S&P 500 Stocks With Biggest Gap Between Market Price, Estimate

By Wendy Soong - Dec 2, 2011 11:28 PM GMT+0700

The following table shows the companies in the Standard & Poor’s 500 Index (SPX) with the biggest gaps between their stock price and analysts’ average price estimates as of Dec. 2.

The average estimate (IBM) is based on data compiled by Bloomberg and reflects forecasts for the next 12 months, a period that varies among brokerage firms. Only companies that have at least four analyst target prices are included.

Positive Gap Percentage
                                   # of     Last   Average    1 Year
Tkr   Company Name          Gap%   Analyst  Price    Target   %Return
=====================================================================
MWW   MONSTER WORLDWI       76.8     10      7.30     12.91    -68.61
WFR   MEMC ELEC MATER       73.4     18      4.29      7.43    -64.99
BAC   BANK OF AMERICA       67.1     24      5.76      9.63    -50.79
MU    MICRON TECH           61.3     20      5.71      9.21    -20.30
BTU   PEABODY ENERGY        53.8     23     38.93     59.87    -36.68
ANR   ALPHA NATURAL R       53.3     22     24.59     37.69    -52.67
F     FORD MOTOR CO         52.3     11     11.00     16.75    -35.66
GNW   GENWORTH FINANC       51.6      5      6.65     10.08    -45.59
CLF   CLIFFS NATURAL        51.2     12     69.83    105.62     -0.89
QEP   QEP RESOURCES I       51.2     13     32.08     48.50    -12.02
C     CITIGROUP INC         50.6     20     28.46     42.86    -37.18
HAL   HALLIBURTON CO        48.0     28     37.09     54.90     -6.33
SLM   SLM CORP              47.7      5     12.86     19.00      8.34
CNX   CONSOL ENERGY         47.5     25     41.37     61.00     -5.46
MS    MORGAN STANLEY        47.0     23     15.60     22.94    -41.28
PCS   METROPCS COMMUN       46.8     21      8.32     12.21    -33.06
LUV   SOUTHWEST AIR         46.7     12      8.33     12.21    -37.82
HIG   HARTFORD FINL S       45.3     11     18.11     26.31    -21.74
DNR   DENBURY RESOURC       45.2     15     16.78     24.36    -11.36
CVC   CABLEVISION SY-       44.8     18     15.18     21.98    -31.91
OI    OWENS-ILLINOIS        44.5      7     19.87     28.71    -29.87
MET   METLIFE INC           44.4     13     31.93     46.10    -19.06
RRD   RR DONNELLEY &        44.0      4     14.93     21.50     -4.70
CHK   CHESAPEAKE ENER       43.1     27     25.96     37.16     19.52
JPM   JPMORGAN CHASE        41.3     26     32.75     46.29    -18.48
BHI   BAKER HUGHES IN       41.3     24     55.22     78.00      3.61
CPWR  COMPUWARE CORP        41.0      6      8.51     12.00    -22.20
MPC   MARATHON PETROL       40.2     12     34.24     48.00        na
HES   HESS CORP             39.7     13     60.09     83.93    -18.21
NBR   NABORS INDS LTD       39.2     22     17.97     25.02    -22.50
MOS   MOSAIC CO/THE         38.9     16     52.17     72.47    -22.73
DVN   DEVON ENERGY CO       38.4     24     66.10     91.46     -8.80
CF    CF INDUSTRIES H       38.1     12    141.62    195.64     19.24
VLO   VALERO ENERGY         37.6     12     22.79     31.36     11.05
DV    DEVRY INC             37.1     13     35.44     48.58    -18.41
APA   APACHE CORP           36.7     20     98.51    134.65    -11.02
SYMC  SYMANTEC CORP         36.5     20     16.22     22.14     -5.25
GS    GOLDMAN SACHS G       36.2     20    100.65    137.05    -39.71
BK    BANK NY MELLON        35.9     20     19.43     26.40    -28.93
HRS   HARRIS CORP           34.8     11     36.20     48.80    -18.95
PRU   PRUDENTL FINL         34.7     12     50.90     68.57     -0.96
JDSU  JDS UNIPHASE          34.4      9     11.20     15.06    -10.88
TMO   THERMO FISHER         34.3     12     47.30     63.54     -8.75
LNC   LINCOLN NATL CR       34.1     13     20.56     27.57    -16.90
BRCM  BROADCOM CORP-A       33.9     32     30.61     40.99    -32.74
NYX   NYSE EURONEXT         33.8     14     27.89     37.32      3.31
WYNN  WYNN RESORTS LT       33.6     21    119.08    159.04     19.80
AES   AES CORP              32.2      4     11.91     15.75     10.90
AMP   AMERIPRISE FINA       31.9     10     46.45     61.27    -12.74
FLR   FLUOR CORP            31.5     18     54.90     72.18     -8.22
GCI   GANNETT CO            31.5      6     11.60     15.25    -15.98
Negative Gap Percentage
                                  # of     Last   Average    1 Year
Tkr   Company Name          Gap%   Analyst  Price    Target   %Return
=====================================================================
MAS   MASCO CORP           -17.0      5      9.41      7.81    -17.07
AN    AUTONATION INC       -13.8      5     36.73     31.67     35.86
FAST  FASTENAL CO           -6.6      5     41.93     39.17     55.05
ED    CONS EDISON INC       -6.4      9     58.92     55.15     27.61
MOLX  MOLEX INC             -6.1      9     24.93     23.40     17.80
FTI   FMC TECHNOLOGIE       -6.0     19     53.53     50.33     20.96
PSA   PUBLIC STORAGE        -5.4     13    130.64    123.64     36.09
AEE   AMEREN CORP           -5.2      4     32.98     31.25     21.84
PGN   PROGRESS ENERGY       -4.1     11     53.66     51.46     29.02
COST  COSTCO WHOLESAL       -3.8     19     87.42     84.10     28.98
TROW  T ROWE PRICE GR       -3.7     16     58.16     56.00     -2.85
ISRG  INTUITIVE SURGI       -3.5      9    443.01    427.44     63.57
CINF  CINCINNATI FIN        -3.3      4     28.97     28.00     -0.70
JCP   J.C. PENNEY CO        -3.3     12     32.92     31.85     -2.00
OKE   ONEOK INC             -2.4      5     83.65     81.67     66.81
FDO   FAMILY DOLLAR S       -2.3     17     59.22     57.83     19.00
DUK   DUKE ENERGY COR       -2.3     12     20.66     20.18     22.76
BEAM  BEAM INC              -2.0      7     52.23     51.17     13.23
POM   PEPCO HOLDINGS        -2.0      4     19.73     19.33     13.01
LLY   ELI LILLY & CO        -1.9      8     37.57     36.85     15.92
BMY   BRISTOL-MYER SQ       -1.7     13     33.11     32.53     34.86
LXK   LEXMARK INTL-A        -1.7      8     33.56     33.00     -9.06
RAI   REYNOLDS AMERIC       -1.6      4     41.39     40.71     38.71
ROST  ROSS STORES INC       -1.3     16     92.49     91.28     42.64
GPC   GENUINE PARTS C       -1.2      4     59.95     59.25     25.90
BF/B  BROWN-FORMAN -B       -1.1      6     78.02     77.20     23.07
SO    SOUTHERN CO           -1.0     14     43.95     43.50     20.77 

To contact the reporter on this story: Wendy Soong in New York at csoong@bloomberg.net

To contact the editor responsible for this story: Alex Tanzi at at atanzi@bloomberg.net

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GOP Split Slows Drive for Payroll Tax Cut

By Steven Sloan and Richard Rubin - Dec 3, 2011 2:23 AM GMT+0700

A bloc of Republicans is complicating U.S. House Speaker John Boehner’s attempts to extend a payroll tax cut, saying the party is divided over whether the break should continue into 2012.

The Ohio Republican today presented his caucus with a plan that would extend the payroll tax cut for employees into 2012 and offset the forgone revenue. The proposal hasn’t been released publicly.

Boehner is facing a political dilemma of tending to his party’s concerns while trying to rebuff Democratic criticism that Republicans are willing to allow taxes for the middle class to rise. Representative Jeff Flake, an Arizona Republican, said many Republican lawmakers during today’s caucus meeting cautioned Boehner against pushing a proposal to the House floor.

“Most of the people standing up were troubled with moving ahead on this,” Flake told reporters.

Unless Congress acts, the tax cut -- which lowered the employee portion of the Social Security payroll tax from 6.2 percent to 4.2 percent for 2011 -- will expire Dec. 31. The 2011 break resulted in $111.7 billion in forgone revenue over 10 years, according to the congressional Joint Committee on Taxation.

The government transfered money from its general fund to cover the reduced funding for Social Security resulting from the payroll tax cut.

House Republicans

The House hasn’t scheduled a vote on an extension. If a significant number of Republicans don’t back it, Boehner will need the support of at least some Democrats for passage.

The debate marks an unexpected reversal for congressional Democrats, who remain bitter over the deal President Barack Obama worked out last year with Republicans to extend the Bush- era tax cuts through 2012. Boehner and other Republican leaders warned that allowing tax cuts for income, capital gains and dividends to expire would harm the economy and small business owners. That’s the argument Democrats are using now to pressure Republicans to extend the payroll tax cut.

Representative Nancy Pelosi, the House Democratic leader, said lawmakers should “stop toying with the American people and their economic security.”

She told reporters today that Republicans are “feeling the heat” from Democrats over tax policy.

The ‘High Ground’

Representative Steve Israel of New York, who leads the Democratic Congressional Campaign Committee, said Democrats have the “high policy ground” on taxes as a result of the payroll debate.

“We’ve got them trying to defend the indefensible,” he said.

President Barack Obama told reporters this morning that a failure to extend the payroll tax cut “would be a significant blow to our economy.”

“I expect that it’s going to get done before Congress leaves,” Obama said. “Otherwise, Congress may not leave at all and we can all spend Christmas here together.”

At a morning press conference, Boehner said he wasn’t worried about Republicans losing control of their message on tax issues.

“The fact is that Republicans are doing everything we can to allow American families and small businesses to keep more of what they earn,” he said. “The other side can go out, come out with all the rhetoric they want to come up with but the facts are facts.”

Senate Shuns Surtax

The U.S. Senate yesterday rejected a Democratic proposal that would have imposed a 3.25 percent surtax on annual income exceeding $1 million to pay for extending the payroll tax cut and expanding it to employers.

The Senate also rejected a separate measure that would have extended the payroll tax cut for employees for one year and offset the cost by reducing the federal workforce by 10 percent, freezing federal pay through 2015 and requiring high earners to pay more for Medicare premiums.

The Republican offset proposal was notable because it was rejected by 26 members of the party. Some Republicans, such as Senator Orrin Hatch, have said they are troubled by the tax cut and that it hasn’t provided economic growth as promised. Representative Tim Walberg, a Michigan Republican, said the tax cut is a short-term patch that saves lawmakers from tackling the more fundamental fiscal problems the U.S. is facing.

‘Flat Broke’

“Extending and taking away the pain and taking away the reality that we are flat broke and printing our money right now has really hurt this country,” he said. “We understand that we have a problem that we just can’t kick down the road.”

Like the Republican plan that was blocked in the Senate yesterday, the proposal being developed in the House includes a freeze on federal pay, according to Representative Peter King, a New York Republican.

Representative Steve LaTourette, an Ohio Republican, said the House measure would change the structure for unemployment insurance and would avoid cuts to physician reimbursements by Medicare for two years. It would include language addressing the Keystone pipeline and an Environmental Protection Agency proposal to limit emissions for industrial boilers, LaTourette said. These provisions could attract more Republican support.

“There’s obviously some angst among some members of our conference,” LaTourette said. “It’s the speaker’s job to work that out.”

Pelosi said lawmakers should use the money that would have funded the wars in Iraq and Afghanistan to cover the extension’s cost.

“It’s the perfect place to go,” she said.

House Budget Committee Chairman Paul Ryan, a Wisconsin Republican who said in June that the payroll tax cut is a “sugar high,” said today that he believes a deal will be worked out to extend the break.

“We’ll figure it out,” he said. “It’s all good.”

To contact the reporters on this story: Steven Sloan in Washington at ssloan7@bloomberg.net; Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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U.S. Stocks End Little Changed to Cap Best Week Since March 2009

By Inyoung Hwang - Dec 3, 2011 5:00 AM GMT+0700

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Dec. 2 (Bloomberg) -- Bill Gross, co-chief investment officer at Pacific Investment Management Co., discusses the U.S. November jobs report and the outlook for Federal Reserve policy. The jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed. Payrolls climbed 120,000. Gross speaks with Tom Keene and Ken Prewitt on Bloomberg Radio's "Surveillance." (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks were little changed, after wiping out an early rally, as a drop in the jobless rate to a two-year low wasn’t enough to extend the biggest weekly advance since March 2009 for the Standard & Poor’s 500 Index. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)

U.S. stocks (SPX) were little changed, after wiping out an early rally, as a drop in the jobless rate to a two-year low wasn’t enough to extend the biggest weekly advance since March 2009 for the Standard & Poor’s 500 Index.

Equities headed lower as the largest U.S. companies including Caterpillar Inc. (CAT) reversed their gains. Tenet Healthcare Corp. (THC) and Boston Scientific Corp. (BSX) lost at least 6.8 percent, leading declines in health-care companies. JPMorgan Chase & Co. and Morgan Stanley (MS) climbed at least 6.1 percent, as financial companies (SPXL1) had the biggest rise among S&P 500 groups.

The S&P 500 dropped less than 0.1 percent to 1,244.28 as of 4 p.m. New York time, after rising as much as 1.3 percent. The index rallied 7.4 this week. The Dow Jones Industrial Average lost 0.61 points, or less than 0.1 percent, to 12,019.42. The Russell 2000 Index, a measure of the smallest U.S. companies, jumped 0.6 percent to 735.02.

“It’s another incremental step in the right direction for the labor market, but we’re still not out of the rut we’ve been in,” John Canally, who helps oversee about $340 billion as an economist and investment strategist at LPL Financial Corp. in Boston, said in a telephone interview. “More than anything this is still about Europe.”

The benchmark index for American equities has trimmed its decline for 2011 to 1.1 percent after rebounding 13 percent from its low for the year on Oct. 3. Improving U.S. economic data has helped alleviate concern that the world’s largest economy will relapse into a recession as Europe’s debt crisis threatens to derail the recovery.

Economic Surprise

The Citigroup Economic Surprise Index for the U.S. has risen to the highest level since March 9. The gauge, which measures the rate at which data is beating or missing economist forecasts, reached 85.7 today and has rebounded from a more-than two-year low of minus 117.2 in June.

Today’s jobs data showed that payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000. The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed.

“The market anticipated stronger-than-expected data and it was already discounted,” said Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. “What typically happens with these macro surprises is they get to a point where expectations have moved up and you’re no longer surprising the market.”

More Resources

The International Monetary Fund said today it will need more resources to fight Europe’s debt crisis if market conditions worsen. The S&P 500 has rallied this week as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut the proportion that banks need to hold as reserve capital.

Equity futures rose earlier following a report that as much as 200 billion euros ($270 billion) of national central bank loans may be channeled through the IMF. Germany and France are pushing for closer economic ties among euro-area nations and tougher enforcement of budget rules to counter the region’s debt crisis.

Financial stocks posted the largest gains out of 10 groups in the S&P 500, climbing 1.4 percent. JPMorgan (JPM) surged 6.1 percent, the biggest rise in the Dow, to $32.33, while Morgan Stanley rallied 7 percent to $15.52. Citigroup Inc. (C) jumped 4.4 percent to $28.17 and Goldman Sachs Group Inc. (GS) added 3 percent to $97.25.

Reversing Gains

Caterpillar, the world’s largest construction and mining- equipment maker, slid 0.6 percent to $96.29, after rallying as much as 1.2 percent. Chevron Corp. (CVX) slumped 0.1 percent to $101.69, after rising as much as 1.3 percent.

Western Digital jumped 7.5 percent, the most in the S&P 500, to $31.44. The disk-drive maker raised its quarterly revenue forecast (WDC) after sales rebounded from a flood in Thailand that devastated factories and constrained supplies.

Hospital and medical device stocks tumbled after a report that insurers who handle Medicare payments in 11 states will perform audits on hospital stays related to heart and orthopedic procedures. Hospitals will have to wait 30 to 60 days while hospital records are reviewed to determine whether procedures performed during the stay were medically necessary, the Wells Fargo Securities note said today.

Health-care companies posted the biggest losses as a group today, falling 1.3 percent. Tenet Healthcare plunged 11 percent to $4.18. Boston Scientific erased 6.8 percent to $5.50.

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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MF Customer: $50M Commodity Account Gone

By Linda Sandler and Thom Weidlich - Dec 3, 2011 4:40 AM GMT+0700

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Dec. 2 (Bloomberg) -- U.S. Representative Michael Conaway, a Texas Republican, talks about the House Agriculture Committee's vote to subpoena Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., for a Dec. 8 hearing on the collapse of the New York-based brokerage. Conaway talks with Peter Cook on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Highridge Futures Fund LP, a customer of the MF Global Inc. brokerage, said its $50 million account with the defunct company is “missing.”

James Giddens, the trustee liquidating the brokerage, has “failed and refused” to provide any information about the whereabouts of the account, Highridge said in a filing today in U.S. Bankruptcy Court in Manhattan. Highridge asked the judge handling the case to order Giddens to locate and transfer the account, containing mostly cash and also unsettled commodity positions.

Highridge described itself in the filing as a registered commodity pool incorporated in Delaware, with a general partner that is an Illinois company.

Giddens has transferred about 38,000 commodity accounts to other firms, and said he plans to sell 330 securities accounts. Three transfers of collateral made and pending will give commodity customers about $4 billion of their assets, according to court filings.

“Highridge’s account was not among the accounts transferred,” the fund said. “This account is nowhere to be found.”

Kent Jarrell, a Giddens spokesman, said, “The trustee’s office has been in contact with Highridge and will continue to try to resolve the issue without the need for a judicial decision.”

Transfer Lists

Highridge said its account showed up twice on lists of accounts to be transferred to other future firms, first to Vision Financial Markets LLC, then to R.J. O’Brien.

CME Clearing, part of CME Group Inc., told Highridge on Nov. 29 that there was no information on the account because its unsettled positions were on the London Metal Exchange, which also had no information to give at the time.

“Twice Highridge was told the account was being transferred and twice the account was not transferred,” it said.

Separately, Queen’s Quay Avante Ltd., which opened a Canadian dollar account of $7 million at MF Global on Sept. 21, said it hadn’t received any money from the all-cash account, possibly because of the Canadian currency, or a failed wire transfer from Harris Trust & Savings Bank in Chicago, which was maintaining the account, to “a different bank.”

Account Shortfall

The shortfall in the MF Global brokerage’s U.S. segregated customer accounts may exceed $1.2 billion, more than double what was previously expected, Giddens has said. That would mean customer accounts are missing about 22 percent of their total of $5.4 billion.

The parent company’s Oct. 31 bankruptcy filing, the eighth- largest in U.S. history, listed assets of $41 billion. The firm said it has about $26 million in cash. Jon Corzine, the former co-chief executive officer of Goldman Sachs Group Inc. (GS), quit as MF Global’s CEO on Nov. 4.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Thom Weidlich in New York at tweidlich@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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Payrolls May Be Shorting U.S. Job Gains

By Carlos Torres - Dec 3, 2011 2:06 AM GMT+0700

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Dec. 2 (Bloomberg) -- Al Hunt, executive editor at Bloomberg News, talks about the U.S. November jobs report, the debate over the extending the payroll tax cut, and Newt Gingrich expressing confidence he will be the 2012 Republican presidential nominee. Hunt, speaking on Bloomberg Television's "InBusiness With Margaret Brennan," also previews his interview with U.S. Representative Fred Upton, a Michigan Republican, on Bloomberg Television's "Political Capital With Al Hunt," which airs this weekend. (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Mark Zandi, chief economist at Moody's Analytics Inc., discusses the U.S. November jobs report. Job gains in the U.S. picked up last month and the unemployment rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force. Zandi speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

American households may be signaling the job market is stronger than the payroll numbers indicate.

Employers said they took on 120,000 workers in November, bringing job gains over the past four months to 534,000, Labor Department data showed today in Washington. A separate survey of households showed 278,000 more people were employed last month, pushing the increase during the same period to 1.28 million.

At turning points in the economy, the latter may prove more accurate because it’s more likely to pick up hiring at small companies and new firms that may be under the government’s radar. In another sign of recovery, the payroll figures the last three reports have been revised up by a combined 91,000 on average for the prior two months.

“Maybe we are doing a little better than the payroll survey suggests,” Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said in a research note. “The payroll survey keeps getting revised up and up and up,” he said, and “the household survey is more likely to catch start-ups.”

The employment increase in the household survey helped propel a decrease in the jobless rate to 8.6 percent, the lowest since March 2009, from 9 percent in October, today’s report showed. The median forecast of economists surveyed by Bloomberg News projected no change.

A shrinking workforce also contributed to the decline in joblessness, taking some of the shine off the unexpected drop.

Unemployment Drops

“When the unemployment rate declines, we want to see both employment and participation increase as discouraged workers return to the labor force,” Neil Dutta, an economist at Bank of America Corp. in New York, said in a note to clients. “Today, we got the former, but not the latter, making the 0.4 percentage point drop look a bit suspect. We would not be surprised to see the unemployment rate give back some of its decline in coming months.”

Small companies may be behind the recent increase in household jobs. The net share of owners planning to hire over the next three months rose 4 points to a net 7 percent, the highest reading since September 2008, a report today from the National Federation of Independent Business showed today. Small- business owners increased employment in November for the first time in five months.

“The employment indicators delivered a significant positive signal, still at weak levels but a meaningful movement forward,” William Dunkelberg, chief economist for the NFIB, said in a statement. “A bit more job creation should emerge.”

More Volatile

To be sure, the household survey is a more volatile series than the payroll survey because the sample is smaller. It covers about 60,000 families, compared with the poll of employers that covers 140,000 businesses representing about 440,000 worksites.

“We can’t get too excited, because if you look at the past 12 months they are showing the same picture,” said Gault. “The household survey was doing worse earlier on and is now catching up.” Nonetheless, if this divergence continues, “that would be stronger evidence that the payroll number is underestimating.”

At the same time, consecutive gains over the past four months in the household survey cannot be easily dismissed.

“While this survey is far more volatile than the establishment survey, four months could be considered a trend, meaning the labor market might be stronger than the payrolls tally suggests,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, wrote in a note to clients.

2.5 Million

The household survey does include groups not captured by the payroll figures, like people working for themselves and agricultural workers. After adjusting to make the data adhere with what is captured in payrolls, the household figures showed a 498,000 jump in hiring in November. Since November 2010, adjusted household employment has climbed by 2.5 million compared with a 1.6 million payroll increase.

An increase in hiring of temporary workers, which may foreshadow gains in permanent staff as companies wait to make sure improvement in sales is sustained, is also a positive signal. Payrolls at temporary-help agencies climbed by 22,300 in November and are up by 98,900 in the past five months, today’s report from the Labor Department showed.

“Over time, household employment and payroll employment have trended together, but in recent years the household measure has tended to lead, suggesting bigger payroll gains are coming very soon,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said in a note to clients. “There are clear signs in the household employment and temp numbers to suggest better times are ahead.”

To contact the reporter on this story: Carlos Torres in Washington at cschlisserma@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Payroll Gains Speed Up as U.S. Jobless Rate Drops

By Shobhana Chandra - Dec 3, 2011 4:11 AM GMT+0700

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Dec. 2 (Bloomberg) -- U.S. President Barack Obama, Bill Gross, co-chief investment officer at Pacific Investment Management Co., and Dean Maki, chief economist at Barclays Capital, offer their views on today's jobs data and the outlook for the U.S. labor market and Federal Reserve monetary policy. This report also contains comments from Mark Zandi chief economist at Moody's Analytics Inc.; Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC; Maury Harris, chief economist at UBS Securities LLC, and Scott Brown, chief economist at Raymond James & Associates Inc. (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Alan Blinder, an economics professor at Princeton University and former Federal Reserve vice chairman, talks about today's report showing job gains in the U.S. picked up last month and the outlook for the labor market. Blinder also discusses Europe's sovereign debt crisis. He speaks with Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Mark Zandi, chief economist at Moody's Analytics Inc., discusses the U.S. November jobs report. Job gains in the U.S. picked up last month and the unemployment rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force. Zandi speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, discusses the U.S. November jobs report and the outlook for the bond market. Payroll gains in the U.S. picked up last month and the jobless rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force. LeBas speaks on Bloomberg Television’s “InBusiness With Margaret Brennan.” (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Bill Gross, co-chief investment officer at Pacific Investment Management Co., discusses the U.S. November jobs report and the outlook for Federal Reserve policy. The jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed. Payrolls climbed 120,000. Gross speaks with Tom Keene and Ken Prewitt on Bloomberg Radio's "Surveillance." (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- Scott Brown, chief economist at Raymond James & Associates Inc., talks about the November U.S. jobs report and the outlook for the U.S. economy. The jobless rate unexpectedly declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed today in Washington. Brown speaks with Betty Liu on Bloomberg Television's "In the Loop." Stephen Roach, non-executive chairman of Morgan Stanley Asia, also speaks. (Source: Bloomberg)

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Dec. 2 (Bloomberg) -- U.S. Secretary of Labor Hilda Solis discusses the November employment report and President Barack Obama's proposed payroll tax-cut extension. Solis speaks with Betty Liu and Peter Cook on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Job gains in the U.S. picked up last month and the unemployment rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force.

Payrolls climbed 120,000, after a revised 100,000 increase in October, with more than half the hiring coming from retailers and temporary help agencies, Labor Department figures showed today in Washington. The median estimate in a Bloomberg News survey called for a 125,000 gain. The jobless rate declined to 8.6 percent from 9 percent. Revisions to prior reports added a total of 72,000 jobs to payrolls in September and October.

“It’s good news, not great news,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, whose forecast matched the survey median. “The labor market is gradually healing.”

The Obama administration used the data to push for an extension of a payroll-tax cut it says is needed to maintain the expansion and reduce the jobless rate further. At the same time, the report damped speculation that Federal Reserve policy makers meeting on Dec. 13 will embark on another round of large-scale asset purchases.

The Standard & Poor’s 500 Index (SPX) was little changed at 1,244.27 at 4 p.m. New York time, erasing an earlier gain of as much as 1.3 percent. The yield on the benchmark 10-year Treasury note fell to 2.03 percent from 2.09 percent late yesterday.

Europe Crisis

There are also signs Europe’s troubles may be starting to ease. A European proposal to channel central bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($270 billion) to fight the debt crisis, two people familiar with the negotiations said.

At a Nov. 29 meeting attended by European Central Bank President Mario Draghi, euro-area finance ministers gave the go- ahead for work on the plan, said the people, who declined to be named because the talks are at an early stage.

Europe’s debt crisis has been a source of uncertainty on the outlook for the U.S. economy, prompting companies such as DirecTV (DTV) to keep a tight rein on spending and employment.

“We’re tightening our belts in terms of spending,” Michael White, chief executive officer of the largest U.S. satellite-TV provider, said in an interview last week. “We’ll cut back on overhead, hiring and programming.”

Aircraft Maker

Among companies expanding payrolls is Boeing Co. (BA), the largest U.S. aircraft maker. The Chicago-based company is hiring about 100 machinists a week as it boosts production by about 60 percent over three years to whittle down a backlog that now stretches to nearly 4,000 aircraft.

The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in a radio interview on “Bloomberg Surveillance” with Tom Keene.

President Barack Obama said the drop in the jobless rate is a sign the recovery is getting stronger, and extending a cut in the payroll tax will provide more fuel for the economy.

Energy Efficiency

“We need to keep that growth going,” Obama said after he and former President Bill Clinton toured a building in Washington to promote a government and private industry initiative to upgrade the energy efficiency of public and commercial buildings that the administration says will help create construction jobs.

Employment at service-providers increased 126,000 in November, including a 50,000 gain in retail trade as companies began hiring for the holiday shopping season. The number of temporary workers increased 22,300.

Macy’s Inc. (M), the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.

Private hiring, which excludes government agencies, rose 140,000 after a revised gain of 117,000. Still, factory payroll growth slowed and construction employment dropped.

Government payrolls decreased by 20,000 in November, including a 16,000 decline on the state and local levels.

Limited Wage Gains

Even as payrolls grow, limited wage gains are restraining consumers’ ability to boost spending, which accounts for about 70 percent of the economy. Average hourly earnings fell 0.1 percent to $23.18, today’s report showed. The average work week for all workers held at 34.3 hours.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 15.6 percent from 16.2 percent.

The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, rose to 43 percent from 42.4 percent.

Fed Chairman Ben S. Bernanke and his colleagues last month cut economic growth forecasts for 2012 and said unemployment will average 8.5 percent to 8.7 percent in the final three months of next year, up from a prior range of 7.8 percent to 8.2 percent.

Differing Interpretations

Fed policy makers today offered differing interpretations of the decline in the unemployment rate.

“While the rate is certainly a very favorable rate, I would highlight that a lot of it is because people pulled out of the workforce,” Fed Bank of Boston President Eric Rosengren said in a speech. Rosengren said in a Nov. 16 speech that the central bank still has power to boost the economy through lower interest rates.

Charles Plosser, president of the Philadelphia Fed, said in a Bloomberg radio interview it’s a sign the “labor market is in fact healing.” Plosser has dissented twice this year against decisions to ease policy.

“Whether the swoon in the unemployment rate is legitimate or not, the doves on the Fed have just been sidelined from advocating QE3, at least for the next few months,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, referring to a third round of asset purchases.

Six central banks led by the Fed acted on Nov. 30 to make more funds available to lenders to preserve the global expansion. The move came after European leaders said they failed to boost the region’s bailout fund as much as planned, fueling concern about a possible breakup of the euro bloc.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Zynga Seeks $1B in Biggest Web IPO Since Google

By Douglas MacMillan, Brian Womack and Lee Spears - Dec 2, 2011 8:31 PM GMT+0700
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Zynga is selling about 14 percent of its common stock, a larger portion than some Web companies have sold this year in offerings. Photographer: Jeff Chiu/AP Photo

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Dec. 2 (Bloomberg) -- Alex Bangash , managing director of Rumson Consulting Group, talks about Zynga Inc.'s initial public offering. Zynga is seeking to raise as much as much as $1 billion and is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. Bangash speaks with Scarlet Fu on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

(Corrects to show what existing holders may sell if over- allotment option is exercised, starting in seventh paragraph.)

Zynga Inc. is seeking to raise as much as $1 billion in the biggest initial public offering by a U.S. Internet company since Google Inc. (GOOG)

The company is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. The high end of the range would value San Francisco-based Zynga, the biggest developer of games for Facebook Inc., at $7 billion.

Zynga had originally planned a larger IPO, scaling back after Internet companies including Groupon Inc. and Pandora Media Inc. sank following their debuts this year, a person familiar with the plans said yesterday. Zynga is selling about 14 percent of its common stock, a larger portion than some Web companies have sold this year in offerings.

“It’s a reflection of what we’ve seen in Groupon,” said David Dillon, a San Francisco-based portfolio manager at HighMark Capital Management, which oversees about $17 billion. “If you price yourself too high, you do yourself a disservice in the long term.”

The top end of Zynga’s price range would value the company at 6.8 times trailing 12-month sales, according to the filing. Game maker Electronic Arts Inc. (ERTS) had a market value of $7.73 billion at yesterday’s close, or about 2 times sales in the same period, Bloomberg data show.

Facebook IPO?

Facebook may raise about $10 billion in an IPO next year that would value the world’s largest social-networking site at more than $100 billion, a person with knowledge of the matter said Nov. 29. Google, operator of the world’s biggest search engine, raised $1.9 billion in its 2004 IPO, including an over- allotment option.

Zynga is selling all of the 100 million shares in the offering. If underwriters exercise an option to buy 15 million additional shares in the over-allotment, then venture backer Avalon Ventures would sell the largest portion at more than 2.5 million. Founder and Chief Executive Officer Mark Pincus, who isn’t selling any shares in the offering, will have about 37 percent voting control once the offering is complete.

If the over-allotment is exercised, Foundry Group and Institutional Venture Partners would each sell about 2.5 million shares, while Union Square Ventures would offer 2.2 million. Venture firm Kleiner Perkins Caufield & Byers, Zynga’s biggest shareholder after Pincus, isn’t selling shares in the IPO.

Google and buyout firm Silver Lake would trim their stakes by about 1.7 million shares each. Mail.ru Group Ltd. and Digital Sky Technologies, both managed by Russian billionaire Yuri Milner, would sell more than 1 million shares combined. Investment firm Tiger Global Management would offer about 554,000 shares.

Popular Games

Zynga aims to capitalize on the popularity of social networks and virtual goods. The company lets users play games for free and then makes money by selling items, such as a townhouse in “CityVille” or a shipyard in “Empires & Allies.”

Founded in 2007, Zynga has hired Morgan Stanley and Goldman Sachs Group Inc. (GS) to manage the IPO. Zynga’s shares will trade on the Nasdaq Stock Market under the symbol ZNGA.

About 6.7 million of Zynga users were paying customers in the first nine months of the year, up from 5.1 million in the year-earlier period, according to the filing. Revenue more than doubled to $828.9 million. The worldwide virtual-goods market will more than double to $22.5 billion in 2015 from $9.27 billion last year, according to Lazard Capital Markets.

In October, Zynga announced a new service, called Project Z, geared toward reducing its dependence on Facebook users. The company also introduced new games, including “Zynga Bingo” and “Hidden Chronicles.”

Diversifying

Ninety-three percent of Zynga’s third-quarter revenue was generated on Facebook, the world’s most popular social network. That number has ranged from 91 percent to 94 percent since the beginning of last year, according to Zynga filings.

Adding more mobile games is part of Zynga’s plan to diversify. The company said in November that the number of daily active users on mobile devices increased more than 10-fold from November 2010 to September 2011, reaching 9.9 million. By October, the number was 11.1 million.

Sunil Paul, a founding partner of venture capital firm Spring Ventures, recently joined Zynga’s board. Paul, who started software companies Brightmail Inc. and FreeLoader, was brought on because of “his extensive experience with Internet companies,” Zynga said on Nov. 17.

Groupon’s Offering

Groupon went public earlier this month, helping revive the IPO market after the European debt crisis and stock-market volatility hampered deals. The shares of the Chicago-based company, which leads the Internet-coupon industry, have dropped 5.3 percent through yesterday.

Angie’s List, a site that rates plumbers, contractors and other service providers, has seen its shares decline 3.5 percent since their debut on the Nasdaq on Nov. 17.

Yelp Inc., which features user reviews of restaurants and businesses, also is planning an IPO. The San Francisco-based company filed on Nov. 17 to raise as much as $100 million in a 2012 offering. The $100 million amount is typically used as a placeholder to calculate fees and may change.

To contact the reporters on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net

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Euro Central Banks May Provide $270B Through IMF to Fight Debt Crisis

By James G. Neuger - Dec 2, 2011 7:24 PM GMT+0700

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Dec. 2 (Bloomberg) -- Eric Upin, chief investment officer at Makena Capital Management LLC, talks about a European proposal to channel central bank loans through the International Monetary Fund to fight the debt crisis. Upin, speaking with Erik Schatzker and Sara Eisen Bloomberg Television's "InsideTrack," also discusses the outlook for global markets and investment strategy. (Source: Bloomberg)

A European proposal to channel central bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($270 billion) to fight the debt crisis, two people familiar with the negotiations said.

At a Nov. 29 meeting attended by European Central Bank President Mario Draghi, euro-area finance ministers gave the go- ahead for work on the plan, said the people, who declined to be named because the talks are at an early stage. The need for a new crisis-containment tool emerged as the effort to boost the 440 billion-euro rescue fund to 1 trillion euros fell short.

Under the proposal, national central banks would recycle funds through the IMF, potentially to underwrite precautionary lending programs for Italy or Spain, the two countries judged to be the most vulnerable now, the people said.

“We’re looking for a maximum reinforcement with the IMF and the central bank,” Belgian Finance Minister Didier Reynders told reporters Nov. 30.

For governments in rich countries such as Germany that are unwilling to lend more to high-debt states, the idea would unlock a fresh source of funds without violating European rules that bar central banks from offering direct budget financing, the people said.

The euro area’s 17 national central banks operate under the umbrella of the ECB. Draghi yesterday hinted at a stepped-up crisis-fighting role as long as governments take steps toward a ‘‘fiscal compact’’ that ensures healthy long-term public finances.

Merkel’s Strategy

German Chancellor Angela Merkel laid out elements of that strategy today, calling for European treaty amendments to create automatic, court-enforced sanctions on countries that overstep limits of 3 percent of gross domestic product on deficits and 60 percent of GDP on debt.

Bonds of Italy and Spain rose today amid optimism that European leaders will piece together a tighter fiscal framework at a Dec. 8-9 summit that would prompt a greater central bank commitment.

One option is the lending via the IMF, which specializes in aid programs. The sums being discussed by finance officials range from 100 billion to 200 billion euros, the people said. Bilateral loans through the Washington-based lender would also spare the euro-area central banks from conflicts of interest that could arise from enforcing conditions on countries where they also set interest rates, the people said.

‘‘If we could see the proposed combination of IMF and ECB action, obviously that would be very, very credible to the market,’’ Swedish Finance Minister Anders Borg said Nov. 30.

Such a program wouldn’t be a substitute for the increase in ECB bond purchasing that countries such as Spain have clamored for. The central bank has bought 203.5 billion euros of bonds of three countries receiving financial aid -- Greece, Ireland and Portugal -- plus Italy and Spain since May 2010.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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Big Lots, H&R Block, Lululemon, RIM, Western Refining: U.S. Equity Preview

By Kaitlyn Kiernan - Dec 2, 2011 8:44 PM GMT+0700

Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses and prices are as of 8:30 a.m. in New York.

Avago Technologies Ltd. (AVGO) erased 1.4 percent to $29.50. The maker of semiconductor components forecast first- quarter sales may fall as much as 14 percent from the fourth quarter. Analysts estimated revenue will slip 5 percent on average.

Big Lots Inc. (BIG) fell 5.6 percent to $37.50. The discount retailer reported third-quarter earnings excluding some items of 6 cents a share, missing the average analyst estimate by 29 percent, according to Bloomberg data.

Groupon Inc. (GRPN US): The largest Internet daily-deal site is being investigated by Britain’s competition regulator over concerns including unfair promotions and exaggerated savings.

H&R Block Inc. (HRB) slid 4.1 percent to $15.40. The biggest U.S. tax preparer reported a second-quarter loss excluding some items of 38 cents a share, missing the average analyst estimate by 9.2 percent, according to Bloomberg data.

Lululemon Athletica Inc. (LULU) rose 3.7 percent to $48.91. The Canadian yoga-wear retailer was raised to “overweight” from “equal weight” at Barclays Plc, which said the shares have declined to an attractive price.

PVH Corp. (PVH) gained 2.8 percent to $69.50. The clothing retailer that owns labels such as Calvin Klein and Tommy Hilfiger forecast 2012 earnings of at least $5.23 a share, up from a previous projection of no more than $5.12 and exceeding the average analyst estimate of $5.11.

Research In Motion Ltd. (RIM) fell 5 percent to $17.65. The BlackBerry maker reported revenue missed its forecast last quarter amid market-share losses to Apple Inc. (AAPL) , signaling its smartphones and tablets are continuing to lose ground.

Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) rose 1.5 percent to $69.53. The beauty-products retailer forecast fourth- quarter revenue between $552 million to $562 million. Analysts estimated sales of $558.7 million.

Western Digital Corp. (WDC) climbed 9.4 percent to $32.01. The U.S. maker of disk drives and networking products raised its quarterly revenue forecast to at least $1.8 billion from at most $1.25 billion after rebounding from a flood in Thailand that devastated factories and constrained supplies.

Western Refining Inc. (WNR) jumped 4.3 percent to $13.28. Credit Suisse raised the refineries operator to “outperform” from “neutral.” The 12-month target price is $20.50 a share.

Zumiez Inc. (ZUMZ) surged 11 percent to $26. The retailer forecast fourth-quarter earnings may be as much as 54 cents a share, compared with the average analyst estimate of 52 cents.

To contact the reporter on this story: Kaitlyn Kiernan in New York at kkiernan2@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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European Stocks Rise Before U.S. Jobs Data

By Julie Cruz - Dec 2, 2011 7:24 PM GMT+0700

European stocks climbed, with the Stoxx Europe 600 Index extending its largest weekly rally since November 2008, before a report that may show the U.S. economy added workers at a faster pace last month. U.S. index futures and Asian shares also gained.

Commerzbank AG (CBK) rose 5.5 percent after a report that the lender has a plan to shore up its capital without state aid. Home Retail Group Plc (HOME) surged following a report that private- equity firms CVC Capital Partners and Bridgepoint Capital Holdings may be considering a cash bid.

The Stoxx 600 (SXXP) rose 1.2 percent to 241.42 at 12:22 p.m. in London. Standard & Poor’s 500 Index futures expiring this month climbed 1.1 percent, while the MSCI Asia Pacific Index increased 0.4 percent.

The Stoxx 600 has rallied 9 percent this week, its biggest advance in three years, as the European Central Bank and five other central banks lowered the cost of dollar funding, China cut its reserve-requirement ratio for banks and U.S. consumer confidence unexpectedly rose in November.

“Overall, we have positive U.S. economic data,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn. “I don’t expect disappointing payrolls data. The market is still very nervous, but I am optimistic for the end of the year.”

The Labor Department report at 8:30 a.m. in Washington today may show payrolls climbed by 125,000 workers in November, following the 80,000 increase in October, according to the median forecast of 90 economists surveyed by Bloomberg News. The jobless rate held at 9 percent, economists said.

Budget Monitoring

German Chancellor Angela Merkel said that only fiscal union will tackle the euro area’s debt crisis at its roots, as she used a speech to lawmakers in Berlin today to outline her position before a European Union summit on Dec. 9. The euro area needs fiscal oversight that’s “binding” and punishes states that persistently breach debt and deficit rules, Merkel said.

French President Nicolas Sarkozy called for “more discipline” and automatic penalties for nations that break fiscal rules late yesterday. In his speech in Toulon, France, Sarkozy said the 17-nation euro area, bound by a currency introduced a decade ago and intended to be permanent, risked “exploding” if members failed to converge.

ECB President Mario Draghi signaled yesterday that the European Central Bank could do more to fight the sovereign-debt crisis in return for closer fiscal union.

Commerzbank Shares Rally

Commerzbank gained 5.5 percent to 1.43 euros as Die Welt said Germany’s second-biggest bank could generate about 1 billion euros ($1.4 billion) by retaining profit through June 30. The lender could boost its core capital by 3 billion euros by offloading some 30 billion euros in risk-weighted assets, the newspaper said, citing options that its supervisory board will discuss today. The lender could also generate as much as 6 billion euros by converting hybrid capital, according to Die Welt. The German newspaper cited banking officials.

Banking shares were the best-performing industry today, soaring 3.7 percent. HSBC Holdings Plc (HSBA) rose 3 percent to 510.6 pence in London, while BNP Paribas (BNP) SA surged 7.9 percent to 31.15 euros.

Home Retail jumped 8.5 percent to 98.1 pence, its highest price in a month. CVC and Bridgepoint are working on a deal that would value the owner of the Argos chain at a “significant premium” to its market price, the Daily Mail said today. Spokesmen for Home Retail, Bridgepoint and CVC declined to comment.

Mining Companies Climb

BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO), the world’s biggest mining companies, led gains in commodity stocks, rising 4.6 percent to 2,010.5 pence and 2.3 percent to 3,379 pence, respectively. The industry was among the best performers in the Stoxx 600 this week, surging 13 percent. Aluminum, copper, lead, nickel and zinc all climbed on the London Metal Exchange today.

Bayerische Motoren Werke AG (BMW) and Daimler AG advanced 2.7 percent to 56.68 euros and 3.3 percent to 34.44 euros, respectively. A report from Autodata Corp. yesterday showed that U.S. light-vehicle sales accelerated to their fastest pace in 2011. Daimler sells more than 17 percent of its vehicles in the U.S., Bloomberg data shows.

Separately, Daimler plans to cut production costs by 10 percent annually in 2012 and 2013, Reuters reported, citing Wolfgang Nieke, a works council member.

Neopost SA gained 1.8 percent to 52.51 euros as it said after the market close yesterday that its third-quarter revenue (NEO) rose to 242 million euros from 233.7 million euros a year earlier. Neopost also confirmed its full-year outlook.

ThyssenKrupp AG (TKA) fell 2.3 percent to 18.58 euros after Germany’s biggest steelmaker posted a fiscal full-year loss because of 2.9 billion euros of impairments charges, mostly after construction of a plant in Brazil was delayed.

-- Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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Europe Demand Falling Fifth Year as Fiat Makes Last Lancia in Sicily: Cars

By Tommaso Ebhardt and Alex Webb - Dec 2, 2011 8:31 PM GMT+0700
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Car demand in Europe may decline for the fifth straight year in 2012 to 12.9 million vehicles, down 1 percent from this year and 17 percent from the 2007 peak. Photographer: Kostas Tsironis/Bloomberg

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Dec. 2 (Bloomberg) -- For the first time since before the 2008 financial crisis, a European automaker will close down a production plant in its own country. Fiat SpA will close its Termini Imerese factory in Sicily, where the Lancia Ypsilon was made, at the end of the year. Poppy Trowbridge reports on Bloomberg Television's "The Pulse" with Maryam Nemazee. (Source: Bloomberg)

For the first time since before the 2008 financial crisis, a European automaker will close down a production plant in its own country.

Fiat SpA (F) will shutter its Termini Imerese factory in Sicily at the end of the year. The plant’s last Lancia Ypsilon subcompact rolled off the assembly line on Nov. 24.

The decision comes amid a growing car glut across the continent as most automakers continue to churn out vehicles in the face of slumping sales and growing concerns over the sovereign debt crisis and an economic slowdown in Europe. Overcapacity in the region may surge 41 percent to 2.92 million vehicles next year, according to forecasts from IHS Automotive.

“The global auto sector has been suffering for years from chronic overcapacity,” Fiat Chief Executive Officer Sergio Marchionne said last week in London. “In Europe, the situation has now reached suffocation point.”

The Fiat boss joined other auto executives, including Daimler AG (DAI) CEO Dieter Zetsche and Ford Motor Co. (F)’s European chief Stephen Odell, in a meeting in Brussels today to discuss the outlook for the auto industry with the European Commission.

The region’s auto lobby ACEA, which elected Marchionne as its president today, called on political leaders to act quickly to restore confidence in the region.

“One of my hopes is to find a will to achieve the economic stability in Europe, which will lessen the burden on the industry,” Marchionne said today in Brussels. “We need a healthy market” to be able to address the industry‘s “structural overcapacity.”

Five-Year Slump

Car demand in Europe may decline for the fifth straight year in 2012 to 12.9 million vehicles, down 1 percent from this year and 17 percent from the 2007 peak. Production in the region may slip 2.9 percent to 16.4 million vehicles, compared with a 1.8 percent increase in capacity to 19.3 million, IHS estimates.

Until the Fiat closure, European automakers had been unable to take bold steps to scale back production. Political interference has thwarted industry restructuring as governments propped up demand in 2009 with sales incentives and hindered efforts to trim capacity to protect local jobs. With strapped public budgets restraining the scope for aid, European mass- market automakers may face years of losses as idle workers and equipment cost money without generating revenue.

Marchionne’s decision to pull the plug on the 41-year-old factory in Sicily will cut capacity by as many as 140,000 vehicles a year.

‘Failure to Act’

Europe’s volume carmakers are the region’s worst performers. Fiat shares have posted the second-biggest decline on the Stoxx 600 Automobiles & Parts Index this year, dropping 41 percent. PSA Peugeot Citroen has posted the steepest decline, falling 49 percent, while French rival Renault SA (RNO) is down 34 percent.

“I doubt there is a single European player today that can make money on the strength of the European market alone,” Marchionne said last week during a speech in London. “The lack of a common intervention strategy in Europe, and a failure to act, has forced Fiat to find its own solution.” A new round of aid is unlikely.

“The probability of governments providing incentives is about zero,” said Christoph Stuermer, an analyst with IHS in Frankfurt. “There’ll be no backing” for a repeat of 2009 sales incentives, when Germany committed 5 billion euros ($6.7 billion) to boost demand by offering money to scrap old cars.

Interference

Efforts to prevent job losses continue. French President Nicolas Sarkozy, faced with an election in six months and the highest unemployment claims in more than a decade, summoned Peugeot CEO Philippe Varin on Nov. 17, asking him to reconsider plans to cut as many as 6,800 jobs, including temporary staff employed by partners.

Peugeot, Europe’s second-largest carmaker after Volkswagen AG (VOW), earlier this year distanced itself from a leaked proposal to close a French plant after the government described it as “unacceptable.” Renault CEO Carlos Ghosn pledged in May to make building upscale cars in France a priority in return for support from the government, which owns 15 percent of the manufacturer, to appoint a new chief operating officer.

“It becomes increasingly difficult to see any meaningful restructuring actions at PSA or Renault ahead of French elections in 2012,” said Erich Hauser, an analyst with Credit Suisse in London. Sarkozy’s meeting with Varin “illustrates once again just how hard it is to restructure industrial assets in France.”

GM’s German Woes

France isn’t alone in actively shaping its auto industry. German Chancellor Angela Merkel brokered the sale of General Motors Co. (GM)’s Opel unit, which is based near Frankfurt, tying state aid for the money-losing unit to a change in ownership. The deal fell apart when GM backed out in November 2009 after exiting bankruptcy.

GM, which hasn’t turned an annual profit in Europe in more than a decade, continues to struggle to turn around Opel. The company had $900 million in restructuring and early-retirement costs in Europe and cut 5,800 jobs in the region through Sept. 30. Last month, Detroit-based GM abandoned its goal of breaking even in Europe this year.

“When you’re running your plants at a utilization of anything less than 100 percent -- and in most of Europe they run at 85 percent -- you’re trying to bend the demand curve to meet the supply curve,” GM Chief Executive Officer Dan Akerson said at a Nov. 17 event hosted by the Detroit Economic Club.

No Profit Before 2014

Morgan Stanley estimates that European carmakers are utilizing about 70 percent of their capacity, with Renault, Opel and Fiat the least productive. The region’s mass-market carmakers may not return to a profitable rate of more than 80 percent until 2014, according to a Nov. 30 research note.

Before Fiat’s move to halt production in Sicily, GM was the only other carmaker to shut a factory since 2008, closing its facility in Antwerp, Belgium, at the end of last year. It was the first plant shut in Europe since 2006.

Fiat’s plans in Italy are aimed at ending losses estimated at 800 million euros a year, leading Marchionne to risk opposition. Fiom Cgil, Fiat’s biggest union, has called for a general strike on Dec. 16, its second in less than two months.

Workers at the Termini Imerese plant blocked the last car from leaving the factory until Fiat agreed with unions and the government on Nov. 26 to pay about 21 million euros to support early retirements for about 640 workers. Other staff will be hired by Dr Motor Co SpA, which will pay 1 euro for the plant and will continue to assemble vehicles there.

‘Great Attention’

Fiat, which has threatened to stop production in Italy, canceled labor contracts after withdrawing from Italian employers’ group Confindustria earlier this year in order to have a free hand in negotiating wage agreements. Talks on new Italian contracts started this week.

“The government is following with great attention” Fiat’s plan for Italy “and it’s ready to offer its constructive contribution,” Labor Minister Elsa Fornero said last week. “As a Turin citizen, I can’t stay quiet about Fiat. Big companies shouldn’t leave the country.”

To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net; Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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JPMorgan Follows UBS Cutting Carbon Jobs

By Ben Sills - Dec 2, 2011 3:26 PM GMT+0700

Investment banks are cutting traders and analysts in climate-related businesses as a slump in shares and carbon emission permits coincides with a deadlock in international climate talks.

JPMorgan Chase & Co. (JPM) Managing Director for Environmental Markets Odin Knudsen left his post in New York by mutual accord after his team was shrunk, while UBS Securities LLC fired Vice Chairman Jon Anda and his Climate Policy Group co-workers, Anda and Knudsen said in interviews. Ben Lynch left his London job as an alternative-energy analyst for Commerzbank AG (CBK) and it was taken over by a utilities analyst, company spokeswoman Claire Tappenden said. The departures took place since September.

The biggest banks, trying to recover from trading losses and a clampdown on investing their own money, are clipping resources from emissions-related businesses as United Nations talks have failed for years to extend Kyoto Protocol greenhouse- gas curbs beyond their expiration in 2012. The International Emissions Trading Association, the main carbon-market trade group, has seen its membership slide about 6 percent this year.

“People are leaving the industry because they’ve been fired or because they see no prospects,” said Emmanuel Fages, head of energy research for Europe at Societe Generale SA in Paris. “That is the sad story.”

Climate Talks

Fages said he used to work full-time on carbon at the French bank’s emissions trading unit Orbeo and the industry now occupies about 20 percent of his time.

JPMorgan spokesman Brian Marchiony declined to comment.

UBS officials confirmed Anda’s departure and declined to give details about his department. “Jon Anda has left the bank and is seeking new opportunities,” UBS’s New York-based spokesman Christiaan Brakman said in an e-mailed response to questions. “UBS remains committed to address climate change.”

The Kyoto emissions caps for industrialized nations, which underpin carbon trading, are set to end in December 2012 unless United Nations-led talks under way in South Africa produce an extension.

Clean-power stocks and emission permits have plunged as the European Union, the biggest advocate for climate action among developed nations, is ravaged by its own sovereign debt crisis.

Benchmark EU carbon permits lost 44 percent in the year through yesterday and fell to a record last week while the Bloomberg Industry solar energy index (BISOLAR) plunged 65 percent, damping investor demand for research and advisory services.

EU allowances for delivery this month fell 0.4 percent to 7.90 euros a metric ton today as of 8:14 a.m. on London´s ICE Futures Europe exchange. The Bloomberg Industry Global Leaders Large Solar Energy index fell 0.6 percent, headed for its first decline this week.

‘Shakeouts, Departures’

“There are shakeouts and departures happening as you would expect to be the case during any market that was a little bit unsure about where it was going,” Henry Derwent, president of the International Emissions Trading Association, said in a telephone interview. Carbon trading “is currently suffering, as so many other markets are, from low economic activity in the main area which is the European Union.”

About 10 institutions have withdrawn from the Geneva-based trade group this year, cutting membership to about 150 companies, spokeswoman Noria Mezlef said.

EU countries, which subsidize clean energy and bought more than 80 percent of solar panels last year as well as running the biggest carbon market, are facing pressure to rein in budget deficits as investors dump their sovereign debt. The turmoil wracking the bloc has hurt photovoltaic equipment stocks and businesses that service that industry.

‘Little Companies’

“It been a tough time for everyone doing solar,” John Hardy, who lost his job in New York as an alternative energy analyst at Gleacher & Co. in August, said in an interview. “Market capitalizations have dropped to a point where funds can’t touch these little companies.”

He said he expects some of his colleagues and competitors will also be let go because the market valuation of the industry can no longer sustain their research.

Dennis Mignon left his job as a carbon trader at First Climate in Bad Vilbel, Germany, to trade government bonds at DZ Bank AG in Frankfurt, he said last week.

The value of carbon trading fell 8 percent to 23.7 billion euros ($32 billion) in the third quarter from the previous three months as the price of European emission permits tumbled, according to New Energy Finance data.

ClimateCare

UBS shut its climate-change advisory practice and fired its staff after theSwiss bank lost $2.3 billion from unauthorized trading this year.

JPMorgan, which sold its ClimateCare carbon offset developer to the unit’s management in August, tied for second place producing new credits last year, behind Vitol Group and alongside Climate Change Capital Ltd., according to Bloomberg New Energy Finance data.

The New York bank cut back its environmental markets team to just “a few” people compared with several “tens” of people around the world at its height, Knudsen said in an interview.

Societe Generale said Nov. 25 it agreed to sell its 50 percent stake in carbon trading joint venture Orbeo to its partner Solvay SA. The Paris-based lender will develop emissions trading as part of its gas and power business, deputy head of commodities Jonathan Whitehead said in a telephone interview.

“The emissions market, whatever shape or form it ends up continuing in, is going to be an important part of our offering for our clients,” he said Nov. 25. “The emissions market goes hand in hand with the power market in Europe.”

A record 1.5 billion tons of EU carbon permits was traded on the ICE Futures Europe exchange from July to September even as the price slump cut the value of the transactions, exchange data show. Trade in UN carbon credits was a record 348 million tons in the same period.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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U.S. Jobless Rate Unexpectedly Declines to 8.6%

By Shobhana Chandra - Dec 2, 2011 8:36 PM GMT+0700

Unemployment in the U.S. unexpectedly dropped in November to a two-year low, while employers added fewer workers than projected and earnings eased, indicating the labor market is making limited progress.

The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed today in Washington. Payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000.

Companies like DirecTV (DTV) have said they will keep a tight rein on spending and employment in 2012, reflecting concern over the outlook for demand, Europe’s debt crisis and the U.S. deficit. The scant number of jobs is limiting wage gains and restraining consumers’ ability to boost spending, which accounts for about 70 percent of the economy.

“The labor market is showing very gradual progress, but it is progress,” Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut, said before the report. “Things are getting a little bit better on the economy. Firms are hiring but staying trim.”

Bloomberg survey estimates ranged from increases of 75,000 to 175,000.

Stock-index futures maintained gains after the figures. The contract on the Standard & Poor’s 500 index expiring this month rose 1.3 percent to 1,259.6 at 8:33 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 2.13 percent from 2.09 percent late yesterday.

Unemployment Rate

The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent, according to the survey median. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

The labor participation rate declined to 64 percent from 64.2 percent.

Private hiring, which excludes government agencies, rose 140,000 after a revised gain of 117,000. It was projected to rise by 150,000, the survey showed.

Revisions to prior reports added a total of 72,000 jobs to payrolls in September and October.

Stanley estimates sustained gains of 125,000 a month on average are needed to keep the unemployment rate stable.

Factory Employment

Factory payrolls increased by 2,000, less than the survey forecast of a 9,000 increase and following a 6,000 gain in the previous month.

Employment at service-providers increased 126,000, including a 50,000 gain in retail trade at companies hired for the holiday shopping season. The number of temporary workers increased 22,300.

Macy’s Inc. (M), the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.

Construction companies shed 12,000 workers. Government payrolls decreased by 20,000. State and local governments employment dropped by 16,000, while the federal government trimmed 4,000 positionss.

Average hourly earnings fell 0.1 percent to $23.18, today’s report showed. The average work week for all workers held at 34.3 hours.

Underemployment Rate

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 15.6 percent from 16.2 percent.

The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 43 percent from 42.4 percent.

The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.

Federal Reserve Chairman Ben S. Bernanke and his colleagues last month cut economic growth forecasts for 2012 and said unemployment will average 8.5 percent to 8.7 percent in the final three months of next year, up from a prior range of 7.8 percent to 8.2 percent.

Fed’s Yellen

Growth in the U.S. and other advanced economies “has been proceeding too slowly to provide jobs for millions of unemployed people,” Fed Vice Chairman Janet Yellen said in a Nov. 29 speech in San Francisco. She called for “urgent” international action to combat a “dearth” of global demand.

Six central banks led by the Fed acted on Nov. 30 to make more funds available to lenders to preserve the global expansion. The move came after European leaders said they failed to boost the region’s bailout fund as much as planned, fueling concern about a possible breakup of the euro bloc.

The crisis in Europe and presidential election in the U.S. make it difficult to predict the level of economic expansion, causing DirecTV to “slow our growth rate,” Michael White, chief executive officer of the largest U.S. satellite-TV provider, said in an interview last week.

“We’re tightening our belts in terms of spending,” White said in the Nov. 21 interview. “We’ll cut back on overhead, hiring and programming.”

Payrolls may pick up as more businesses benefit from increased demand. Boeing Co. (BA), the largest U.S. aircraft maker, is hiring about 100 machinists a week as it boosts production by about 60 percent over three years to whittle down a backlog that now stretches to nearly 4,000 aircraft.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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