Sunday, September 20, 2009

Monday Watch

Weekend Headlines

- Paul Volcker, a former Federal Reserve chairman and now a outside economic adviser to President Barack Obama, criticized the administration’s plan to give the Fed authority to supervise “systemically important” financial firms. “I don’t know what systemically important institutions are,” Volcker said. “But I’m sure that if you picked them out, people will assume they’re going to be saved, that they’re too big to fail.” Volcker’s remarks appeared in the form of a “conversation” with Gary Stern, who retired last month as president of the Fed Bank of Minneapolis, and published in “The Region,” the bank’s quarterly bulletin. Volcker, 81, is chairman of the Economic Recovery Advisory Board, a body created by Obama in February to recommend responses to the crisis.

- The cost to protect corporate bonds in the U.S. from default fell for a second straight week to the lowest close in 16 months on optimism the economic recession has ended. Credit swaps on the Markit CDX North America Investment- Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, fell 8.5 basis points to 102.5 basis points this week as of 4:08 p.m. in New York, according to Barclays Capital. That’s the lowest weekly close since May 2008, according to CMA DataVision. The index fell 11.6 basis points last week, the biggest drop since the period ended July 17, CMA prices show. Federal Reserve Chairman Ben S. Bernanke said on Sept. 15 that “the recession is very likely over,” and reports on the retail industry, jobless claims and manufacturing beat analyst forecasts. Improving investor confidence helped companies sell at least $40.8 billion of U.S. corporate bonds this week, the most since May, according to data compiled by Bloomberg. “Another round of strong economic data, as well as Fed Chairman Ben Bernanke’s declaration that the recession is over, boosted credit to another winning week,” Ashish Shah, a strategist at Barclays Capital Inc., said today in a report. “Issuers are taking advantage of the strong tone to raise capital through the debt and equity markets.” Buyers are rewarding financial companies with the lowest yields relative to benchmark rates since June 2008, three months before Lehman Brothers Holdings Inc. collapsed. Spreads on financial company bonds have narrowed 565 basis points since March to 316 basis points on Sept. 16, according to Merrill Lynch & Co. index data.

- Copper prices in New York fell the most this month as rising inventories spurred concern that demand will slacken. Stockpiles monitored by the London Metal Exchange increased for a 16th straight session to 327,700 metric tons, the highest level since May 22. Inventories tallied by the Shanghai Futures Exchange rose 7 percent this week to a five-year high. “We have seen quite a big build in copper stocks, and the fundamentals are looking weaker,” said David Wilson, a Societe Generale SA analyst in London. “Investors are beginning to look at that, and they are a bit concerned.” Canceled warrants, or metal booked for removal from LME- monitored warehouses, fell for a third day, sliding 21 percent to 6,400 tons. That amounts to 2 percent of stockpiles, down from 21 percent on May 1. “In the absence of an increase in LME canceled warrants, there is no market-derived data to suggest that restocking is imminent,” John Reade, UBS AG’s head metals strategist in London, said in a note.

- Crude oil fell for a second day as the dollar strengthened against the euro, dimming investors’ demand for dollar-priced assets to hedge against inflation. “The rally in energy is looking a little long in the tooth,” said John Kilduff, senior vice president of energy at MF Global in New York. “It will take a long while, six months or a year, to work off the inventory overhang,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington. Stockpiles of crude oil dropped 4.73 million barrels to 332.8 million last week, the Energy Department reported on Sept. 16. The decline left inventories 7.9 percent above the five-year average for the week. Supplies of distillate fuel, which include heating oil and diesel, climbed 2.24 million barrels to 167.8 million, the highest since January 1983 and 24 percent more than the five- year average. Gasoline inventories rose 547,000 barrels to 207.7 million last week, 4 percent greater than average, the department said. OPEC members were left with 6.055 million barrels a day of spare capacity, the survey showed. “This market looks very over-valued based on supply and demand,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “It’s become more of a playground for investment banks in recent years. The greater their involvement the more it is influenced by equities and the dollar.”

- President Barack Obama is undertaking an unprecedented media blitz on behalf of his health-care plan, seeking to balance the risk of overexposure with the benefit of reaching the widest audience possible. “They’re pushing all their chips into the middle of the table,” said Dan Schnur, who was communications director of Republican Senator John McCain’s 2000 presidential campaign. “You only have so many bullets to fire in any particular debate and this is the biggest one they’ve got.” “This is precedent setting,” said Alan Schroeder, a professor at Northeastern University in Boston and author of “Celebrity-in-Chief: How Show Business Took Over the White House.” Hitting so many shows will “produce sound bites that are going to get a lot of play later.” Obama risks overexposure in trying to respond, said Douglas Brinkley, a presidential historian at Rice University in Houston. “If you’re talking all the time sometimes your voice doesn’t come in as clear,” Brinkley said. “You have to have a belly full of confidence to think the more people see and hear you the more impressed they’re going to be.” Administration spokesman Robert Gibbs said the president’s advisers aren’t worried the public is getting too much of Obama.

- Federal investigators are probing whether a local union president at a Pennsylvania U.S. Energy Department laboratory improperly helped President Barack Obama’s 2008 campaign on government time by using government facilities, union lawyers said. The U.S. Office of Special Counsel is probing whether Ronald Demicheli improperly taped a video criticizing 2008 Republican presidential nominee John McCain in an office at the National Energy Technology Laboratory near Pittsburgh, said Ward Morrow, a lawyer for the American Federation of Government Employees. Demicheli is president of the union’s Local 1916, which represents employees at the Energy Department lab and nearby research facilities of the National Institute of Occupational Safety and Health. The special counsel’s office, which polices compliance with a law restricting political activities by federal employees, seized Demicheli’s office computer, said Mark Roth, general counsel of the government employees union in Washington. The Energy Department inspector general’s office also is investigating whether Demicheli was inappropriately on government time at an April 2008 Pennsylvania AFL-CIO convention when he helped escort then-candidate Obama from a holding room to the stage for a speech, Morrow said.

- Russian President Dmitry Medvedev said Israeli leaders assured him they’re not planning a military strike against Iran.

- Wynn Resorts Ltd.(WYNN) plans to raise as much as HK$12.6 billion ($1.63 billion) in a Hong Kong initial public offering of its Macau casino assets, two people familiar with the matter said. Wynn plans to sell 1.25 billion shares for between HK$8.52 and HK$10.08 apiece, the two people said, asking not to be identified because the information is confidential. The sale represents about 25 percent of the Macau business, they said.

- The head of the Association of Community Organizations for Reform Now, a group in danger of losing funding after videos appeared to show employees giving advice on opening a prostitution business, said she was “outraged” by the actions of those workers and will announce an independent auditor for the organization tomorrow. “I was outraged by it, everyone should be,” said Bertha Lewis, chief executive officer of the nonprofit group, on “Fox News Sunday.” She added that “all of our employees, if they’re too stupid to understand that they’re not reaching professional standards, we terminate them.”

- Germany’s recovery from recession came in time to give a boost to Chancellor Angela Merkel’s re- election bid in the Sept. 27 vote. It may not last much longer. Unemployment is set to jump and consumer spending to fall in 2010 as government stimulus runs out, according to the Halle- based IWH institute, an adviser to the government. Companies are warning of a credit crunch, and debt at a post-World War II high leaves policy makers with few options to counter a double dip. “The pace of the upswing can’t be maintained,” said Klaus Baader, co-chief European economist at Societe Generale SA in London. “Next year is going to be more difficult, with unemployment rising and government stimulus petering out.”

- International investors are increasing purchases of Treasuries on a bet U.S. inflation will remain subdued, even as the dollar falls to the lowest levels of the year and the budget deficit tops $1 trillion. Investors outside the U.S. bought 43.1 percent of the $1.41 trillion of notes and bonds sold by the Treasury Department this year, compared with 27.1 percent of the $527 billion issued at this point in 2008, government figures show. The Merrill Lynch & Co. Treasury Master Index of U.S. securities returned 1.18 percent in the third quarter after the worst first half on record as demand from the investor group that includes central banks climbed to record levels at Treasury auctions.

- Senate Banking Committee Chairman Christopher Dodd’s plan for a single bank regulator may set up a fight with House colleague Barney Frank and the Obama administration and might slow the overhaul of financial rules. Dodd, leading efforts to rewrite regulations, will suggest combining the Federal Reserve, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency into one agency, the senator’s office said yesterday. “Establishing a single regulator is a very bad idea,” Camden Fine, president of the Independent Community Bankers of America, a Washington-based trade group with 5,000 members, said yesterday in an e-mail. “When you have a cyclopic regulatory system, it only takes one stick in the eye to blind it.”

- Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, had its price target tripled and stock rating raised at Morgan Stanley, which said the industry slump that began in 2007 is over. The share-price estimate was raised to 23,000 won from 6,500 won, while the rating was increased to “equal-weight” from “underweight,” Keon Han, a Seoul-based analyst at Morgan Stanley, wrote in a report today. Han revised up the target price on Samsung Electronics Co.’s stock 12 percent to 955,000 won. Hynix rose as much as 5.4 percent, the biggest intraday gain since July 27, at 10:35 a.m. on the Korea Exchange. Samsung, the world’s largest memory chipmaker, declined 0.4 percent, while Korea’s benchmark Kospi stock index was little changed. The computer-memory industry is headed for one to two years of sustainable recovery after chipmakers scaled back production, Han wrote. Morgan Stanley also raised its ratings on Taiwan’s Winbond Electronics Corp., Inotera Memories Inc. and Nanya Technology Corp.

Wall Street Journal:

- Federal prosecutors arrested a 24-year-old Afghan immigrant in Aurora, Colo., who has been under questioning for days related to an alleged terror plot, charging him, his father and a third man with lying to investigators in connection with an ongoing terrorism investigation. The arrests grow out of an FBI investigation of "several individuals" in the U.S., Pakistan and elsewhere relating to a plot to conduct bomb attacks in the U.S., according to an FBI affidavit filed in U.S. District Court in Denver late Saturday night. Federal agents arrested Najibullah Zazi, a legal U.S. resident of Aurora, Colo., along with his father, Mohammed Wali Zazi, 53, also of Aurora and a U.S. citizen originally from Afghanistan. In New York, FBI agents arrested Ahmad Wais Afzali, 37, an Afghan national who is a legal U.S. resident of Flushing, N.Y. FBI agents found a laptop computer containing an image of nine-pages of handwritten notes containing instructions for making bombs in a car Najibullah Zazi rented and drove from Colorado to New York, according to affidavits released with the complaint.

- A bill in Congress to curb global warming has a lot of Texans boiling. The bill proposes to make some companies pay for the carbon dioxide and other greenhouse gases they emit, gases that scientists believe are contributing to rising temperatures. And that puts the Lone Star State, which produces more emissions than any other state and even some big industrialized countries like Canada, squarely in the cross-hairs. If the climate-change bill becomes law, it will have a severe impact on the Texas economy, local officials say. A study commissioned by the state comptroller says 135,000 to 277,000 jobs could be lost in 2012, the year the legislation would take effect. Roughly 312,000 people work in the oil and gas industries in the state, home to a quarter of the nation's refining capacity and to oil giants Exxon Mobil Corp. and ConocoPhillips. Texas Gov. Rick Perry, a Republican, has said he thinks the bill would "devastate" some of the industries that have helped his state weather the recession better than other regions. "To throttle that one bright spot is a little bit puzzling," Mr. Perry said at a June roundtable held in Austin to discuss possible effects of the legislation. Joining Texas are the Oklahoma Legislature, which in May issued a statement against the bill, and former Alaska Gov. Sarah Palin, who lambasted the proposal in a Washington Post op-ed column, calling it "an enormous threat." The bill, sponsored by U.S. Reps. Edward Markey (D., Mass.) and Henry Waxman (D., Calif.), won narrow approval in the House in June, but it is expected to face more heated debate in the Senate in coming months. Ms. Combs, the state comptroller, says the wind industry has created only 500 to 800 permanent jobs in the state, a small fraction of the jobs that she believes will be lost. "I don't know where the new jobs are going to come from," Ms. Combs says. "They're not going to come from wind." Landing a green job in Texas, she adds, could be akin to finding a "unicorn—a sort of mythical beast."

- A Goldman Sachs Group Inc.(GS)-managed private equity fund is investing about $250 million in Geely Holding Group's Hong Kong-listed arm to fund the auto maker's growth ambitious, according to a person familiar with the matter.

- The bear market is over? Tell the quants. The stock surge since March has done little to bolster the fortunes of a group of "quantitative" hedge funds, which make investments based on mathematical formulas. One way these investors like to make money is by betting on high-quality stocks while at the same time wagering against the fortunes of stocks that seem overpriced. For much of the year, that strategy hasn't worked out, because momentum stocks like American International Group and MGM Mirage, some without great earnings prospects or with poor balance sheets, have led the charge higher. Overall performance figures for quant traders, while disappointing, haven't been horrible. Quantitative "directional" funds rose 9.6% through August, well off the 14% gain of the average hedge fund. But some of the big funds are doing much worse. The MAN AHL Diversified fund was down more than 14% through August, according to investors, while Renaissance Technologies' RIEF fund dropped nearly 12%. Two funds run by Winton Capital Management were down about 8%. There are indications that the losses have gotten worse in recent days for some quants. Shares with the highest levels of short interest have been among the best performers in the past few weeks, according to Barclays Capital, while those with improving growth prospects are actually doing worse than the market. "Quality" stocks are on one of their worst streaks since 1950, Barclays said, causing problems for many quants.

- Securities and Exchange Commission Chairman Mary Schapiro predicted that any new regulation of hedge funds will likely require detailed disclosure to regulators, but not necessarily as much disclosure to the public. Also, Ms. Schapiro said in a speech on Friday that she expects the agency to address its "expectations" for the potential adoption of a set of global accounting standards. She laid out the various initiatives the SEC has taken to provide investors with more information, ranging from ratings companies and short-selling to risk-taking and "flash" orders. But she acknowledged that in some instances, such as dealing with hedge funds, it can be hard to strike a balance between informing investors without disclosing too much about firms' trading strategies. She said there are still "issues to be resolved" in this area.

- Bankers and lawmakers are sharply divided over the Federal Reserve's plan to review -- and possibly veto -- the way that thousands of U.S. banks pay their key employees. While the roughly 25 largest U.S. banks would get the most scrutiny, overall the plan would give the Fed sweeping powers over executives, traders and loan officers at more than 5,000 banks. The proposal, which was first reported Friday in The Wall Street Journal, will "give [regulators] another opportunity to have someone come in and tell us how to run our business," said Edward Wehmer, chief executive of Wintrust Financial Corp., a Lake Forest, Ill., company with about $11 billion in assets and 79 branches. "It's opening Pandora's box," he said. Amid the debate, other bank regulators could soon take similar steps. The Office of the Comptroller of the Currency has recently begun reviewing policies regarding compensation standards at the national banks it regulates, according to a person familiar with the matter.

- The U.S. and Western Europe can point to a remarkable achievement over the past 40 years: significant reductions in air pollution with only a modest effect on our economic growth and prosperity. So, why can't we expect to do the same with greenhouse-gas emissions? Greenhouse gas isn't a traditional air-pollution problem. It is an energy-use problem, and that makes a world of difference. Traditional air pollution is an unwanted byproduct. Reducing it does not require any constraint on fossil-fuel use. Indeed, over the past few decades, we've doubled consumption of some fossil fuels while making huge cuts in pollution. Carbon dioxide, however, is the result of complete fuel combustion. Apart from still-unproven technologies, there's no way to remove it from the process. The only way to reduce emissions is to burn less fuel, which means less energy output. So, to meet the target the climate campaigners have set, the U.S., Europe and Japan will have to replace virtually their entire fossil-fuel energy infrastructure. For the U.S., the 80% target means reducing fossil-fuel greenhouse-gas emissions to a level the nation last experienced in 1910. On a per-capita basis, we'd have to go back to the level of about 1875. It is not even clear the goal of replacing fossil fuels can be accomplished at any cost, a point the International Energy Agency raised in its most recent annual energy forecast:
- The International Monetary Fund's executive board on Friday was discussing selling some of the fund's gold to provide low-interest loans to poor countries and shore up its internal finances.

- Companies are digging deeper and searching farther in the hunt for big oil. The deep waters off the coasts of countries like Brazil and Sierra Leone have recently become hot spots for large discoveries of oil this year as exploration continues to move further from shore and technology improves.

- Equipment upgrades and new operating procedures seem to have brought the industry's accident rate way down. And fuel prices have fallen, too. That makes for a strong tail wind for the nation's largest air medical service provider, Englewood, Colo.-based Air Methods (AIRM).

NY Times:

- The proliferation of personal computers, iPods, cellphones, game consoles and all the rest amounts to the fastest-growing source of power demand in the world. Americans now have about 25 consumer electronic products in every household, compared with just three in 1980. Worldwide, consumer electronics now represent 15 percent of household power demand, and that is expected to triple over the next two decades, according to the International Energy Agency, making it more difficult to tackle the greenhouse gas emissions responsible for global warming. To satisfy the demand from gadgets will require building the equivalent of 560 coal-fired power plants, or 230 nuclear plants, according to the agency. Most “energy experts” see only one solution: mandatory efficiency rules specifying how much power devices may use.

- Economists point to powerhouse countries like India to illustrate the hurdles facing some 100 world leaders due to gather in New York this Tuesday for the highest level summit meeting on climate change ever convened. The Indian government has announced a major commitment to solar power as a renewable means of bringing electricity to more than 400 million people now living without it. Yet the government was pilloried at home last summer for accepting the international goal of preventing a global temperature rise of more than 2 degrees Celsius (3.6 degrees Fahrenheit) by limiting emissions. Opposition parties accused it of selling out the country’s future development. While virtually all of the largest developed and developing nations have made domestic commitments toward creating more efficient, renewable sources of energy to cut emissions, none want to take the lead in fighting for significant international emissions reduction targets, lest they be accused at home of selling out future jobs and economic growth. The negotiations for a new climate change agreement to be signed in Copenhagen in December are badly stalled.

- A year ago, as the financial system was threatening to collapse, federal regulators offered all sorts of assistance to ward off catastrophe. The strategy worked, at least so far, but the bill is starting to come due. The Federal Housing Administration, which is supporting the housing market by insuring loans for millions of struggling buyers, said Friday that its cash reserves had fallen below 2 percent for the first time. Raising its insurance premiums would replenish the reserves, but could also hamper the housing recovery. Another unpleasant option: asking for a federal bailout. The Federal Deposit Insurance Corporation, meanwhile, is running out of money to pay back the depositors of failed banks. Its chairwoman said Friday the agency might for the first time decide to borrow from the Treasury. Taken together, the two developments indicate “the limits of the government’s ability to make all the bad stuff go away,” said the investment strategist Ed Yardeni.

- Can Amazon(AMZN) Be Wal-Mart(WMT) of the Web?

- ARE the days of the cocooned corporate director finally coming to an end? One can only hope. Even though directors — through the boards they sit on and the various committees they oversee — are supposed to keep wayward or incompetent chief executives at bay, all too often they are, in practice, just cronies of management. For years, shareholders have done little to voice complaints about such cozy relationships, but it seems that the financial fiasco of the last few years, and the lackadaisical performance by directors at major banks that contributed to the meltdown, is encouraging investors to become more vocal. Signs of such a welcome development can be seen in the results of this year’s director elections at annual corporate meetings. According to an early assessment of these shindigs, shareholders voiced significantly greater opposition to directors who were up for election this year than they did in 2008. Although such “no” votes aren’t binding, they send a powerful message that should reverberate throughout corporate board rooms.

- The world can be a rough place for independent inventors. They can often find themselves in court, battling big corporations, spending piles of money on lawyers and leaving it up to judges and juries to determine the value of their hard-won patents.That could be changing. Wrangling over patents is beginning to move out of the courtroom and into the marketplace. A flurry of new companies and investment groups has sprung up to buy, sell, broker, license and auction patents. And venture capital and private equity is starting to pour into the field.

Washington Post:
- The liberal political organizing group ACORN faced internal chaos and allegations of financial mismanagement and fraud long before two young conservatives embarrassed the group with undercover videos made at field offices in Washington and across the country. Internal ACORN documents show an organization in turmoil as last year's presidential election approached, with a board torn over how to handle embezzlement by the founder's brother and growing concern that donor money and pension funds had been plundered in the insider scheme. Minutes from a meeting ACORN held in Los Angeles last summer reveal a group then on the brink of financial collapse. "Currently owe over $800k to IRS," the minutes note. "Haven't paid medical bills of over $300k. We are essentially 'broke' nationally and lots of offices are struggling." Some top ACORN officials tried to shield the scheme, which involved Dale Rathke, the brother of ACORN founder Wade Rathke. "Leadership has no faith in staff. Wade betrayed them," the minutes said. The documents present a troubling picture of one of the nation's leading social justice advocacy groups, with more than 400,000 members, offices in 75 cities and an expanding international presence. ACORN, or Association of Community Organizations for Reform Now, was founded in 1970 and is supported in part by government grants. It has forged relationships with banks, federal and state agencies, and nonprofit groups that have made it a major force in helping low-income families buy homes and in bringing marginalized voters to the polls. The ACORN political action committee endorsed Barack Obama in February 2008. An investigation by Republican members of the House Committee on Oversight and Government Reform also showed that there was concern within ACORN that its voter outreach efforts, which are required to be nonpartisan, were aimed at electing Democratic candidates, a key complaint of conservative critics. The Obama campaign paid Citizens Services of New Orleans, a close ally of ACORN, more than $800,000 for get-out-the-vote activities, and the group's political action arm endorsed Obama. Obama's ties to ACORN date to his days as a community organizer in Chicago. He represented ACORN in a lawsuit in 1994 and conducted two leadership training sessions for ACORN's Chicago chapter in the late 1990s. In 1992, Obama served as director of Project Vote in Chicago, helping to register 150,000 voters on the South Side. Issa's investigators unearthed e-mails and documents offering details of how the organization reacted to the discovery that Dale Rathke, the former chief financial officer of ACORN, had embezzled $947,000 in 1999 and 2000. Wade Rathke left his post as ACORN's chief organizer in June 2008 after the embezzlement was discovered. Neither the full ACORN board nor most of its staff members knew about the embezzlement until a donor revealed it in 2008, eight years later. ACORN reached a private settlement with Dale Rathke in which he and his family agreed to repay the money that, according to ACORN documents, he spent on luxury hotels and trips on the Concord. The organization agreed not to turn over the matter to prosecutors. Dale Rathke could not be reached for comment Saturday. Issa said his inquiry found a handful of Wade Rathke loyalists in charge of nearly 200 entities and affiliates with varying status -- some tax-exempt, some political -- but with blurred lines. "If you weren't interested in merging all your corporate entities to foster one political end, why did you create this structure that would allow you to do just that?" Issa said. ACORN and allied groups have received about $53 million in federal funds since 2004. Despite a move last week in Congress to block ACORN's funding, Kettenring said cutting off federal support "would have a negligible impact on our core operations."

- Gov. Jon Corzine has a stake in a private hedge fund related to the corporate owner of four New Jersey casinos, an investment Republican critics contend presents at least the appearance of a conflict for a multimillionaire governor who has vowed to steer clear of them. Corzine and his advisers say the investment was properly reported and does not violate state regulations that bar the governor and senior state officials from business relationships with casino operators. They say the hedge fund's holdings are kept separate from those of its founding company, which bought Harrah's Entertainment in late 2006. The Corzine hedge fund is TPG-Axon, while its founder is Texas Pacific Group (TPG). They share the same address and some of the same people as well as the same name. Republicans plan to raise the issue in the gubernatorial campaign as Corzine seeks a second term. "Any way you slice it, Jon Corzine has run afoul of the law and certainly afoul of the standard he set for himself," said former state Republican chairman Tom Wilson, who has long criticized Corzine for how he uses and manages his personal finances. "You cannot be in business with a casino license holder and that's exactly what's happened here. To Jon Corzine, the rules are for other people to live by. But just because you're rich doesn't mean you get a pass on the rules."

- The best new gadgets for business.

LA Times:

- Jump on a jet for that next business meeting and you may be doing more than pocketing free peanuts. You may be helping the American economy. Business travel budgets have been slashed as corporations try to ride out the recession. Spending on business travel in the U.S. is expected to reach $234 billion in 2009, down 10.3% from 2008, according to the National Business Travel Assn., a group that represents 15,000 business travel professionals. But both studies say a boost in business travel spending can act as the energy drink our slumping economy needs to start flying again. The assumption is that face-to-face meetings generate more clients, better business deals, greater revenue and healthier profits. The study commissioned by the U.S. Travel Assn., a trade group representing about 2,000 travel organizations, said a 10% increase in spending on business travel would boost the country's gross domestic product by 1%. Such an increase would be enough to shove the economy out of its recession, said Adam Sacks, a managing director at Oxford Economics, the research firm that produced the report. The U.S. Travel Assn. study, based on surveys and "econometric analysis" from the last 13 years, concluded that for every dollar invested in business travel, companies can generate an average of $12.50 in revenue and $3.80 in profit. The study was read by Martin A. Asher, an adjunct professor of finance at the Wharton School, who declared the analysis sound. The National Business Travel Assn.'s study concluded that businesses can make an incremental increase of $15 in revenue for ever dollar spent on business travel. If businesses increase travel spending to "optimum levels," the boost would create 5.1 million new jobs and generate more than $101 billion in tax revenue, according to the study, conducted by IHS Global Insight, an economics research consulting firm. "Decisions to cut travel are very shortsighted," Sacks said.

The Business Insider:

- As Jim Grant himself acknowledges, he's no perma-bull. Many, in fact, would put him in the other camp. But now he's arguing that we're a quarter into what will be a startlingly sharp recovery. Why does Grant think that Bernanke, Obama, Roubini, and other grand consensus thinkers are getting it wrong? Because the faster they fall, the faster they rise.


- Senate Republicans — and one Democrat — fired the opening salvo in the fight over the raising the nation’s debt limit Friday, arguing in a letter to Treasury Secretary Timothy Geithner that ending the Troubled Asset Relief Program at the end of the year would “reduce” the need to raise the debt ceiling. “As you know, the latest TARP report shows a significant amount of unobligated funds,” wrote all but one of the Senate’s 40 Republicans, joined by Alaska Democratic Sen. Mark Begich. “Ending the authority for TARP would help improve the Federal debt going forward and reduce the need to increase the debt limit, which Congress has raised three times in the last 14 months.” Treasury’s authority to spend TARP money expires Dec. 31, but Geithner has the option of extending it to October 2010. Treasury has not yet decided whether to do so or not.

- In his first public comments on Attorney General Eric Holder’s decision to launch an inquiry into Bush-era interrogations of terror suspects, President Barack Obama said he doesn’t want to see any “witch hunts” but won’t interfere with the Justice Department’s efforts to enforce the law. “I trust career prosecutors to be judicious. I've made clear both publicly and privately that I have no interest in witch hunts,” Obama said on CNN’s “State of the Union” during a round of television talk show interviews aired Sunday. “But, ultimately, the law is the law, and we don't go around sort of picking and choosing how we approach it.” On Friday, seven former CIA directors sent Obama a letter Friday asking him to order Holder to reverse his decision to assign a federal prosecutor to re-examine a series of cases of alleged prisoner abuse which the Justice Department declined to prosecute during the Bush Administration. Obama politely brushed aside that request, while expressing respect for the ex-CIA chiefs who warned that the new inquiry could devastate morale at the spy agency.

- President Barack Obama is warning U.S. commanders that he’s “skeptical” about whether more troops will make a difference in Afghanistan, saying he’ll approve an upcoming request only if the forces fit into a strategy to beat back al-Qaida and protect the United States. U.S. generals are preparing to seek as many as tens of thousands additional troops for the increasingly unpopular conflict, but in several of his five Sunday talk show interviews, Obama made clear that he’s far from convinced about the need for a massive infusion of troops and won’t be rushed on the decision. Obama had made a focus on the war in Afghanistan a central tenet of his foreign policy when he ran for president – often holding up the decision to invade Afghanistan, home to the 9/11 plotters, as the right move compared to President George W. Bush’s decision to invade Iraq.

Rasmussen Reports:

- Fifty-six percent (56%) of voters nationwide now oppose the health care reform proposed by President Obama and congressional Democrats. That’s the highest level of opposition yet measured and includes 44% who are Strongly Opposed. Just 43% now favor the proposal, including 24% who Strongly Favor it.

- The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 31% 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 -9 (see trends).


- A man who once claimed to have fathered the child of John Edwards' mistress says in a book proposal the former presidential candidate is the real father and that he and Edwards worked with his campaign finance chairman to hide that secret, according to a newspaper report published online Saturday. The New York Times said the book proposal by former Edwards aide Andrew Young states he helped facilitate the affair between Edwards and Rielle Hunter. According to the newspaper, Young wrote that Edwards once told Hunter they would wed after Edwards' wife, who has cancer, died. Edwards told Hunter that the ceremony would be held on a rooftop in New York and the Dave Matthews Bands would make an appearance, the newspaper said, citing its examination of the book proposal. Edwards has said the affair with Hunter ended in 2006. That year, Edwards' political action committee paid Hunter's video production firm $100,000 for work. Then the committee paid another $14,086 on April 1, 2007. The Edwards camp has said the latter payment from the PAC was exchanged for 100 hours of unused videotape Hunter shot. The same day, the Edwards presidential campaign had injected $14,034.61 into the PAC for a "furniture purchase," according to federal election records. Edwards, a Democratic U.S. senator representing North Carolina from 1998 until his vice presidential bid in 2004, acknowledged in May that federal investigators are looking into how he used campaign funds. Grand jury proceedings are secret, and the U.S. attorney's office in Raleigh has declined to confirm or deny an investigation. The New York Times said the book proposal states Edwards knew from the start that he was the father of the child and expended considerable effort trying to conceal that. The proposal says Edwards pleaded with Young to claim paternity and asked Baron to check whether a doctor would fake the results of a paternity test.

San Francisco Chronicle:

- Paul Bertolli's credentials as a chef are impressive, including 10 years at the helm of Chez Panisse and a turn as private chef for Sir Harold Acton in his Florentine Villa la Pietra, where he served such guests as Princess Margaret and Rex Harrison. Bertolli left that world in 2006 to found Fra'Mani in Berkeley and began producing artisanal salumis - salami, pancetta and sausages. Now, he's aiming at the home table, with a line of fresh, ready-to-heat-dishes now available at Costco warehouse stores. The four dishes - organic polenta, penne Bolognese, beef braised in Zinfandel with vegetables, and organic turkey meat loaf - are unfrozen and organic with no preservatives or hormone additives. The meals serve five, and none sells for more than $14.

Washington Times:

- White House National Security Adviser James L. Jones says President Obama's decision to abandon a long-range missile defense site in Eastern Europe was driven by U.S. intelligence concerns that Iran is further along than previously thought in developing medium-range missiles that could strike Western Europe and the Middle East with nuclear warheads.


- Embattled New York Governor David Paterson said on Sunday he was still running for office, in the face of reports that President Barack Obama had asked him to withdraw from the 2010 race for fear that he cannot regroup from a series of political setbacks. "I am running for office," Paterson told reporters at a Manhattan parade. "I'm not going to discuss confidential conversations," he said, adding that he planned to continue focusing on matters related to the financial crisis. The New York Times reported on Sunday that the Obama administration is worried Paterson's unpopularity could drag down New York's Democratic members of Congress and the Democratic-controlled state legislature in November 2010 elections. Citing an administration official, the Times reported that Obama's request that Paterson step aside was put forward by his political advisers, but approved by the president.

- Cautious investors may have missed the major gains in eBay Inc's(EBAY) stock price this year, but a growing belief in the Internet giant's comeback suggests the shares still have room to rise.

Financial Times:

- Activist investors are turning a beady eye on investment trusts, as the large discounts of share prices to net asset values of these companies have many investors rubbing their hands in glee about possible returns. Investment trusts were severely affected by market downturn, caught out by involvements in many smaller companies in esoteric areas that affected the liquidity of their shares. While equity markets have rebounded this year, many of the investment trusts are still on substantial discounts of as much as 50 per cent. That forms opportunities for activist investors, who have been quietly snapping up shares this year.

- Forget caller ID. A coming wave of “social” mobile phones is likely to tell you everything you ever wanted to know and more about the person calling you. An application called, available in the fourth quarter on the iPhone and handsets that run Google’s Android operating system, offers a stream of information about callers, including personal videos, photos and their current location. With, when the phone rings, a user can see a video recorded by the caller as a “status update” that shows their mood and where they are. The screen can also feature their latest Twitter messages, their name and title from the Linkedin professional network, recent photos posted to the Flickr photo service and a map of their location. Rey Flemings, chief executive of Particle,’s parent company, says the service should come into its own in 2010 as more phones feature a forward-facing camera for video calls.

- America’s all-consuming debate over healthcare reform is threatening to snuff out efforts to conclude the Doha round of world trade negotiations, Europe’s top trade chief has warned. Baroness Ashton, the European Union’s trade commissioner, welcomed recent progress on Doha, which would reduce tariffs on a broad range of goods and services, after ministers from 30 countries met in New Delhi earlier this month and pledged to complete the long-stalled negotiation in 2010. The pledge was seen as particularly important because of the commitment of the Indian government, whose dispute with the US over farm subsidies was a central factor in the breakdown of talks in July 2008. But she worried that the Obama administration’s focus on healthcare legislation had left it with little energy or political capital to sell the merits of the deal to a sceptical US public.

- European commercial property owners face a wave of complex debt refinancings and restructurings that pose a threat to the sector, according to bankers and industry groups. Senior bankers and industry representatives in the UK used a meeting with the Bank of England in the summer to highlight the problems caused by billions of pounds worth of debt that needs to be refinanced or has breached banking agreements. They are particularly concerned about the amount of European debt packaged in complex bonds, known as commercial mortgage-backed securities (CMBS), where restructuring has proved especially difficult and highlighted this issue to the Bank for the first time. There is mounting concern among industry professionals about how to restructure or refinance the $2,100bn of European commercial property loans, in particular the $200bn in CMBS. A report from the UK industry group that met with the Bank highlighted that the UK commercial property sector could be in negative equity until 2017 and undercapitalized by up to £120bn ($195bn) based on current conservative banking refinancing terms. Close to £43bn of loans to the commercial property sector are due for repayment this year alone, according to De Montfort University research. Half of the outstanding European CMBS market needs to be repaid in 2011 and 2012, and CMBS in default have already proved difficult to restructure.

- A former journalist looks set for a £2.7m payday from the sale of his internet-based financial analysis service. Hugo Dixon is in advanced talks to sell to the media giant Thomson Reuters, after agreeing a price of about £10m. The deal will also bring a windfall for City luminaries who backed the online venture, including Stephen Hester, chief executive of Royal Bank of Scotland, Lord Davies, the trade minister, and investment bankers.

The Guardian:

- Barack Obama has demanded the Pentagon conduct a radical review of US nuclear weapons doctrine to prepare the way for deep cuts in the country's arsenal, the Guardian can reveal. Obama has rejected the Pentagon's first draft of the "nuclear posture review" as being too timid, and has called for a range of more far-reaching options consistent with his goal of eventually abolishing nuclear weapons altogether, according to European officials.

Economic Daily News:

- Quanta Computer Inc. expects third-quarter laptop shipments to climb almost 30% from the last three months, citing Vice Chairman C.C. Leung. The company previously forecast a 20% increase. Laptop shipments in the fourth quarter will increase by 20% from the current period.

The Times of India:

- BOGOTA: The United States knew about an abortive coup against Venezuelan President Hugo Chavez in 2002, and may even have taken part, former US president Jimmy Carter has told a Colombian newspaper. "I think there is no doubt that in 2002, the United States had at the very least full knowledge about the coup, and could even have been directly involved," Carter said in an interview with El Tiempo published Sunday. The former US leader said it is understandable that Chavez continues to blame the United States for the failed overthrow attempt. Carter told El Tiempo that he believed Chavez was elected in a "fair" vote in 1999, had carried out necessary reforms for Venezuela and ensured that "those who are traditionally excluded are able to get a larger share of the national wealth."

The Standard:

- Up to 30 percent of Asia's population is predicted to be sickened by human swine flu (H1N1) amid a global vaccine shortage, but World Health Organization and Hong Kong health leaders were yesterday guarded on the safety of the mainland-made Sinovac vaccine. He said experts have estimated that from 20 to 30 percent of the population in the WHO's Western Pacific region eventually will be affected - or between 448 million and 672 million people. The worst-case death scenario is 0.1 to 0.5 percent of those infected, said Kasai Takeshi, the WHO regional adviser for communicable diseases, surveillance and response.

Weekend Recommendations
- Made positive comments on (GG), (AUY), (NEM), (VOD), (CFN), (MWW), (SCHW), (YHOO)
and (GFI).


- Reiterated Buy on (GOOG), boosted estimates, target $580. (GOOG) remains our #1 Large Cap ‘Net Long.

- Lowered (POT) estimates. For the third time this year (POT) has significantly cut 2009 EPS guidance on weaker than expected potash volumes. We downgraded fertilizer stocks last wee for 3 reasons – 1) The late harvest may reduce the fall application, 2) Risk from the China contract & uncertainty from debt-laden producers, and 3) Lower farmer profitability. Buyers are waiting, producer inventories are at historic highs, and retailers are living hand-to-mouth.

- Reiterated Buy on (GLW), target $20.50.

Morgan Stanley:

- Reiterated Overweight on (MU). The DRAM industry downturn that began in 2007 is over. We still see risk of the usual seasonal downturn in 1H10, but nothing near the magnitude of the structural decline that occurred in the past three years. We are now taking a positive view of the DRAM industry globally – a 1- to 2-year sustainable industry recovery, true to its past boom and bust cycles.

Night Trading
Asian indices are -.50% to +.25% on avg.

Asia Ex-Japan Inv Grade CDS Index 116.50 +3.0 basis points.
S&P 500 futures -.13%.
NASDAQ 100 futures -.19%.

Morning Preview
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report In Play

SeekingAlpha Market Currents Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?

Politico Headlines
Rasmussen Reports Polling

Earnings of Note
- (LEN)/-.51

- (SNX)/.62

Upcoming Splits

- (UTHR) 2-for-1

Economic Releases

10:00 am EST

- Leading Indicators for August are estimated to rise .7% versus a .6% gain in July.

Other Potential Market Movers
- The Fed’s Cumming speaking, Bank of America Smid Cap Conference, CIBC Energy Infrastructure Conference, UBS Global Life Science Conference, (NKE) annual meeting, (GIS) annual meeting and the TAF auction
could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.

No comments: