(Repeating item that initially moved late Friday)
By Phil Wahba
NEW YORK, Aug 17 (Reuters)- After a spate of disappointing initial public offerings over the last two months, the IPO market is on its traditional summer break for the rest of August.
But September may not bring much relief for underwriters as risk adverse investors are likely to shy away from all but the most compelling stories among companies coming to market.
"Solid businesses are what it takes," said Linda Killian, a principal at Renaissance Capital, a Greenwich, Connecticut-based IPO research firm.
This year is on track to be the worst for U.S. IPOs since 2003. According to Thomson Reuters data, there have only been 29 so far this year, about a quarter of the tally at this time last year.
Investors have reason to be wary. Renaissance Capital's IPO Index, which tracks the performance of U.S. IPOs over the past 24 months, has fallen 18.1 percent this year, underperforming the Standard & Poor's 500 index and the Nasdaq composite index, which are down 12 percent and 7.6 percent, respectively.
But it has not been all gloom and doom. Some IPOs from 2008 have done well so far.
For example, medical device maker CardioNet Inc has risen 88 percent since its March debut, propelled by its niche market position. Intrepid Potash Inc has soared 30 percent since its April launch, thanks to high demand for the crop nutrient which is its main product.
The year also saw the largest U.S. IPO ever, by credit-card processor Visa Inc whose shares have risen 34 since their March debut.
But others have stumbled. Verso Paper Corp , which provides paper to the ailing magazine industry, has plunged 53 percent since going public in May, making it the worst performing IPO of the year. And last week, coal producer Rhino Resources Inc shelved its IPO after coal stocks hit a bumpy patch, one of 58 offerings that have been pulled this year.
SHOW ME THE MONEY
After getting burned on a number of IPOs and with the overall equity markets volatile, investors are setting higher standards for upcoming IPOs, said Francis Gaskins of IPO Desktop.
Yet, last week alone saw seven new filings, which analysts say is a healthy pace given the time of year and state of the markets.
Companies trying their luck include Massachusetts-based rechargeable lithium-ion battery maker A123 Systems Inc, whose chief executive told Reuters on Friday he expects the company to float shares within three to six months, and use the proceeds to expand manufacturing and pay off debt.
Other anticipated IPOs include AGA Medical Holdings Inc, a maker of medical devices for heart defects; Yandex, a Russian Internet search technology maker that has not yet submitted its filing; and Liquidnet Holdings Inc, an operator of an alternative equities trading system, according to Scott Sweet, a senior managing partner with IPO Boutique.
Gaskins says to attract investors now, the rule of thumb is a market capitalization of $250 million or more, at least $80 million in annual sales and revenue growth of 30 percent per year. Companies should have at least three quarters of growth before attempting an IPO, and a "stellar" quarter going right into it, he added.
Those tough standards may explain the drop in IPOs this year, according to David Menlow, president of IPOfinancial.com.
"Underwriters have not forced deals through just to get fees," he said.
LESSONS LEARNED
Some sectors, such as health care and education, might fare better, while investors are likely to shun tech and biotech, Killian said, adding that no sector has been consistently hot.
It might even play against a company to be in a so-called favored sector, according to Menlow. GT Solar International Inc , whose shares sank on their debut, may have been the victim of a glut of offerings in the sector, Menlow said.
Investors have also not rewarded companies that use IPO proceeds to pay existing shareholders.
"The IPO market likes companies that use proceeds to grow their business with capital investments," said Gaskins.
That, he said, could affect the market's interest in Liquidnet, whose IPO is expected in the fall.
Still, investors' current high standards could plant the seeds for a rebound.
"When the market first starts to turn around, IPOs tend to be priced to sell and because of that, IPOs tend to do better," Killian said. "And when the IPO market rebounds from a period like this, the quality of the companies is better." (Editing by Richard Chang)
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Sunday, August 17, 2008
Russia to Begin Troop Pullout After Western Pressure
By Helena Bedwell and Greg Walters
Aug. 17 (Bloomberg) -- President Dmitry Medvedev said Russian troops will begin pulling out of Georgia tomorrow, after the U.S. and other western governments increased calls for the Kremlin to honor a cease-fire announced two days ago.
Medvedev told French President Nicolas Sarkozy by phone today that Russia will begin withdrawing troops from Georgia proper into the breakaway region of South Ossetia on Aug. 18, the Kremlin said in an e-mailed statement. Sarkozy, as head of the European Union, helped broker the accord that ended a five-day war between the two former Soviet republics.
Sarkozy told Medvedev there would be ``grave consequences'' for EU-Russia relations if full Russian adherence to the cease- fire accord wasn't ``rapid and complete,'' according to a statement from the French president's office today. U.S. President George W. Bush, who has warned Russia not to interfere with an ongoing humanitarian airlift, yesterday called on Russia to withdraw immediately.
Russia's incursion into its Caucasus neighbor began on Aug. 8, after heavy fighting between Georgia and South Ossetia, where most residents hold Russian passports. Russian peacekeepers have been in South Ossetia since the region gained de facto independence from Georgia in a war in the early 1990s. Georgia's U.S.-educated president, Mikheil Saakashvili, called the Russian offensive a ``well-planned invasion.''
NATO
German Chancellor Angela Merkel held talks in Tbilisi today with her Georgian counterpart Mikheil Saakashvili to express continued support for the country and its drive to join the North Atlantic Treaty Organization, which Russia opposes.
``I cannot tell you when'' Georgia will join NATO, Merkel told reporters. ``But Georgia is a sovereign state that deserves to be in NATO.''
The cease-fire accord calls for the withdrawal of Georgian and Russian troops, forswearing the use of force and making humanitarian aid freely available in the conflict areas. It allows Russian peacekeepers who were in South Ossetia and another breakaway region, Abkhazia, before the war broke out to take ``additional security measures,'' U.S. Secretary of State Condoleezza Rice said yesterday.
Those forces -- about 3,000 in Abkhazia and 588 in South Ossetia before the fighting began, according to the Russian government -- would be allowed to ``have limited patrols in a prescribed area within the zone of conflict, not to go into Georgian urban areas,'' Rice told reporters after meeting with Bush at his Crawford, Texas, ranch.
Russian Control
Russian troops still retain control of key areas of Georgia, including the central transport hub of Gori, the Interfax news service reported today, citing Anatoly Nogovitsyn, deputy chief of Russia's General Staff.
The failure to retreat prompted fresh U.S. calls for withdrawal.
``Yet again the Russian president has given his word,'' Rice said on the ``Fox News Sunday'' program. ``I hope this time he'll honor it,'' Rice said, adding that she had talked to Sarkozy earlier in the day.
``The Russians control the four main entrances to Gori, and Georgian police aren't being allowed into the city,'' Kakha Lomaia, head of Georgia's Security Council, said by mobile phone today before the Kremlin statement. The Russians put up six new checkpoints on the road from Khashuri to Gori, and said they wouldn't pull out until they get the order from Moscow, he said.
Fields Burning
Cities and the country north of Tbilisi yesterday bore signs of the armed conflict between Russia and Georgia. In the villages and towns around Gori, which was hit hardest by the war, shops were shuttered and streets were deserted, while fields were still burning. Russian tanks and armored cars control strategic points along the road to the Georgian capital.
A reporter for Bloomberg News was among a group of journalists traveling with the Russian military at the government's invitation. Gori, about 30 kilometers from South Ossetia, is the transport hub that connects Georgia's east and west.
The United Nations estimates the number of people displaced by the conflict is approaching 115,000, according to an Aug. 15 statement on its Web site. UN High Commissioner for Refugees Antonio Guterres will visit Georgia and Russia this week to discuss operations there.
The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets, bypassing Russia.
The North Atlantic Treaty Organization, whose 26 member nations overlap with much of the EU, plans a meeting of foreign ministers on Aug. 19 in Brussels, at the request of the U.S. The Bush administration is seeking confirmation of NATO's declaration at its April summit that Ukraine and Georgia ``will become members of NATO.''
The U.S. backs Georgia's bid to join NATO. The Russian leadership views further eastward expansion of NATO as a threat to its security.
To contact the reporters on this story: Greg Walters in Moscow gwalters1@bloomberg.net; Helena Bedwell in Tbilisi hbedwell@bloomberg.net
Read more...
Aug. 17 (Bloomberg) -- President Dmitry Medvedev said Russian troops will begin pulling out of Georgia tomorrow, after the U.S. and other western governments increased calls for the Kremlin to honor a cease-fire announced two days ago.
Medvedev told French President Nicolas Sarkozy by phone today that Russia will begin withdrawing troops from Georgia proper into the breakaway region of South Ossetia on Aug. 18, the Kremlin said in an e-mailed statement. Sarkozy, as head of the European Union, helped broker the accord that ended a five-day war between the two former Soviet republics.
Sarkozy told Medvedev there would be ``grave consequences'' for EU-Russia relations if full Russian adherence to the cease- fire accord wasn't ``rapid and complete,'' according to a statement from the French president's office today. U.S. President George W. Bush, who has warned Russia not to interfere with an ongoing humanitarian airlift, yesterday called on Russia to withdraw immediately.
Russia's incursion into its Caucasus neighbor began on Aug. 8, after heavy fighting between Georgia and South Ossetia, where most residents hold Russian passports. Russian peacekeepers have been in South Ossetia since the region gained de facto independence from Georgia in a war in the early 1990s. Georgia's U.S.-educated president, Mikheil Saakashvili, called the Russian offensive a ``well-planned invasion.''
NATO
German Chancellor Angela Merkel held talks in Tbilisi today with her Georgian counterpart Mikheil Saakashvili to express continued support for the country and its drive to join the North Atlantic Treaty Organization, which Russia opposes.
``I cannot tell you when'' Georgia will join NATO, Merkel told reporters. ``But Georgia is a sovereign state that deserves to be in NATO.''
The cease-fire accord calls for the withdrawal of Georgian and Russian troops, forswearing the use of force and making humanitarian aid freely available in the conflict areas. It allows Russian peacekeepers who were in South Ossetia and another breakaway region, Abkhazia, before the war broke out to take ``additional security measures,'' U.S. Secretary of State Condoleezza Rice said yesterday.
Those forces -- about 3,000 in Abkhazia and 588 in South Ossetia before the fighting began, according to the Russian government -- would be allowed to ``have limited patrols in a prescribed area within the zone of conflict, not to go into Georgian urban areas,'' Rice told reporters after meeting with Bush at his Crawford, Texas, ranch.
Russian Control
Russian troops still retain control of key areas of Georgia, including the central transport hub of Gori, the Interfax news service reported today, citing Anatoly Nogovitsyn, deputy chief of Russia's General Staff.
The failure to retreat prompted fresh U.S. calls for withdrawal.
``Yet again the Russian president has given his word,'' Rice said on the ``Fox News Sunday'' program. ``I hope this time he'll honor it,'' Rice said, adding that she had talked to Sarkozy earlier in the day.
``The Russians control the four main entrances to Gori, and Georgian police aren't being allowed into the city,'' Kakha Lomaia, head of Georgia's Security Council, said by mobile phone today before the Kremlin statement. The Russians put up six new checkpoints on the road from Khashuri to Gori, and said they wouldn't pull out until they get the order from Moscow, he said.
Fields Burning
Cities and the country north of Tbilisi yesterday bore signs of the armed conflict between Russia and Georgia. In the villages and towns around Gori, which was hit hardest by the war, shops were shuttered and streets were deserted, while fields were still burning. Russian tanks and armored cars control strategic points along the road to the Georgian capital.
A reporter for Bloomberg News was among a group of journalists traveling with the Russian military at the government's invitation. Gori, about 30 kilometers from South Ossetia, is the transport hub that connects Georgia's east and west.
The United Nations estimates the number of people displaced by the conflict is approaching 115,000, according to an Aug. 15 statement on its Web site. UN High Commissioner for Refugees Antonio Guterres will visit Georgia and Russia this week to discuss operations there.
The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets, bypassing Russia.
The North Atlantic Treaty Organization, whose 26 member nations overlap with much of the EU, plans a meeting of foreign ministers on Aug. 19 in Brussels, at the request of the U.S. The Bush administration is seeking confirmation of NATO's declaration at its April summit that Ukraine and Georgia ``will become members of NATO.''
The U.S. backs Georgia's bid to join NATO. The Russian leadership views further eastward expansion of NATO as a threat to its security.
To contact the reporters on this story: Greg Walters in Moscow gwalters1@bloomberg.net; Helena Bedwell in Tbilisi hbedwell@bloomberg.net
Read more...
Australian Banks Have `No Excuse' on Rates, Swan Says
By Robert Fenner
Aug. 17 (Bloomberg) -- Australian banks have no excuse to hold borrowing costs steady should the nation's central bank cut official interest rates this year, Treasurer Wayne Swan said.
``The banks have simply no excuse, no excuse at all for not following the official cash rate down,'' Swan told Australian Broadcasting Corp. television today.
Governor Glenn Stevens and his Reserve Bank board are preparing to trim borrowing costs for the first time in seven years as evidence mounts that Australia's $1 trillion economy is cooling. Ric Battellino, deputy governor, this week said the central bank is in a position to lower rates from a 12-year high because consumers have reduced spending enough to cool the economy and inflation.
``The banks keep making arguments that they are in a competitive environment and how they respond to an official rate cut will be the acid test to see if that is true,'' said Christopher Zinn, a spokesman for Choice, Australia's largest consumer association. ``The banks moved in lockstep to raise rates when the reserve was doing so.''
Stevens and his board raised rates four times between August 2007 and March 2008, increasing the benchmark overnight cash rate target by a total of 1 percentage point. The nation's five largest banks have boosted home-loan rates by an average 1.55 percentage points in that period as the global credit squeeze increased the cost of funding.
Swan said borrowing costs in international credit markets are now declining, adding to the amount banks can cut rates.
`Passing on Benefits'
``In the longer term, if those rates continue to come down then the banks should be passing on those benefits as well,'' he said. ``But if the price of money is coming down then they should be following it there too in the long run.''
The Reserve Bank will lower the overnight cash rate target, currently at 7.25 percent, on Sept. 2, according to 18 of 25 economists surveyed by Bloomberg News. Thirteen expect a cut of 25 basis points and five forecast 50 basis points. A basis point is 0.01 percentage point.
``The public have got a right to expect when official rates come down, then rates set by the banks come down as well,'' Swan said. ``The truth is that a substantial proportion of their borrowing costs come down when the RBA takes the decision to move rates down.''
The government wants to increase competition among banks to lower home-loan costs, with new rules to be introduced in November to make it easier for customers to switch their mortgages to other lenders.
``So, if customers are unhappy with the behavior of their bank, they can more easily shift their account,'' Swan said. ``I would hope to see the market become much more competitive.''
Swan declined to comment on whether he will approve Westpac Banking Corp.'s A$17.4 billion ($15 billion) agreed takeover bid for St. George Bank Ltd.
The Australian Competition & Consumer Commission, the nation's antitrust regulator, this week approved the deal to create the nation's biggest mortgage lender as it was ``unlikely to substantially lessen competition.''
``I don't speculate about the outcome of that decision,'' Swan said. ``But we have our eye on financial stability in the system, as well as the competitive nature of the system, when I take that decision about national interest considerations.''
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Aug. 17 (Bloomberg) -- Australian banks have no excuse to hold borrowing costs steady should the nation's central bank cut official interest rates this year, Treasurer Wayne Swan said.
``The banks have simply no excuse, no excuse at all for not following the official cash rate down,'' Swan told Australian Broadcasting Corp. television today.
Governor Glenn Stevens and his Reserve Bank board are preparing to trim borrowing costs for the first time in seven years as evidence mounts that Australia's $1 trillion economy is cooling. Ric Battellino, deputy governor, this week said the central bank is in a position to lower rates from a 12-year high because consumers have reduced spending enough to cool the economy and inflation.
``The banks keep making arguments that they are in a competitive environment and how they respond to an official rate cut will be the acid test to see if that is true,'' said Christopher Zinn, a spokesman for Choice, Australia's largest consumer association. ``The banks moved in lockstep to raise rates when the reserve was doing so.''
Stevens and his board raised rates four times between August 2007 and March 2008, increasing the benchmark overnight cash rate target by a total of 1 percentage point. The nation's five largest banks have boosted home-loan rates by an average 1.55 percentage points in that period as the global credit squeeze increased the cost of funding.
Swan said borrowing costs in international credit markets are now declining, adding to the amount banks can cut rates.
`Passing on Benefits'
``In the longer term, if those rates continue to come down then the banks should be passing on those benefits as well,'' he said. ``But if the price of money is coming down then they should be following it there too in the long run.''
The Reserve Bank will lower the overnight cash rate target, currently at 7.25 percent, on Sept. 2, according to 18 of 25 economists surveyed by Bloomberg News. Thirteen expect a cut of 25 basis points and five forecast 50 basis points. A basis point is 0.01 percentage point.
``The public have got a right to expect when official rates come down, then rates set by the banks come down as well,'' Swan said. ``The truth is that a substantial proportion of their borrowing costs come down when the RBA takes the decision to move rates down.''
The government wants to increase competition among banks to lower home-loan costs, with new rules to be introduced in November to make it easier for customers to switch their mortgages to other lenders.
``So, if customers are unhappy with the behavior of their bank, they can more easily shift their account,'' Swan said. ``I would hope to see the market become much more competitive.''
Swan declined to comment on whether he will approve Westpac Banking Corp.'s A$17.4 billion ($15 billion) agreed takeover bid for St. George Bank Ltd.
The Australian Competition & Consumer Commission, the nation's antitrust regulator, this week approved the deal to create the nation's biggest mortgage lender as it was ``unlikely to substantially lessen competition.''
``I don't speculate about the outcome of that decision,'' Swan said. ``But we have our eye on financial stability in the system, as well as the competitive nature of the system, when I take that decision about national interest considerations.''
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Qwest, Unions Extend Labor Negotiations Past Deadline
By Whitney Kisling
Aug. 17 (Bloomberg) -- Qwest Communications International Inc., the third-largest U.S. local phone company, and two unions extended a midnight deadline on labor contract talks to avert a strike of more than half its employees.
Talks will continue, according to a Qwest statement. Qwest didn't provide a new deadline. The Communications Workers of America and the International Brotherhood of Electrical Workers are negotiating wage increases, health-care benefits and future union jobs.
``Qwest will continue to bargain in good faith and remains committed to reaching an agreement as soon as possible,'' the company said in the statement.
The unions represent about 20,000 workers, or 57 percent of Qwest's employees. A week ago, workers authorized a call for a strike if the two sides didn't reach an agreement by midnight local time tonight. The contract expires a week before the start of the Democratic National Convention in Denver, where Qwest is based.
``We're prepared to reorganize the company temporarily should we need to,'' Qwest spokesman Bob Toevs said Aug. 15 in a telephone interview. ``It's something we do in every bargaining cycle.''
The unions mostly represent customer-service workers and technicians who install and maintain lines. The CWA covers employees in Qwest's 14 West and Midwest states except Montana, where the IBEW covers about 200 employees. Qwest has about 12 million phone lines.
Losing Lines
Qwest lost 1.08 million phone lines in the 12 months ended in June as customers defected to cable companies and wireless service. The company, third behind AT&T Inc. and Verizon Communications Inc., this month reported a 24 percent drop in second-quarter profit and cut its annual forecast.
Qwest rose 6 cents to $3.92 on Aug. 15 in New York Stock Exchange composite trading. The shares have dropped 44 percent this year.
Negotiations began July 8. The unions want to limit employee health-care premiums, increase wages and ensure there are future union jobs. The three issues are equally important, said spokeswoman Candice Johnson, declining to give further details.
Last year, Qwest cut its benefits costs to $39 million, an 81 percent reduction from 2006, after changes to post-retirement benefit plans, according to the company's annual report.
``Workers have made substantial sacrifices over the years,'' Johnson said.
Qwest's last union contract negotiations were in 2005, when the company averted a walkout by agreeing to a 7.5 percent wage increase over three years.
The two unions agreed on a new contract with Verizon a week ago. Under those terms, New York-based Verizon will increase workers' wages about 10 percent over three years and continue to provide fully paid health-care premiums for current employees.
To contact the reporter on this story: Whitney Kisling in Washington at wkisling@bloomberg.net
Read more...
Aug. 17 (Bloomberg) -- Qwest Communications International Inc., the third-largest U.S. local phone company, and two unions extended a midnight deadline on labor contract talks to avert a strike of more than half its employees.
Talks will continue, according to a Qwest statement. Qwest didn't provide a new deadline. The Communications Workers of America and the International Brotherhood of Electrical Workers are negotiating wage increases, health-care benefits and future union jobs.
``Qwest will continue to bargain in good faith and remains committed to reaching an agreement as soon as possible,'' the company said in the statement.
The unions represent about 20,000 workers, or 57 percent of Qwest's employees. A week ago, workers authorized a call for a strike if the two sides didn't reach an agreement by midnight local time tonight. The contract expires a week before the start of the Democratic National Convention in Denver, where Qwest is based.
``We're prepared to reorganize the company temporarily should we need to,'' Qwest spokesman Bob Toevs said Aug. 15 in a telephone interview. ``It's something we do in every bargaining cycle.''
The unions mostly represent customer-service workers and technicians who install and maintain lines. The CWA covers employees in Qwest's 14 West and Midwest states except Montana, where the IBEW covers about 200 employees. Qwest has about 12 million phone lines.
Losing Lines
Qwest lost 1.08 million phone lines in the 12 months ended in June as customers defected to cable companies and wireless service. The company, third behind AT&T Inc. and Verizon Communications Inc., this month reported a 24 percent drop in second-quarter profit and cut its annual forecast.
Qwest rose 6 cents to $3.92 on Aug. 15 in New York Stock Exchange composite trading. The shares have dropped 44 percent this year.
Negotiations began July 8. The unions want to limit employee health-care premiums, increase wages and ensure there are future union jobs. The three issues are equally important, said spokeswoman Candice Johnson, declining to give further details.
Last year, Qwest cut its benefits costs to $39 million, an 81 percent reduction from 2006, after changes to post-retirement benefit plans, according to the company's annual report.
``Workers have made substantial sacrifices over the years,'' Johnson said.
Qwest's last union contract negotiations were in 2005, when the company averted a walkout by agreeing to a 7.5 percent wage increase over three years.
The two unions agreed on a new contract with Verizon a week ago. Under those terms, New York-based Verizon will increase workers' wages about 10 percent over three years and continue to provide fully paid health-care premiums for current employees.
To contact the reporter on this story: Whitney Kisling in Washington at wkisling@bloomberg.net
Read more...
Southern Africa Starts Free Trade Area to Bolster Integration
By Mike Cohen
Aug. 17 (Bloomberg) -- Twelve Southern African nations set up a free trade area today in a bid to bolster regional exchange of goods and economic integration for a market of 247 million people and an economy worth more than $430 billion.
The accord was made at the annual summit of the 15-nation Southern African Development Community in Johannesburg. The bloc includes Angola, Botswana, Zambia, Malawi, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, South Africa, Zimbabwe and the Democratic Republic of Congo. Angola, Seychelles and Congo have yet to sign the agreement.
The free trade area ``required a lot of compromise to be made on a number of sensitive issues,'' including requiring member states to relinquish some of their sovereignty, said Tomas Salomao, SADC's executive secretary. The agreement will make ``SADC an attractive area for doing business.''
The free-trade plan was first considered eight years ago and required SADC's member states to systematically cut tariffs on goods traded within the bloc. By the beginning of the year, duties on 85 percent of their trade had been abolished, meeting the World Trade Organization's definition of a free trade area. All remaining tariffs are due to be scrapped by 2012.
``We need to recognize that regional economic integration is not only about the removal of tariff barriers,'' South African Trade Minister Mandisi Mpahlwa said in Pretoria on Aug. 13. ``We need to embark on to build both our productive and trade capacity. We need to focus on expanding our agriculture and industrial base to promote intra-regional trade.''
SADC also intends to create a customs union by 2012, a plan that's been complicated by its member states signing separate trade deals with the European Union, known as economic partnership agreements, or EPAs.
``All SADC countries are participating in EPAs with the EU, but in four separate configurations,'' Mpahlwa said. ``All these EPAs differ in terms of having different tariff liberalization obligations to the EU.''
To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net
Read more...
Aug. 17 (Bloomberg) -- Twelve Southern African nations set up a free trade area today in a bid to bolster regional exchange of goods and economic integration for a market of 247 million people and an economy worth more than $430 billion.
The accord was made at the annual summit of the 15-nation Southern African Development Community in Johannesburg. The bloc includes Angola, Botswana, Zambia, Malawi, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, South Africa, Zimbabwe and the Democratic Republic of Congo. Angola, Seychelles and Congo have yet to sign the agreement.
The free trade area ``required a lot of compromise to be made on a number of sensitive issues,'' including requiring member states to relinquish some of their sovereignty, said Tomas Salomao, SADC's executive secretary. The agreement will make ``SADC an attractive area for doing business.''
The free-trade plan was first considered eight years ago and required SADC's member states to systematically cut tariffs on goods traded within the bloc. By the beginning of the year, duties on 85 percent of their trade had been abolished, meeting the World Trade Organization's definition of a free trade area. All remaining tariffs are due to be scrapped by 2012.
``We need to recognize that regional economic integration is not only about the removal of tariff barriers,'' South African Trade Minister Mandisi Mpahlwa said in Pretoria on Aug. 13. ``We need to embark on to build both our productive and trade capacity. We need to focus on expanding our agriculture and industrial base to promote intra-regional trade.''
SADC also intends to create a customs union by 2012, a plan that's been complicated by its member states signing separate trade deals with the European Union, known as economic partnership agreements, or EPAs.
``All SADC countries are participating in EPAs with the EU, but in four separate configurations,'' Mpahlwa said. ``All these EPAs differ in terms of having different tariff liberalization obligations to the EU.''
To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net
Read more...
Storm buffets Cuba, hurricane warnings for Florida
By Jeff Franks
HAVANA, Aug 17 (Reuters) - Gusty winds and driving rain buffeted eastern Cuba early on Sunday as Tropical Storm Fay neared the island while U.S. authorities issued a hurricane watch for parts of the Florida coast.
Cuban officials ordered evacuations from flood-prone areas of coastal provinces where Fay was expected to come ashore on Sunday before crossing the Caribbean nation and heading toward Florida as a likely hurricane.
As of 5 a.m. EDT (0800 GM), Fay had top winds of near 50 miles per hour (80 km per hour) and was close to the Cuban coast, the U.S. National Hurricane Center in Florida said.
Weather reports showed the U.S. Naval Station at Guantanamo Bay was getting rain and winds gusting up to 52 mph (83 kph).
Fay was cruising west at 14 mph (22 kph) across very warm waters -- 90 degrees Fahrenheit (32 C), said an official at Cuba's Meteorological Institute -- and therefore was likely to strengthen before crossing the island.
It was possible Fay would clip the communist island twice, in the southeast near Guantanamo Bay, and again in the center as it began a turn to the northwest and eventually the north.
The U.S. hurricane center did not expect Fay to become a hurricane, which has top sustained winds of at least 74 mph (118 kph), until it passed through Cuba.
Cuban forecasters predicted rains of up to 8 inches (20 cm) from the storm.
FIVE DEAD
Heavy rains from the storm killed at least five people on the island of Hispaniola, shared by the Dominican Republic, a major tourist magnet, and impoverished Haiti.
A 34-year-old Dominican woman died and two nephews, aged 13 and 5, were missing after their truck was engulfed by flood waters raging through a gully 86 miles (140 km) east of Santo Domingo, the Caribbean country's emergency operations center said.
Four people died in Haiti, at least three of them drowning in rain-swollen rivers, said Alta Jean-Baptiste, head of the country's civil protection office.
The hurricane center said Fay, after emerging from Cuba on Monday, was likely to brush the Florida Keys and hit the west coast of Florida as a hurricane on Tuesday.
A hurricane watch was in effect for the Florida Keys and along a south-western section of the mainland, meaning that hurricane conditions were possible within 36 hours.
The state government of Florida declared an emergency to free up federal funds to deal with the approaching storm and the authorities in the low-lying Florida Keys said they expected to order tourists to evacuate on Sunday morning.
The state's most densely populated areas around Miami and Fort Lauderdale, in the southeast, were not out of the line of fire should the storm steer more to the east than expected. The National Hurricane Center said it had become difficult to predict the exact path of the storm with different computer programs producing varying scenarios.
Areas of the Gulf of Mexico where around a quarter of U.S. oil and 15 percent of U.S. natural gas are produced did not appear to be at immediate risk.
But long-range storm forecasts are prone to error, especially when it comes to intensities, and Shell Oil Co said it was pulling 200 workers from offshore operations in the eastern Gulf of Mexico ahead of the storm.
In addition to the hurricane alert in Cuba, tropical storm warnings and watches were in effect for the central Bahamas, the Cayman Islands and Jamaica. (Additional reporting by Michael Christie in Miami, Erwin Seba in Houston, Manuel Jimenez in Santo Domingo and Joseph Guyler Delva in Port-au-Prince; Editing by Alan Elsner)
Read more...
HAVANA, Aug 17 (Reuters) - Gusty winds and driving rain buffeted eastern Cuba early on Sunday as Tropical Storm Fay neared the island while U.S. authorities issued a hurricane watch for parts of the Florida coast.
Cuban officials ordered evacuations from flood-prone areas of coastal provinces where Fay was expected to come ashore on Sunday before crossing the Caribbean nation and heading toward Florida as a likely hurricane.
As of 5 a.m. EDT (0800 GM), Fay had top winds of near 50 miles per hour (80 km per hour) and was close to the Cuban coast, the U.S. National Hurricane Center in Florida said.
Weather reports showed the U.S. Naval Station at Guantanamo Bay was getting rain and winds gusting up to 52 mph (83 kph).
Fay was cruising west at 14 mph (22 kph) across very warm waters -- 90 degrees Fahrenheit (32 C), said an official at Cuba's Meteorological Institute -- and therefore was likely to strengthen before crossing the island.
It was possible Fay would clip the communist island twice, in the southeast near Guantanamo Bay, and again in the center as it began a turn to the northwest and eventually the north.
The U.S. hurricane center did not expect Fay to become a hurricane, which has top sustained winds of at least 74 mph (118 kph), until it passed through Cuba.
Cuban forecasters predicted rains of up to 8 inches (20 cm) from the storm.
FIVE DEAD
Heavy rains from the storm killed at least five people on the island of Hispaniola, shared by the Dominican Republic, a major tourist magnet, and impoverished Haiti.
A 34-year-old Dominican woman died and two nephews, aged 13 and 5, were missing after their truck was engulfed by flood waters raging through a gully 86 miles (140 km) east of Santo Domingo, the Caribbean country's emergency operations center said.
Four people died in Haiti, at least three of them drowning in rain-swollen rivers, said Alta Jean-Baptiste, head of the country's civil protection office.
The hurricane center said Fay, after emerging from Cuba on Monday, was likely to brush the Florida Keys and hit the west coast of Florida as a hurricane on Tuesday.
A hurricane watch was in effect for the Florida Keys and along a south-western section of the mainland, meaning that hurricane conditions were possible within 36 hours.
The state government of Florida declared an emergency to free up federal funds to deal with the approaching storm and the authorities in the low-lying Florida Keys said they expected to order tourists to evacuate on Sunday morning.
The state's most densely populated areas around Miami and Fort Lauderdale, in the southeast, were not out of the line of fire should the storm steer more to the east than expected. The National Hurricane Center said it had become difficult to predict the exact path of the storm with different computer programs producing varying scenarios.
Areas of the Gulf of Mexico where around a quarter of U.S. oil and 15 percent of U.S. natural gas are produced did not appear to be at immediate risk.
But long-range storm forecasts are prone to error, especially when it comes to intensities, and Shell Oil Co said it was pulling 200 workers from offshore operations in the eastern Gulf of Mexico ahead of the storm.
In addition to the hurricane alert in Cuba, tropical storm warnings and watches were in effect for the central Bahamas, the Cayman Islands and Jamaica. (Additional reporting by Michael Christie in Miami, Erwin Seba in Houston, Manuel Jimenez in Santo Domingo and Joseph Guyler Delva in Port-au-Prince; Editing by Alan Elsner)
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Singapore's Birth Rate Drops to Almost Half of Target, Lee Says
By Jean Chua
Aug. 17 (Bloomberg) -- Singapore's birth rate declined to 1.29, just more than half of the target needed for the population to replace itself, Prime Minister Lee Hsien Loong said today.
The city-state of 4.6 million people will be halved in one generation if the birth rate doesn't increase to 2.1, Lee, 56, said during his annual National Day Rally speech today.
``After a few generations, there will be no more to replace,'' Lee said in his speech delivered in Chinese. ``The gap is very wide.''
A decline in the island's birth rate may reduce the supply of younger and more productive workers and hurt economic growth, prompting the government to offer incentives such as cash bonuses to new parents. The city-state, a quarter the size of Rhode Island, has no natural resources and has said that it depends on its populace to generate economic growth.
Lee may announce new measures tomorrow night targeted at increasing the birth rate in the city-state. His speeches in Malay and Chinese were aired on local television tonight, and the speech in English, which will include the new measures, will be shown tomorrow to avoid a programming clash as the city seeks it first Olympic gold medal.
To contact the reporter on this story: Jean Chua in Singapore at jchua4@bloomberg.net.
Read more...
Aug. 17 (Bloomberg) -- Singapore's birth rate declined to 1.29, just more than half of the target needed for the population to replace itself, Prime Minister Lee Hsien Loong said today.
The city-state of 4.6 million people will be halved in one generation if the birth rate doesn't increase to 2.1, Lee, 56, said during his annual National Day Rally speech today.
``After a few generations, there will be no more to replace,'' Lee said in his speech delivered in Chinese. ``The gap is very wide.''
A decline in the island's birth rate may reduce the supply of younger and more productive workers and hurt economic growth, prompting the government to offer incentives such as cash bonuses to new parents. The city-state, a quarter the size of Rhode Island, has no natural resources and has said that it depends on its populace to generate economic growth.
Lee may announce new measures tomorrow night targeted at increasing the birth rate in the city-state. His speeches in Malay and Chinese were aired on local television tonight, and the speech in English, which will include the new measures, will be shown tomorrow to avoid a programming clash as the city seeks it first Olympic gold medal.
To contact the reporter on this story: Jean Chua in Singapore at jchua4@bloomberg.net.
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Qwest fails to come to agreement with labor union
NEW YORK, Aug 17 (Reuters) - Qwest Communication International Inc , a U.S. phone company, and union workers failed to reach a labor agreement by a Sunday morning deadline.
The Communication Workers of America said workers will continue reporting to their jobs, and the company said it remains operational.
Qwest said it would continue to bargain with the union.
The union voted last week to authorize a strike if it could not come to an agreement with the company. (Reporting by Ritsuko Ando and Sarah Coffey, editing by Maureen Bavdek)
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The Communication Workers of America said workers will continue reporting to their jobs, and the company said it remains operational.
Qwest said it would continue to bargain with the union.
The union voted last week to authorize a strike if it could not come to an agreement with the company. (Reporting by Ritsuko Ando and Sarah Coffey, editing by Maureen Bavdek)
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Kroger Co recalls corn puff snack
NEW YORK, Aug 17 (Reuters) - Kroger Co said it was recalling packages of Kroger Hulless Corn Puff Poppers - Extreme Butter because the snack could contain milk not listed on the label.
The artificially flavored snack is in 8-ounce packages with a sell-by date of "Nov 08 08 244" followed by A or B. Customers can return the product to stores for a refund or replacement, Kroger said on Friday.
No illnesses have been reported.
The recall includes stores under Kroger and Baker's, City Market, Dillons, Fry's, Hilander, Jay C, King Soopers, Owen's, Pay Less and Scott's.
The stores involved are in Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia and West Virginia.
On Thursday, Kroger expanded its recall of ground beef, part of a recall by Nebraska Beef. (Reporting by Sarah Coffey, editing by Maureen Bavdek)
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The artificially flavored snack is in 8-ounce packages with a sell-by date of "Nov 08 08 244" followed by A or B. Customers can return the product to stores for a refund or replacement, Kroger said on Friday.
No illnesses have been reported.
The recall includes stores under Kroger and Baker's, City Market, Dillons, Fry's, Hilander, Jay C, King Soopers, Owen's, Pay Less and Scott's.
The stores involved are in Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia and West Virginia.
On Thursday, Kroger expanded its recall of ground beef, part of a recall by Nebraska Beef. (Reporting by Sarah Coffey, editing by Maureen Bavdek)
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Morgan Stanley sees more finance crisis pain: paper
Sun Aug 17, 2008 9:23am EDT
FRANKFURT (Reuters) - The financial crisis will probably not end until next year or even 2010, Germany's Handelsblatt newspaper quoted Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) co-President Walid Chammah as saying in a preview of its Monday edition.
Chammah also expected more banks to fall victim to the crisis, the paper said.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," the paper quoted him as saying.
Chammah also said return-on-equity rates of 25 percent were a thing of the past for the investment banking industry, the paper reported.
"I estimate returns in the industry will be more like 15 to 20 percent as a rule," the paper quoted him as saying.
(Reporting by James Regan; editing by Rory Channing)
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FRANKFURT (Reuters) - The financial crisis will probably not end until next year or even 2010, Germany's Handelsblatt newspaper quoted Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) co-President Walid Chammah as saying in a preview of its Monday edition.
Chammah also expected more banks to fall victim to the crisis, the paper said.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," the paper quoted him as saying.
Chammah also said return-on-equity rates of 25 percent were a thing of the past for the investment banking industry, the paper reported.
"I estimate returns in the industry will be more like 15 to 20 percent as a rule," the paper quoted him as saying.
(Reporting by James Regan; editing by Rory Channing)
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Bukit Asam's Operation Unaffected by Indonesian Train Collision
By Naila Firdausi
Aug. 17 (Bloomberg) -- PT Tambang Batubara Bukit Asam, which holds a quarter of Indonesia's coal reserves, said it's operations are unaffected by a collision involving its freight train in Sumatra yesterday which killed at least nine people.
The Sriwijaya passenger train hit a parked freight train owned by Bukit Asam at a station in Sumatra's Lampung province, Eko Budhiwijayanto, the company's spokesman said. The collision ``slightly'' damaged the locomotive and derailed the train's first three carriages, he said.
``Operation is not affected,'' Eko said in a mobile phone text message today. ``We can use other locomotives and the station has other tracks to use for coal transportation.''
The accident at 7:40 a.m. local time yesterday killed at least nine people, Detikcom newspaper said, citing officials at railway company PT Kereta Api. The government is still investigating the cause of the collision, the Web site said.
The coal train was empty after unloading at Tarahan port on the way back to Tanjung Enim, Eko said.
To contact the reporter on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net.
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Aug. 17 (Bloomberg) -- PT Tambang Batubara Bukit Asam, which holds a quarter of Indonesia's coal reserves, said it's operations are unaffected by a collision involving its freight train in Sumatra yesterday which killed at least nine people.
The Sriwijaya passenger train hit a parked freight train owned by Bukit Asam at a station in Sumatra's Lampung province, Eko Budhiwijayanto, the company's spokesman said. The collision ``slightly'' damaged the locomotive and derailed the train's first three carriages, he said.
``Operation is not affected,'' Eko said in a mobile phone text message today. ``We can use other locomotives and the station has other tracks to use for coal transportation.''
The accident at 7:40 a.m. local time yesterday killed at least nine people, Detikcom newspaper said, citing officials at railway company PT Kereta Api. The government is still investigating the cause of the collision, the Web site said.
The coal train was empty after unloading at Tarahan port on the way back to Tanjung Enim, Eko said.
To contact the reporter on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net.
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CORRECTED - UK watchdog chief attacks drug firms on prices
(Amends headline to show comment refers to drug firms in general)
LONDON, Aug 16 (Reuters) - Incentive schemes linking drug industry executives' pay to their firms' share price and profits help drive up the price of new drugs, the head of Britain's health cost-effectiveness watchdog was quoted as saying.
Michael Rawlins, chairman of the National Institute for Health and Clinical Excellence (NICE), hit back after the watchdog was criticised this month over its decision that kidney cancer patients on Britain's state-run National Health Service should not be treated with four expensive new medicines.
"We are told we are being mean all the time, but what nobody mentions is why the drugs are so expensive," The Observer newspaper quoted Rawlins as saying in an interview to be published on Sunday.
Kidney cancer drugs could be produced for about a tenth of their current cost, Rawlins said.
He was quoted as warning of "perverse incentives" in the pharmaceutical industry that drove up the price of new drugs -- such as linking the pay of industry executives to their firm's share price, which in turn relied on growing profits.
"Pharmaceutical companies have enjoyed double-digit growth year on year and they are out to sustain that, not least because their senior management's earnings are related to the share price," the newspaper quoted him as saying.
"It's not in their interests to take less profit, personally as well as from the point of view of the business. All these perverse incentives drive the price up," he said.
Halting such "perverse incentives" could significantly reduce drug prices, he said.
Another factor in high drugs prices was that the pharmaceutical industry faced a "very bad period" in the future because a lot of its big-earning drugs were going off-patent, allowing rivals to make cheaper versions, Rawlins was quoted as saying.
"So part of the cost is cushioning against that," he said.
Marketing costs were also included in the price, he said.
"Traditionally the pharmaceutical industry will admit that they actually charged what they think the market will bear. The wiser ones are recognising that that model is no longer available," he said.
The drug industry says it costs around $1 billion and years of work to develop a new medicine and these costs must be recouped, although it says prices have fallen in real terms.
Earlier this month, NICE said Roche's Avastin, Bayer's Nexavar, Pfizer's Sutent and Wyeth's Torisel could extend kidney cancer patients' lives by some months but were not cost-effective.
The decision fuelled controversy about the way NICE rations treatment on the state health service in England and Wales, denying patients access to costly modern medicines that are used routinely in some countries. (Reporting by Adrian Croft; Editing by Jon Boyle)
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LONDON, Aug 16 (Reuters) - Incentive schemes linking drug industry executives' pay to their firms' share price and profits help drive up the price of new drugs, the head of Britain's health cost-effectiveness watchdog was quoted as saying.
Michael Rawlins, chairman of the National Institute for Health and Clinical Excellence (NICE), hit back after the watchdog was criticised this month over its decision that kidney cancer patients on Britain's state-run National Health Service should not be treated with four expensive new medicines.
"We are told we are being mean all the time, but what nobody mentions is why the drugs are so expensive," The Observer newspaper quoted Rawlins as saying in an interview to be published on Sunday.
Kidney cancer drugs could be produced for about a tenth of their current cost, Rawlins said.
He was quoted as warning of "perverse incentives" in the pharmaceutical industry that drove up the price of new drugs -- such as linking the pay of industry executives to their firm's share price, which in turn relied on growing profits.
"Pharmaceutical companies have enjoyed double-digit growth year on year and they are out to sustain that, not least because their senior management's earnings are related to the share price," the newspaper quoted him as saying.
"It's not in their interests to take less profit, personally as well as from the point of view of the business. All these perverse incentives drive the price up," he said.
Halting such "perverse incentives" could significantly reduce drug prices, he said.
Another factor in high drugs prices was that the pharmaceutical industry faced a "very bad period" in the future because a lot of its big-earning drugs were going off-patent, allowing rivals to make cheaper versions, Rawlins was quoted as saying.
"So part of the cost is cushioning against that," he said.
Marketing costs were also included in the price, he said.
"Traditionally the pharmaceutical industry will admit that they actually charged what they think the market will bear. The wiser ones are recognising that that model is no longer available," he said.
The drug industry says it costs around $1 billion and years of work to develop a new medicine and these costs must be recouped, although it says prices have fallen in real terms.
Earlier this month, NICE said Roche's Avastin, Bayer's Nexavar, Pfizer's Sutent and Wyeth's Torisel could extend kidney cancer patients' lives by some months but were not cost-effective.
The decision fuelled controversy about the way NICE rations treatment on the state health service in England and Wales, denying patients access to costly modern medicines that are used routinely in some countries. (Reporting by Adrian Croft; Editing by Jon Boyle)
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BA boss says will not give up Heathrow slots-paper
Sun Aug 17, 2008 10:45am EDT
LONDON, Aug 17 (Reuters) - British Airways Chief Executive Willie Walsh has vowed the airline will not surrender runway slots at Heathrow in order to land its proposed alliance with American Airlines , the Sunday Times reported.
Walsh told the paper that BA would not give up any of the prized slots, which have changed hands for 20 million pounds ($37.45 million) a pair, just as competition regulators are tipped to demand that the two carriers forego as many as 10 slot pairs a day.
"There should be no slot remedy, I don't see how it could be justified." he said.
Both airlines along with Spain's Iberia said on Thursday they had agreed to a transatlantic tie-up and would file for antitrust immunity from the U.S. Transportation Department and notify EU regulators.
BA, which is also in all-share merger talks with Iberia, holds over 40 percent of Heathrow's slots.
Reporting by Marc Roca; editing by Rory Channing)
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LONDON, Aug 17 (Reuters) - British Airways Chief Executive Willie Walsh has vowed the airline will not surrender runway slots at Heathrow in order to land its proposed alliance with American Airlines , the Sunday Times reported.
Walsh told the paper that BA would not give up any of the prized slots, which have changed hands for 20 million pounds ($37.45 million) a pair, just as competition regulators are tipped to demand that the two carriers forego as many as 10 slot pairs a day.
"There should be no slot remedy, I don't see how it could be justified." he said.
Both airlines along with Spain's Iberia said on Thursday they had agreed to a transatlantic tie-up and would file for antitrust immunity from the U.S. Transportation Department and notify EU regulators.
BA, which is also in all-share merger talks with Iberia, holds over 40 percent of Heathrow's slots.
Reporting by Marc Roca; editing by Rory Channing)
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Fay churns toward Cuban coast, Florida
(Recasts, updates with new location, adds details)
By Jeff Franks
HAVANA, Aug 17 (Reuters) - Tropical Storm Fay churned along Cuba's southeastern coast on Sunday with 50 mile per hour (80 km per hour) winds and was expected to hit land overnight before heading toward Florida as a likely hurricane.
The storm was just off Cuba's lightly populated Cabo Cruz, which juts out into the Caribbean Sea, and moving northwest at 13 miles per hour (20 km per hour), the U.S. National Hurricane Center in Florida said.
Fay, which killed at least five people when it struck Haiti and the Dominican Republic on Saturday, was crossing over warm waters -- 90 degrees Fahrenheit (32 degrees Celsius) -- and expected to strengthen before going ashore in Cuba's central provinces, forecasters said.
In its latest advisory, the hurricane center predicted Fay, the sixth storm of the Atlantic hurricane season, would move slowly across Cuba overnight before emerging in the Florida Straits or Gulf of Mexico on Monday.
It said Fay could be near hurricane strength before striking Cuba, and may be a hurricane, which has winds of at least 74 mph (118 kph), when it reaches Florida's west coast.
Hurricane watches were posted along much of Cuba's southern and northern coasts, including Havana, and in southern Florida.
Fay hit eastern Cuba with gusty winds and rain beginning on Saturday night, but so far there were no reports of injuries, major damage or flooding.
In Guantanamo, the weather was not bad enough to stop the annual Carnival celebration, said Pedro Alvarez, 35, a resident of the coastal city that is a neighbor of the controversial U.S. military detention center where the Bush administration holds more than 200 accused terrorists.
"Up to now there has been just a very light, off-and-on rainfall, so much so that last night the people continued celebrating Carnival," he told Reuters.
Cubans living in flood-prone areas were being evacuated ahead of the storm, Cuban officials said.
Rains up to eight inches (20 cm), the Cuban Meteorological Institute said.
In the Florida Keys, 90 miles (144 km) north of Cuba, officials on Sunday initiated a Keys-wide evacuation of visitors. Anyone planning to visit the area in the next few days needs to postpone their trip, they said.
Florida Gov. Charlie Crist, a Republican, told CNN: "The watch word for Floridians is be calm, but be alert."
"Florida is very, very practiced at these things unfortunately, so we're ready. But we want to make sure all our citizens are ready."
The hurricane center said it expected Fay to eventually hit Florida's western coast, which is well east of the United States' oil and natural production in the Gulf of Mexico.
Shell Oil Co said on Saturday it was pulling 200 workers from offshore platforms as a precaution.
In addition to the hurricane alert in Cuba, tropical storm warnings and watches were in effect for the central Bahamas, the Cayman Islands, Jamaica and southeastern Florida. (Additional reporting by Michael Christie in Miami, Mark Frank in Havana)
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By Jeff Franks
HAVANA, Aug 17 (Reuters) - Tropical Storm Fay churned along Cuba's southeastern coast on Sunday with 50 mile per hour (80 km per hour) winds and was expected to hit land overnight before heading toward Florida as a likely hurricane.
The storm was just off Cuba's lightly populated Cabo Cruz, which juts out into the Caribbean Sea, and moving northwest at 13 miles per hour (20 km per hour), the U.S. National Hurricane Center in Florida said.
Fay, which killed at least five people when it struck Haiti and the Dominican Republic on Saturday, was crossing over warm waters -- 90 degrees Fahrenheit (32 degrees Celsius) -- and expected to strengthen before going ashore in Cuba's central provinces, forecasters said.
In its latest advisory, the hurricane center predicted Fay, the sixth storm of the Atlantic hurricane season, would move slowly across Cuba overnight before emerging in the Florida Straits or Gulf of Mexico on Monday.
It said Fay could be near hurricane strength before striking Cuba, and may be a hurricane, which has winds of at least 74 mph (118 kph), when it reaches Florida's west coast.
Hurricane watches were posted along much of Cuba's southern and northern coasts, including Havana, and in southern Florida.
Fay hit eastern Cuba with gusty winds and rain beginning on Saturday night, but so far there were no reports of injuries, major damage or flooding.
In Guantanamo, the weather was not bad enough to stop the annual Carnival celebration, said Pedro Alvarez, 35, a resident of the coastal city that is a neighbor of the controversial U.S. military detention center where the Bush administration holds more than 200 accused terrorists.
"Up to now there has been just a very light, off-and-on rainfall, so much so that last night the people continued celebrating Carnival," he told Reuters.
Cubans living in flood-prone areas were being evacuated ahead of the storm, Cuban officials said.
Rains up to eight inches (20 cm), the Cuban Meteorological Institute said.
In the Florida Keys, 90 miles (144 km) north of Cuba, officials on Sunday initiated a Keys-wide evacuation of visitors. Anyone planning to visit the area in the next few days needs to postpone their trip, they said.
Florida Gov. Charlie Crist, a Republican, told CNN: "The watch word for Floridians is be calm, but be alert."
"Florida is very, very practiced at these things unfortunately, so we're ready. But we want to make sure all our citizens are ready."
The hurricane center said it expected Fay to eventually hit Florida's western coast, which is well east of the United States' oil and natural production in the Gulf of Mexico.
Shell Oil Co said on Saturday it was pulling 200 workers from offshore platforms as a precaution.
In addition to the hurricane alert in Cuba, tropical storm warnings and watches were in effect for the central Bahamas, the Cayman Islands, Jamaica and southeastern Florida. (Additional reporting by Michael Christie in Miami, Mark Frank in Havana)
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Prince Alwaleed top private investor in Saudi stocks
RIYADH, Aug 17 (Reuters) - Saudi billionaire Prince Alwaleed bin Talal is the largest private investor on the Saudi stock exchange, with 53.47 billion riyals ($14.3 billion) worth of direct and indirect shareholdings, exchange data showed.
Alwaleed -- the world's 19th richest person with a $21 billion fortune according to Forbes -- runs Kingdom Holding Co 4280.SE, Citigroup Inc's largest shareholder.
The largest Arab bourse began naming investors holding stakes of 5 percent or more on Saturday to boost transparency and encourage confidence in the Gulf region's worst-performing benchmark this year.
About 90 percent of Alwaleed's holdings in Saudi shares are in Kingdom, in which he owns 94 percent of the conglomerate's 6.3 billion shares, the stock exchange said on its website.
Kingdom, meanwhile, holds 5 percent of Samba Financial Group 1090.SE, Saudi Arabia's second-largest listed bank, and 10.1 percent of Savola Group 2050.SE, the data showed.
The conglomerate also owns 6.2 percent in Saudi industrial group Tasnee 2060.SE and is the largest shareholder in Saudi Research and Marketing Group 4210.SE, publisher of pan-Arab daily newspaper Asharq al-Awsat, with a 29.9 percent stake.
Saudi market operator Tadawul said last month it was implementing the new disclosure rule to improve transparency. The Saudi market is dominated by day traders and restricts foreign access to shares.
The new disclosure rule could help the regulator dispel rumours that big retail traders are behind rapid fluctuations in share prices, a common assumption in the market, analysts have said.
Alwaleed's holdings in Saudi stocks surpass those held by members of the Al-Rajhi family, who control Al-Rajhi Bank 1120.SE, the biggest Gulf Arab market value, and the Olayan family who have indirect stakes in Saudi Hollandi Bank 1040.SE and SABB bank 1060.SE.
The state dominates shareholding in Saudi Arabia. The Saudi Public Investment Fund is the biggest investor, holding 380 billion riyals of shares in 18 firms, the data showed.
Shares of Kingdom surged more than 6 percent at 0841 GMT. The stock is down 36 percent this year, underperforming the Saudi benchmark, which has fallen 24.5 percent.
(Reporting by Souhail Karam; Editing by Daliah Merzaban)
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Alwaleed -- the world's 19th richest person with a $21 billion fortune according to Forbes -- runs Kingdom Holding Co 4280.SE, Citigroup Inc's largest shareholder.
The largest Arab bourse began naming investors holding stakes of 5 percent or more on Saturday to boost transparency and encourage confidence in the Gulf region's worst-performing benchmark this year.
About 90 percent of Alwaleed's holdings in Saudi shares are in Kingdom, in which he owns 94 percent of the conglomerate's 6.3 billion shares, the stock exchange said on its website.
Kingdom, meanwhile, holds 5 percent of Samba Financial Group 1090.SE, Saudi Arabia's second-largest listed bank, and 10.1 percent of Savola Group 2050.SE, the data showed.
The conglomerate also owns 6.2 percent in Saudi industrial group Tasnee 2060.SE and is the largest shareholder in Saudi Research and Marketing Group 4210.SE, publisher of pan-Arab daily newspaper Asharq al-Awsat, with a 29.9 percent stake.
Saudi market operator Tadawul said last month it was implementing the new disclosure rule to improve transparency. The Saudi market is dominated by day traders and restricts foreign access to shares.
The new disclosure rule could help the regulator dispel rumours that big retail traders are behind rapid fluctuations in share prices, a common assumption in the market, analysts have said.
Alwaleed's holdings in Saudi stocks surpass those held by members of the Al-Rajhi family, who control Al-Rajhi Bank 1120.SE, the biggest Gulf Arab market value, and the Olayan family who have indirect stakes in Saudi Hollandi Bank 1040.SE and SABB bank 1060.SE.
The state dominates shareholding in Saudi Arabia. The Saudi Public Investment Fund is the biggest investor, holding 380 billion riyals of shares in 18 firms, the data showed.
Shares of Kingdom surged more than 6 percent at 0841 GMT. The stock is down 36 percent this year, underperforming the Saudi benchmark, which has fallen 24.5 percent.
(Reporting by Souhail Karam; Editing by Daliah Merzaban)
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Israel's Osem to buy Tribe Mediterranean for $57 mln
TEL AVIV, Aug 17 (Reuters) - Israeli food maker Osem Investments said on Sunday it agreed to buy U.S.-based Tribe Mediterranean Foods Co for $57 million.
Osem said in a statement to the Tel Aviv Stock Exchange the Massachusetts-based chilled salad maker had sales of $20.6 million in 2007, up from $17.9 million in 2006.
Tribe has a 17 percent share of the Mediterranen chilled salad market in the United States.
Osem said the acquisition would be financed through its own funds as well as external funding. The company said it does not expect to have to make any substantial investments in Tribe in the near term.
The deal is subject to regulatory approval.
Osem, 53.8 percent owned by Swiss food maker Nestle , is one of Israel's largest food producers and exporters.
Osem said the acquisition had the support and cooperation of Nestle with the aim of developing the chilled salad market in North America.
(Reporting by Tova Cohen, Editing by Jacqueline Wong)
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Osem said in a statement to the Tel Aviv Stock Exchange the Massachusetts-based chilled salad maker had sales of $20.6 million in 2007, up from $17.9 million in 2006.
Tribe has a 17 percent share of the Mediterranen chilled salad market in the United States.
Osem said the acquisition would be financed through its own funds as well as external funding. The company said it does not expect to have to make any substantial investments in Tribe in the near term.
The deal is subject to regulatory approval.
Osem, 53.8 percent owned by Swiss food maker Nestle , is one of Israel's largest food producers and exporters.
Osem said the acquisition had the support and cooperation of Nestle with the aim of developing the chilled salad market in North America.
(Reporting by Tova Cohen, Editing by Jacqueline Wong)
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Indonesia Says Palm Oil Demand Strong as Prices Fall
By Leony Aurora
Aug. 17 (Bloomberg) -- Indonesia, the world's biggest palm oil producer, expects demand for the vegetable oil to remain strong after prices of the commodity slumped in the past month, Trade Minister Mari Pangestu said.
Palm oil for October delivery, the most-actively traded contract on the Malaysia Derivatives Exchange, fell as much as 8.7 percent to 2,392 ringgit ($714) a metric ton on Aug. 15, the lowest since May 9, 2007. The contract closed at 2,453 ringgit. Shares in palm oil producers also declined.
A drop in prices of commodities such as palm oil and coal may slow an increase in the value of Indonesian exports, which helped boost economic growth in the second quarter. Rising demand from the world's two most-populated nations, India and China, may help sustain demand for palm oil, Pangestu said.
``Demand is still strong from China and India,'' Pangestu told reporters in Jakarta today. Demand from Europe for use as a biofuel is also rising.
Indonesia's economic growth unexpectedly accelerated to 6.4 percent in the second quarter as rising prices and demand for the nation's coal, palm oil and rubber pushed exports to a record. Economists had expected a 6.1 percent gain. Demand may rise as Asian nations prepare for the festive season.
``China, India and Middle Eastern countries should commence their palm oil buying operations shortly ahead of the upcoming festival season,'' Alexander Ivanovitch, a London-based analyst at Kaupthing, Singer & Friedland Group, said in a note to investors on Aug. 15. ``Long-term fundamentals for palm oil remain solid, as a result of the increasing global demand from the food industry, bio-fuels demand and trans-fatty acid free oils demand in the U.S.''
Diwali, Id-Ul-Fitr
Muslims nations in the Middle East celebrate Id-ul-Fitr in October, while India may boost purchase of vegetable oil before the festival of Diwali the same month.
Traders in China, the world's biggest oilseed consumer, have canceled orders for almost 150,000 tons of palm oil and some soybeans on weak domestic demand and plunging global commodity prices, according to China Cereals and Oils Business Net, an agricultural market researcher.
Delivery Declined
In the past two weeks, some of the biggest dealers in China have declined to take delivery of palm oil shipments and sold back five cargoes of soybeans, said Gao Yingbin, an analyst at the researcher.
The decline in palm oil prices may not affect Indonesia's export growth target, Pangestu said after celebrations to mark the nation's 63rd Independence Day. Southeast Asia's biggest economy is targeting export growth of as much as 15 percent this year, she said.
``We're confident that with higher volume and increases in other exports not related to commodities, like automotive and footwear,'' Indonesia will meet its growth target, Pangestu said. The 30 percent increase in exports in the first six months of the year will ensure the goal is reached even if commodity prices fall in the second half, she said.
To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net; Arijit Ghosh in Jakarta at aghosh@bloomberg.net;
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Aug. 17 (Bloomberg) -- Indonesia, the world's biggest palm oil producer, expects demand for the vegetable oil to remain strong after prices of the commodity slumped in the past month, Trade Minister Mari Pangestu said.
Palm oil for October delivery, the most-actively traded contract on the Malaysia Derivatives Exchange, fell as much as 8.7 percent to 2,392 ringgit ($714) a metric ton on Aug. 15, the lowest since May 9, 2007. The contract closed at 2,453 ringgit. Shares in palm oil producers also declined.
A drop in prices of commodities such as palm oil and coal may slow an increase in the value of Indonesian exports, which helped boost economic growth in the second quarter. Rising demand from the world's two most-populated nations, India and China, may help sustain demand for palm oil, Pangestu said.
``Demand is still strong from China and India,'' Pangestu told reporters in Jakarta today. Demand from Europe for use as a biofuel is also rising.
Indonesia's economic growth unexpectedly accelerated to 6.4 percent in the second quarter as rising prices and demand for the nation's coal, palm oil and rubber pushed exports to a record. Economists had expected a 6.1 percent gain. Demand may rise as Asian nations prepare for the festive season.
``China, India and Middle Eastern countries should commence their palm oil buying operations shortly ahead of the upcoming festival season,'' Alexander Ivanovitch, a London-based analyst at Kaupthing, Singer & Friedland Group, said in a note to investors on Aug. 15. ``Long-term fundamentals for palm oil remain solid, as a result of the increasing global demand from the food industry, bio-fuels demand and trans-fatty acid free oils demand in the U.S.''
Diwali, Id-Ul-Fitr
Muslims nations in the Middle East celebrate Id-ul-Fitr in October, while India may boost purchase of vegetable oil before the festival of Diwali the same month.
Traders in China, the world's biggest oilseed consumer, have canceled orders for almost 150,000 tons of palm oil and some soybeans on weak domestic demand and plunging global commodity prices, according to China Cereals and Oils Business Net, an agricultural market researcher.
Delivery Declined
In the past two weeks, some of the biggest dealers in China have declined to take delivery of palm oil shipments and sold back five cargoes of soybeans, said Gao Yingbin, an analyst at the researcher.
The decline in palm oil prices may not affect Indonesia's export growth target, Pangestu said after celebrations to mark the nation's 63rd Independence Day. Southeast Asia's biggest economy is targeting export growth of as much as 15 percent this year, she said.
``We're confident that with higher volume and increases in other exports not related to commodities, like automotive and footwear,'' Indonesia will meet its growth target, Pangestu said. The 30 percent increase in exports in the first six months of the year will ensure the goal is reached even if commodity prices fall in the second half, she said.
To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net; Arijit Ghosh in Jakarta at aghosh@bloomberg.net;
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Persian Gulf Shares Gain as the Dollar Rises; Tamweel Declines
By Zainab Fattah
Aug. 17 (Bloomberg) -- Persian Gulf shares advanced on optimism inflation may slow after the dollar climbed to a six- month high against the euro. Dubai's index dropped.
Arab National Bank, Saudi Arabia's sixth-largest publicly traded lender by assets, rose for a second day. Bank Muscat SAOG, Oman's largest bank, climbed to its highest in three weeks. Aviation Lease & Finance Co. rose after leasing planes to a Saudi Arabian airline. In Dubai, Tamweel PJSC dropped a second day after Dubai police said a former chief executive officer of the company is under investigation for alleged financial wrongdoing.
``The dollar's rise will help stem off inflation, which is plaguing the whole region,'' Mohamed Dwaikat, a senior broker at Al-Fajer Securities, said in a telephone interview from Abu Dhabi. ``Lower inflation will help companies retain higher margins of profitability as the cost of imports falls and it may attract more investors to the stock markets.''
Saudi Arabia's Tadawul All Share Index gained 0.3 percent to 8,357.23, bringing the five-day surge to 6 percent. The Muscat Securities Market 30 Index rose 1.3 percent, the highest close since Aug. 5, while the Kuwait Stock Exchange Index increased 0.2 percent.
Five of the six Gulf countries peg their currencies to the U.S. dollar. Inflation is at record levels in the region as the weaker dollar and high commodity prices make imports more expensive and as oil-fueled economic growth creates shortages of real estate and labor. Oman's inflation rate increased for the 22nd month to a record 14 percent in June on higher food costs. Kuwait is the only Gulf Arab state that ended the dollar peg.
Dollar's Rise
Last week, the U.S. currency climbed to strongest level in almost six months against the euro and advanced to a seven-month high versus the yen as the European and Japanese economies shrank and crude oil dropped.
Arab National Bank advanced 3.2 percent to 56.5 riyals. Bank Muscat climbed 2.8 percent to 1.74 rials, its highest since July 28.
Aviation Lease & Finance gained 2 percent to 260 fils. The Kuwaiti company said it leased eight Airbus aircraft to Saudi Arabian Airlines.
Damac Kuwaiti Holding Co. climbed 3.9 percent to 270 fils. The unit of Dubai's real-estate group Damac Holding reported second-quarter net income of 7.4 million dinars ($27.6 million), according to a statement on the Web site of the Kuwaiti bourse.
`Scaring' Investors
In the United Arab Emirates, the Dubai Financial Market General Index decreased 0.6 percent, while the Abu Dhabi Securities Exchange General Index fell less than 0.1 percent.
Mortgage provider Tamweel dropped for a second day, losing 4.1 percent to 5.86 dirhams. The company's former chief executive officer, Adel Al Shirawi, is under investigation by the Dubai Public Prosecution for alleged financial wrongdoing, a police official said on Aug. 14.
``The news of financial wrongdoing in major companies is scaring off investors,'' Hiba Azar, senior broker at Shaheen Financial Brokers in Dubai, said in a phone interview. ``The low volumes show investors are waiting for more news on the issue.''
Nakheel PJSC, the Dubai government-owned real-estate developer building three man-made islands in the shape of palm trees, said yesterday that one of its employees is being investigated by the police for bribery.
About 69 million shares traded in Abu Dhabi today, 69 percent less than the six-month daily average. In Dubai, volume fell by 51 percent compared with the six-month average.
The Bahrain All Share Index lost 0.4 percent, while Qatar's Doha Securities Market Index fell 0.8 percent.
Agility retreated 1.7 percent to 1,140 fils. The largest storage and logistics operator in the Middle East said second- quarter profit dropped 9 percent to 35.1 million dinars.
Zain declined 2.3 percent to 1,680 fils. The Kuwait-based phone company with operations in 22 Middle Eastern and African countries started selling shares to existing shareholders at 850 fils each, it said in a statement on the Web site to the Kuwaiti bourse.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
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Aug. 17 (Bloomberg) -- Persian Gulf shares advanced on optimism inflation may slow after the dollar climbed to a six- month high against the euro. Dubai's index dropped.
Arab National Bank, Saudi Arabia's sixth-largest publicly traded lender by assets, rose for a second day. Bank Muscat SAOG, Oman's largest bank, climbed to its highest in three weeks. Aviation Lease & Finance Co. rose after leasing planes to a Saudi Arabian airline. In Dubai, Tamweel PJSC dropped a second day after Dubai police said a former chief executive officer of the company is under investigation for alleged financial wrongdoing.
``The dollar's rise will help stem off inflation, which is plaguing the whole region,'' Mohamed Dwaikat, a senior broker at Al-Fajer Securities, said in a telephone interview from Abu Dhabi. ``Lower inflation will help companies retain higher margins of profitability as the cost of imports falls and it may attract more investors to the stock markets.''
Saudi Arabia's Tadawul All Share Index gained 0.3 percent to 8,357.23, bringing the five-day surge to 6 percent. The Muscat Securities Market 30 Index rose 1.3 percent, the highest close since Aug. 5, while the Kuwait Stock Exchange Index increased 0.2 percent.
Five of the six Gulf countries peg their currencies to the U.S. dollar. Inflation is at record levels in the region as the weaker dollar and high commodity prices make imports more expensive and as oil-fueled economic growth creates shortages of real estate and labor. Oman's inflation rate increased for the 22nd month to a record 14 percent in June on higher food costs. Kuwait is the only Gulf Arab state that ended the dollar peg.
Dollar's Rise
Last week, the U.S. currency climbed to strongest level in almost six months against the euro and advanced to a seven-month high versus the yen as the European and Japanese economies shrank and crude oil dropped.
Arab National Bank advanced 3.2 percent to 56.5 riyals. Bank Muscat climbed 2.8 percent to 1.74 rials, its highest since July 28.
Aviation Lease & Finance gained 2 percent to 260 fils. The Kuwaiti company said it leased eight Airbus aircraft to Saudi Arabian Airlines.
Damac Kuwaiti Holding Co. climbed 3.9 percent to 270 fils. The unit of Dubai's real-estate group Damac Holding reported second-quarter net income of 7.4 million dinars ($27.6 million), according to a statement on the Web site of the Kuwaiti bourse.
`Scaring' Investors
In the United Arab Emirates, the Dubai Financial Market General Index decreased 0.6 percent, while the Abu Dhabi Securities Exchange General Index fell less than 0.1 percent.
Mortgage provider Tamweel dropped for a second day, losing 4.1 percent to 5.86 dirhams. The company's former chief executive officer, Adel Al Shirawi, is under investigation by the Dubai Public Prosecution for alleged financial wrongdoing, a police official said on Aug. 14.
``The news of financial wrongdoing in major companies is scaring off investors,'' Hiba Azar, senior broker at Shaheen Financial Brokers in Dubai, said in a phone interview. ``The low volumes show investors are waiting for more news on the issue.''
Nakheel PJSC, the Dubai government-owned real-estate developer building three man-made islands in the shape of palm trees, said yesterday that one of its employees is being investigated by the police for bribery.
About 69 million shares traded in Abu Dhabi today, 69 percent less than the six-month daily average. In Dubai, volume fell by 51 percent compared with the six-month average.
The Bahrain All Share Index lost 0.4 percent, while Qatar's Doha Securities Market Index fell 0.8 percent.
Agility retreated 1.7 percent to 1,140 fils. The largest storage and logistics operator in the Middle East said second- quarter profit dropped 9 percent to 35.1 million dinars.
Zain declined 2.3 percent to 1,680 fils. The Kuwait-based phone company with operations in 22 Middle Eastern and African countries started selling shares to existing shareholders at 850 fils each, it said in a statement on the Web site to the Kuwaiti bourse.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
Read more...
Bidders line up to buy Gatwick airport: paper
LONDON (Reuters) - International infrastructure groups have approached British Airports Authority (BAA) with offers to buy London's Gatwick airport for up to 3 billion pounds ($5.62 billion), the Sunday Times reported without citing sources.
A BAA spokeswoman declined to comment.
Sun Aug 17, 2008 7:47am EDT
Germany's Hochtief, Global Infrastructure Partners, the GE-Credit Suisse investment fund, Australia's Macquarie and Britain's Manchester Airport Group have all indicated their interest to Ferrovial-owned BAA ahead of the Competition Commission's report expected this week, the paper said.
The competition watchdog is expected to say that the group's ownership of London's three largest airports -- Heathrow, Gatwick and Stansted -- is against the public interest and experts believe it could be asked to sell two of the London hubs and one of its largest Scottish airports, it added.
BAA chairman Nigel Rudd told the BBC on Saturday that he expects the Competition Commission to recommend the breakup of the airport operator, adding that would not be a financial disaster.
(Reporting by Marc Roca; editing by Rory Channing)
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A BAA spokeswoman declined to comment.
Sun Aug 17, 2008 7:47am EDT
Germany's Hochtief, Global Infrastructure Partners, the GE-Credit Suisse investment fund, Australia's Macquarie and Britain's Manchester Airport Group have all indicated their interest to Ferrovial-owned BAA ahead of the Competition Commission's report expected this week, the paper said.
The competition watchdog is expected to say that the group's ownership of London's three largest airports -- Heathrow, Gatwick and Stansted -- is against the public interest and experts believe it could be asked to sell two of the London hubs and one of its largest Scottish airports, it added.
BAA chairman Nigel Rudd told the BBC on Saturday that he expects the Competition Commission to recommend the breakup of the airport operator, adding that would not be a financial disaster.
(Reporting by Marc Roca; editing by Rory Channing)
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Housing Starts Probably Slumped in July: U.S. Economy Preview
By Shobhana Chandra
Aug. 17 (Bloomberg) -- U.S. builders began work in July on the fewest houses in 17 years and the economic outlook dimmed, indicating the real-estate slump is at the epicenter of the growth slowdown, economists said before reports this week.
Housing starts plunged 9.9 percent to an annual rate of 960,000, according to the median estimate in a Bloomberg News survey ahead of a Commerce Department report on Aug. 19. The Conference Board's index of leading indicators probably fell 0.2 percent last month, a third consecutive drop.
Stricter lending rules, rising borrowing costs, falling property values and record foreclosures may further depress home sales and cause builders to keep retrenching. Housing, job losses and the credit crisis are likely to weaken the economy for the rest of the year and into 2009.
``There's no underlying support for the housing market,'' said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. ``The economy as a whole is in fairly poor shape.''
The leading indicators index, a measure of the economy's likely path over the next three to six months, is due for release on Aug. 21.
Commerce's housing report may also show building permits, a sign of future construction and a component of the leading index, fell 15 percent last month, according to the Bloomberg survey.
A change in New York City's building code that took effect July 1 caused housing starts and permits to unexpectedly surge in June as builders broke ground ahead of the new regulations.
The magnitude of the projected July drop in starts and permits reflects, in part, ``a payback from the big jump'' the month before, York said.
Sales Fall
Underneath the gyrations, demand continues to weaken. Existing home sales fell to a 10-year low in the second quarter and the median price for a single-family house slid 7.6 percent, according to the National Association of Realtors. A third of all sales were foreclosures or ``short sales,'' in which lenders take a loss on a property.
To make matters worse, financing is also becoming scarce, a quarterly survey of banks by the Federal Reserve showed. Three- fourths of the loan officers polled reported they tightened standards on prime mortgage loans, up from the April survey. Lending rules on non-traditional loans were also toughened.
The five largest U.S. homebuilders reported a combined $1.08 billion in losses in their most recent quarters.
Record Pessimism
Builders are understandably downbeat as the losses mount. The National Association of Home Builders/Wells Fargo's sentiment index may show optimism held at a record low in August for a second month, economists forecast a report tomorrow will show.
Still, construction companies are making some headway in reducing the supply glut. The number of new homes for sale dropped in June by the most in four decades.
Some firms are seeing an improvement. Toll Brothers Inc., the largest U.S. luxury homebuilder, reported cancellations last quarter dropped to the lowest level in more than two years, and said buyers are starting to return to the market.
``There is growing pent-up demand from those who have postponed buying during the past almost three years,'' Chief Executive Officer Robert Toll said on an Aug. 13 conference call.
Finally this week, a Labor Department report Aug. 19 may show wholesale costs rose at a slower pace last month as fuel expenses peaked. The producer price index probably climbed 0.5 percent in July after jumping 1.8 percent the prior month, according to economists surveyed.
Bloomberg Survey
================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
NAHB Housing Index 8/18 Aug. 16 16
PPI MOM% 8/19 July 1.8% 0.5%
Core PPI MOM% 8/19 July 0.2% 0.2%
PPI YOY% 8/19 July 9.2% 9.2%
Core PPI YOY% 8/19 July 3.0% 3.2%
Housing Starts ,000's 8/19 July 1066 960
Building Permits ,000's 8/19 July 1138 970
Initial Claims ,000's 8/21 Aug. 16 450 440
Cont. Claims ,000's 8/21 Aug. 9 3417 3404
Philly Fed Index 8/21 Aug. -16.3 -14.0
LEI MOM% 8/21 July -0.1% -0.2%
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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Yen Wave Reversal
| Daily Forex Technicals | Written by TheLFB-Forex.com | Aug 17 08 09:16 GMT | | |
| Momentum on USDJPY looks to be turning bearish, and possibly providing a potential to draw attention from short-term, swing and position participants. The price has failed to break 110.40 three days in a row, the analysis is:
The market may look to follow the emerging w.5 to the short side, and that interest could be instigated from a pullback to 109.05-109.30, looking at the resistance area above at 110.50 as a reversal point that signals things have failed. The market may be looking to the support 1 area at 107.10, and if that breaks then support 2 area at 103.15 to see what price action is generated. In the big picture support 3 sits 101.78, with other larger time-frame areas at 99.55, 97.86, 95.90, 92.90, 86.80. These areas are potential market momentum points of interest, we will monitor how they unfold. Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174. The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC. | |
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Treasury Yields To Lead Dollar Lower?
| Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 17 08 09:13 GMT | | |
| The U.S. Treasury department confirmed that the net purchase of Treasury notes by overseas investors (central banks and sovereign wealth funds included) jumped from $5.7b in May to $28.2b in June, an increase way above the norm. The increase in the amount of notes purchased at that time, added to the huge Treasury auctions of new debt in August, has created an imbalance in the Yield/Dollar story, that may just signal that recent dollar buying could soon be tested. Yields dropping will normally reflect that the expectancy for economic growth is also dropping, and positive economic sentiment is waning. That is also being shown in the drop in Fed Fund futures contracts reducing dramatically the expectancy of a Fed rate increase in 2008. The chances of a rate hike by year-end have gone from 60% reported in July to 25% reported in August. If the Fed is not going to raise rates the Treasury yields will drop further, and the value of the dollar may get pressurized. There is no tick-for-tick comparison to be made between yields and the dollar index, but they do run in correlation over time. When the Fed do re-set interest rates the mechanics are that they adjust the Treasury yields by increasing or decreasing the amounts of notes in circulation; it is referred to as Open Market Operations. Yields dropping have the same effect as lowering interest rates; rates are lowered to stimulate growth, and as such will now questions the ability of the dollar to hold onto new-found valuations. The markets are starting to reveal the answers as to why the dollar exploded in August, and are also giving the clues as to what will be required for the markets to hold these valuations. Treasury yields dropping will not help the dollar to easily make the next moves higher, it may not be the thing to stop the moves, but will weigh heavily on valuations. There is an imbalance at the moment that may have to correct itself before the next long-dollar moves can be made.
Before and After The last thrity years Since 1973 the $100 note has gone from being worth $100 of buying power to $76 now (the value of the dollar index). With that steep of a drop there really should not be much of a trade balance deficit, if any at all, as U.S. exports have become progressively cheaper to sell abroad. The downside of a reducing dollar is seen when imports increase; a weak dollar increases import prices. A stronger dollar may not really be that benieficial after all to the U.S., the only ones that a stronger dollar really impacts are those Central Banks that hold a swath of their Reserves in dollar denominated assets, global oil producers who hold dollar based reserves and dollar based oil in the ground, and Sovereign Wealth Funds who are seeing the depreciating dollar ravage the value of their holdings. A 'strong dollar policy' is required to attract overseas investment; without it the U.S. economy would have to print more dollar bills to pay its way, and that devalues the notes already in circulation. From an overseas perspective it may be better to buy up a cheap dollar, rather than watch it devalue the Reserves already held. The dollar may have just got stronger out of need, rather than greed. The signs have been there that the buying was coming, and it has very quickly got to a stage that now questions are being asked about the ability to hold that rapid a move. If it does hold, and the greenback goes higher, the global Central banks will be the ones to thank as they step in to protect their 'long dollar policy' that shuts off the selling at 71.50 on the dollar index it seems. Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174. The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC. | |
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Economic Calendar Summary 8/18 - 8/22
Monday, Aug 18, 2008
Tuesday, Aug 19, 2008
Wednesday, Aug 20, 2008
Thursday, Aug 21, 2008
Friday, Aug 22, 2008
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