Monday, August 18, 2008

Today's Headlines

Bloomberg:
- China's stocks plunged, extending an 18-month low, on concern the government will avoid introducing measures to boost the world's worst-performing market this year. Shanxi Lu'an Environmental Energy Development Co. and Shandong Gold Mining Co. led coal and metal companies lower on speculation the bear market in commodities will deepen. ``There is no confidence in the market,'' said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. ``Everyone is disappointed that the regulator hasn't done anything concrete to stem the decline.'' The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, declined 134.21, or 5.5 percent, to 2,313.40 at the close, the lowest since Feb. 5, 2007. About 60 of the gauge's 300 companies fell by the maximum daily limit. The measure, which is at its cheapest in relation to earnings since March 2006, has tumbled 57 percent this year, the most among 88 global measures tracked by Bloomberg, on concern measures to cool inflation will damp earnings.
- Fisherman Cao Jianzhou may abandon the job his family has done for more than half a century because rising fuel costs mean he loses money every time he sets out to sea from his home northeast of Shanghai. ``About 70 percent of the fishermen in our village lost money in the first half of this year,'' said Cao, 44, who catches crab and shrimp with his eight-man crew off Chongming Island. ``Some have quit and survive on the fee from selling their boats for scrap.'' Cao is one of 750 million Chinese fishermen, farmers and their families who are being squeezed after the government in June joined India, Malaysia and Indonesia in raising state- controlled fuel prices to cut losses for refiners. The 17 percent increase in gasoline prices and 18 percent jump in diesel fall disproportionately on rural China, where household incomes average 315 yuan ($46) a month.
- The cost of default protection on mortgage-backed securities sold by Caja Madrid, Spain’s second-biggest savings bank, soared to a record as investors speculate the nation’s property crash may worsen. Credit-default swaps on a top ranking portion of the lender’s Madrid RMBS III FTA transaction jumped to 500 basis points from 310 at the end of July, according to BNP Paribas SA prices.
- Diapason Commodities Management SA, the Switzerland-based manager of $8.5 billion in commodities, said investors withdrew 5 percent to 10 percent of their holdings from its index funds after a drop in prices. The Diapason Commodities Index has lost 20 percent from its July 3 peak as crude oil, gold and agricultural products fell. Commodities as measured by the CRB index advanced for six consecutive years, bolstered by record prices for everything from oil to gold. Assets linked to commodity indexes totaled $297 billion as of June, from about $76.7 billion at the beginning of 2006, according to Lehman Brothers Holdings Inc. Money has also been withdrawn from structured commodity products, customized investments for those unwilling or unable to invest through indexes or derivatives, Lausanne-based Corrigan said.
- Gold held in exchange-traded funds managed by ETF Securities Ltd. climbed to a record last week while platinum holdings plunged 8.2 percent. Gold assets rose 2.1 percent to 1.853 million ounces on Aug. 15, according to data posted on the company's Web site today. Platinum assets fell to 232,073 ounces.
- U.S. and Georgian officials disputed Russia's assertion that it began withdrawing its forces to the separatist region of South Ossetia, leaving the fate of a two- day old cease-fire agreement in doubt.
- Lowe's Cos.(LOW), the world's second- largest home-improvement retailer, reported profit that fell less than some analysts estimated after consumers spent their tax-rebate checks.
- Fannie Mae(FNM) and Freddie Mac(FRE) tumbled to about 18-year lows in New York trading on concern the government will be forced to bail out the mortgage-finance companies, wiping out common stockholders.

- Companies have sold $9.1 billion of high-yield, high-risk bonds since the end of May, the slowest US summer since 1994, according to JPMorgan Chase(JPM).
- Tropical Storm Fay is poised to hit Florida as a hurricane in the next day after killing about a dozen people on its path through the Caribbean. The storm may approach the Florida Keys later today, then make landfall on the state's west coast between Naples and Tampa Bay tomorrow, packing winds of at least 74 miles (119 kilometers) per hour.
- Brazil is drawing U.S. celebrities at an unprecedented clip, contributing to a record current account deficit that is leading Wall Street firms from Goldman Sachs Group Inc. to Morgan Stanley to predict an end to the four-year, 83 percent rally in the real.
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Russian industrial production grew at a slower pace than economists forecast in July. ``The softening may not be as temporary as we thought,'' said Yevgeny Nadorshin, an economist at Trust Investment Bank in Moscow. ``The pace of manufacturing growth is very low, and the picture with mineral extraction isn't pleasant.''
- Last week, the Government Accountability Office released a report showing that 60 percent to 70 percent of companies in the U.S. pay no taxes. That led to an Associated Press story with the startling headline, ``Most Companies in U.S. Avoid Federal Income Taxes.'' First, while it is true that 60 percent to 70 percent of companies in the study paid no tax in a given year, there was a big qualification. The study focused on an Internal Revenue Service tax database that included millions and millions of companies. The vast majority of firms in the study were tiny mom- and-pop enterprises. Why did the tiny mom-and-pop enterprises pay no taxes? Because they didn't make any money! In other words, there was virtually no news in the study. The truth is, of course, that we are all in it together. Workers will have better jobs if the U.S. is a more attractive climate for corporations. That means we need to reduce corporate taxes, not increase them.

Wall Street Journal:
- Michael Phelps, the US swimmer who’s won an unprecedented 8 gold medals at the Beijing Olympics, may be worth as much as $50 million to a sportswear company such as Nike Inc.(NKE).

BusinessWeek.com:
- Marcial: Sequenom’s(SQNM) Down Syndrome Test. The genetic tester’s prenatal-screening product could help it dominate a market with multibillion-dollar potential and transform medical diagnostics. There are tests for Down Syndrome already on the market, but, says Bassett, Sequenom's product removes prevailing concern about their accuracy.

HedgeFund.net:
- Hedge Fund Asset Flows Signal Investor Sentiment Shifts. The report estimates total hedge fund assets increased 4.41% in Q2 2008 to $2.973 trillion. The dollar amount of fund liquidations during Q2 was larger than new fund launches by an estimated $8.52 billion; the third highest level of fund closures on record. Fund of funds experienced net withdrawal of investor assets in Q2 2008 for the second time on record. Funds operating in Asia saw total assets fall an estimated $3.12 billion from a combination of performance losses and investor withdrawals. For the third consecutive quarter, investors have reduced allocations to equity strategies and increased allocations to fixed income related strategies. Allocations to emerging market hedge funds have slowed significantly in the last three quarters. Dislocations in credit markets and credit related securities in recent prior quarters, event driven and special situations funds experienced record growth in Q2 2008. Total assets in distressed funds increased an estimated $23.11 billion to $275.43 billion in Q2 08. CTA/Managed Futures products have been prime beneficiaries of broadly rising commodity prices. In the past four quarter these funds have experienced increasing rates of organic growth. In Q2 08 investor allocations increased assets 7.28%, the highest rate of organic growth in four years. Total CTA/Managed Futures assets reached an estimated $218.36 billion in Q2.

InvestmentNews:
- Funds of hedge funds losing their luster. As performances slow, some are questioning extra fees and lack of differentiation. From 1999 through the end of June, the number of hedge funds had jumped 147% to 7,662, and the number of funds of funds grew 413% to 2,642. The most recent data from Morningstar Inc. in Chicago shows that individual hedge funds had net inflows of $10.7 billion in June, while funds of funds suffered $9.2 billion in net outflows. "Generally speaking, I think a lot of people are starting to look at the funds-of-funds model, wondering what they're getting for the added layer of fees," said Ryan Tagal, director of hedge funds at Morningstar.

East Bay Business Times:
- Austin remains resilient in an increasingly bleak national housing market, according to a new study by national research firm Metrostudy. Home prices fell 3.1 percent across the country in the last year, while they rose 7.7 percent in Austin. Other Texas cities saw home prices rise about 3 to 4.5 percent.

ZDNet:
- When most publishers use RSS feeds to syndicate their content, most are hoping readers click through to the original content, and then they can monetize it from there — unfortunately, consumers of this feed data are often just looking for a quick fix, and not really that interested in the actual source of the information. This has made monetizing content a bit tricky when providing full-text feeds. When Google(GOOG) bought Feed Burner, they instantly got access to a whole bunch of new ad inventory — which has largely remained untapped. Google has finally publicly launched their solution to that problem — AdSense for Feeds.

Vedomosti:
- OAO VimpelCom, Russia’s second-largest mobile-phone company, and OAO MegaFon, the third-largest, may sign a deal with Apple Inc.(AAPL) to start selling iPhones in the country this week. As part of the agreement, Apple wants each operator to buy 1 million to 1.5 million iPhones.

Herald Sun:
- Ken Wood, coach of Australian Olympian Jessicah Schipper, sold his training program to the Chinese swimmer who defeated his protégé for gold last week. Wood received “big money” by selling his training methods to the coach of Chinese swimmer Liu Zige, citing an interview with the Australian coach.

Xinhua News:
- The Beijing municipal authorities haven’t approved any of the 77 applications to hold protests and demonstrations in the Chinese capital. China said last month it would allow approved protests in three Beijing parks during the Olympic Games.

Arab News:
- Saudi Arabia’s gold demand fell 16% to 35.9 tons in the second quarter as the metal’s price rose, citing data from the World Gold Council. Gold demand fell 11% in the UAE and 24% in other Gulf countries as the average gold price advanced 34% to $896.29 an ounce between April-June.

Jordan Times:
- Jordan expects its first shipment of Iraqi oil by middle of next month, citing the kingdom’s Minister of Energy Khaldoun Qteishat.

Emirates Business 24/7:
- A shortage of qualified bankers in the Middle East is leading to wage inflation that may hinder growth, citing Standard Chartered Plc. Regional CEO Shayne Nelson.

- The majority of United Arab Emirates residents cannot afforest to buy a home in the country, citing a survey by real-estate Web site propertyfinder.ae.

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