Thursday, January 14, 2010

Today's Headlines


- Yahoo! Inc.(YHOO), owner of the No. 2 search engine in the U.S., was targeted by a Chinese attack similar to the one that affected Google Inc.(GOOG), according to a person familiar with the matter. Google said this week that at least 20 other companies were targeted in a series of “highly sophisticated” attacks in December. Yahoo was one of those companies, said the person, who declined to be identified because the information isn’t public.

- SAP AG(SAP), the world’s biggest maker of business-management software, said full-year revenue from its main unit and operating margins beat company forecasts. The non-GAAP operating margin, at constant currencies, was 27.5 percent, beating a forecast range of 25.5 percent to 27 percent, the company said in an e-mailed statement. “We had been waiting for evidence of revenue recovery, and thus it is very encouraging to see the company beat revenue expectations -- also suggesting there could be revenue upgrades for the first quarter and 2010 as well,” Stacy Pollard, a Cazenove analyst who rates SAP “in line,” said in a note.

- Mortgage rates in the U.S. fell for the second consecutive week, lowering borrowing costs for consumers and making homes more affordable. The rate for 30-year fixed U.S. home loans dropped to 5.06 percent for the week ended today from 5.09 percent, mortgage finance company Freddie Mac said in a statement today. Rates reached a record low of 4.71 percent last month. This week’s average 15-year rate was 4.45 percent, the McLean, Virginia- based company said.

- Corn fell, heading for the biggest weekly decline since July, on signs of slowing demand from makers of animal feed, sweeteners and ethanol. U.S. exporters sold 327,286 metric tons (26.2 million bushels) of corn in the week ended Jan. 7, down 10 percent from a week earlier, the U.S. Department of Agriculture said today in a report. Export sales since Sept. 1 are 49 percent of the government’s 12-month forecast, lagging behind the 55 percent average of the previous five years for this time of year.

- Michel Barnier, nominated as European Union internal market commissioner, won support in the European Parliament after saying regulation of commodities trading, derivatives and short selling should be revamped. “No financial market, no financial product, no territory should be able to escape regulation and oversight,” Barnier said at a European Parliament confirmation hearing yesterday. “We need to put transparency, responsibility and ethics at the heart of the financial system. This crisis is too serious. Let’s not pretend we’re going to reform. We are going to reform.”

- China’s economy is overheating as asset bubbles and inflation pressures build, posing a “major risk” to global growth, the World Economic Forum said. A drop in momentum in the world’s fastest-growing major economy “could adversely affect global capital and commodity markets,” the group said in a report issued before this year’s Jan. 27-31 annual meeting in Davos, Switzerland. “Growth below 6 percent in China is a red alert in 2010,” Daniel Hofmann, group chief economist at Zurich Financial Services AG and one of the authors of the report, told reporters at a briefing today in London. “A hard-landing in China is a major risk.” “The Chinese economy is in the process of overheating,” Hofmann said. “The result of the monetary stimulus was a credit expansion of 30 percent in a year alone,” and “large cities like Shanghai and Beijing saw houses price increase more than 60 percent in 2009 alone.” “China is on a very unbalanced growth trajectory right now. The authorities have already announced some policies on the monetary policy side and some increase in capital requirements from the banks.” Hofmann said. “We’re in an environment where policy mistakes can be made.”

- European Central Bank President Jean-Claude Trichet comments on monetary policy, inflation and growth in the economy of the 16 nations sharing the euro.

- U.S. holiday sales rose 1.1 percent to $446.8 billion after consumer spending surged in December, topping the National Retail Federation’s forecast for a decline. The improvement in November and December, compared with a 3.4 percent drop in the 2008 holiday season, was bolstered by a 2.3 percent jump last month, the NRF said today in a statement. The Washington-based trade group had predicted sales in the last two months of 2009 would drop by 1 percent.

- The Obama administration’s proposal to tax financial firms may cost JPMorgan Chase & Co.(JPM) and Bank of America Corp.(BAC) more than $1.5 billion each, hinder the industry’s recovery and stifle investor interest in bank stocks, analysts and investors said. “This is not conducive to an investor-friendly environment,” said Peter Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati. “Profit will be hampered by this tax. It keeps the industry hobbled and it never gets healthy or out from under the thumb of the government.” “Using tax policy to punish people is a bad idea,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said in Washington yesterday after a hearing of the Financial Crisis Inquiry Commission. “All businesses tend to pass their costs onto customers.”

- The Commodity Futures Trading Commission today proposed limits on energy speculation that may curtail the investment of large banks and swaps dealers in the markets for oil, natural gas, heating oil and gasoline. Speculators in the futures market will no longer be lumped in with commodity-linked businesses like airlines and oil companies that are allowed to exceed limits on the number of energy futures one trader can hold, according to the proposal. Swaps dealers would no longer receive confidential hedge exemptions that allow them to exceed position limits, and instead would need “limited risk management exemptions” that would be reviewed monthly by the commission, and made public after six months, the commission said. The limited-risk exemptions would be administered by the commission while the so-called end-user hedge exemptions would remain in the hands of the exchanges. The exemptions would apply at the “owner level,” and would not look through to the clients initiating the transaction, according to the proposal. The rule would affect approximately 10 large traders, across the four commodities, some of whom may be eligible for exemptions, the commission said. Commission staffers declined to name the companies, saying the disclosure would be illegal.

- Monsanto Co.(MON), the world’s largest seed producer, said the U.S. Justice Department formally requested information on its herbicide-tolerant soybean seed business as part of an investigation. The Justice Department issued a civil investigative demand seeking confirmation that competitors and farmers will have access to first-generation Roundup Ready soybean seeds following patent expiration in 2014, St. Louis-based Monsanto said today in a statement.

- Treasury Secretary Timothy Geithner agreed to testify before a House panel investigating why the Federal Reserve Bank of New York asked insurer American International Group Inc. to limit disclosures of the government’s financial rescue to investors, a lawmaker said.

Wall Street Journal:

- Haitians grew desperate for international aid on Thursday as survivors from the earthquake that killed an untold number of people pleaded for medical care, tried to dig out their loved ones from the rubble or roamed the streets looking for basic necessities. Tens of thousands of survivors were huddled in the city's plazas and streets. The stink of human waste hung in the air. A grim silence was pierced by an occasional cry for help from beneath the ruins.

- Bank of America Corp.'s(BAC) shotgun marriage to Merrill Lynch & Co. has produced plenty of ill will, and big profits in real-estate investment banking. The Charlotte, N.C., bank blew away the competition last year in the business of underwriting stock offerings by commercial real-estate firms. The secret of success: Bank of America leveraged its relationships with real-estate borrowers to generate a flood of investment-banking work, much of it handled by former Merrill bankers who decided to stick around after the securities firm was acquired last year.

- For Google Inc.(GOOG) users in China, the big question isn't whether the Internet giant retreats from China, but if Beijing retaliates by blocking Google's international search site. If Beijing decides to put the site on the other side of the "Great Firewall," as the country's system of Internet controls is informally known, college student Shi Yuchen has a workaround already planned. She'll simply fanqiang, or "scale the wall."

"No matter what, I will continue to use [Google] by applying some 'scaling the wall' tools," Ms. Shi says. To help people like Ms. Shi, a small but influential number of tech-savvy Chinese have been schooling their fellow citizens on how to gain access to blocked sites. A search for the term fanqiang on Google or Baidu Inc., China's largest search engine, turns up dozens of Web sites with instructions on how to get around the country's Internet restrictions.


- Barclays Capital analyst Douglas Anmuth today repeated his Overweight rating on Google (GOOG), lifting his target price to $675, from $620. The stock closed yesterday at $587.09.

- Barclays Capital analyst Douglas Anmuth this morning repeated his overweight rating on (AMZN), lifting his price target on the shares to $160, from $130. He also upped his 2009 EPS estimate to $1.92, from $1.86, pushing up his Q4 number to 74 cents, from 70 cents.

- Morgan Stanley analyst Adam Holt today added Oracle (ORCL) to his firm’s Best Idea list, while lifting his price target on the stock to $31, from $29. ORCL closed yesterday at $24.80.


- President Obama will propose fees of 15 basis points (.15) on so-called high-risk transactions of big banks and financial institutions who derive profits from trades in derivatives and other complex financial instruments. A senior administration official said Obama's proposal is designed to take affect June 30 and run for at least ten years, longer if the fees do not cover unpaid sums from the Troubled Asset Relief Program (TARP).Obama will call the new levy the "financial crisis responsibility fee." The administration, through current Treasury Department accounting, estimates TARP is running a deficit $117 billion. Officials said that amount may shrink by billions and, even if the new transaction fees recoup all of the TARP-derived deficit, the administration intends to keep them on the books as a means to reduce the deficit and punish big-dollar firms. Significantly, the administration will exempt GM, Chrsyler, Fannie Mae and Freddie Mac from the fees even though most of the current TARP deficit is linked to taxpayer bailouts of these firms.

The Business Insider:

- Remember when YouTube was "doomed"? Whoops! Barclays analyst Doug Anmuth says YouTube will be profitable for Google(GOOG) this year. Doug says the video site will do it on $700 million revenues -- up 55% compared to 2009. YouTube is monetizing over a billion videos a week, and its homepage advertising is selling well.

- The meltdown is just getting worse. An Democratic political aide violently knocked-down a Weekly Standard reporter who was asking about Democratic Senate contender Martha Coakley about the health care lobbyists at her fund-raiser. Here's how reporter John McCormack tells the story:

- ExxonMobil(XOM), the largest publicly traded international oil and gas company, announced a project in northeast Texas on Wednesday to recover the equivalent of an additional 40 million barrels of oil, or enough to meet the annual energy needs of over one million Texas households.

- 15 Hot Tech Companies Ready For An IPO.


- U.S. Senate Majority Leader Harry Reid said Thursday he expects climate change legislation this spring, but warned it would fail without bipartisan support. The Nevada Democrat speaking at a geothermal industry conference in New York said legislation to address climate change cannot be forgotten among other major issues, including health care, the Senate is working on.

Washington Examiner:

- Whether there will be enough of them to defeat the enormous power of the Massachusetts Democratic party is another question. But even if there aren't, next Tuesday's election will still likely be the closest such race in many, many years. It's Scott Brown against the machine, and right now Brown has all the momentum.


- Reports of Fox News impresario Roger Ailes' demise, to paraphrase Mark Twain, may be greatly exaggerated. "News Corp.(NWSA) is 100% behind Roger Ailes," News Corp. President Chase Carey said, adding, "we hope and expect he will continue to lead Fox News well into the future." Ailes' current contract runs until 2013.


- The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15 (see trends).


- Nebraska Sen. Ben Nelson and his wife were leaving dinner at a new pizza joint near their home in Omaha one night last week when a patron began complaining about Nelson’s decisive vote in favor of the Senate’s health care bill. Other customers started booing. A woman yelled, “Get him the hell out of here!” And the Nelsons and their dining companions beat a hasty retreat. “It was definitely a scene in there,” said Tom Lewis, a 41-year-old dentist and registered Republican who witnessed the incident. A second witness confirmed the incident to POLITICO. It’s a new experience for Nelson. He used to be a popular figure back home, a Democrat who served eight years in the governor’s office and was elected twice to the Senate by a state that’s as red as the “N” on the University of Nebraska's football helmets. But Nelson has seen his approval ratings tumble in the wake of his wavering over the historic health care bill, his deal-cutting with other Senate Democrats and, ultimately, his support to break a GOP filibuster and send the bill to a House-Senate conference committee.

- The White House has reached a tentative deal with labor leaders to tax expensive health insurance plans, averting a standoff on one of the most contentious issues standing in the way of a compromise, according to a source familiar with agreement. House Speaker Nancy Pelosi has told colleagues that organized labor struck a deal with the White House on the excise tax, said Rep. Lynn Woolsey (D-Calif.), who spoke with the speaker during the party's annual issues conference Thursday in the Capitol Visitor Center. But AFL-CIO spokesman Eddie Vale said reports of a deal were "false," and negotiations were ongoing. Rep. Joe Courtney (D-Conn.), who has led the House effort against the tax, said he was not aware of a deal, and had not seen a proposal from labor or the leadership.

I, Cringely:

- Apple(AAPL) 2010: More of the Same and Blu-Ray, too. Back to my 2010 predictions, this time mainly about Apple, the PC company that fared best in 2009 and is likely to fare best in 2010, too.


- A survey of top U.S. manufacturing executives on Thursday showed the highest level of optimism in nearly two years, suggesting the hard-hit factory sector is finally beginning to recover. The Manufacturers Alliance/MAPI said its quarterly index of future business activity jumped to 57 percent in December from 38 percent in September and the highest reading since a matching 57 percent in March 2008.


- Soros Fund Management LLC, owned by billionaire investor George Soros, appealed a decision by a Hungarian court upholding a fine for manipulating the share price of OTP Bank Nyrt. Hungary’s financial regulator, known as PSZAF, imposed a fine of $2.7 million in March for manipulating the share price of Hungary’s largest lender on Oct. 9, 2008, triggering an intraday drop in the stock of over 20%.


- Nvidia's(NVDA) Tegra processor shipments are estimated to increase from about 100,000 units in 2009 to 2.5-3 million units in 2012 as the processor will be fully adopted in Audi's automobile lines in 2012, according to market watchers. Orders for Tegra processors from automobile players including Audi, Volkswagen, Bentley, Lamborghini, Seat and Skoda, in 2012 are estimated to reach 1.5 million units, accounting for about half or even 60% in Nvidia' total shipments, while the other 1-1.5 million units will be mainly used for smartphones, mobile PCs and digital music players, the market watchers noted. In 2010, the market watchers expect Tegra series processor shipments will reach 500,000 units.

Emirates Business 24/7:
- The UAE plans to spend billions of dollars in Iraq, making it the biggest investor in the oil rich country, citing Iraq’s Minister of State for National Security, Shirwan Al-Waili.

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