Today's Financial News Courtesy of the Financial Times

Today's Financial News Courtesy of the Financial Times


Equities and commodities rally
By Jamie Chisholm, Global Markets Commentator
Copyright The Financial Times Limited 2010
Published: September 20 2010 07:26 | Last updated: September 24 2010 17:01
http://www.ft.com/cms/s/0/0163b8c2-c470-11df-b827-00144feab49a,s01=1.html


Friday 16:45 BST. Global stocks hit five-month highs as Wall Street traders took a selectively optimistic view of recent economic data and embraced the bullish talk of a well known hedge fund manager.

The FTSE All-World index is up 1.5 per cent, while core sovereign debt is in retreat. A closely watched commodities index has hit an 8-month high, with gold touching $1,300 an ounce and silver at its most nominally expensive for three decades.

The dollar is at six-month lows, with the market swift to reverse the impact of yen-intervention rumours early in the Asian session.

The S&P 500 on Wall Street is up 1.8 per cent after investors were pleased by better-than-expected durable goods orders.

In addition, traders enjoyed hearing David Tepper, head of hedge fund Appaloosa, say on CNBC television that stocks were going higher because even if the economy did badly the Federal Reserve would push liquidity into the system and every asset, other than sovereign debt, will do well.

If “the economy is not going to pick up in the next three months and the Fed is going to come in with QE.....Then what’s going to do well? Everything, in the near term [though] not bonds.” said Mr Tepper, expressing a view which seemed to take many market participants by surprise..

The first test of this morally-hazardous investment wonderland was swiftly passed, as a weak new home sales report was dismissed and the S&P trundled even higher.

Earlier in the global session, all eyes were on forex, however.

At about 05:15 BST, the dollar shot higher versus the yen, rising from Y84.50 to Y85.30 within a few minutes as traders sensed the Japanese Ministry of Finance was making its presence felt. The Tokyo authorities refused to confirm any intervention had occurred.

However, it is clear that if indeed intervention did take place, the Japanese Ministry of Finance will be disappointed by the bang it got for its buck. The yen is now higher by 0.2 per cent at Y84.21. When Tokyo intervened last week, the yen had swiftly fallen 3 per cent.

The Market Eye

Analysts are rowing back their third quarter earnings forecasts for Wall Street’s banks as the industry continues to suffer from thin trading. Volumes on the NYSE remain anaemic and this is also being felt in the “home of the hedge”, the Chicago Board Options Exchange. Fears of dwindling activity in the CBOE’s products has resulted in a miserable performance for the group’s shares since they floated in July. A barometer to watch.

The yen’s slide provided a brief bounce for Japanese stocks – on the hope it would make the country’s exporters more competitive. But the rally soon faded as traders remembered the poor performance overnight on Wall Street – on soft US jobs data and eurozone fiscal angst – and as worries grew over rising tensions between Tokyo and Beijing.

Perhaps traders also recognised that whether the MOF has intervened or not, the previous attempt to lower the yen, and the current debate between the US and China regarding the renminbi, are evidence of a trend towards competitive devaluation – a beggar thy neighbour approach that does not bode well for global commerce.

Europe. Bourses opened lower, tracking the S&P 500’s late 0.8 per cent slide, which saw the benchmark settle below the 1,130 support level. However, the durable goods data and QE chat has engineered a sharp change of tack.

The FTSE Eurofirst 300 climbed 1.1 per cent and London’s FTSE 100 added 0.9 per cent with miners turning early declines into decent gains. A modicum of support for stocks has also been provided by news German business sentiment rose unexpectedly in September.

Asia-Pacific. Trading returned close to normal in the region as major centres such as Tokyo, Hong Kong and Seoul came back from holidays. Shanghai remained closed for the mid-autumn festival.

The Nikkei 225 was nursing losses at the open as it played catch-up with Wall Street’s dip and as exporting stocks bemoaned the sight of the yen starting to creep higher again following last week’s intervention by the Ministry of Finance.

The dollar’s spike against the yen briefly helped the Nikkei into positive territory, but it swiftly lost its gains, leaving the benchmark down 1 per cent.

Hong Kong climbed 0.3 per cent and Sydney fell 0.7 per cent as worries about the limp US economy hurt growth-focused stocks. The FTSE Asia-Pacific index is down 0.2 per cent as India’s Sensex bucked the broader trend and advanced 0.9 per cent to reclaim the 20,000 level as foreign funds piled in.

Forex. The yen was the only real action in the sector in early trading, with other crosses adjusting accordingly to the Japanese unit’s dip.

However, the euro sparked into life following the stronger than forecast Ifo German business sentiment report. And it added to these gains as the Wall Street bounce triggered a broad rush into risk, and out of the dollar.

The single currency is up 1 per cent versus the yen at Y113.48 and is higher by 1.3 per cent against the dollar to $1.3478. The US dollar index, which tracks the buck against a basket of its peers, has hit a fresh six-month low, down 1 per cent at 79.34.

Rates. The US data and equity rally also caused a swift change in fortunes for core sovereign debt, with traders removing funds to take riskier bets elsewhere. US 10-year bonds are up 5 basis points to 2.60 per cent, though yields may remain under pressure on concerns about potential quantitative easing by the Federal Reserve and as worries about eurozone fiscal woes encourage investors to consider such perceived havens.

The yield on Ireland’s 10-year note has hit a euro-record high above 6.60 per cent and is now up 3bp to 6.57 per cent as concerns about Dublin’s fiscal position nag.

Commodities. Gold briefly traded at $1,300-an-ounce, as fears over a bout of competitive currency revaluations drive some investors into the metal. There was some confusion in the market because most quote systems did not show the breach. However, dealers contacted by the FT confirmed that $1,300.05 had traded twice.

Silver is trading at $21.38 an ounce, a 30-year high, as the grey metal attracts investment flows on the coat tails of gold.

Industrial metal prices are firmer as supply concerns support copper, but China’s day off means an important market driver is absent. Nevertheless, the Reuters-Jefferies CRB index is up 0.9 per cent having hit its highest level since January as the weakening dollar gives raw materials an added push. Oil is up 1.6 per cent at $76.37 a barrel as traders go risk ballistic.

Follow the market comments of Jamie Chisholm in London and Telis Demos in New York on Twitter: @JamieAChisholm and @telisdemos






US home sales flat as housing market sputters
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: September 24 2010 14:36 | Last updated: September 24 2010 17:38
http://www.ft.com/cms/s/0/b00321ea-c7d8-11df-8683-00144feab49a,s01=1.html


The US housing market continued to sputter in August, as new home sales were flat and prices fell in a troubling sign for the economy.

Separately, weak demand for aircraft and cars pulled back US durable goods orders in August, but there were signs of underlying business spending strength, commerce department figures showed on Friday.

New home sales held steady at an adjusted annual rate of 288,000 last month, according to government data. Economists were expecting that sales would pick up after sliding in July and compared with sales a year ago are off by nearly 30 per cent.

Prices were also down in August, with the median price of a new home falling by 0.58 per cent from July to $204,700.

The market for new homes has been plagued by competition from existing homes and properties selling at fire-sale prices due to rampant foreclosures. There was a boost in demand in the spring from the government’s first-time homebuyer tax credit, but the withdrawal of that support has left the market deflated.

“I still think we’re suffering from a hangover from the tax credit programme,” said Christopher Mayer, a professor of real estate economics at Columbia Business School

Regionally, sales plunged in the midwest and south but rose in the northeast and west.

The struggles facing the housing market were underscored by KB Home’s third quarter earnings that were released on Friday. The homebuilder’s loss narrowed to $1.4m, or 2 cents a share, and its revenues were up by 9 per cent to $501m, but orders for new homes were down by 39 per cent from a year ago.

“The housing market continues to face significant headwinds from high unemployment and foreclosures, which are impeding a broader recovery, and recent net order trends in the homebuilding industry have injected additional caution into our near-term outlook,” said Jeffrey Mezger, chief executive of KB Home.

Meanwhile, durable goods orders were down by 1.3 per cent to $191.2bn from July to August, marking the third decline in the last four months. On the year, orders are up by 15.2 per cent.

The drop was more than Wall Street analysts expected, as orders were dragged lower by a 40.2 per cent decline for non-defence aircraft and a 4.4 per cent decline for cars and parts.

Much of the drop in aircraft orders can be attributed to Boeing, which said it saw a steep fall-off in orders from July to August.

However, analysts were heartened by signs of underlying demand in other sectors. Excluding orders for transportation-related goods, demand for durables rose by a solid 2 per cent, signalling that most businesses are still willing to spend.

“While the headline number was a modest disappointment, everything else proved positive,” said Michael Woolfolk, analyst at BNY Mellon Global Markets.

Last month, orders for metals, machinery and computers rose.

John Ryding and Conrad DeQuadros, of RDQ Economics, pointed out that shipments of capital goods, excluding commercial aircraft, are running 10.3 per cent above their second quarter average in the last two months. That suggests that business equipment investment could provide a substantial boost to third quarter economic growth.









Zucker to leave NBC Universal
By Andrew Edgecliiffe-Johnson and David Gelles in New York
Copyright The Financial Times Limited 2010
Published: September 24 2010 16:54 | Last updated: September 24 2010 18:17
http://www.ft.com/cms/s/0/aada70f6-c7f1-11df-ae3a-00144feab49a.html


Jeff Zucker will make an earlier than expected exit from NBC Universal, stepping down after three turbulent years as chief executive once Comcast completes its $40bn takeover of the broadcaster, cable channel operator and film studio owner.

The news comes just months after GE and Vivendi, NBCU’s current owners, extended his contract earlier this year until 2013, allowing him to leave with a near-three year payoff and his GE options, which do not vest until the deal closes.

Insiders said Mr Zucker had struggled to build a strong working relationship with Comcast executives, led by Brian Roberts, and that he was highly emotional as he broke the news to colleagues.

In a letter to staff, Mr Zucker indicated that his strategy may have clashed with that of Comcast, saying: “they deserve the chance to implement their own vision,” but gave no indication of how that vision differed from his. Insiders said Comcast had been cautious about sharing their plans with NBCU.

Mr Zucker’s exit is expected to see Steve Burke, Comcast’s chief operating officer, take control of the combined NBCU and Comcast entertainment properties, at least in the short term.

Most analysts had expected Mr Zucker to leave after the deal closed, but the news has come sooner than expected, and at a time when he is still presenting the two companies’ case to regulators in Washington.

Comcast agreed in December to buy 51 percent of NBCU from GE and Vivendi, with the French media group selling its entire 20 per cent holding. The deal is expected to close towards the end of this year, pending a final round of regulatory approval.

“Although regulatory processes can be unpredictable, we expect to close the Comcast deal in the fourth quarter,” said Jeff Immelt, chairman of GE. Analysts have highlighted the fast-moving online video arena as one area where regulators are likely to focus on the new company’s competitive might.

Mr Zucker began his career at NBC more than 20 years ago, quickly rising from a researcher’s position to produce the Today Show. As chief executive, however, he has faced criticism for his management of NBC’s entertainment properties, notably after a failed attempt to shake up its core broadcast network’s prime time schedule.

He was mocked, sometimes by comedians on his own payroll, for the reshuffling of Jay Leno and Conan O’Brien, and the jury is still out on the scripted programming which now again fills the evening schedule.

NBCU’s cable properties, by contrast, grew strongly through the downturn and Mr Immelt sang Mr Zucker’s praises. ”He has always stepped up when the company needed him. He never blinked when it came to tough decisions. “

“It has not been an easy or simple decision,” Mr Zucker told staff. “Sure, there have been ups and downs in the last quarter century. But when I step back, and think about what we’ve been through, I feel nothing but pride and joy.”

The 45-year-old independent has expressed interest in a political career but said he had not begun to think about his next move.

At a Goldman Sachs media conference on Wednesday, Mr Zucker had given no indication that his exit was imminent, saying that integrating Comcast’s cable channels into a NBCU portfolio channel stretching from the USA Network to CNBC was the biggest challenge facing the company.