The executive, Don Ching Trang Chu, 56 years old, of Somerset, N.J., was arrested before a trip to Taiwan he had scheduled for Sunday, prosecutors said.
Mr. Chu, a naturalized U.S. citizen and Taiwan native, has been charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud and fraud in connection with securities. The first count carries a maximum sentence of five years and the second up to 25 years. Both carry a potential fine of $250,000 or twice the gross gain or loss from the offense, prosecutors said.
Mr. Chu was listed earlier this week as an Asia expert on the website of Primary Global Research LLC. The Mountainview, Calif.-based firm, which was not identified by prosecutors in their complaint against Mr. Chu filed Wednesday, pairs hedge funds and other investment companies with current and former employees at publicly traded corporations to provide insight into their companies and industries.
In a statement Wednesday, Primary Global said Mr. Chu served as the company's Taiwan liaison and had been with the company for about seven years. 'Based upon recent events, PGR has severed its relationship with Mr. Chu,' the company said.
Mr. Chu briefly appeared in Manhattan federal court on Wednesday. He was released on $1 million bail, to be secured by his New Jersey home. He surrendered his passport and his travel was restricted to parts of New York, Pennsylvania and New Jersey.
James R. DeVita, a lawyer for Mr. Chu, declined comment Wednesday.
Prosecutors said Mr. Chu built a relationship in 2008 with Richard Choo-Beng Lee, a hedge-fund manager.
Mr. Lee pleaded guilty and agreed to cooperate with prosecutors in their insider trading investigation of the Galleon Group hedge fund, which resulted in charges against 23 defendants and 14 guilty pleas.
A lawyer for Mr. Lee didn't immediately respond to a request for comment.
Mr. Lee's hedge fund was a client in late 2008 and early 2009 of Mr. Chu's expert-network firm, according to prosecutors. Mr. Chu allegedly provided inside information about public companies directly to Mr. Lee and by arranging conversations for him with consultants who worked at public companies.
Thursday, November 25, 2010
Tuesday, November 23, 2010
Contagion once again emerged in Europe as investors turned from Ireland's debt crisis and set their sights on Portugal and Spain
Both Spanish and Portuguese bond prices fell sharply Tuesday, and the yields above German bunds rose to records. The euro slid below $1.34 for the first time in two months, though part of the weakness came as investors turned to the safe-haven status of the U.S. dollar after North Korean artillery attacks on South Korea.
'People that are betting on contagion are probably making the right bet here,' said David Gilmore, a strategist at Foreign Exchange Analytics. 'There's not really anything to stop the markets from pushing the next domino over.'
The unease over Europe, combined with the events in Korea, spread to U.S. markets as well. The Dow Jones Industrial Average slumped 142.21 points, or 1.3%, to 11036.37.
Prices of Treasurys, typically seen as a haven investment, jumped.
Highlighting the concerns about European financial markets, German Chancellor Angela Merkel called Ireland's crisis 'very worrying' for the region.
The sudden turn in Europe has caught many traders off guard.
The focus in recent weeks has been on the impact of the Federal Reserve's easing measures. And at the tail end of last week, many investors had assumed the Irish situation was on its way to being resolved. But with the unraveling of Ireland's coalition government Monday, contagion is back on the minds of investors.
Ireland's request for a bailout from the European Union and the International Monetary Fund followed government capital injections to prop up banks that suffered big loan losses. This has turned the spotlight to banks in Spain and Portugal.
Meanwhile, Portugal reported on Monday that its 10-month budget deficit widened from a year ago. Tuesday, Spain issued short-term debt at a significantly higher cost than a month ago.
'I think that's the market's realization; that these are systemic problems that are going to need a systemic solution,' said Brian Yelvington, fixed-income strategist at Knight Capital. 'This is not a one-off problem with an individual country.'
Rising spreads have hit one country after the other, moving from Greece to Ireland and now to Portugal and Spain.
The worry is that those rising borrowing costs eventually may prove prohibitive, forcing countries to seek some sort of bailout.
Contagion, broadly defined as when a loss of market confidence in one economy transmits to others, can occur through trade connections, economic similarities or financial linkages. An economic downturn in one country can hit its trading partner's exports or reduce tourism revenue.
A collapse in value of financial assets in one country can hit confidence about banks in another if those banks hold a lot of those assets.
A second source of contagion is where investors look across from a troubled economy and see similar problems elsewhere.
While Portugal doesn't have banking problems of the scale of Ireland's or a budget deficit as big as Greece's, it does have a combination of budget deficits, high government debt and low growth that worries some investors.
A third transmission mechanism for contagion is through investor portfolios, in which price declines in one asset class cause some investors to sell other assets.
Particularly noteworthy is the focus on Spain. Tuesday, the gap between German and Spanish bonds rose 0.30 percentage point overnight, to 2.36 percentage points, the highest since the euro was introduced in 1999, well above the previous record of 2.21 percentage points set in May, according to RBC Capital Markets.
That selloff is notable because while Greece, Portugal and Ireland are facing significant fiscal and economic woes, those economies are relatively small. Bailouts of all three are seen as manageable.
But should Spain fall into a death spiral, where its interest payments rise so much that the country can't afford to borrow, a bailout is seen by many in the markets as impractical and more likely to require a restructuring of debt that would inflict losses on bondholders, many of whom happen to be European banks.
Traders said those banks likely were among those selling either Spanish, Portuguese and even Italian bonds Tuesday, as well as buying insurance against default by those countries as a hedge.
For hedge funds and other money managers, figuring out how best to trade in the turmoil has been complicated by several factors.
Many said they are hesitant to make big speculative bets through the market for credit-default swaps, because trading in Portuguese and Spanish swaps is relatively infrequent. That makes buying and selling much more difficult. Credit-default swaps act like insurance, protecting bondholders in the event of a default.
There also is a concern among hedge funds that governments quickly could change the rules on trading credit-default swaps on sovereign debt as they did with financial stocks during the 2008 crisis.
Instead, some managers are looking to trade the debt of financial companies in countries such as Ireland and Portugal by betting that some of that debt will fall in price.
It also is harder to place bets against the euro, now that the Federal Reserve is pumping the financial system with money.
'People that are betting on contagion are probably making the right bet here,' said David Gilmore, a strategist at Foreign Exchange Analytics. 'There's not really anything to stop the markets from pushing the next domino over.'
The unease over Europe, combined with the events in Korea, spread to U.S. markets as well. The Dow Jones Industrial Average slumped 142.21 points, or 1.3%, to 11036.37.
Prices of Treasurys, typically seen as a haven investment, jumped.
Highlighting the concerns about European financial markets, German Chancellor Angela Merkel called Ireland's crisis 'very worrying' for the region.
The sudden turn in Europe has caught many traders off guard.
The focus in recent weeks has been on the impact of the Federal Reserve's easing measures. And at the tail end of last week, many investors had assumed the Irish situation was on its way to being resolved. But with the unraveling of Ireland's coalition government Monday, contagion is back on the minds of investors.
Ireland's request for a bailout from the European Union and the International Monetary Fund followed government capital injections to prop up banks that suffered big loan losses. This has turned the spotlight to banks in Spain and Portugal.
Meanwhile, Portugal reported on Monday that its 10-month budget deficit widened from a year ago. Tuesday, Spain issued short-term debt at a significantly higher cost than a month ago.
'I think that's the market's realization; that these are systemic problems that are going to need a systemic solution,' said Brian Yelvington, fixed-income strategist at Knight Capital. 'This is not a one-off problem with an individual country.'
Rising spreads have hit one country after the other, moving from Greece to Ireland and now to Portugal and Spain.
The worry is that those rising borrowing costs eventually may prove prohibitive, forcing countries to seek some sort of bailout.
Contagion, broadly defined as when a loss of market confidence in one economy transmits to others, can occur through trade connections, economic similarities or financial linkages. An economic downturn in one country can hit its trading partner's exports or reduce tourism revenue.
A collapse in value of financial assets in one country can hit confidence about banks in another if those banks hold a lot of those assets.
A second source of contagion is where investors look across from a troubled economy and see similar problems elsewhere.
While Portugal doesn't have banking problems of the scale of Ireland's or a budget deficit as big as Greece's, it does have a combination of budget deficits, high government debt and low growth that worries some investors.
A third transmission mechanism for contagion is through investor portfolios, in which price declines in one asset class cause some investors to sell other assets.
Particularly noteworthy is the focus on Spain. Tuesday, the gap between German and Spanish bonds rose 0.30 percentage point overnight, to 2.36 percentage points, the highest since the euro was introduced in 1999, well above the previous record of 2.21 percentage points set in May, according to RBC Capital Markets.
That selloff is notable because while Greece, Portugal and Ireland are facing significant fiscal and economic woes, those economies are relatively small. Bailouts of all three are seen as manageable.
But should Spain fall into a death spiral, where its interest payments rise so much that the country can't afford to borrow, a bailout is seen by many in the markets as impractical and more likely to require a restructuring of debt that would inflict losses on bondholders, many of whom happen to be European banks.
Traders said those banks likely were among those selling either Spanish, Portuguese and even Italian bonds Tuesday, as well as buying insurance against default by those countries as a hedge.
For hedge funds and other money managers, figuring out how best to trade in the turmoil has been complicated by several factors.
Many said they are hesitant to make big speculative bets through the market for credit-default swaps, because trading in Portuguese and Spanish swaps is relatively infrequent. That makes buying and selling much more difficult. Credit-default swaps act like insurance, protecting bondholders in the event of a default.
There also is a concern among hedge funds that governments quickly could change the rules on trading credit-default swaps on sovereign debt as they did with financial stocks during the 2008 crisis.
Instead, some managers are looking to trade the debt of financial companies in countries such as Ireland and Portugal by betting that some of that debt will fall in price.
It also is harder to place bets against the euro, now that the Federal Reserve is pumping the financial system with money.
Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants
The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide 'expert network' services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
'I have no comment on that,' said Phani Kumar Saripella, Primary Global's chief operating officer.
Primary's chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
'Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,' the email said. '(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web.'
The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.
SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney's office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
A First New York spokesman said: 'We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully.' He added: 'We stand behind our traders and our systems and policies in place that ensure full regulatory compliance.'
Key parts of the probes are at a late stage. A federal grand jury in New York has heard evidence, say people familiar with the matter. But as with all investigations that aren't completed, it is unclear what specific charges, if any, might be brought.
The action is an outgrowth of a focus on insider trading by Preet Bharara, the Manhattan U.S. Attorney. In an October speech, Mr. Bharara said the area is a 'top criminal priority' for his office, adding: 'Illegal insider trading is rampant and may even be on the rise.' Mr. Bharara declined to comment.
Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late 2009 survey by Integrity Research Associates in New York.
The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.
Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets' shares rise in value.
The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last autumn to more than 30 hedge funds and other investors.
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement.
Merck said it 'has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners.'
Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca PLC in 2007, the people say. MedImmune shares jumped 18% on April 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
In subpoenas, the SEC has sought information about communications─related to Schering-Plough and other deals─with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s Jennison Associates asset-management unit, UBS AG's UBS Financial Services Inc. unit, and Deutsche Bank AG, according to subpoenas and the people familiar with the matter.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government's insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide 'expert network' services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
'I have no comment on that,' said Phani Kumar Saripella, Primary Global's chief operating officer.
Primary's chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
'Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,' the email said. '(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web.'
The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.
SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney's office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
A First New York spokesman said: 'We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully.' He added: 'We stand behind our traders and our systems and policies in place that ensure full regulatory compliance.'
Key parts of the probes are at a late stage. A federal grand jury in New York has heard evidence, say people familiar with the matter. But as with all investigations that aren't completed, it is unclear what specific charges, if any, might be brought.
The action is an outgrowth of a focus on insider trading by Preet Bharara, the Manhattan U.S. Attorney. In an October speech, Mr. Bharara said the area is a 'top criminal priority' for his office, adding: 'Illegal insider trading is rampant and may even be on the rise.' Mr. Bharara declined to comment.
Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late 2009 survey by Integrity Research Associates in New York.
The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.
Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets' shares rise in value.
The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last autumn to more than 30 hedge funds and other investors.
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement.
Merck said it 'has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners.'
Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca PLC in 2007, the people say. MedImmune shares jumped 18% on April 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
In subpoenas, the SEC has sought information about communications─related to Schering-Plough and other deals─with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s Jennison Associates asset-management unit, UBS AG's UBS Financial Services Inc. unit, and Deutsche Bank AG, according to subpoenas and the people familiar with the matter.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government's insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
Monday, November 22, 2010
If this month has felt like a wild ride for stock investors, it has been positively hair-raising for those in the commodities market
Price swings for raw materials reached the highest levels in more than a year as investors initially celebrated the prospect of U.S. monetary easing and then panicked at the possibility China would be too severe in its attempts to cool its economy.
Prices of everything from gold to copper and cotton leapt to new highs, only to be slapped down just as quickly. Trading volume in many commodities roared to records, including for silver, cotton and corn.
Since the beginning of October, the Dow Jones-UBS Commodity Index's 30-day realized volatility has doubled to 25%, the highest since September 2009.
The moves were particularly striking because stock-market volatility has been relatively benign, even with triple-digit moves in the past few sessions. The same measure of 30-day volatility in the Standard & Poor's 500-stock index is near six-month lows.
For commodities, the overarching reason for the volatility is the outsize reaction to new signs that China has stepped up its moves to tighten credit and contain inflation. But the huge amount of money flooding into commodities markets appears to be helping exaggerate those moves.
With that money has come a new breed of investors more focused on trading in and out of commodities to profit from price moves rather than the standard producers and consumers relying on the market to manage their risks.
Since August, money managers, such as hedge funds, have raised their bullish bets on oil, copper, soybeans and many other markets. These funds' total net-long positions all peaked in the week ended Nov. 9, before being cut in the past week, according to the Commodity Futures Trading Commission.
All this suggests volatility will at least be around, if not increase, in the short term, even if many people believe commodities overall have a lot further to rally.
'When you have this large [speculative] exposure built up, you do run a risk,' said Tim Evans, a commodity analyst at Citi Futures Perspective, a commodity-research arm of Citigroup. Because 'you've used up your potential to draw in more new money -- that's the time when you are vulnerable to a reversal.'
That may have started.
Since Nov. 9, the Dow Jones-UBS Commodity Index has declined 7%, amid waves of selling triggered by China's moves to tackle inflation.
Of all the commodities that were whipped around, those directly affected by demand from China suffered most. Zinc sank 16%, cotton shed 15%, and crude oil fell 7%.
Investors 'are getting more and more nervous as we get close to year end,' said Andy Smith, senior commodity strategist at Bache Commodities. They are 'not sure whether they should take the money off the table and run for the year or stay in the game.'
Commodity consumers around the world are making real-time assessments about whether they should jump in and buy now or wait for better prices.
Many are balancing not just fundamental supply-and-demand data but also macro forces such as monetary policy in China and the U.S.
The debate over how fast China's economy may expand and whether other emerging markets will step down hard on their economies also is driving some of the price swings.
The current volatility is a 'fundamental manifestation of uncertainty about the pace of rising demand,' said Colin P. Fenton, head of global commodities research and strategy at J.P. Morgan Chase.
Consumer prices in China rose 4.4% in October from a year earlier, a 25-month high, setting off a slew of anti-inflation moves, including an increase in bank reserve requirements and talk of possible price controls.
China has been the main source of demand growth for many commodities.
This year, the country's oil consumption is expected to increase 820,000 barrels a day, or 35% of the world's total oil consumption growth, according to the International Energy Agency.
The country has an even bigger influence in other markets, accounting for 70%, 57% and 46% of this year's global consumption rise for cotton, copper and soybeans, respectively.
'If you think China will grow less as a result of these policies, the next logical conclusion will be commodity demand from that country will also moderate given its importance' in terms of generating demand growth, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
Some expect China's measures will only temporarily damp price increases for raw materials and won't hurt the nation's real appetite for commodities. Even if China's economy expands at a slightly slower rate, it will be a huge force in the commodities market.
'The steps that they're taking so far will have only a marginal impact,' said Dwight Anderson, managing partner at Ospraie Management LLC, a hedge fund specializing in commodities.
Soon, the markets will come to 'conclude that the global economic recovery is intact and there will be sustained growth, especially in the emerging markets, for commodity imports,' Mr. Fenton said.
Other analysts even see a silver lining to China's cooling moves.
China is taking pre-emptive measures to tackle inflation. In 1994, when inflation ran up to 27.7%, the country's central bank didn't increase interest rates but waited until a year later when the economy lost steam.
Prices of everything from gold to copper and cotton leapt to new highs, only to be slapped down just as quickly. Trading volume in many commodities roared to records, including for silver, cotton and corn.
Since the beginning of October, the Dow Jones-UBS Commodity Index's 30-day realized volatility has doubled to 25%, the highest since September 2009.
The moves were particularly striking because stock-market volatility has been relatively benign, even with triple-digit moves in the past few sessions. The same measure of 30-day volatility in the Standard & Poor's 500-stock index is near six-month lows.
For commodities, the overarching reason for the volatility is the outsize reaction to new signs that China has stepped up its moves to tighten credit and contain inflation. But the huge amount of money flooding into commodities markets appears to be helping exaggerate those moves.
With that money has come a new breed of investors more focused on trading in and out of commodities to profit from price moves rather than the standard producers and consumers relying on the market to manage their risks.
Since August, money managers, such as hedge funds, have raised their bullish bets on oil, copper, soybeans and many other markets. These funds' total net-long positions all peaked in the week ended Nov. 9, before being cut in the past week, according to the Commodity Futures Trading Commission.
All this suggests volatility will at least be around, if not increase, in the short term, even if many people believe commodities overall have a lot further to rally.
'When you have this large [speculative] exposure built up, you do run a risk,' said Tim Evans, a commodity analyst at Citi Futures Perspective, a commodity-research arm of Citigroup. Because 'you've used up your potential to draw in more new money -- that's the time when you are vulnerable to a reversal.'
That may have started.
Since Nov. 9, the Dow Jones-UBS Commodity Index has declined 7%, amid waves of selling triggered by China's moves to tackle inflation.
Of all the commodities that were whipped around, those directly affected by demand from China suffered most. Zinc sank 16%, cotton shed 15%, and crude oil fell 7%.
Investors 'are getting more and more nervous as we get close to year end,' said Andy Smith, senior commodity strategist at Bache Commodities. They are 'not sure whether they should take the money off the table and run for the year or stay in the game.'
Commodity consumers around the world are making real-time assessments about whether they should jump in and buy now or wait for better prices.
Many are balancing not just fundamental supply-and-demand data but also macro forces such as monetary policy in China and the U.S.
The debate over how fast China's economy may expand and whether other emerging markets will step down hard on their economies also is driving some of the price swings.
The current volatility is a 'fundamental manifestation of uncertainty about the pace of rising demand,' said Colin P. Fenton, head of global commodities research and strategy at J.P. Morgan Chase.
Consumer prices in China rose 4.4% in October from a year earlier, a 25-month high, setting off a slew of anti-inflation moves, including an increase in bank reserve requirements and talk of possible price controls.
China has been the main source of demand growth for many commodities.
This year, the country's oil consumption is expected to increase 820,000 barrels a day, or 35% of the world's total oil consumption growth, according to the International Energy Agency.
The country has an even bigger influence in other markets, accounting for 70%, 57% and 46% of this year's global consumption rise for cotton, copper and soybeans, respectively.
'If you think China will grow less as a result of these policies, the next logical conclusion will be commodity demand from that country will also moderate given its importance' in terms of generating demand growth, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
Some expect China's measures will only temporarily damp price increases for raw materials and won't hurt the nation's real appetite for commodities. Even if China's economy expands at a slightly slower rate, it will be a huge force in the commodities market.
'The steps that they're taking so far will have only a marginal impact,' said Dwight Anderson, managing partner at Ospraie Management LLC, a hedge fund specializing in commodities.
Soon, the markets will come to 'conclude that the global economic recovery is intact and there will be sustained growth, especially in the emerging markets, for commodity imports,' Mr. Fenton said.
Other analysts even see a silver lining to China's cooling moves.
China is taking pre-emptive measures to tackle inflation. In 1994, when inflation ran up to 27.7%, the country's central bank didn't increase interest rates but waited until a year later when the economy lost steam.
Saturday, November 20, 2010
A scandal over the government's allotment of telecom spectrum threatens to tarnish the reputation of Prime Minister Manmohan Singh
Mr. Singh stands out among Indian politicians for his impeccable reputation for probity. And no one is suggesting that he in any way benefited from the tainted 2008 second-generation spectrum allotment that has led to dramatic revelations in the past few weeks and forced the resignation last weekend of the telecommunications minister, Andimuthu Raja.
But the Supreme Court's direct criticism of the prime minister for failing to take quicker action over a request for a probe into the allotment process has brought a whiff of scandal to Mr. Singh's doorstep for the first time since he assumed power in 2004.
Although he is a noted economist famous for introducing India's market-led reforms in 1991, much of Mr. Singh's political support rests on the perception that he is above reproach in administrative matters and abhors any suggestion of corruption in his ministerial ranks.
'Prime Minister Manmohan Singh is heading for the most crucial time of his political career,' said S. Chandrasekharan, director of the New Delhi-based South Asia Analysis Group. '
But the Supreme Court's direct criticism of the prime minister for failing to take quicker action over a request for a probe into the allotment process has brought a whiff of scandal to Mr. Singh's doorstep for the first time since he assumed power in 2004.
Although he is a noted economist famous for introducing India's market-led reforms in 1991, much of Mr. Singh's political support rests on the perception that he is above reproach in administrative matters and abhors any suggestion of corruption in his ministerial ranks.
'Prime Minister Manmohan Singh is heading for the most crucial time of his political career,' said S. Chandrasekharan, director of the New Delhi-based South Asia Analysis Group. '
Friday, November 19, 2010
Federal Reserve Chairman Ben Bernanke is firing back amid criticism of the Fed's easy-money policies at home and abroad
By keeping their currencies artificially weak, Mr. Bernanke argues, China and other emerging markets are allowing their economies to overheat, preventing trade imbalances from adjusting and producing what he called 'a two-speed . . . recovery' that isn't sustainable. Their 'strategy of currency undervaluation' has 'important drawbacks' for them and the world economy, he warns.
Mr. Bernanke has come under attack for the Fed's decision to purchase $600 billion in U.S. Treasury bonds in an effort to drive down long-term interest rates. Critics in the U.S say it could cause inflation. Critics abroad say the flood of dollars that the Fed is effectively printing to finance the purchases is causing investors to pour money into overseas economies and could cause asset bubbles.
Some have accused the Fed of trying to weaken the dollar to spur U.S. exports.
Fed officials have denied that is their goal, though Mr. Bernanke effectively acknowledged the U.S. currency should weaken against currencies in emerging markets because their economies are growing so much faster than economies in the developed world.
The Fed chairman's message, though scholarly in tone, was unusually blunt in laying blame for inflationary pressures in emerging markets and for tensions over currencies on countries like China that hold their currencies down.
'Why have officials in many emerging markets leaned against appreciation of their currencies toward levels more consistent with market fundamentals?' he asks. Mainly because they believe that will spur exports and boost growth, he says.
Central banks in many countries intervene in currency markets to manage exchange rates. As dollars flood into their economies from exports, the central banks hold on to the dollars and use them to purchase assets like U.S. Treasury bonds, rather than converting them back into their domestic currencies, which would make those currencies rise in value.
Mr. Bernanke notes that in preventing the yuan from appreciating in exchange for dollars, China has accumulated a massive $2.6 trillion stock of U.S.-dollar assets.
Mr. Bernanke also makes his case against domestic critics, arguing that unemployment could keep rising without action by the Fed and that inflation was too low and could fall further.
Though critics say inflation could soar because of the Fed's actions, Mr. Bernanke says he is committed to keeping inflation at around 2%. It is now around 1%, by the Fed's preferred measures, which strip out food and energy prices.
Mr. Bernanke has come under attack for the Fed's decision to purchase $600 billion in U.S. Treasury bonds in an effort to drive down long-term interest rates. Critics in the U.S say it could cause inflation. Critics abroad say the flood of dollars that the Fed is effectively printing to finance the purchases is causing investors to pour money into overseas economies and could cause asset bubbles.
Some have accused the Fed of trying to weaken the dollar to spur U.S. exports.
Fed officials have denied that is their goal, though Mr. Bernanke effectively acknowledged the U.S. currency should weaken against currencies in emerging markets because their economies are growing so much faster than economies in the developed world.
The Fed chairman's message, though scholarly in tone, was unusually blunt in laying blame for inflationary pressures in emerging markets and for tensions over currencies on countries like China that hold their currencies down.
'Why have officials in many emerging markets leaned against appreciation of their currencies toward levels more consistent with market fundamentals?' he asks. Mainly because they believe that will spur exports and boost growth, he says.
Central banks in many countries intervene in currency markets to manage exchange rates. As dollars flood into their economies from exports, the central banks hold on to the dollars and use them to purchase assets like U.S. Treasury bonds, rather than converting them back into their domestic currencies, which would make those currencies rise in value.
Mr. Bernanke notes that in preventing the yuan from appreciating in exchange for dollars, China has accumulated a massive $2.6 trillion stock of U.S.-dollar assets.
Mr. Bernanke also makes his case against domestic critics, arguing that unemployment could keep rising without action by the Fed and that inflation was too low and could fall further.
Though critics say inflation could soar because of the Fed's actions, Mr. Bernanke says he is committed to keeping inflation at around 2%. It is now around 1%, by the Fed's preferred measures, which strip out food and energy prices.
Wednesday, November 17, 2010
When the Japanese and European companies that pioneered high-speed rail agreed to build trains for China
They thought they'd be getting access to a booming new market, billions of dollars' worth of contracts and the cachet of creating the most ambitious rapid rail system in history.
What they didn't count on was having to compete with Chinese firms at their own game just a few years later.
Today, Chinese rail companies that were once junior partners with the likes of Kawasaki Heavy Industries Ltd., Siemens AG, Alstom SA and Bombardier Inc. are vying against them in the burgeoning global market for super-fast train systems. From the U.S. to Saudi Arabia to Brazil and in China itself, Chinese companies are selling trains that in most cases are faster than those offered by their foreign rivals. On a recent visit to China, California Gov. Arnold Schwarzenegger said he is interested in Chinese help to build a planned high-speed line in his state.
The progression of China's rail business reflects a national economic strategy of boosting state-owned firms and obtaining advanced technology, even at the expense of foreign partners. It's an approach that is challenging the U.S. and other powers, and fueling a broader angst among multinational firms doing business here.
Industries such as autos and aerospace have long sought to tap China's vast market, entering into joint ventures that have brought them enormous reward. But by handing over their technology, some companies have opened the door for homegrown competitors to compete in the global marketplace. China's market share of manufacturing of advanced machinery could climb to 30% of global exports within the decade, from 8% today, said Min Zhu, special adviser for the International Monetary Fund and former deputy governor of the People's Bank of China, at Monday's Wall Street Journal CEO Council.
China acknowledges that the trains its own companies are now selling were developed using foreign technology. But officials say domestic companies like China South Locomotive & Rolling Stock Industry (Group) Corp., or CSR, added their own innovations that make the final product Chinese. 'China's railway industry produced this new generation of high-speed train sets by learning and systematically compiling and re-innovating foreign high-speed train technology,' the Railways Ministry said in a faxed response to questions. Some foreign executives say that such 're-innovating,' if it involves selling the trains overseas, is a violation of China's agreements with them.
The future of China's rail industry is being assembled amid a flurry of welding sparks in a sprawling CSR manufacturing complex in the port city of Qingdao. Called the CRH380A, the newest train is equipped with first-class seats that fold completely flat and can go up to 236 miles per hour. When it goes into service in 2012 linking Beijing and Shanghai, the train will cut travel time to four hours from 10, and will be part of a network that is expected to extend 9,700 miles by 2020.
CSR obtained Japanese high-speed technology starting in 2004 as part of a deal with Kawasaki. CSR engineers and executives say they have adapted and improved that technology to make trains that are faster and better. The fastest trains now operating in Japan and Europe run about 199 mph.
Smiling proudly on the factory floor before half-assembled sections of the needle-nosed, blue-and-silver CRH380A trains, Liang Jianying, a senior CSR engineer, explains how the company reduced wheel-to-track friction and made the train more aerodynamic. 'We improved, optimized, and self-innovated . . . and came up with a brand new design,' she says.
'See, this is nothing like Kawasaki's bullet train,' chimes in Wu Qunliang, chief spokesman for the CSR factory. 'Real original innovation is rare,' adds Wang Xinhong, another senior engineer. 'We attained our achievements in high-speed train technology by standing on the shoulders of past pioneers.'
Foreign companies are generally reluctant to criticize the powerful Railways Ministry publicly. Bernd Eitel, a spokesman for Siemens, says the German company has 'a trusting relationship' with its Chinese partners and expects that to continue. Bombardier China President Zhang Jiawei said in a statement that 'we have contracts and agreements, and both sides respect' them. A spokeswoman for the French company Alstom declined to comment, citing the 'sensitive nature' of the subject.
What they didn't count on was having to compete with Chinese firms at their own game just a few years later.
Today, Chinese rail companies that were once junior partners with the likes of Kawasaki Heavy Industries Ltd., Siemens AG, Alstom SA and Bombardier Inc. are vying against them in the burgeoning global market for super-fast train systems. From the U.S. to Saudi Arabia to Brazil and in China itself, Chinese companies are selling trains that in most cases are faster than those offered by their foreign rivals. On a recent visit to China, California Gov. Arnold Schwarzenegger said he is interested in Chinese help to build a planned high-speed line in his state.
The progression of China's rail business reflects a national economic strategy of boosting state-owned firms and obtaining advanced technology, even at the expense of foreign partners. It's an approach that is challenging the U.S. and other powers, and fueling a broader angst among multinational firms doing business here.
Industries such as autos and aerospace have long sought to tap China's vast market, entering into joint ventures that have brought them enormous reward. But by handing over their technology, some companies have opened the door for homegrown competitors to compete in the global marketplace. China's market share of manufacturing of advanced machinery could climb to 30% of global exports within the decade, from 8% today, said Min Zhu, special adviser for the International Monetary Fund and former deputy governor of the People's Bank of China, at Monday's Wall Street Journal CEO Council.
China acknowledges that the trains its own companies are now selling were developed using foreign technology. But officials say domestic companies like China South Locomotive & Rolling Stock Industry (Group) Corp., or CSR, added their own innovations that make the final product Chinese. 'China's railway industry produced this new generation of high-speed train sets by learning and systematically compiling and re-innovating foreign high-speed train technology,' the Railways Ministry said in a faxed response to questions. Some foreign executives say that such 're-innovating,' if it involves selling the trains overseas, is a violation of China's agreements with them.
The future of China's rail industry is being assembled amid a flurry of welding sparks in a sprawling CSR manufacturing complex in the port city of Qingdao. Called the CRH380A, the newest train is equipped with first-class seats that fold completely flat and can go up to 236 miles per hour. When it goes into service in 2012 linking Beijing and Shanghai, the train will cut travel time to four hours from 10, and will be part of a network that is expected to extend 9,700 miles by 2020.
CSR obtained Japanese high-speed technology starting in 2004 as part of a deal with Kawasaki. CSR engineers and executives say they have adapted and improved that technology to make trains that are faster and better. The fastest trains now operating in Japan and Europe run about 199 mph.
Smiling proudly on the factory floor before half-assembled sections of the needle-nosed, blue-and-silver CRH380A trains, Liang Jianying, a senior CSR engineer, explains how the company reduced wheel-to-track friction and made the train more aerodynamic. 'We improved, optimized, and self-innovated . . . and came up with a brand new design,' she says.
'See, this is nothing like Kawasaki's bullet train,' chimes in Wu Qunliang, chief spokesman for the CSR factory. 'Real original innovation is rare,' adds Wang Xinhong, another senior engineer. 'We attained our achievements in high-speed train technology by standing on the shoulders of past pioneers.'
Foreign companies are generally reluctant to criticize the powerful Railways Ministry publicly. Bernd Eitel, a spokesman for Siemens, says the German company has 'a trusting relationship' with its Chinese partners and expects that to continue. Bombardier China President Zhang Jiawei said in a statement that 'we have contracts and agreements, and both sides respect' them. A spokeswoman for the French company Alstom declined to comment, citing the 'sensitive nature' of the subject.
Tuesday, November 16, 2010
Some of the investing world's top names disclosed their stockholdings on Monday
Four times a year, many investors who manage more than $100 million are required to disclose holdings in certain types of securities, including stocks, within 45 days of the end of a given quarter.
Most hedge-fund managers and others wait until the last possible moment to make these filings, and the disclosures to the Securities and Exchange Commission cover the quarter ending Sept. 30.
The so-called 13-F disclosures give the public a relatively fresh look inside the portfolios of major money managers such as Warren Buffett, George Soros and John Paulson. They are often the investing public's first notice that closely watched figures have reversed course on a given sector or major company.
John Paulson
Hedge-fund manager John Paulson drew down holdings in the U.S. financial-services industry, reporting no stake in Goldman Sachs Group Inc. and reduced stakes in firms including Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase & Co.
Mr. Paulson, who runs Paulson & Co., gave no mention in his most recent Securities and Exchange Commission filing of the 1.1 million-share Goldman stake he previously reported. The filing shows that his Citigroup holdings fell to 424 million shares from 507 million, while Bank of America holdings dropped to 138 million from 168 million and J.P. Morgan Chase to 23.7 million from 25.7 million.
-- Brendan Conway
Warren Buffett
Warren Buffett's Berkshire Hathaway Inc. took a $52 million stake in Bank of New York Mellon Corp. in the third quarter, while reducing or eliminating positions in several other stocks.
Berkshire sold all shares of Home Depot Inc., CarMax Inc., Iron Mountain Inc., NRG Energy Inc. and trash-hauler Republic Services Inc.
Berkshire also reduced holdings of Comcast Corp., Ingersoll-Rand PLC, Nalco Holding Co., Nike Inc. and Fiserv Inc. Comcast and Nike had been in Berkshire's portfolio for several years, while Fiserv was a position Berkshire first disclosed just three months ago. All but Nike had been valued at less than $250 million at the end of the second quarter.
-- Erik Holm
George Soros
Billionaire investor George Soros's hedge fund bought more shares of blue chips AT&T Inc. and Monsanto Co. in the third quarter.
Mr. Soros, who has said that gold is the ultimate bubble, reduced his direct ownership stake in the SPDR Gold Trust, a gold-backed exchange-traded fund, by 501,300 shares to 4.7 million shares.
The fund also reported a new position in drug maker Dendreon Corp., disclosing it purchased 1.8 million shares valued at $74.8 million at the end of the third quarter.
-- Brett Philbin
David Einhorn
Greenlight Capital Inc., run by hedge-fund manager David Einhorn, in the third quarter bought 525,000 more shares in Apple Inc., and added stakes in Broadridge Financial Solutions, Ingram Micro Inc., and semiconductor solutions provider Verigy Ltd.
The filings showed Greenlight also boosted holdings in offshore drilling company Ensco PLC, home-building and mortgage-banking company NVR Inc., Symmetricom Inc. and reinsurer Transatlantic Holdings Inc.
-- Amy Or
Carl Icahn
Billionaire investor Carl Icahn reported he has taken new investments in toy maker Mattel Inc. and building-products maker Masco Corp.
Mr. Icahn, known for his activist stances and battles with boards, said in his 13-F filing that he built up a stake of 2.43 million shares in Mattel and 5.02 million shares in Masco, two bets that lean on the U.S. consumer spending money.
But at the same time, he reported no stakes as of Sept. 30 in two of his more high-profile holdings, fast-food chain Wendy's/Arby's Group Inc. and Yahoo Inc.
-- David Benoit
Bill Ackman
Activist investor Bill Ackman's Pershing Square Capital Management has exited restaurant-chain owner Yum Brands Inc. for the quarter ended Sept. 30, according to regulatory filings. Yum owns KFC, Pizza Hut and Taco Bell.
In the SEC filing, Mr. Ackman also disclosed reduced stakes in both Kraft Foods Inc. and Target Corp. in the third quarter.
Last month, Mr. Ackman, an activist investor who often takes large stakes, disclosed a 16.5% stake in J.C. Penney Co.
Most hedge-fund managers and others wait until the last possible moment to make these filings, and the disclosures to the Securities and Exchange Commission cover the quarter ending Sept. 30.
The so-called 13-F disclosures give the public a relatively fresh look inside the portfolios of major money managers such as Warren Buffett, George Soros and John Paulson. They are often the investing public's first notice that closely watched figures have reversed course on a given sector or major company.
John Paulson
Hedge-fund manager John Paulson drew down holdings in the U.S. financial-services industry, reporting no stake in Goldman Sachs Group Inc. and reduced stakes in firms including Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase & Co.
Mr. Paulson, who runs Paulson & Co., gave no mention in his most recent Securities and Exchange Commission filing of the 1.1 million-share Goldman stake he previously reported. The filing shows that his Citigroup holdings fell to 424 million shares from 507 million, while Bank of America holdings dropped to 138 million from 168 million and J.P. Morgan Chase to 23.7 million from 25.7 million.
-- Brendan Conway
Warren Buffett
Warren Buffett's Berkshire Hathaway Inc. took a $52 million stake in Bank of New York Mellon Corp. in the third quarter, while reducing or eliminating positions in several other stocks.
Berkshire sold all shares of Home Depot Inc., CarMax Inc., Iron Mountain Inc., NRG Energy Inc. and trash-hauler Republic Services Inc.
Berkshire also reduced holdings of Comcast Corp., Ingersoll-Rand PLC, Nalco Holding Co., Nike Inc. and Fiserv Inc. Comcast and Nike had been in Berkshire's portfolio for several years, while Fiserv was a position Berkshire first disclosed just three months ago. All but Nike had been valued at less than $250 million at the end of the second quarter.
-- Erik Holm
George Soros
Billionaire investor George Soros's hedge fund bought more shares of blue chips AT&T Inc. and Monsanto Co. in the third quarter.
Mr. Soros, who has said that gold is the ultimate bubble, reduced his direct ownership stake in the SPDR Gold Trust, a gold-backed exchange-traded fund, by 501,300 shares to 4.7 million shares.
The fund also reported a new position in drug maker Dendreon Corp., disclosing it purchased 1.8 million shares valued at $74.8 million at the end of the third quarter.
-- Brett Philbin
David Einhorn
Greenlight Capital Inc., run by hedge-fund manager David Einhorn, in the third quarter bought 525,000 more shares in Apple Inc., and added stakes in Broadridge Financial Solutions, Ingram Micro Inc., and semiconductor solutions provider Verigy Ltd.
The filings showed Greenlight also boosted holdings in offshore drilling company Ensco PLC, home-building and mortgage-banking company NVR Inc., Symmetricom Inc. and reinsurer Transatlantic Holdings Inc.
-- Amy Or
Carl Icahn
Billionaire investor Carl Icahn reported he has taken new investments in toy maker Mattel Inc. and building-products maker Masco Corp.
Mr. Icahn, known for his activist stances and battles with boards, said in his 13-F filing that he built up a stake of 2.43 million shares in Mattel and 5.02 million shares in Masco, two bets that lean on the U.S. consumer spending money.
But at the same time, he reported no stakes as of Sept. 30 in two of his more high-profile holdings, fast-food chain Wendy's/Arby's Group Inc. and Yahoo Inc.
-- David Benoit
Bill Ackman
Activist investor Bill Ackman's Pershing Square Capital Management has exited restaurant-chain owner Yum Brands Inc. for the quarter ended Sept. 30, according to regulatory filings. Yum owns KFC, Pizza Hut and Taco Bell.
In the SEC filing, Mr. Ackman also disclosed reduced stakes in both Kraft Foods Inc. and Target Corp. in the third quarter.
Last month, Mr. Ackman, an activist investor who often takes large stakes, disclosed a 16.5% stake in J.C. Penney Co.
Monday, November 15, 2010
The price of love: Finding a partner costs two close friendships, scientists reveal
Ever found yourself dumped by a friend embarking on a romance? Don't worry, you're probably not the only one. For according to Oxford University scientists, every time we start a relationship we jettison two of our closest friends.
Most of us simply don't have enough time for intimate friendships with more than four or five people, their research shows.
And a new love interest leads to two friends being pushed out of the inner circle.
Professor Robin Dunbar, one of Britain's leading experts in evolutionary biology, explained: 'If you go into a romantic relationship it actually costs you two friends in that inner core of relationships.
'Instead of having the typical five friends, they only have four in that inner circle. And bearing in mind that one of those is the new person that has come into your life, it means you have to give up two others.'
Men tend to have four or five intimate friends, women five or six, he said.
However, men were just as likely to jettison friends at the start of a new romantic attachment as women, found the study of those aged 18 to 60.
'Your attention is so wholly focused on the romantic partners, you just don't get to see the other folks you had a lot to do with before,' the professor told the British Science Festival in Birmingham. 'Those relationships start to deteriorate.'
But it's not just romance that can push out close friends, he explained. Children or buying a dog can have the same effect.
'You can only have five slots for deeply intense and meaningful relations. Those individuals don't have to be human. They can be your dog - or your favourite chrysanthemum plant. They can be people in an entirely fictional world - they can be soap opera characters. They can be God or they can be saints.'
Most of us simply don't have enough time for intimate friendships with more than four or five people, their research shows.
And a new love interest leads to two friends being pushed out of the inner circle.
Professor Robin Dunbar, one of Britain's leading experts in evolutionary biology, explained: 'If you go into a romantic relationship it actually costs you two friends in that inner core of relationships.
'Instead of having the typical five friends, they only have four in that inner circle. And bearing in mind that one of those is the new person that has come into your life, it means you have to give up two others.'
Men tend to have four or five intimate friends, women five or six, he said.
However, men were just as likely to jettison friends at the start of a new romantic attachment as women, found the study of those aged 18 to 60.
'Your attention is so wholly focused on the romantic partners, you just don't get to see the other folks you had a lot to do with before,' the professor told the British Science Festival in Birmingham. 'Those relationships start to deteriorate.'
But it's not just romance that can push out close friends, he explained. Children or buying a dog can have the same effect.
'You can only have five slots for deeply intense and meaningful relations. Those individuals don't have to be human. They can be your dog - or your favourite chrysanthemum plant. They can be people in an entirely fictional world - they can be soap opera characters. They can be God or they can be saints.'
Sunday, November 14, 2010
Happy Singles Day!
Singles Day, known as Guang Gun Festival, was first observed by university students in the 1990s, who chose the date because of its four lonely figures, 11/11. The special day is now welcomed by many young people.“Happy Singles Day!” is the congratulatory message spread among single youths via short message services on cell phones on November 11th, a day on the calendar for unmarried people.
Many youths in big cities such as Beijing, Shanghai and Guangzhou like to hold parties on the day or go to bars to enjoy themselves in twos and threes.
Zhi Chengguan, 38, a white-collar employee in Guangzhou, said he has waited for the Singles Day to come for a few days.
Zhi said he will see a film by himself in the evening, then visit a local bar, drink beer and chat with friends until midnight.
It is no longer a taboo to be single in the country, especially in big metropolises like Guangzhou, Zhi said.
Zhi, who dated seriously twice in his 20s but was sadly dumped each time, has no plans to date again, let alone get married.
This year, single Chinese people are being invited to shop for a partner at a so-called love supermarket as the country prepares for the Singles Day.
Millions of singletons were being encouraged to pay about 100 yuan to submit photos of themselves - along with their vital statistics, age, salary, profession and hometown - to be viewed by people shopping for a partner.。
Clients are even required to produce official documents to support their claims.
“This way, we are superior to online dating agencies, where people put up false information, " said Gao Shan, the love supermarket`s company secretary.
Over the past five years, the number of one-person households in China rose by 29 percent.
By 2020, according to the Chinese Academy of Social Sciences, 23 million Chinese men will have no choice but to remain bachelors.
Many youths in big cities such as Beijing, Shanghai and Guangzhou like to hold parties on the day or go to bars to enjoy themselves in twos and threes.
Zhi Chengguan, 38, a white-collar employee in Guangzhou, said he has waited for the Singles Day to come for a few days.
Zhi said he will see a film by himself in the evening, then visit a local bar, drink beer and chat with friends until midnight.
It is no longer a taboo to be single in the country, especially in big metropolises like Guangzhou, Zhi said.
Zhi, who dated seriously twice in his 20s but was sadly dumped each time, has no plans to date again, let alone get married.
This year, single Chinese people are being invited to shop for a partner at a so-called love supermarket as the country prepares for the Singles Day.
Millions of singletons were being encouraged to pay about 100 yuan to submit photos of themselves - along with their vital statistics, age, salary, profession and hometown - to be viewed by people shopping for a partner.。
Clients are even required to produce official documents to support their claims.
“This way, we are superior to online dating agencies, where people put up false information, " said Gao Shan, the love supermarket`s company secretary.
Over the past five years, the number of one-person households in China rose by 29 percent.
By 2020, according to the Chinese Academy of Social Sciences, 23 million Chinese men will have no choice but to remain bachelors.
Wednesday, November 10, 2010
China's consumer price index rose 4.4%
The move came Wednesday just after China reported its second-largest monthly trade surplus this year, and highlighted the nation's unusual economic position ahead of this week's summit of the Group of 20 major economies in Seoul. China and some other emerging markets are increasingly concerned that their strong economic rebound from last year's global slowdown will result in inflation and asset bubbles, while the U.S. and other developed economies are expanding weakly if at all.
China's reserve requirement ratio for banks will rise by half a percentage point starting next week, the People's Bank of China said in a statement on its website Wednesday. That would put the standard ratio for large banks up to 17.5%, though the actual requirement imposed on individual banks can be higher or lower at the central bank's discretion.
'Beijing's policy focus has shifted decisively from concerns about domestic growth and external demand to concerns about inflation pressures and liquidity management,' said Brian Jackson, an economist at Royal Bank of Canada. As is its usual practice, the central bank offered no commentary on or explanation of its decision.
Requiring banks to keep more money at the central bank will drain funds from the financial system, helping relieve some of the inflationary pressures.
Those concerns appear to have been heightened by the shift in U.S. monetary policy. Central bank Gov. Zhou Xiaochuan said last week that while the Federal Reserve's plan to start buying bonds again may make sense for the U.S., it could still have undesirable effects on the world economy. He warned that the policy, sometimes known as quantitative easing, could cause a surge of capital inflows into China that would complicate its economic management.
Also Wednesday, Zhou Wangjun, a vice director of the price department of the National Development and Reform Commission─China's top economic planning agency─blamed the recent surge in global commodity prices on the Federal Reserve's quantitative easing policy.
Earlier this year, the central bank raised the reserve-requirement ratio three times, but stopped after May as worries about the possibility of a sharp slowdown in the world economy grew. In the event, China's economic growth stabilized, and some economists think it may even have re-accelerated in the last few months.
The central bank renewed its effort to tighten monetary policy in October, when it raised benchmark interest rates for the first time in three years. Last week it said in a report that it will 'continue to guide monetary conditions gradually back to a normal level' from the recent crisis-response mode, a statement that many economists have read as signaling more interest-rate increases to come. Beijing has also adopted a series of measures to cool the real-estate market and curb speculation.
Those policies have led to some moderation in China's growth, and China's Customs agency reported separately Wednesday that the nation's merchandise trade surplus rose to $27.15 billion in October from $16.9 billion in September, as imports, particularly of commodities, cooled down. China was running much smaller surpluses earlier this year, when imports were growing by more than 50%, but its trade surplus started to grow again in May as those gains tailed off.
The U.S. and other countries have long been seeking a stronger Chinese currency in order to narrow the trade gap, with limited success. But the trade data did come after China's central bank on Wednesday set the yuan's central parity rate─a reference for daily trading─at a fresh high against the dollar of 6.6450. The yuan has now risen 2.9% against the U.S. dollar since China's June pledge to allow greater exchange-rate flexibility.
China's reserve requirement ratio for banks will rise by half a percentage point starting next week, the People's Bank of China said in a statement on its website Wednesday. That would put the standard ratio for large banks up to 17.5%, though the actual requirement imposed on individual banks can be higher or lower at the central bank's discretion.
'Beijing's policy focus has shifted decisively from concerns about domestic growth and external demand to concerns about inflation pressures and liquidity management,' said Brian Jackson, an economist at Royal Bank of Canada. As is its usual practice, the central bank offered no commentary on or explanation of its decision.
Requiring banks to keep more money at the central bank will drain funds from the financial system, helping relieve some of the inflationary pressures.
Those concerns appear to have been heightened by the shift in U.S. monetary policy. Central bank Gov. Zhou Xiaochuan said last week that while the Federal Reserve's plan to start buying bonds again may make sense for the U.S., it could still have undesirable effects on the world economy. He warned that the policy, sometimes known as quantitative easing, could cause a surge of capital inflows into China that would complicate its economic management.
Also Wednesday, Zhou Wangjun, a vice director of the price department of the National Development and Reform Commission─China's top economic planning agency─blamed the recent surge in global commodity prices on the Federal Reserve's quantitative easing policy.
Earlier this year, the central bank raised the reserve-requirement ratio three times, but stopped after May as worries about the possibility of a sharp slowdown in the world economy grew. In the event, China's economic growth stabilized, and some economists think it may even have re-accelerated in the last few months.
The central bank renewed its effort to tighten monetary policy in October, when it raised benchmark interest rates for the first time in three years. Last week it said in a report that it will 'continue to guide monetary conditions gradually back to a normal level' from the recent crisis-response mode, a statement that many economists have read as signaling more interest-rate increases to come. Beijing has also adopted a series of measures to cool the real-estate market and curb speculation.
Those policies have led to some moderation in China's growth, and China's Customs agency reported separately Wednesday that the nation's merchandise trade surplus rose to $27.15 billion in October from $16.9 billion in September, as imports, particularly of commodities, cooled down. China was running much smaller surpluses earlier this year, when imports were growing by more than 50%, but its trade surplus started to grow again in May as those gains tailed off.
The U.S. and other countries have long been seeking a stronger Chinese currency in order to narrow the trade gap, with limited success. But the trade data did come after China's central bank on Wednesday set the yuan's central parity rate─a reference for daily trading─at a fresh high against the dollar of 6.6450. The yuan has now risen 2.9% against the U.S. dollar since China's June pledge to allow greater exchange-rate flexibility.
Tuesday, November 9, 2010
Obama Urges Lawmakers to Act Quickly on Economic Legislation
President-elect Barack Obama urged congressional leaders on Monday to act quickly to pass a huge stimulus package for the U.S. economy. Mr. Obama met with a bipartisan group of lawmakers on Capitol Hill.
Obama met individually with Democratic and Republican House and Senate leaders and later spoke to a bipartisan leadership gathering.
In comments to reporters early on Monday, he underscored the urgency of finalizing economic legislation.
"We have got an extraordinary economic challenge ahead of us," said Barack Obama. "We are expecting a sobering job[s] report at the end of the week. The Speaker [of the House of Representatives, Nancy Pelosi] and her staff have been extraordinarily helpful in working with our team so that we can shape an economic recovery and reinvestment plan that starts putting people back to work."
Mr. Obama wants tax cuts for individual Americans and businesses to make up a significant portion of expected legislation. This could involve as much as $300 billion of a bill that is likely to exceed $700 billion and include aid to cash-poor U.S. states, and money for alternative energy and a range of infrastructure projects.
Later, Mr. Obama said he expects to be able to sign legislation as soon as the end of this month, adding that quick action is necessary to "break the momentum of the U.S. recession".
Emerging later from bipartisan talks with Mr. Obama, House of Representatives Speaker Nancy Pelosi said lawmakers discussed with the president-elect how to pass a stimulus package as quickly as possible.
"An economic recovery package that will create jobs immediately and will grow the economy and that is what we talked about today," said Nancy Pelosi. "How we could do this expeditiously, deliberatively and to act upon it soon."
Just how soon that would be, Pelosi would not say. But the Majority Leader Steny Hoyer has said a measure could move in the House by the end of this month, sending it to the Senate, with the objective of passage in mid-February.
How much support Democrats can obtain from Republicans will depend on the details. But the severity of the U.S. recession has created considerable bipartisan backing for quick action.
Senate Majority Leader, Harry Reid:
"There are investments that we need to make on behalf of the American people to turn around this economy," said Harry Reid. "I felt very good about the meeting; I am confident that we can do this and we have to do this."
Earlier, White House Press Secretary Dana Perino made this comment to reporters when asked about legislation shaping up on Capitol Hill.
"I think the best thing I can do is to decline to comment on what they are going to do going forward," said Dana Perino. "Obviously, we think that tax cuts were the right way to help our economy get out of the recession that this president inherited and we know that tax cuts can spur innovation."
Asked by reporters how large the economic stimulus package might be, Senate Majority Leader Reid said President-elect Obama indicated that all but one of some 28 economists advising him had said it should range from $800 billion to $1.3 trillion.
Obama met individually with Democratic and Republican House and Senate leaders and later spoke to a bipartisan leadership gathering.
In comments to reporters early on Monday, he underscored the urgency of finalizing economic legislation.
"We have got an extraordinary economic challenge ahead of us," said Barack Obama. "We are expecting a sobering job[s] report at the end of the week. The Speaker [of the House of Representatives, Nancy Pelosi] and her staff have been extraordinarily helpful in working with our team so that we can shape an economic recovery and reinvestment plan that starts putting people back to work."
Mr. Obama wants tax cuts for individual Americans and businesses to make up a significant portion of expected legislation. This could involve as much as $300 billion of a bill that is likely to exceed $700 billion and include aid to cash-poor U.S. states, and money for alternative energy and a range of infrastructure projects.
Later, Mr. Obama said he expects to be able to sign legislation as soon as the end of this month, adding that quick action is necessary to "break the momentum of the U.S. recession".
Emerging later from bipartisan talks with Mr. Obama, House of Representatives Speaker Nancy Pelosi said lawmakers discussed with the president-elect how to pass a stimulus package as quickly as possible.
"An economic recovery package that will create jobs immediately and will grow the economy and that is what we talked about today," said Nancy Pelosi. "How we could do this expeditiously, deliberatively and to act upon it soon."
Just how soon that would be, Pelosi would not say. But the Majority Leader Steny Hoyer has said a measure could move in the House by the end of this month, sending it to the Senate, with the objective of passage in mid-February.
How much support Democrats can obtain from Republicans will depend on the details. But the severity of the U.S. recession has created considerable bipartisan backing for quick action.
Senate Majority Leader, Harry Reid:
"There are investments that we need to make on behalf of the American people to turn around this economy," said Harry Reid. "I felt very good about the meeting; I am confident that we can do this and we have to do this."
Earlier, White House Press Secretary Dana Perino made this comment to reporters when asked about legislation shaping up on Capitol Hill.
"I think the best thing I can do is to decline to comment on what they are going to do going forward," said Dana Perino. "Obviously, we think that tax cuts were the right way to help our economy get out of the recession that this president inherited and we know that tax cuts can spur innovation."
Asked by reporters how large the economic stimulus package might be, Senate Majority Leader Reid said President-elect Obama indicated that all but one of some 28 economists advising him had said it should range from $800 billion to $1.3 trillion.
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