Tuesday, December 23, 2008

Today's Headlines

- Tax lawyers are urging private- equity and hedge-fund clients to restructure their partnerships so they can sidestep the higher taxes that President-elect Barack Obama has vowed to impose on their profits. Obama’s promise to revive a failed 2007 bill forcing executives to pay rates of 35 percent or more instead of the 15 percent capital-gains tax has prompted lawyers to advise the firms to take measures such as setting up offshore entities. That would help circumvent higher taxes on so-called carried- interest profits that executives at the firms typically earn.

- Jeffrey Gendell, whose investment firm Tontine Associates LLC is liquidating two hedge funds after losses of more than 60 percent this year, plans to start a new fund in February.

- The cost of protecting European corporate bonds from default fell, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings dropped 25 basis points to 1,010, according to JPMorgan Chase & Co. prices at 3:49 p.m. in London.

- Food inflation may fall to no more than 4.5 percent in 2009 as lower dairy costs give consumers relief from this year’s price gains, the highest in almost three decades, the U.S. Department of Agriculture said. The forecast for lower inflation, estimated at as high as 6 percent this year, follows declines in commodity prices from records set earlier this year, the USDA said today in a monthly report. Crude oil, a major determinant of transportation costs, has plunged 74 percent from a record $147.27 a barrel in July, based on New York trading. Corn, wheat and soybean prices all have dropped at least 46 percent from all-time highs this year.

- American Express Co.(AXP), the credit- card company that’s converting into a bank, plans to sell $3.39 billion in securities to the U.S. Treasury’s Troubled Asset Relief Program.

- Vice President-elect Joe Biden said the incoming Obama administration and congressional leaders are nearing an agreement on the broad principles of an economic- stimulus package.

- Thierry Magon de La Villehuchet, who ran a fund that invested with Bernard Madoff, was found dead at his office today in an apparent suicide, according to a police officer at the scene. De la Villehuchet, 65, was a co-founder and chief executive officer of Access International Advisors, according to a marketing document. Access, based in New York, invested $1.4 billion with Madoff, who was arrested on Dec. 11 for allegedly running a $50 billion Ponzi scheme.

- Russia, Iran and other countries with the world’s biggest natural-gas reserves agreed to coordinate forecasts, investments and relations with consumers to defend their market interests amid volatile energy prices. The 15-member Gas Exporting Countries Forum, which adopted a charter in Moscow today, will locate the headquarters of its new secretariat in Doha, Qatar, the biggest source for world liquefied natural gas shipments. Western consumer countries have warned against a “gas OPEC” modeled after the Organization of Petroleum Exporting Countries.

- New York City felonies have dropped 4 percent in 2008 compared with last year, a likely 18th consecutive annual decline in major crime, the Police Department reported. Although the city’s 501 murders as of Dec. 21 represent a 5.2 percent increase over last year, the total remains the second-lowest since 1961, when the city began such tabulations. Overall, crime has fallen 28 percent since 2002, when Mayor Michael Bloomberg took office and felony assaults reached record lows, the department said. Virtually every category of crime decreased in all five boroughs this year.

Wall Street Journal:

- A New York woman who lost nearly $2 million investing with Bernard Madoff has filed a claim against the Securities and Exchange Commission alleging the agency was negligent in failing to detect an alleged decades-long fraud. The administrative claim for relief was filed with the SEC on Monday and is believed to be the first attempt by an investor to recover lost money from regulators.

- Cerberus Capital Management LLC suspended withdrawals from its Cerberus Partners Fund. Redemptions were halted for as long as a year.


- Pending today's shareholder vote, Wachovia Corp. is set to officially become part of Wells Fargo & Co. on New Year's Eve, but behind the scenes, the transition is already taking shape.


- A new-generation of NVIDIA-based iMacs are due to begin shipping out of China sometime next month, according to a new report out of the Far East.


- Russia will boost defense orders 28% next year and add 70 strategic missiles by 2011.

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Ekho Moskvy:

- The number of unemployed people in Russia will rise to 10 million next year, or more than 10% of the country’s workforce, former Prime Minister Mikhail Kasyanov said. Russia’s inflation rate will reach as much as 15% even as industrial output and gross domestic product shrink amid the government’s inability to cope with the financial crisis, Kasyanov said. The ruble will weaken to 35 rubles versus the dollar, said Kasyanov, Vladimir Putin’s prime minister from 2000 to 2004.

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