samsung saw the largest jump in brand value, soaring 80 percent from the previous year to $11.3 billion.

‘Technology brands demonstrated their pervasiveness in our daily lives,’ Millward Brown said in a release. ‘Use of social media was a key trend across many of the successful brands.’

The overall value of the Top 100 brands rose four per cent to more than two trillion dollars, according to Millward Brown, which specialises in advertising, marketing communications, media and brand equity research.

‘This ranking has elevated the importance of building brands among some of the world’s most successful companies,’ said Millward Brown global chief executive Eileen Campbell.

‘CEOs and CFOs around the world should be asking their brand and marketing teams how they can leverage brand to both protect and grow the business.’

An investor who put their money into a Brandz portfolio five years ago would have earned a double-digit return as opposed to losing cash with a set of stocks based on the SP 500 index, according to Millward Brown.

‘In the past, many companies were quick to cut their marketing spend during a down economy,’ said Joanna Seddon, head of Millward Brown Optimor.

‘A new trend has emerged in the wake of the recession as more companies realised the importance of maintaining and even increasing budgets to support brand loyalty and engagement.’
• Source(s): Millward Brown
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24
Apr
10

Apple Market Cap Bigger Than Microsoft? Not Quite Yet, It Isn’t

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Apple Market Cap Bigger Than Microsoft? Not Quite Yet, It Isn’t

Saturday, April 24, 2010

Boosted by upbeat investor reaction to its strong earnings report this week, Apple on yesterday became the second largest company on the S&P 500 Index in terms of market capitalization, surpassing software giant Microsoft.
Revenge, they say, is a dish that is best served cold. And if this is true, then Apple must be pleased as punch to see itself in the second spot in the S&P 500, second only to Exxon Mobil.

While coming second is in itself notable – with the notable exception of coming first – what must be especially pleasing to Apple is the company it has replaced – Microsoft.

To understand this, you must travel back in time to 1988. In that year, Apple filed a case against Microsoft, claiming that the Windows graphical user interface (GUI) infringed upon the Mac’s “look and feel.” Of course, since Apple had itself borrowed the Mac’s look and feel by looking at products from Xerox and feeling that the GUI is a good thing, the judges of the United States Court of Appeals for the Ninth Circuit ruled that Apple cannot get patent-like protection for the idea of a GUI.

What is more humiliating than being beaten by an opponent? Running back to the same opponent for help when you are down. And Apple was forced to do this in 1997, when Steve Jobs announced that Apple would join Microsoft to release new versions of Microsoft Office for the Macintosh, and that Microsoft made a $150 million investment in non-voting Apple stock. The money made a huge difference to Apple because in 1997 Apple was in deep trouble and was facing a huge finance crunch.

Enough history. Cut to the here and now. Apple is on top and has ousted Microsoft to become the No 2 company on the S&P index. It would be wrong to say that its iPod, iPhone and iPads are selling like hot cakes – it would perhaps be better to say that hot cakes are selling like iPads.

Purists may argue that the S&P 500 represents merely float-adjusted market cap. In fact, as Marco Tabini posted on macworld.com, “Microsoft’s full market cap still outstrips Apple’s by $275 billion to $241 billion.”

True, Microsoft’s market cap is still higher, but Apple has one psychological advantage that was once enjoyed by Microsoft in the PC era – the ability to drive the direction of the market. Now, Apple decides what happens.

Want proof? The iPad now accounts for 26 per cent of all of the mobile traffic on wired.com. The site is so impressed that they are making their Flash-heavy pages iPad compatible. “We are aware of the irony that the majority of wired.com’s videos, which use an Adobe Flash-based player, don’t play on the iPad. We’re working on that, starting with our homepage,” wrote Dylan F. Tweney in an article that appeared on the site.

Many many moons ago, when Steve Jobs hired John Sculley from Pepsi, he is reputed to have asked him, “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” Scully didn’t change the world. In fact, during his regime, Microsoft threatened to discontinue Office for the Mac if Apple did not licence parts of the Mac GUI for use with Windows. And those days, Microsoft got what it wanted. But it looks like iPad has just turned the tables.

• What is S&P 500?
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. After the Dow Jones Industrial Average, the S&P 500 is the most widely followed index of large-cap American stocks. It is considered a bellwether for the American economy.

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22
Apr
10

President Obama seeks reform buy-in from Wall Street

NEWS
President Obama seeks reform buy-in from Wall Street
The President Speaks to Wall Street, Republicans, and All of America

Thursday, April 22, 2010

Barack Obama has railed at unfettered corporate greed as he laced a defining pitch for U.S. financial reform with stark warnings of future economic meltdowns if the bid fails.

Just blocks from Wall Street, the epicentre of high finance in the United States, the president sent a tough message to financial barons, American voters and Republican opponents critical of his plans.

Obama recalled how he had visited the historic college at Cooper Union during his election campaign to warn of the dangers of corporate excess.

‘And I take no satisfaction in noting that my comments then have largely been borne out by the events that followed,’ he told an audience of banking notables, including Lloyd Blankfein, chief executive of fraud-tainted titan Goldman Sachs, on Thursday.

‘But I repeat what I said then, because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat them. Make no mistake, that is exactly what will happen if we allow this moment to pass.’

Obama assured investors he believed in the ‘power of the free market’ and a ‘strong financial sector that helps people to raise capital and get loans and invest their savings’.

‘But a free market was never meant to be a free licence to take whatever you can get, however you can get it.

‘Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, to pay for an education, open a business, save for retirement.

‘What happens on Wall Street has real consequences across the country, across our economy.’

Obama urged Wall Street bosses to call off armies of lobbyists trying to thwart what he has promised will be the most sweeping regulatory reform drive since the 1930s Great Depression.

As Democrats and Republicans spar over the final shape of the financial regulatory legislation, Obama argued that middle-ground could be found on the draft law.

Plans include protections for taxpayers should one financial institution pose a systemic risk to the whole economy if it failed, and limits on the size of corporate entities.

‘A vote for reform is a vote to put a stop to taxpayer-funded bailouts,’ Obama said. ‘The goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail.’

Obama also called for stronger protections for consumers and greater transparency by bringing risky financial instruments such as derivatives out into the open.

His efforts got a boost on Wednesday, when a Senate panel approved new restrictions on derivatives, a complex financial instrument blamed for partly igniting the meltdown from which America is just emerging.

Obama’s Democrats needs to peel away at least one vote from Republicans in a final vote in the full Senate, which could come within weeks.

Polls show Americans, though highly suspicious of government, support efforts to rein in Wall Street.

Obama’s financial reform effort is reaching a climax after regulators slapped civil fraud charges on finance titan Goldman.

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17
Apr
10

SEC tries to ride Goldman Sachs Group back to credibility

NEWS
SEC tries to ride Goldman Sachs Group back to credibility

Saturday, April 17, 2010

Financial shares led the stock market sharply lower after federal regulators filed civil fraud charges against Goldman Sachs over its dealings in subprime mortgages.

The Dow Jones industrial average lost about 125 points, having been down as much as 170 points. At times, it fell below 11,000 after closing above that level on Monday for the first time in more than a year and a half.

Analysts say the market was poised to fall after a steady run of gains the past two months, and the Goldman Sachs news gave investors a reason to sell and take some profits.

“Basically it’s sell, and ask questions later,” said Quincy Krosby, market strategist at Prudential Financial. “A market that wants to sell off will find an excuse.”

Stocks were already lower before news of the Securities and Exchange Commission’s charges against the leading investment bank. Investors were disappointed after Google reported earnings that didn’t live up to forecasts.

General Electric Co. and Bank of America Corp. also reported profits that topped forecasts, but their stocks still fell. GE’s revenue came up short of expectations, while Bank of America said loan losses remain high.

The SEC charged Goldman and one of its vice presidents with failing to disclose key information to investors regarding complex mortgage-backed securities.

“It’s all a knee-jerk reaction to Goldman,” said Steven Goldman, chief market strategist at Weeden & Co., referring to the market’s drop. He said the fundamentals of the market have not changed.

The charges come as the Obama administration seeks greater regulation of America’s banks and their trading of exotic securities like those involved in the Goldman case. These kinds of investments are widely seen as one of the triggers of the financial crisis that crippled the nation’s financial system in the (northern) autumn of 2008.

“Road blocks for financial regulation have taken a hit today,” said Thomas Villalta, co-portfolio manager of the Jones Villalta Opportunity Fund.

Analysts say other banks that also traded these types of securities will be closely scrutinised. That means the financial industry could continue to struggle because of uncertainty about reform and other potential investigations.

Investors looked past economic news. The Commerce Department said housing construction rose to a 16-month high in March. However, construction of single-family homes, the most important segment of the market, fell.

Economists are also concerned about continued hurdles in the housing market, like rising mortgage rates and the end this month of a homebuyer tax credit. A separate report showed consumer sentiment fell this month.

Friday’s drop comes after six straight days of gains that pushed the Dow to its highest close in more than 18 months. Stocks have been steadily rising in recent months on growing signs that the economy is recovering, albeit slowly.

The Dow Jones Industrial Average fell 127.34 points or 1.14 per cent, to 11,017.23 points.

The tech-rich Nasdaq composite slipped 33.98 points or 1.35 per cent, to 2,481.71 and the broad-market Standard Poor’s 500 index dipped 18.54 points or 1.53 per cent, to 1,193.13.

After mixed early trades, the SEC announcement, and its refusal to rule out further charges across the financial sector, sent shares in some of Wall Streets biggest firms deep into negative territory.

Goldman stocks were over 10 per cent down, slicing $20 off each share. They were followed by Bank of America, JP Morgan and Morgan Stanley, whose stocks were between three and five per cent off.

Trading had got off to a subdued start despite larger-than-forecasted increases in housing starts and building permits in March, as well as favourable earnings reports from Bank of America and General Electric.

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09
Apr
10

Dow Jones tops 11,000

NEWS
Dow Jones tops 11,000

Friday, April 9, 2010

The stock market closed at a new 18-month high Friday, with the Dow Jones industrial average briefly touching 11,000 before retreating slightly.

The gains were driven by fresh signs that the economy continues to recover. Many analysts remain skeptical that the market’s gains are sustainable since they have come on relatively low volume, indicating that a large number of investors are still sitting on the sidelines.

The Dow very briefly touched 11,000 in the final five minutes of trading before ending with a gain of 70 points. It hadn’t crossed that level since Sept. 29, 2008, just as the worst phase of the financial crisis was beginning.

Stocks got a boost after reassuring statements from Greece’s finance minister and the head of the European Central Bank. Major European indexes closed higher, while the dollar fell against the euro.

Major indexes pulled back briefly after Fitch Ratings cut its view on Greece’s debt, but quickly recovered. Stocks have been fluctuating in recent days and the euro has weakened because of concerns that Greece might default on its debt.

Greece’s deepening fiscal crisis has upset other financial markets and caused concerns that other weak European countries also might default on their debt, which could cause a crisis for Europe’s shared currency.

“If (Greece) falls apart, it makes everything else there fall apart,” Chip Cobb, a senior vice president at Bryn Mawr Trust Asset Management in Bryn Mawr, Pa. “Greece is becoming a real thorn in the side.”

Rising commodity prices also helped energy and material stocks, pushing indexes higher. Commodities mostly climbed on hopes demand will jump as the economy continues to improve. Chevron Corp. and ExxonMobil Corp. both rose.

The Dow Jones industrial average crept toward 11,000 throughout the day, having come within 12 points of that barrier on both Monday and Tuesday before closing lower.
While the Dow’s approach to 11,000 has been a big focus for many individual investors, a number of Wall Street analysts downplay its importance for professional money managers. The Dow has crossed the 11,000 level 34 times since first hitting it in May of 1999.

“Round numbers are always psychologically significant,” but rarely do they represent a technical milestone such as an index breaking out of a recent trading range, said Uri Landesman, head of global growth at ING Investment Management in New York.

The Dow rose 70.28, or 0.6 percent, to close at 10,997.35. The Standard & Poor’s 500 index climbed 7.93, or 0.7 percent, to 1,194.37. The Nasdaq composite index rose 17.24, or 0.7 percent, to 2,454.05.

The Dow’s rise Friday gives the index its sixth straight weekly gain for the first time since a stretch in March and April last year, just after market bottomed out at 12-year lows. The Dow started the day at exactly the same level it closed last week.

The Dow Jones industrial average is now up 68 percent from a 12-year low of 6,547.05 on March 9, 2009. It’s still down 22 percent from its October 2007 peak of 14,164.53.

A report on wholesale inventories Friday provided the latest positive sign on the economy. The Commerce Department said inventories rose 0.6 percent in February, better than the 0.4 percent forecast by economists polled by Thomson Reuters.

Sales at wholesalers also rose faster than expected, gaining 0.8 percent. It was the 11th straight month of rising sales. Economists had forecast a 0.5 percent rise.

Consistently rising inventories and sales at the wholesale level mean that manufacturers are getting steady orders that should allow them to hire more workers. It also means retailers are ramping up orders as consumers return to stores after curtailing their spending during the recession.

The start of earnings reports could give the Dow the push it needs to close above 11,000 if investors see companies continuing to increase profits. Reports are expected next week from Aloca Inc., as well as JPMorgan Chase & Co. and Bank of America Corp. Traders will also have plenty of economic data to digest, including March retail sales Wednesday and housing starts Friday.

Advancing stocks narrowly outpaced those that fell two to one on the New York Stock Exchange, where consolidated volume came to 4.4 billion shares, compared with 4.8 billion shares Thursday.

Benchmark crude for May delivery pulled back from morning highs to close down 47 cents at $84.92 a barrel.

Chevron jumped $1.84, or 2.4 percent, to close at $79.50, while ExxonMobil rose 90 cents to $68.76. J.C. Penney climbed 54 cents to $31.52.

Bond prices edged up. The yield on the 10-year Treasury note fell to 3.88 percent from 3.89 percent late Thursday.

The Russell 2000 index of smaller companies rose 3.31, or 0.5 percent, to 702.95.

Britain’s FTSE 100 gained 1 percent, Germany’s DAX index rose 1.3 percent, and France’s CAC-40 jumped 1.8 percent. Japan’s Nikkei stock average rose 0.3 percent.

• The Dow Jones industrial average closed the week up 70.28 points, or 0.6 percent, at 10,997.35. The Standard & Poor’s 500 index rose 16.27, or 1.4 percent, to 1,194.37. The Nasdaq composite index rose 51.47, or 2.1 percent, to 2,454.05.

The Russell 2000 index, which tracks the performance of small company stocks, rose 18.97, or 2.8 percent, for the week to 702.95.

The Dow Jones U.S. Total Stock Market Index – which measures nearly all U.S.-based companies – ended at 12,316.03, up 191.63, or 1.6 percent for the week.

The Index is up 81 percent – about $6.3 trillion in market capitalization – from a 12 1/2-year low of 6800.08 on March 9, 2009. It’s still down nearly 22 percent – or about $4.8 trillion in value – from its October 2007 peak of 15,745.39.

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