Economic Calendar

Tuesday, March 6, 2012

European Economy Shrank in Fourth Quarter

By Gabi Thesing - Mar 6, 2012 6:03 PM GMT+0700
Timothy Fadek/Bloomberg
Finished wind turbine blades stored ahead of shipping at the Siemens AG plant in Aalborg, Denmark. Siemens AG, Europe's largest engineering company, forecast stagnant profit for next year as sales growth moderates and the global economy cools, sending the shares to their lowest in more than a month.

Europe’s economy contracted in the fourth quarter as investment declined by the most since 2009 and exports and consumer spending dropped.

Gross domestic product shrank 0.3 percent from the third quarter, the European Union’s statistics office said today, confirming an estimate published on Feb. 15. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment dropped 0.7 percent.

A shipping container is loaded onto a ship at the Port of Southampton, jointly operated by DP World Ltd and Associated British Ports Holdings Plc, in Southampton, U.K. Photographer: Chris Ratcliffe/Bloomberg

While Europe is facing its second recession in less than three years, the economy shows “tentative signs of stabilization,” European Central Bank President Mario Draghi has said. ECB efforts to pump cash into the economy have helped ease concern about a credit crunch and won governments time to agree on measures to contain the debt crisis.

“The region is still facing major headwinds, notably including increased fiscal tightening in many countries and markedly rising unemployment,” said Howard Archer, chief European economist at IHS Global Insight in London. “Despite some recent overall improvement in euro zone surveys and evidence that Germany is returning to growth, we doubt that the euro zone will be able to avoid further contraction in the first quarter of 2012 and very possibly the second.’”

European investor confidence rose for a third month in March, the Sentix research institute said yesterday.

ECB Loans

The ECB lent 800 banks 529.5 billion euros ($698 billion) for three years last week in the biggest single refinancing operation in its history, taking total long-term lending above 1 trillion euros. Euro-area finance ministers the same week authorized the region’s bailout fund to raise money for Greece’s bond exchange, the first step in releasing funds from a 130 billion-euro rescue package.

ECB policy makers including Draghi and Ewald Nowotny from Austria said they expect the central bank loans will be channeled to households and companies, helping to boost the so- called real economy.

The economy will likely be “turning the tide in the coming months,” Olli Rehn, the EU’s commissioner for economic and monetary affairs, said today.

So far, the Stoxx Europe 600 Index (SXXP) has gained 8.8 percent and yields on debt of European sovereigns and banks have tumbled. Germany’s Audi AG (NSU), the world’s second-largest maker of luxury vehicles, said March 1 that it is targeting 2012 profit “on par” with last year’s record results as higher sales offset increased spending on new models and factories.

Shrinking Services

Even so, euro-area services output shrank more than estimated in February, led by Italy and Spain, a survey of purchasing managers showed yesterday.

The 17-nation euro economy may shrink 0.3 percent this year, driven by a contraction of 1.3 percent in Italy and 1 percent in Spain, the European Commission said on Feb. 23. Germany’s economy, Europe’s largest, will expand 0.6 percent, according to the commission.

The ECB will leave its benchmark lending rate at 1 percent when policy makers meet in Frankfurt on March 8, according to the median of 58 forecasts in a Bloomberg News survey, giving officials time to weigh the impact of the cash injection and consider new economic and inflation forecasts which will be released on that date.

To contact the reporter on this story: Gabi Thesing in London at

To contact the editor responsible for this story: Craig Stirling at


Samsung-LG TVs Thinner Than IPad Undermine Sony-Panasonic: Tech

By Jun Yang and Mariko Yasu - Mar 6, 2012 1:45 PM GMT+0700
David Paul Morris/Bloomberg
The Samsung Electronics Co. OLED television at the International Consumer Electronics Show (CES) in Las Vegas on Jan. 13, 2012.

Samsung Electronics Co. and LG Electronics Inc. (066570), the world’s two biggest TV makers, want to widen their lead over Japanese rivals by using new display technology in 55-inch sets thinner than Apple Inc.’s iPad.

The South Korean companies are developing organic light- emitting diode, or OLED, televisions that are as thin as 4 millimeters (0.16 inches) and produce images 200 times sharper than current liquid-crystal-display models. Both plan to start selling OLED sets as early as this year, while Sony Corp. (005930) and Panasonic Corp. (6752) haven’t set target dates for introducing them.

The Samsung Electronics Co. OLED 55-inch television, that has a depth of 7 millimeters, is displayed at the International Consumer Electronics Show (CES) in Las Vegas on Jan. 12, 2012. The South Korean company is developing organic light- emitting diode, or OLED, televisions that are as thin as 4 millimeters (0.16 inches) and produce images 200 times sharper than current liquid-crystal-display models. Photographer: David Paul Morris/Bloomberg

Attendees look at LG Electronics Inc. 3D OLED televisions during the 2011 International Consumer Electronics Show (CES) in Las Vegas on Jan. 7, 2011. The South Korean company is developing organic light-emitting diode, or OLED, televisions that are as thin as 4 millimeters (0.16 inches) and produce images 200 times sharper than current liquid-crystal-display models. Photographer: Andrew Harrer/Bloomberg

Samsung and LG (066470) are turning to OLED technology to extend the advantage they gained during the transition from analog to digital TVs. Having been slower in ditching bulky sets and now stuck with growing losses, Sony (6758) and Panasonic are again lagging behind as the OLED market may be the fastest-growing in the $100 billion industry during the next three years.

“OLED TVs could be another game-changer,” said Hyun Park, a Seoul-based analyst at Tong Yang Securities Inc. “The Korean companies are leading the initial development stage. Sony and Japanese companies aren’t really responding.”

Shipments of OLED TVs may grow to 2.1 million sets in 2015 from 34,000 in 2012, according to Englewood, Colorado-based IHS Inc.’s iSuppli.

Samsung shares rose 0.5 percent to 1,180,000 won, and LG gained 0.5 percent to 85,000 won at the close of trading in Seoul. In Tokyo, Sony fell 0.8 to 1,678 yen, and Panasonic dropped 2.1 percent to 711 yen.

Samsung, LG

Using organically glowing materials, OLED TVs don’t require separate backlights and can be half the thickness of Apple (AAPL)’s iPad 2, which measures 8.8 millimeters. The technology, already used in mobile devices including Samsung’s Galaxy smartphones, uses less power than LCD and has a higher contrast rate, creating more vivid images.

Suwon, South Korea-based Samsung and Seoul-based LG showed 55-inch (140-centimeter) sets at the Consumer Electronics Show in Las Vegas in January. LG’s prototype was 4 millimeters thick, while Samsung declined to discuss dimensions. Both sets have 3-D and Internet capabilities.

The two companies employ different technologies. Samsung uses red, green and blue OLED materials inside individual pixels to create images, while LG uses white light and an extra color filter.

Samsung’s method can be more energy-efficient and show a broader range of colors, said Paul Semenza, senior vice president of analyst services at Santa Clara, California-based DisplaySearch. The technology requires greater accuracy and consistency, making manufacturing harder than LG’s approach, he said.

Power Consumption

The downside of LG’s technology is higher power consumption to keep the white layer bright, Semenza said. Google Inc. (GOOG) created a search application with a black background for mobile phones using OLED technology.

Ha Joon Doo, an analyst at Shinhan Investment Corp. in Seoul who saw both technologies at the Las Vegas show, said the OLED sets showed colors better than comparable LCD models. It was difficult to distinguish between the two prototypes, Ha said.

“OLED TVs had a bit of more comfortable and natural feel to colors,” he said.

Japanese manufacturers probably won’t enter the OLED market until after 2013, said Alvin Lim, an associate director at Fitch Ratings in Seoul.

Sony, Panasonic

Sony’s incoming Chief Executive Officer Kazuo Hirai pledged “painful” cost cuts as the company forecast its TV business will lose money for the eighth straight year. Tokyo-based Sony more than doubled its companywide loss forecast to 220 billion yen ($2.7 billion) for the year ending March 31 because of a stronger yen and flooding in Thailand that disrupted output.

Osaka-based Panasonic almost doubled its loss forecast to a record 780 billion yen on Feb. 3. Outgoing President Fumio Ohtsubo is eliminating jobs and shifting production abroad as the stronger currency makes domestic manufacturing more expensive.

By contrast, Samsung’s fourth-quarter profit rose 17 percent as its TV unit posted operating profit of 570 billion won ($505 million). The company, which doesn’t give a profit forecast, plans $22 billion of capital spending this year.

“South Korean companies have sizable capital expenditure and cost-competitiveness,” said Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo. “The Japanese companies don’t have the power” to enter the OLED market, he said.

LCD Focus

Sony, which introduced the first OLED TV with an 11-inch screen in 2007, is studying the demand for larger sets and the investment that would be needed to make them, Hirai said in an interview last month.

OLED sets won’t represent the bulk of TV sales “next year, the year after or even the year after that,” said Hirai, who becomes CEO on April 1, replacing Howard Stringer. “The volume is going to be in the LCD TVs.”

Ohtsubo said in January that Panasonic wants to introduce OLED sets “not long after” Samsung and LG.

“Development is steadily progressing,” he said. “While we’ll be releasing it in the market after the two South Korean companies, we’ll also be looking for the best timing to launch a product that’s superior in quality to those two.”

Ohtsubo will be replaced by Kazuhiro Tsuga after shareholders meet in June, Panasonic said Feb. 28.

Manufacturing expenses may favor Hirai’s strategy of focusing on LCD sets. Samsung and LG both face challenges in cutting costs, said Vinita Jakhanwal, a Santa Clara, California- based director for OLED research at iSuppli.

Korean ‘Trendsetters’

A 55-inch OLED set will be priced at about $8,000 in 2012, more than twice the $3,700 average for an equivalent LCD set, according to iSuppli. Although the price may fall to about $4,000 next year, comparable LCD (WVPR107A) models may cost less than $2,000 by then, Jakhanwal said.

“Price is the most important factor,” said Choi Do Yeon, an analyst at LIG Investment & Securities Co. in Seoul. “Being thinner and lighter, or expressing colors better, may not be enough.”

Samsung has to resolve “some technical issues” before starting mass output of OLED TVs, Kim Hyun Suk, head of the company’s TV operations, said in an interview in Las Vegas.

“You can charge $10,000 and $20,000, but that’s not real volume,” he said. “You can’t do anything without volume.”

LG expects to start selling “more competitively priced” models earlier than rivals, Roh Seong Ho, senior vice president at LG’s Home Entertainment Company, said in an e-mail. Initial investment costs and low output rates pose the biggest obstacles, Roh said.

Production will be low because, for now, both Samsung and LG don’t have enough capacity or enough equipment to mass- produce OLED TVs.

Slowing sales of TVs may accelerate Samsung and LG’s push to overcome OLED’s cost challenges. Global TV shipments may fall 2.8 percent this year to 252 million units, iSuppli estimates. LCD units make up 88 percent of the total.

“Samsung and LG are making a market right now,” Lim said. “Japanese companies aren’t trendsetters any more. They’re just following markets created by the Koreans (KOEXTOT).”

To contact the reporters on this story: Jun Yang in Seoul at; Mariko Yasu in Tokyo at

To contact the editor responsible for this story: Michael Tighe at


Stocks Fall for Third Day as Yen Gains; Spain Bonds Drop

By Stephen Kirkland and Lynn Thomasson - Mar 6, 2012 9:31 PM GMT+0700

Global stocks fell for a third day, the longest stretch in two months, and commodities slid while the yen strengthened as concern mounted the global economy is slowing. Spanish bonds declined and U.S. Treasuries gained.

The MSCI All-Country World Index (MXWD) lost 1.4 percent at 8:20 a.m. in New York and the Standard & Poor’s 500 Index slipped 0.7 percent. The yen appreciated against all 16 of its most-traded peers, climbing 0.6 percent versus the dollar. The yield on the Spanish 10-year bond rose 10 basis points, with the similar- maturity U.S. Treasury note yield falling six basis points. Copper declined 2.8 percent and oil slid 1.7 percent.

March 5 (Bloomberg) -- Ayman Asfari, chief executive officer of Petrofac Ltd., discusses the company's full-year profit, business outlook and global oil supplies. He speaks with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)

March 6 (Bloomberg) -- Brian Rogers, chairman and chief investment officer of T. Rowe Price Group Inc., talks about the outlook for the stock market, investor sentiment and investment strategy. Rogers speaks with Sara Eisen and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

March 6 (Bloomberg) -- Michael Purves, chief market strategist at BGC Financial LP, talks about U.S. stocks. Purves speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

March 6 (Bloomberg) -- David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., talks about U.S. and emerging-market stocks. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

March 6 (Bloomberg) -- Arnout Van Rijn, chief investment officer for Robeco Groep NV’s Hong Kong division, talks about Asia stocks and his investment strategy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Europe’s economy shrank 0.3 percent last quarter, the European Union’s statistics office confirmed, and the central bank’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week amid crisis-fighting efforts. Private investors that so far declared participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap deal that ends March 8.

“Recessionary forces are still in the ascendance,” Tim Price, chief investment director at PFP Group in London, said in a phone interview. “Greece is going to default. The way politicians and technocrats have the technical default dressed up as something less than a default is pure semantics.”

The S&P 500 slipped for a third day after last week closing at its highest level since 2008. The index has rallied 24 percent from last year’s low in October and started today’s session up 8.5 percent for the year.

The Stoxx 600 Europe Index (SXXP) slid 1.9 percent, its biggest loss of the year and extending yesterday’s 0.6 percent decline as automakers and producers of industrial goods retreated. PSA Peugeot Citroen dropped 3.9 percent as Europe’s second-biggest carmaker announced plans to sell 1 billion euros of shares. Cable & Wireless Worldwide Plc slid 5.1 percent as the Telegraph in London said Vodafone Group Plc may not make a takeover offer.

Spread Widens

The yield on the 10-year German bund fell four basis points to 1.79 percent, leaving the difference in yield between Europe’s benchmark government securities and Spanish debt 12 basis points wider, increasing for the third straight day. Italy’s 10-year yield rose seven basis points. The yield on the Portuguese two-year note jumped nine basis points.

Greece sold 1.137 billion euros of 26-week Treasury bills today with a uniform yield of 4.8 percent with investors bidding for 2.63 times the securities offered, the debt management agency said. The European Financial Stability Facility sold 3.44 billion euros of three-month debt at an average yield of 0.0516 percent.

The cost of insuring European sovereign bonds rose for a third day, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing 5.4 basis points to 351.65.

Yen Strengthens

The yen climbed 1.5 percent against the euro and advanced 0.8 percent versus the dollar. The euro depreciated 0.8 percent to $1.3118. Australia’s dollar dropped 1.1 percent versus the greenback after the nation’s central bank kept interest rates unchanged and said it has scope to ease policy if needed. The New Zealand dollar weakened against all but three of its 16 major counterparts after a report showed the country’s budget deficit widened more than the government had estimated.

The MSCI Emerging Markets Index (MXEF) fell 2 percent, taking its two-day drop to 2.8 percent. Russia’s Micex Index (MICEX) slid 3.2 percent, the most this year, after more than 200 people were detained in protests against Vladimir Putin’s presidential election victory yesterday.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong sank 3.1 percent, the most in almost three months. The BSE India Sensitive Index (SENSEX) slipped 1.1 percent and the FTSE/JSE Africa All Share Index fell 1.9 percent in Johannesburg as industrial metals prices declined.

The S&P GSCI index of 24 commodities slipped 1.2 percent as zinc and lead sank more than 3 percent.

To contact the reporters on this story: Stephen Kirkland in London at; Lynn Thomasson in Hong Kong at

To contact the editor responsible for this story: Nick Baker at


U.S. Stocks Drop on Europe Outlook

By Rita Nazareth - Mar 6, 2012 9:31 PM GMT+0700
Jin Lee/Bloomberg
Traders on the floor of the New York Stock Exchange on March 2, 2012.

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, after a report showed that Europe’s economy contracted and as investors watched developments in a Greece swap deal.

The S&P 500 (SPX) lost 0.8 percent to 1,353.68 at 9:31 a.m. New York time.

March 6 (Bloomberg) -- Michael Purves, chief market strategist at BGC Financial LP, talks about U.S. stocks. Purves speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

March 6 (Bloomberg) -- Brian Rogers, chairman and chief investment officer of T. Rowe Price Group Inc., talks about the outlook for the stock market, investor sentiment and investment strategy. Rogers speaks with Sara Eisen and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

“It comes down to two things,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co, which has more than $119 billion in client assets. “Most of the data thus far appeared to be moving in the right direction, which explains why the market performed better. No. 2, why the market is not moving higher today? The weaker-than-expected data and some nervousness around the Greece debt swap.”

The S&P 500 has risen 8.5 percent in 2012 through yesterday amid better-than-estimated economic data and expectations Europe would tame its debt crisis. The index yesterday completed its biggest two-day drop since January on concern that this year’s rally has outpaced economic prospects. The S&P 500 traded near 14 times earnings, the highest valuation level since August.

Global stocks fell as Europe’s economy contracted in the fourth quarter after investment, exports and consumer spending dropped. The private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap required for an international bailout. The goal of the swap, which runs through March 8, is to reduce by 53.5 percent the total of privately held Greek debt, helping avert an uncontrolled default.

The European Central Bank’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week, 31 percent bigger than the German economy. Lending to euro-area banks jumped 310.7 billion euros to 1.13 trillion euros in the week ended March 2, the Frankfurt-based ECB said in a statement.

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at


European Stocks Decline Amid Concern on Region’s Economy, Greek Debt Swap

By Adria Cimino - Mar 6, 2012 8:10 PM GMT+0700

European (SXXP) stocks fell as a report confirmed a contraction in the euro-area economy and as investors weighed Greece’s chances of avoiding a default by getting private creditors to accept a debt swap. U.S. index futures and Asian shares also dropped.

PSA Peugeot Citroen tumbled 3.6 percent after announcing plans to raise 1 billion euros ($1.32 billion) in a rights offer and saying it won’t pay a dividend for 2011. Cable & Wireless Worldwide (CW/) Plc retreated 5 percent after a newspaper report speculating that a potential bidder won’t make an offer for the company. Nyrstar NV, the largest producer of refined zinc, paced commodity shares lower.

The Stoxx Europe 600 (SXXP) Index declined 1.3 percent to 262.12 at 1:09 p.m. in London. The benchmark gauge slid yesterday as data showed euro-area manufacturing and services shrank more than estimated, and China cut its economic-growth forecast. The measure has still advanced 7.2 percent so far in 2012. Futures on the Standard & Poor’s 500 Index expiring this month lost 0.8 percent. The MSCI Asia Pacific Index slipped 1.2 percent.

“A lot of the good news is behind us,” said Pierre Mouton, a fund manager who helps oversee $7.5 billion at Notz Stucki & Cie. in Geneva. “We’re seeing investors locking in profit and waiting to see what happens. We’ll let the Greek story pass. The economy in Europe can be a bit of a worry, but expectations aren’t too high. Everyone is expecting bad numbers.”

GDP Shrinks

The euro area’s economy contracted in the fourth quarter as investment plunged the most since 2009 and exports and consumer spending also dropped.

Gross domestic product declined 0.3 percent from the third quarter, the European (SXXP) Union’s statistics office said today, confirming an initial estimate published on Feb. 15. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment slid 0.7 percent.

The investors that so far declared their participation in the restructuring hold about 20 percent of Greek bonds. The 12 members of the creditors’ steering committee that said they would join in the exchange have debt with a face value of at least 40 billion euros, compared with the 206 billion euros of bonds in private hands, according to data compiled by Bloomberg.

The goal of the swap, which runs until March 8, is to reduce by 53.5 percent the total of privately held Greek sovereign debt, helping the country avert an uncontrolled default.

Peugeot Rights Offer

Peugeot (UG) tumbled 3.6 percent to 13.69 euros. Europe’s second-biggest carmaker said it is seeking to raise about 1 billion euros in a rights offer and proceeds will be used for projects with General Motors Co. The company won’t pay a dividend for 2011.

Shareholders, who will have the right to buy 16 shares for every 31 they already own, will pay 8.27 euros per share. That is a 42 percent discount to yesterday’s closing price.

Cable & Wireless Worldwide dropped 5 percent to 31.8 pence. Vodafone Group Plc may not make an offer for the company by a March 12 deadline, the Telegraph reported, citing market speculation.

Vodafone, the world’s largest mobile-phone company, said last month it is in the early stages of evaluating a bid for Cable & Wireless.

A gauge of mining-company shares slid 1.3 percent as metal prices fell in London. Nyrstar (NYR) lost 2.4 percent to 6.54 euros. Eramet SA, a refined nickel producer, tumbled 4 percent to 109.6 euros. Kazakhmys Plc, Kazakhstan’s biggest copper producer, retreated 1.7 percent to 935.5 pence.

Michael Page, Q-Cells

Michael Page International Plc, a recruitment services company, tumbled 5.3 percent to 453.5 pence. The stock was cut to “neutral” (MPI) from “buy” at Citigroup Inc.

Q-Cells SE (QCE), a solar-cell maker, plunged 6 percent to 26.6 euro cents, its lowest on record, after losses exceeded sales in the fourth quarter and the company forecast further losses in 2012. Q-Cells posted a loss of 393 million euros in the last three months of 2011 on sales of 353 million euros in a preliminary report today.

Greece’s ASE Index (ASE) rose 2.9 percent, the only western European market to advance today. National Bank of Greece SA (ETE) climbed 8.7 percent to 2.51 euros, while Alpha Bank SA jumped 15 percent to 1.50 euros.

RWE AG (RWE), Germany’s second-biggest utility, advanced 1.5 percent to 35.03 euros after full-year profit fell less than analysts forecast. Recurrent net income, the measure used to calculate the dividend, fell to 2.48 billion euros from 3.75 billion euros a year earlier, the company said. That beat the 2.4 billion-euro median estimate of six analysts surveyed by Bloomberg News.

To contact the reporter on this story: Adria Cimino in Paris at

To contact the editor responsible for this story: Andrew Rummer at


Slim Tops Gates in Billionaire Ranking

By Matthew G. Miller and Peter Newcomb - Mar 6, 2012 7:15 AM GMT+0700
Chris Goodney/Bloomberg
Mexican billionaire Carlos Slim in New York.

Carlos Slim, the telecommunications tycoon who controls Mexico’s America Movil SAB (AMXL), is the richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 20 wealthiest individuals.

The 72-year-old’s net worth fell $478.4 million in a day to $68.5 billion as of the close of markets on March 2, as U.S. moguls Bill Gates and Warren Buffett placed second and third on the list compiled by Bloomberg News. Brazil’s Eike Batista, who ranks 10th, still covets the top spot after vowing a year ago that he’d become the world’s wealthiest man by 2015.

March 5 (Bloomberg) -- Bloomberg's Matthew G. Miller, Peter Newcomb and Rob LaFranco talk about the Bloomberg Billionaires Index: a daily ranking of the world’s 20 richest people. (Source: Bloomberg)

March 5 (Bloomberg) -- Carlos Slim, the telecommunications tycoon who controls Mexico's America Movil SAB, is the richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world's 20 wealthiest individuals. Owen Thomas, Linzie Janis and Matthew G. Miller report on Bloomberg Television's "Countdown." (Source: Bloomberg)

Bill Gates, co-founder of Microsoft Corp. Photographer: Nelson Ching/Bloomberg

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. Photographer: Tomohiro Ohsumi/Bloomberg

Eike Batista, chairman of MMX Mineracao e Metalicos SA. Photographer: Chris Goodney/Bloomberg

“I’m competitive,” Batista, who trails Slim by almost $39 billion, said in a March 2 telephone interview from Rio de Janeiro. “It’s Brazil’s time to be No. 1. Brazilians have always admired the American dream. What’s happening in Brazil is the Brazilian dream and I happen to be the example.”

The Bloomberg Billionaires Index takes measure of the world’s wealthiest people based on market and economic changes and Bloomberg News reporting. Each net worth figure is updated every business day at 5:30 p.m. in New York. The valuations are listed in U.S. dollars.

Today’s ranking was published with the release of new billionaires profile pages in the Bloomberg Professional service. The profiles feature a transparent analysis of how each billionaire’s fortune was calculated.

Slim’s fortune has increased 11 percent this year, according to the index. A spokesman for Slim didn’t immediately return a telephone request for comment.

Gates, Buffett

Gates, 56, co-founder of Microsoft Corp. (MSFT) in Redmond, Washington, is worth $62.4 billion, down $102.1 million on March 2 and up 11 percent year to date.

The fortune of Buffett, 81, chairman of Omaha, Nebraska- based Berkshire Hathaway Inc. (BRK/B), declined $336.9 million to $43.8 billion on March 2 and is up 2.4 percent in 2012. Almost all of Buffett’s wealth is held in Berkshire Hathaway, the publicly traded holding company he has run since 1965.

The combined net worth of the 20 richest people is $676.8 billion. Nine are Americans, including three from the family of Sam Walton, the founder of Wal-Mart Stores Inc. (WMT)

Number seven is Larry Ellison, 67, chief executive officer of Redwood City, California-based Oracle Corp. (ORCL), the world’s third-largest software maker after Microsoft and IBM Corp. His $38 billion fortune puts him $4 billion ahead of brothers Charles and David Koch, who each own 42 percent of Koch Industries Inc., one of the biggest closely held companies in the world by revenue. Charles, 76, and David, 71, control the Wichita, Kansas, refiner and chemical maker.

Batista, 55, whose investments range from iron ore to coal, is worth $29.8 billion, up $133.9 million on March 2. His fortune has grown 32 percent this year, the most on the list.

The House Wins

Sheldon Adelson, the casino magnate who owns 47 percent of Las Vegas Sands Corp. (LVS), which operates resorts in Macau and Las Vegas, is number 13 with $25.7 billion. Adelson, 78, and his family have pledged at least $10 million to a super-PAC supporting Newt Gingrich, a Republican presidential candidate.

Liliane Bettencourt, 89, who with her family owns 31 percent of Paris-based cosmetics company L’Oreal SA (OR), is last on the ranking. Bettencourt was the subject of an international scandal in 2007 when her daughter, Francoise Bettencourt Meyers, filed a lawsuit accusing a family friend, photographer Francois- Marie Banier, of exploiting her mother’s frail state. Evidence later revealed Bettencourt had granted more than $1 billion in cash and gifts to Banier. In October, Meyers and two grandsons became guardians of the clan’s $22.4 billion fortune.

Diluting Zuckerberg

Mark Zuckerberg, the 27-year-old founder of Facebook Inc. (FB), the world’s largest social-networking company, didn’t make the cut. Based on a roughly $100 billion valuation the Menlo Park, California-based company has been trading at in the private market, Zuckerberg’s stake may be worth $21 billion, or about 25 percent less than previous estimates, once Facebook holds its initial public offering.

The reason: Facebook will issue more than 500 million shares of its Class B stock at the offering, diluting Zuckerberg’s ownership to 21 percent after he exercises 120 million options and sells about 42 million shares to cover the tax bill associated with the gain from those options.

Sweden’s Ingvar Kamprad is the richest European, according to the index, ranking fourth globally with a $42.5 billion net worth. Kamprad, 85, controls Ikea Group, the world’s largest furniture retailer, through a series of trusts and foundations he asserts he doesn’t own.

Luxury Goods

Bernard Arnault, the chairman of LVMH Moet Hennessy Louis Vuitton SA (MC), places fifth. The majority of Arnault’s $42.3 billion comes from his stake in Paris-based LVMH, the world’s largest maker of luxury goods. Arnault, 63, controls about 46 percent of LVMH’s outstanding stock through his family group, according to the company’s latest annual report.

Amancio Ortega, whose publicly traded Inditex SA (ITX) owns the Zara clothing chain, is Spain’s wealthiest individual and sixth in the world with a $38.8 billion fortune. Ortega, 75, has invested dividends from Arteixo-based Inditex into a real estate portfolio that owns office and retail properties in the U.S. and Europe.

No Russians appear in the index as falling metals prices hurt the fortunes of many of the richest oligarchs. Alisher Usmanov, 58, the Muscovite who controls the Metalloinvest metals and mining company and Digital Sky Technologies, which currently owns 5.5 percent of Facebook, is Russia’s wealthiest person thanks to a $20.1 billion fortune.

Asia’s Wealthiest

Mukesh Ambani, 54, leads Asians with a net worth of $26.8 billion, down $185.4 million in a day. His fortune is up 25 percent this year, according to the Bloomberg Billionaires Index, as his shares in India’s top company by market value, Mumbai-based Reliance Industries Ltd. (RIL), have risen 17 percent.

Hong Kong’s Li Ka-shing, nicknamed “Superman” by the local media for his investing prowess, ranks second in the region, with $25.8 billion. Li, 83, owns large stakes in Hong Kong-based property developer Cheung Kong Holdings Ltd. (1), Hong Kong shipping and ports operator Hutchison Whampoa Ltd. (13) and Husky Energy Inc. (HSE), the Calgary-based energy company.

Lakshmi Mittal, the India-born chairman of ArcelorMittal (MT), the world’s biggest steelmaker, is the third-richest Asian, with holdings valued at $23.6 billion. In addition to his ArcelorMittal stake, the 61-year-old London resident owns hundreds of millions of dollars in U.K. real estate.

Royalty Rights

On the rise: Gina Rinehart, the Australian mining heiress who is worth $20.4 billion. Rinehart, 58, the daughter of the man who discovered the mines that made Australia the world’s biggest iron ore exporter, inherited perpetual royalty rights to some of Rio Tinto Ltd. (RIO)’s Hamersley mines in addition to other thermal and iron-ore deposits throughout the country.

Soaring demand for coal and iron ore from China have made Rinehart’s assets attractive to acquisitive industrial companies. In separate deals in the past year, steelmakers Posco and GVK Power & Infrastructure Ltd. (GVKP) agreed to pay a combined $2.9 billion for pieces of Rinehart’s empire.

In today’s updated list, Buffett gained $533.1 million for the biggest dollar increase as Berkshire Hathaway’s Class A stock rose 1.2 percent. Adelson’s fortune declined $680.2 million, the largest amount, as Las Vegas Sands fell 2.8 percent.

To contact the reporters on this story: Matthew G. Miller in New York at; Peter Newcomb in New York at

To contact the editor responsible for this story: Matthew G. Miller at


Buffett Cancels Berkshire Press Conference

By Andrew Frye - Mar 6, 2012 6:02 AM GMT+0700

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), opted against hosting a press conference following his company’s annual meeting in May.

“We have decided to cancel Sunday’s press conference due to time constraints,” Carrie Kizer, Buffett’s assistant, said today in an e-mail. The annual meeting is held in Omaha, Nebraska.

Warren Buffett, chairman of Berkshire Hathaway Inc., ata shareholders meeting in Omaha, Nebraska. Photographer: Daniel Acker/Landov

Buffett, 81, and Vice Chairman Charles Munger, 88, are scheduled to preside over the Berkshire shareholders’ meeting on Saturday, May 5. In past years, reporters from the U.S. and around the world have attended a press event with the two men the following day. In 2010, Berkshire discontinued an event it had previously held for non-U.S. shareholders.

Buffett will take questions from a panel of three journalists and three financial analysts at the shareholders’ meeting. The journalists have been instructed to choose questions submitted by shareholders.

To contact the reporter on this story: Andrew Frye in New York at

To contact the editor responsible for this story: Dan Kraut at


Buffett’s Immunity to Gold Bug Baffles Goolgasian

By Charles Stein - Mar 6, 2012 7:23 AM GMT+0700

Warren Buffett is a great investor, says Christopher Goolgasian, a vice president at State Street Global Advisors Inc., which markets a $74 billion gold fund. The Oracle of Omaha just has it wrong when it comes to the metal.

“While he won’t own gold, he also never owned Apple (up around 1,500% since January of 2000) or Google (up 530% since August of 2004),” Goolgasian said of Buffett in a March 2 regulatory filing for SPDR Gold Trust, an exchange-traded fund managed by Boston-based State Street Corp. (STT)

Warren Buffett visits Japan on Nov. 20, 2011. Photographer: Yoshikazu Tsuno/AFP/Getty Images

Goolgasian, a portfolio manager at the investment solutions group, wrote that while Buffett’s Berkshire Hathaway Inc (BRK\A). has risen 105 percent since January of 2000, gold has climbed nearly fivefold during the same period.

Buffett, in his annual letter to shareholders last month, said investors should avoid gold because its uses are limited and it doesn’t have the potential of farmland or companies to produce new wealth. Achieving a long-term gain on the metal requires an “expanding pool of buyers” who believe the group will increase further, he said.

“What motivates most gold purchasers is their belief that the ranks of the fearful will grow,” Buffett wrote in the letter, posted Feb. 25 on the company’s website. “During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As bandwagon investors join any party, they create their own truth -- for a while.”

‘Fondle the Cube’

In his letter, Buffett estimated the world’s stock of gold if melded together would form a cube of about 68 feet per side and, when valued at $1,750 an ounce, amount to about $9.6 trillion.

For the same amount of money, an investor could acquire all the cropland in the U.S. and buy Exxon Mobil Corp. 16 times, while still having $1 trillion left over, Buffett wrote.

“You can fondle the cube, but it will not respond,” he said.

Gold futures for April delivery settled at $1,703.90 an ounce today on the Comex in New York.

Buffett, 81, built Omaha, Nebraska-based Berkshire from a failing textile maker into a firm selling insurance, energy, and jewelry through acquisitions and stock picks. The company has a market value of $194 billion, according to data compiled by Bloomberg.

‘Greatest Investor’

In his note, Goolgasian, called Buffett “the greatest investor of our time.” Still, that didn’t stop him from questioning Buffett’s take on gold.

“It strikes us that Buffett believes that only asset classes and investments that fit his specific investment beliefs can be sensible investments,” Goolgasian wrote. “We, however, are agnostic about how to beat the market. We just want to do it.”

Buffett didn’t immediately return an e-mail sent to his assistant, Carrie Kizer, requesting a comment on State Street’s filing.

To contact the reporter on this story: Charles Stein in Boston at

To contact the editor responsible for this story: Christian Baumgaertel at


Angry Birds Boom Spurs U.S. Job Revival

By Rich Miller - Mar 6, 2012 4:35 AM GMT+0700
Henrik Kettunen/Bloomberg
Angry Birds Rovio Mobile Oy in Espoo, Finland.

A surge in technology-industry hiring is helping to spearhead a jobs-market revival as demand swells for computer-software applications and data.

Online help-wanted advertising for computer and mathematical occupations rose 2.1 percent in February from January to the second-highest since the Conference Board began compiling the data in 2005. Vacancies outnumbered job seekers by more than three to one, according to the New York-based research group. Postings on tech-career website are 12 percent higher than a year ago, with openings for workers skilled in mobile applications up more than 100 percent.

March 2 (Bloomberg) -- Peter Vesterbacka, chief marketing officer at Rovio Entertainment Oy, talks about new products in the "Angry Birds" franchise, retailing in the U.S. and China, and the possibility of an initial public offering. He spoke with Bloomberg Television's Alex Court at the Mobile World Congress in Barcelona on Feb. 28. (Source: Bloomberg)

Peter Vesterbacka, chief marketing officer and co-founder of Rovio Entertainment Oy, speaks during the TechCrunch Disrupt Beijing conference in Beijing, China. Photographer: Keith Bedford/Bloomberg

“This feels like the beginning of another tech-driven jobs boom,” said Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington. “The broad communications sector resisted the downward pull” of the recession and “is going to be a leader in the expansion.”

Government figures to be released on March 9 will show that payrolls grew by 210,000 in February, according to the median forecast of economists surveyed by Bloomberg News. If that estimate proves correct, job growth in the past three months would total 656,000, compared with 471,000 in the previous three months. The unemployment rate is projected to hold steady at a three-year low of 8.3 percent.

Growing Confidence

Stocks will benefit from the expanding jobs market and growing consumer confidence, said James Paulsen, who helps oversee more than $330 billion as chief investment strategist in Minneapolis for Wells Capital Management. He predicted the Standard & Poor’s 500 Index will climb to 1,500 sometime this year, compared with 1,364.33 (SPX) at the close today in New York.

Technology shares are outperforming this year, with the Vanguard Information-Technology Exchange-Traded Fund, which includes Apple Inc. (AAPL) and Google Inc. (GOOG), up 15 percent compared with a 9 percent rise for the SPDR S&P 500 ETF as of the close in New York today.

President Barack Obama has seen his standing among voters improve as the employment picture brightens. His job-approval rating increased to 53 percent from 44 percent in November, according to a POLITICO-George Washington University Battleground Poll released Feb. 27.

Big Technology

Even as conditions get better, some big technology companies are cutting jobs. International Business Machines Corp. (IBM), the world’s largest computer-services provider, fired more than 1,000 workers in North America last week, according to an employee advocacy group. Doug Shelton, a spokesman for the Armonk, New York-based company, declined to confirm the size of the reductions.

Smaller businesses, though, are taking on workers as the so-called app economy blossoms, with more than 500,000 software programs now written for Apple’s iPhone alone, according to the Cupertino, California-based company’s website.

Bully! Commercial and Entertainment Media LLC, a Baltimore- based company that specializes in augmented-reality applications, has increased its workforce to 21 people from 11 in about the past six months and is looking to hire more, said Carlson Bull, executive director and founder.

“We’re in demand; I’d like to ride that,” said the 40- year-old Bull, who added that the company is considering opening up other offices, including overseas.

Tim Burks, of one-man software-development shop Radtastical Inc. in Palo Alto, California, said he gets two to three calls a day from recruiters trying to hire him for other businesses. And “it has gone up lately,” the 45-year-old added.

Employment Spillovers

The app economy now is responsible for about 466,000 jobs in the U.S., up from zero in 2007 when the iPhone was introduced, according to a study released last month that Mandel did for TechNet, a Washington-based group of executives that promotes technology issues. The total includes app-related positions at companies including Inc. (AMZN) and employment spillovers to the rest of the economy.

Apple deserves some credit for the gains, according to Bret Swanson, president of Entropy Economics, a research firm in Zionsville, Indiana. Despite criticism that the tech company is building the guts of the iPhone in China, the product has led to jobs in the U.S. -- even if they aren’t all necessarily at Apple -- because “the iPhone launched a new software industry,” he said.

U.S. Jobs

Apple said on its website that it has created or supported 514,000 U.S. jobs, including 210,000 tied to the app economy. The total, in a report for the corporation by Boston-based consultants Analysis Group, also counts employment at companies that provide Apple with processors and glass and businesses that ship its products.

A separate study released in January by economists Robert Shapiro and Kevin Hassett found that the shift from 2G to 3G Internet and wireless-network technologies led to the creation of more than 1.5 million positions from April 2007 to June 2011 in everything from construction to retail.

“This looks like an unusually powerful jobs driver,” said Shapiro, undersecretary of commerce under President Bill Clinton. “After all, it created 1.5 million jobs at a time when the economy was losing five million.

“And the transition from 3G to 4G in terms of jobs is more promising,” added Shapiro, who is now chairman of economic consultant Sonecon LLC in Washington.

Hassett, director of economic-policy studies at the American Enterprise Institute in Washington, sees two economic effects from these advances: “Angry Birds” and “Angry Boss.”

In Constant Touch

The first, named after the game application, refers to the growing number of developers creating similar software programs, said Hassett, an economic adviser to Republican Senator John McCain of Arizona during the 2008 presidential campaign. The second references the ability of bosses to stay in constant touch with their employees, increasing productivity, profits and ultimately jobs as money is plowed back into businesses.

Congressional authorization last month for sales of wireless spectrum “will support massive job creation” by freeing up airwaves for use by mobile devices, Representative Fred Upton, a Michigan Republican who heads the Energy and Commerce Committee, said in an e-mailed statement.

Spending on the wireless network may benefit antenna- building companies American Tower Corp. (AMT), Crown Castle International Corp. (CCI) and SBA Communications Corp. (SBAC), Paul Gallant, a Washington-based analyst with Guggenheim Partners, said in a Feb. 15 note.

‘Very Fast’

Mandel said employment growth in the app economy may be topping out, albeit at a still “very fast” 45 percent year- over-year rate.

Tom Silver, senior vice president, North America, for New York-based Dice Holdings Inc. (DHX), agreed that the market for tech professionals is cooling off.

“The crackle and sizzle of the early recovery is behind us, but we continue to see strong demand” on the job- posting website, he said.

“We hear a lot about poaching from our customers,” he added in an e-mail. “The number of calls from recruiters into certain skill sets, like software engineers, is staggering.”

Where growth seems to be taking off is in the area of so- called big data, where specialists mine and make sense of the constantly-expanding information available via the Internet for companies from Google to Wal-Mart Stores Inc. (WMT), Mandel said.

‘Deep Analytical’ Skills

By 2018, the U.S. will need as many as 490,000 workers with “deep analytical” skills and an additional 1.5 million data- savvy managers, whether retrained or hired, according to a report last year by McKinsey Global Institute, the research unit of consultants McKinsey & Co.

Supply might not be sufficient to fill all the positions, because “there is a great skills mismatch,” said James Manyika, director in San Francisco of the institute. Even so, big data will lead to “quite phenomenal” productivity gains as companies make more and better use of the information they have, he said.

An academic analysis last year of 179 publicly-traded companies found that those adopting data-driven decision making were about 5 percent more productive and profitable than their competitors. The study was carried out by Erik Brynjolfsson and Heekyung Hellen Kim of the Massachusetts Institute of Technology in Cambridge and Lorin M. Hitt of the University of Pennsylvania in Philadelphia.

Higher Productivity

The effects on productivity will be “as great or greater than what they were in the 1990s,” Brynjolfsson said. Labor- force productivity grew at an average annual rate of 2.1 percent during that decade, up from 1.5 percent in the 1980s.

Technology companies are taking notice and looking for ways to leverage their position through takeovers.

“This year’s technology-deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Charlotte, North Carolina-based Bank of America Corp.

Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion, data compiled by Bloomberg show. Announced mergers and acquisitions last year totaled almost $200 billion.

Dell Inc. (DELL), the third-largest maker of personal computers, last month introduced a new line of servers designed to help business customers beef up data centers for information storage and the delivery of software and computing via the Internet.

Data Explosion

Brynjolfsson likened the explosion of data -- and the means to store and evaluate it -- to the discovery of the microscope. The microscope allowed scientists to look at a whole new world, leading to numerous medical breakthroughs. Big data is doing the same for statisticians and information analysts.

The MIT Center for Digital Business has used Google search data “to accurately predict housing sales up to three months in the future for each of the 50 states in the U.S.,” Brynjolfsson wrote on the university’s website.

“Google searchers have even allowed researchers to accurately predict flu-season trends well before the Center for Disease Control issued its own reports,” he added.

While big data won’t be “the sponge” that absorbs all untrained or moderately trained workers without a job, Robert Litan, vice president for Research and Policy at the Ewing Marion Kauffman Foundation in Kansas City, said he’s “convinced” that eventually new industries will be born from it. And they will require workers.

To contact the reporter on this story: Rich Miller in Washington at

To contact the editor responsible for this story: Chris Wellisz at


S&P 500 Has Biggest Two-Day Decline Since January on Global Growth Concern

By Rita Nazareth - Mar 6, 2012 4:34 AM GMT+0700
Justin Lane/EPA/Landov
Traders at the New York Stock Exchange on March 2, 2012.

U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest two-day loss since January, as China cut its economic growth target and orders to American factories decreased for the first time in three months.

Commodity (S5MATR), technology and industrial shares dropped the most among 10 groups in the S&P 500. Alcoa (AA) Inc. and Caterpillar Inc. (CAT) fell at least 2.1 percent. Apple Inc. (AAPL) slumped 2.2 percent, snapping a seven-day advance. Bank of America Corp. (BAC) and Citigroup Inc. (C) dropped more than 1.2 percent. International Business Machines Corp. closed above $200 (IBM) on a split-adjusted basis for the first time, after rallying 9.1 percent in 2012.

March 5 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest two-day loss since January, as China cut its economic growth target and orders to American factories decreased for the first time in three months. (Source: Bloomberg)

March 5 (Bloomberg) -- Jared Levy, a senior equities strategist for Zacks Investment Research, talks about the U.S. stock market. He speaks with Adam Johnson and Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

March 5 (Bloomberg) -- Sandy Lincoln, chief market strategist with BMO Global Asset Management, and Neil Hennessy, chief executive officer of Hennessey Advisors Inc., talk about the outlook for U.S. stocks and their investment strategies. They speak with Adam Johnson, Trish Regan and Lisa Murphy on Bloomberg Television's "Street Smart." (Source: Bloomberg)

March 5 (Bloomberg) -- Gina Martin Adams, an equity strategist at Wells Fargo Securities LLC, talks about the outlook for the Standard & Poor's 500 Index. Adams, speaking with Betty Liu, Josh Lipton and Dominic Chu on Bloomberg Television's "In the Loop," also discusses investment strategy. (Source: Bloomberg)

The S&P 500 retreated 0.4 percent to 1,364.33 at 4 p.m. New York time, dropping 0.7 percent in two days. The Dow Jones Industrial Average decreased 14.76 points, or 0.1 percent, to 12,962.81. The Nasdaq Composite Index dropped 0.9 percent to 2,950.48. About 6.1 billion shares changed hands on U.S. exchanges, or 9 percent below the three-month average.

“It’s wise to take a little money off the table,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc. His firm oversees $631 billion. “Some of the easy gains have already been made. We’re back to focusing on the economic fundamentals. China saying that they are targeting 7.5 percent growth raises concern of a hard landing.”

Equities joined a global slump as China pared its growth target to 7.5 percent from an 8 percent goal in place since 2005. In the U.S., data on orders to factories signaled manufacturing is cooling. Bookings (TMNOCHNG) fell 1 percent in January after a revised 1.4 percent gain in December that was larger than previously estimated.

Economic Surprise

A drop in Citigroup’s Economic Surprise Index for the U.S. is one of several concerns for the market in the short-term, according to Tobias Levkovich, chief U.S. equity strategist at Citigroup. The index, which measures the extent to which economic reports beat or miss forecasts, fell to 45.10 (CESIUSD) on March 2 from 83.70 on Feb. 3. The S&P 500 (SPX) rose 8.5 percent this year amid better-than-estimated economic data.

“Too many data points are signaling near-term caution, and sticking to our disciplines always trumps emotions,” Levkovich wrote. Because the gauge is based on performance compared with estimates, “one does not have to predict any bad economic data in the months ahead to believe the surprise index will move lower from current extended levels,” which “may put some near- term downward pressure on stock prices.”

Companies most-tied to the economy slumped, sending the Morgan Stanley Cyclical Index down 1.3 percent. Alcoa, the biggest U.S. aluminum producer, lost 3.6 percent to $9.87. Caterpillar, the largest construction and mining-equipment maker, slid 2.1 percent to $110.09.

Banks Slump

The KBW Bank Index (BKX) declined 1.3 percent. Bank of America slumped 2 percent to $7.97. Citigroup lost 1.2 percent to $33.68 after naming board member Michael O’Neill to be chairman to succeed Richard Parsons, who is stepping down after overseeing the company’s recovery from near-collapse in 2008.

Apple sank 2.2 percent to $533.16, sending its market capitalization below $500 billion. The stock rallied 6.3 percent in seven days as investors anticipated a sales boost from the company’s latest iPad tablet computer, due on March 7.

Zynga Inc. (ZNGA) tumbled 4.9 percent to $13.97. The biggest developer of games for social-networking sites was cut to neutral from overweight by JPMorgan Chase & Co., meaning the shares are expected to perform in line with the stocks the analyst covers over the next six-to-twelve months.

MetroPCS Communications Inc. (PCS) decreased 5.7 percent to $9.96, while Leap Wireless International Inc. (LEAP) retreated 7.5 percent to $9.76. Sanford C. Bernstein & Co. cut its recommendation for the shares.

CF Industries

CF Industries Holdings Inc. (CF) fell 5.5 percent to $177.98 after being cut to “neutral” from “buy” at Citigroup Inc. and removed from the firm’s “Top Picks Live” list.

IBM, the world’s biggest computer-services provider, rose for a third day. The shares added 0.9 percent to $200.66.

American International Group Inc. (AIG) rallied 2 percent to $30.39. The insurer that received a bailout after the collapse of Lehman Brothers Holdings Inc. is selling $6 billion of AIA Group Ltd. shares to help pay back the U.S. government.

Big Lots Inc. (BIG) climbed 3.4 percent to $44.15. The discount retailer was raised to “buy” from “neutral” at Northcoast Research. The 12-month share-price estimate is $53.

Corporate profits that doubled since 2009 have left the S&P 500 cheaper than at all 34 peaks since 1989, even as options traders push the cost of protecting against losses to the highest in four years.

Four-Year High

The S&P 500 rose 102 percent since March 2009 to an almost four-year high last week. Valuations are lower than at every 52- week peak since 1989. Traders have pushed the price of contracts that pay should the S&P 500 drop 20 percent to the most since 2007 compared with ones betting on a rally of the same size.

Rising oil prices and concern European leaders have yet to contain the credit crisis are keeping investors from paying more for profits, which are projected to reach annual records through 2013. Bears say equities aren’t cheap because the profit estimates are too optimistic. Bulls say shrinking price-earnings ratios provide a margin of safety should gains in the U.S. economy fail to match forecasts.

“Stocks have just gotten too cheap,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $160 billion. “We were worrying about a Chinese hard landing that didn’t happen. We worried about a U.S. double dip and that didn’t happen. We worried about Europe disintegrating, that didn’t happen. The worst risks have passed.”

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at


Venizelos: Greek Debt Swap Best, Only Offer

By Maria Petrakis and Marcus Bensasson - Mar 6, 2012 12:31 AM GMT+0700
Wu Wei/Xinhua News Agency/eyevine/Redux
Greek Finance Minister Evangelos Venizelos, left, with President of Eurogroup and Prime Minister of Luxembourg Jean-Claude Juncker in Brussels on March 1, 2012.

Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said.

“This is the best offer,” Venizelos said in a Bloomberg Television interview with Nicole Itano in Athens today. “This is the best offer because this is the only one, the only existing offer.”

Evangelos Venizelos, Greece's finance minister. Photographer: Kostas Tsironis/Bloomberg

President of the International Monetary Fund (IMF) Christine Lagarde, right, with Greek Finance Minister Evangelos Venizelos on Feb. 9, 2012 before a Eurogroup Council meeting at EU headquarters in Brussels. Photographer: John Thys/AFP/Getty Images

Evangelos Venizelos, Greece's finance minister, right, at a news conference with Andreas Loverdos, Greece's health minister, in Athens, on Jan. 31, 2012. Photographer: Kostas Tsironis/Bloomberg

European leaders are facing the first test of their attempt to turn the page on the two-year debt crisis as Greece’s private creditors decide whether to sign off on the biggest sovereign- debt restructuring in history. The success of the 106 billion- euro swap, confirmed on the eve of last week’s European summit, depends on how many investors agree to the writedown by the March 8 deadline.

“This is the critical week,” Venizelos said.

Twelve banks and investors represented on the steering committee of the Institute of International Finance, the body that negotiated the swap with the government, said today that they planned to take up the offer. They include companies with the largest holdings of Greek government bonds such as National Bank of Greece SA (ETE), BNP Paribas (BNP), Commerzbank AG (CBK) and Deutsche Bank AG, an e-mailed statement from the Washington-based IIF said.

Only one steering-committee member, Landesbank Baden- Wuerttemberg, has still to back the offer, said the IIF, which represents more than 450 financial-services companies globally. Germany’s DSW investor protection group meanwhile advised private-sector bondholders to reject the offer.

Participation Rate

The Greek government has set a 75 percent participation rate as a threshold for proceeding with the transaction, in which investors will forgive 53.5 percent of their principal and exchange their remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility. Euro- area finance ministers last week authorized the EFSF to issue bonds for the swap.

Erik Nielsen, chief global economist at UniCredit SpA in London, said enough creditors will probably participate in the writedown to avoid triggering so-called collective action clauses, which could be used by Greece to compel investors to participate and roil markets by triggering credit-default swap insurance contracts. Euro-area finance ministers will hold a teleconference on March 9 to review the deal’s outcome.

‘Ready to Implement’

“If we can avoid the triggering of CDSs this is the best solution,” said Venizelos. “With a near universal participation it’s not necessary to activate CACs. But this clause exists in our legal order and we are ready to implement the legislation if necessary.”

European Union leaders last week said their focus will shift from budget-cutting to growth measures after completing the details of the second Greek bailout. Whether that 130 billion-euro rescue package can proceed will depend on the outcome of this week’s swap. The writedown will help Greece focus on restoring growth to an economy now in its fifth year of recession, the longest stretch in peacetime, Venizelos said.

“Greece is now, after the approval of the new program and after the implementation and completion of the PSI, ready to come back to growth,” he said. “It is absolutely necessary.”

‘Achievable Target’

The plan for Greece seeks to reduce debt to 120.5 percent of gross domestic product by 2020. With the swap, that is “an achievable target,” Venizelos said.

Approval of the swap and Greece’s second rescue by other euro-area countries shows that they don’t want to push Greece out of the currency zone, Venizelos said.

“I accept that this phenomenon of the so-called Greek fatigue is a parameter,” Venizelos said. In the end, though, Greece’s partners see the country as “an integral part” of the European community, he said. “Without Greece, it is not possible to preserve the integrity of the European phenomenon.”

Venizelos on Feb. 15 accused some of his euro-area finance minister counterparts of “playing with fire” in trying to push Greece out of the euro area. Those comments were made before approval of the package, which is “the critical point,” Venizelos said today.

Responding to a question about comments made by Luxembourg Prime Minister Jean-Claude Juncker on March 1, when he said the bloc has a backup “Plan B” for Greece, Venizelos said there is no alternative course of action if the debt swap fails.

No ‘Plan B’

“We only have a Plan A,” Venizelos said. “The acceptance and full implementation of the existing plan, the so-called Plan A, is the best solution for Greece, for the euro zone and also for creditors and holders.”

Venizelos, who is touted as a possible next leader of the socialist Pasok party, declined to comment on whether he will stand at party elections due on March 18 to replace George Papandreou, the former prime minister and outgoing leader.

Any new government arising from the next parliamentary elections, probably to be held around April 29 or May 6, will respect the commitments given to the EU and International Monetary Fund in return for funds, he said. Opinion polls suggest neither Pasok nor New Democracy, the second-biggest parliamentary presence, will be able to govern alone.

“The appointment of a strong and stable government is something absolutely sure,” Venizelos said. “We are ready to take our responsibilities and fulfill our commitments and our obligations before our partners.”

To contact the reporters on this story: Maria Petrakis at; Marcus Bensasson in Athens at

To contact the editors responsible for this story: Stephen Foxwell at; James Hertling at