Apple Hits Pause as Austin Digs Deeper to Net Texas Plant

By David Mildenberg and Amanda J. Crawford - Mar 16, 2012 7:53 AM GMT+0700

Apple Inc. (AAPL) may spurn Austin and go to the Phoenix area to build an operations center that Texas Governor Rick Perry said last week would bring 3,600 jobs to his state’s capital, according to an Austin official.

Arizona’s biggest metropolitan area remains an alternative for the Cupertino, California-based maker of iPhones, iPads and Macintosh computers, Kevin Johns, Austin’s director of economic growth and redevelopment services, said after a City Council hearing on Apple’s expansion plans.

“There is no doubt we would be neck and neck and provide anything Austin could provide and then some,” Mesa Mayor Scott Smith said. He said his city, just east of Phoenix, was among Arizona sites being weighed for an Americas operations center.

Austin’s council is scheduled to vote March 22 on an $8.6 million incentive, adding to a $21 million state grant and whatever Travis County, which includes Austin, can offer to Apple, which is sitting on almost $100 billion in cash or equivalents. The company’s top tax and government affairs executives met with the council today to discuss the incentives.

“We’re just trying to respond to what seems to be a very fair evaluation of a couple of cities,” Johns said. “We’re offering $8.6 million in tax abatement and in return we expect to receive more than $14 million in benefits, so it is very good for them and very good for us.”

‘Looking Forward’

The company is “looking forward to building a new campus in Austin, which will more than double the size of our workforce there over the next decade,” according to a statement from Kristin Huguet, a spokeswoman. The company has about 3,500 workers in the Austin area today and won’t comment on competition between sites, she said.

Perry, a Republican who bowed out of the race for the 2012 presidential nomination in January, trumpeted “Apple’s commitment to create these new jobs in Texas” in a March 9 statement. The governor said the company’s $304 million investment was made “in exchange” for the state’s offer of $21 million from the Texas Enterprise Fund over 10 years.

The deal was “contingent upon the finalization of contracts and a local incentive agreement” with Austin and the county, according to the governor’s statement. The city’s incentives would be in the form of property tax relief over a period of 14 years, Johns said. He said Travis County is considering a tax abatement plan smaller than Austin’s.

Record Price

Apple, the world’s most valuable company with a market capitalization of $546 billion today, reached a record $600.01 a share before settling at $585.56 on Nasdaq at 5:20 p.m. New York time. The company has about 64,400 employees worldwide.

The company’s Austin area workers are mostly in sales, administrative and finance for the Americas region, Johns said.

Apple’s expansion would create 650 new full-time jobs with an average salary of $63,950 by the end of January 2015, with another 2,985 jobs added through 2021, according to an Austin report. The company would build a 200,000 square-foot structure, followed by an 800,000 square-foot expansion as market conditions warrant, Johns said.

“I can’t get into the incentives that were offered but the state of Arizona was interested in securing this facility,” said Matthew Benson, a spokesman for Governor Jan Brewer, a Republican. “It sounds like they’ve identified Austin as their site, which is not surprising since they have an existing site” there.

Rejected Site

A site in Phoenix was rejected by Apple because the company said it would be too difficult to get permission to build on the property, which is controlled by the state land department, said Dave Krietor, the deputy city manager. He said Mayor Greg Stanton learned of the interest in the location and made efforts to work with Apple about two weeks ago.

“It was too late,” Krietor said. “They already had selected Austin.”

The Texas Enterprise Fund has invested $443.4 million since its creation in 2003, generating more than 62,000 new jobs, Perry said in the March 9 statement. Arizona has a $25 million deal-closing fund established last year with the creation of the Arizona Commerce Authority.

To contact the reporter on this story: David Mildenberg in Austin, Texas at dmildenberg@bloomberg.net; Amanda J. Crawford in Phoenix at acrawford24@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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Most Asian Stocks Climb as U.S. Jobs Data Buoys Exporters

By Kana Nishizawa and Yoshiaki Nohara - Mar 16, 2012 9:14 AM GMT+0700

Most Asian stocks rose, with a regional benchmark index set to gain for a 12th week in 13 weeks, after U.S. jobs and manufacturing data added to signs the world’s biggest economy is recovering, boosting the outlook for Asian exporters.

Li & Fung Ltd. (494), a clothes and toys supplier to Wal-Mart Stores Inc., rose 4 percent in Hong Kong. Gree Inc. (3632), a Japanese social networking site, rose 4.1 percent in Tokyo after Citigroup Inc. said its shares are suffering from “excessive” regulatory concerns. Hyundai Wia Corp., an auto parts maker, slumped 5.1 percent in Seoul after its shares were offered at discount by South Korean automakers. BHP Billiton Ltd. (BHP), the No. 1 Australian oil producer, slipped 0.8 percent in Sydney after crude prices fell yesterday.

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The MSCI Asia Pacific Index rose 0.02 point, or less than 0.1 percent, to 127.89 as of 11:07 a.m. in Tokyo, set to gain for the 12th week in 13. About nine stocks climbed for every seven that fell, with six of the gauge’s 10 industry groups advancing.

Japan’s Nikkei 225 Stock Average (NKY) rose 0.2 percent. Australia’s S&P/ASX 200 Index (AS51) dropped 0.1 percent and South Korea’s Kospi Index slid 0.2 percent.

Hong Kong’s Hang Seng Index advanced 0.3 percent, while the Shanghai Composite Index (SHCOMP), which tracks the bigger of China’s stock exchanges, gained 0.8 percent.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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Malaysia Said to Prepare for Potential Election in May or June

By Manirajan Ramasamy - Mar 16, 2012 9:21 AM GMT+0700

Malaysia’s government is discussing the possibility of an early election in May or June, ahead of the due date in early 2013, according to four officials who spoke on condition of anonymity because the talks are private.

Prime Minister Najib Razak is scheduled to speak on March 26 to as many as 4,000 information ministry staff, who help oversee elections, the government officials said. One date proposed for the contest is June 3, according to three of the officials.

The ruling National Front coalition is seeking to extend its 55 years in power, and an early vote would allow Najib to take advantage of rising public approval after the government announced cash handouts and vowed to overhaul security laws. Satisfaction with Najib’s leadership rose to 69 percent last month from 59 percent in August, according to a poll by the Merdeka Center for Opinion Research.

“All signs seem to be pointing toward an election at the end of May or early June,” Ong Kian Ming, a political analyst at UCSI University in Kuala Lumpur, said by phone. “It’s the best timing for Najib. If he does wait longer there may be other scandals that emerge and the goodwill that he’s enjoying from the budget handouts given out earlier this year may be lost.”

Election Sweeteners

While Najib has offered election sweeteners, he is also grappling with a potential scandal after a member of the ruling party said she’ll resign from the Cabinet amid a corruption probe against her husband. Shahrizat Abdul Jalil will step down next month as minister for women, family and community, according to the Star newspaper.

Najib had already sparked speculation of an early vote when he said in December that preparations had begun for the contest. His budget announced in October featured cash payments to low- income families.

Malaysia will also announce plans for a minimum wage this month, a government official said earlier this week. Najib’s cabinet has yet to complete the plan, according to the official.

Najib’s rising popularity has reduced the risk of a surprise election result such as one that occurred in 2008 and led to a stock market sell-off, according to a March 13 report from Bank of America Merrill Lynch. In 2008, the ruling National Front lost a third of its seats.

Stock Rise

Since Najib took office in April 3, 2009, the benchmark FTSE Bursa Malaysia KLCI Index (FBMKLCI) has risen 74 percent compared with a 47 percent gain for the MSCI Asia Pacific index.

“The Prime Minister is focused on delivering prosperity, security and democracy for all Malaysians and will call an election when the time is right for the country,” a Malaysian government spokesperson said by e-mail.

Malaysia’s opposition leader Anwar Ibrahim was acquitted of sodomy charges in January that he claimed were politically motivated. He pledged to “clamor for reform” in a bid to unseat Najib after the verdict.

Gross domestic product may expand 5 percent to 6 percent this year, Najib said in the annual budget speech on Oct. 7. The economy expanded by 5.1 percent last year, the government said Feb. 15.

Before 2008, the worst showing for the National Front was in 1969, when candidates representing urban ethnic Chinese and rural Islamic opposition groups won more than a third of seats in Parliament. Ethnic Chinese victory marches prompted a backlash from Malay groups that led to emergency rule.

Najib’s father, Abdul Razak, took over as prime minister in 1970 and responded by creating an affirmative-action policy that gave Malays educational, housing and job preferences.

To contact the reporter on this story: Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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Yen Poised for Weekly Loss Against Most Peers on U.S. Data, BOJ

By Monami Yui and Kristine Aquino - Mar 16, 2012 9:29 AM GMT+0700

The yen headed for a weekly drop against most peers as signs of growth in the U.S. economy and prospects for further stimulus by Japan’s central bank prompted investors to seek higher-yielding assets.

The greenback traded 0.9 percent from an 11-month high versus the yen before U.S. data today that may show industrial production increased and consumer sentiment improved. The Australian and New Zealand dollars were set for a weekly gain against the yen after stocks rallied globally yesterday, boosting demand for riskier assets. Most Bank of Japan (8301) board members said easing steps taken last month were “appropriate,” policy meeting minutes released today showed.

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The Japanese currency has fallen 1.2 percent this week, set for a sixth-straight decline. Photographer: Tomohiro Ohsumi/Bloomberg

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“I’d have to say the momentum is still firmly for a weaker yen,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. (WBC) “The BOJ’s easing stance definitely seems to have at least contributed to the upswing in dollar- yen.”

The yen was little changed at 83.45 per dollar as of 11:26 a.m. in Tokyo from the close yesterday, when it touched 84.18, the weakest level since April 13. The Japanese currency has fallen 1.2 percent this week, set for a sixth-straight decline. It rose 0.1 percent to 109.19 per euro, set for a 0.9 percent drop since March 9. The dollar traded at $1.3084 per euro from $1.3080 yesterday and $1.3123 on March 9.

Australia’s currency was unchanged at 87.96 yen, set for a weekly advance of 0.9 percent. New Zealand’s kiwi dollar bought 68.60 yen from 68.45 yen yesterday and 67.74 on March 9.

The Standard & Poor’s 500 Index (SPX) of shares rose 0.6 percent yesterday, while the MSCI World Index rallied 0.7 percent. The MSCI Asia Pacific Index remained higher after a three-day gain.

BOJ Easing

The BOJ unexpectedly expanded its asset purchase program by 10 trillion yen ($120 billion) and set an inflation goal of 1 percent at its meeting that concluded on Feb. 14. One board member said the central bank should aim for 2 percent inflation, minutes showed.

The BOJ on March 13 expanded loans designed to boost long- term growth. On the same day, the Federal Reserve raised its outlook for U.S. growth, predicting unemployment “will decline gradually.

The dollar has risen against 15 of its 16 major counterparts this week as signs of strength in the U.S. economy reduced the chance for a third round of bond purchases -- known as quantitative easing or QE3 -- by the Fed to spur growth.

Industrial output at U.S. factories, mines and utilities climbed 0.4 percent in February, according to the median of economists surveyed by Bloomberg News before today’s data release. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to a one-year high of 76 in March, a separate poll showed ahead of the figures due today.

Reduced QE Risks

‘‘We are, for the most part, quite positive on the U.S. dollar in the coming weeks,’’ said Westpac’s Callow. ‘‘People in general are saying QE3 risks have receded and I think that’s fair.”

The dollar has strengthened 1.1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The euro rose 0.6 percent, while the yen sank 5.1 percent, the worst performer.

The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, was little changed at 80.282 today. The gauge, which is 57.6 percent weighted to movements in the euro, touched 80.738 yesterday, the strongest since Jan. 18.

The greenback’s 14-day relative strength index against the yen was at 75 today, having held above 70 since March 9. Some traders see RSI levels above 70 as a sign an asset may reverse direction. The euro’s RSI versus the yen was at 69 yesterday.

“The dollar-yen looks to be nearing its peak,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo- Mitsubishi. “The dollar has been too strong and the yen has been too weak, leading to some selling in the pair. I expect the dollar-yen to stay around the 83 level for a while.”

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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Oil, Won Advance on U.S. Growth Optimism; China’s Stocks Climb

By Lynn Thomasson and Ben Sharples - Mar 16, 2012 9:30 AM GMT+0700

Crude oil rose for the first time in three days and the won strengthened before U.S. data that may show consumer confidence rose to a one-year high and factory output increased. Shares of Chinese companies gained on upbeat earnings reports.

Oil added 0.4 percent to $105.53 a barrel as of 11:20 a.m. in Tokyo. The won rose 0.3 percent versus the dollar. The MSCI Asia Pacific Index (MXAP) and futures on the Standard & Poor’s 500 Index were little changed. The Shanghai Composite Index advanced 0.8 percent. Australian bond risk fell to a seven-month low.

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South Korea 10,000 won notes are arranged for a photograph in Seoul, South Korea. Photographer: SeongJoon Cho/Bloomberg

The S&P 500 climbed above 1,400 for the first time since 2008 yesterday after jobless claims matched the lowest level in four years and manufacturing in the New York region expanded at the fastest pace since June 2010. Most Bank of Japan board members said easing steps taken last month were “appropriate,” according to minutes of their last policy meeting.

“The U.S. appears to have established a pretty good base for growth,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The economic news is good. We’re headed in the right direction and that’s certainly a positive for oil.”

The MSCI Asia Pacific Index has gained 0.8 percent this week, the 12th advance in 13 weeks. The gauge’s 12 percent rally this year has pushed valuations to 15.1 times estimated profit, the highest level since May 2010, Bloomberg data show.

The Nikkei 225 Stock Average fell 0.3 percent today, Australia’s S&P/ASX 200 Index lost 0.1 percent and South Korea’s Kospi Index declined 0.2 percent. The Hang Seng Index rose 0.1 percent.

Zoomlion, BoCom

Zoomlion Heavy Industry Science & Technology Co., China’s biggest crane-maker, rallied 4.9 percent in Hong Kong after reporting profit that jumped 73 percent in 2011. Bank of Communications Co. climbed 2.3 percent in Hong Kong after the lender said yesterday it plans to raise 56.6 billion yuan ($8.9 billion) in the world’s biggest share sale since May.

“We spend a lot of time monitoring U.S. data and the way it’s developing positively over the past few months is very encouraging,” said Angus Gluskie, who manages more than $350 million at White Funds Management in Sydney. “We are moving into the start of a more favorable upward spiral.”

The dollar has risen against 14 of its 16 major counterparts this week as signs of strength in the U.S. economy reduced the likelihood of a third round of bond purchases -- known as quantitative easing or QE3 -- by the Federal Reserve to spur growth. The yield on 30-year Treasuries climbed 24 basis points since March 9, set for the biggest weekly gain since August 2009. The rate was little changed today at 3.42 percent.

U.S. industrial output climbed 0.4 percent in February, according to the median forecast of economists surveyed by Bloomberg before data today. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment may have reached 76 in March, a seventh monthly increase, projections show.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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Warmth Expected Across U.S. for Next Three Months, U.S. Says

By Brian K. Sullivan - Mar 16, 2012 1:57 AM GMT+0700

A streak of above-normal temperatures that led to the fourth-warmest U.S. winter on record is expected to continue for the next three months, the National Oceanic and Atmospheric Administration said.

NOAA said the southern states of Louisiana, Alabama and Mississippi will have the highest chance of warm weather from March through May. The forecast was part of a report that said Texas may get drought relief and that the risk of spring river flooding will be the lowest in four years.

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Students near Harvard Square in Cambridge on March 11, 2012. Photographer: Dina Rudick/The Boston Globe via Getty Images

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The Sexy Black Guys Dancing performers on March 13, 2012 in New York City. Photographer: Mario Tama/Getty Images

Temperatures around the U.S. have been as high as 35 degrees Fahrenheit (19.4 Celsius) above normal in the past week, with 400 record highs set yesterday, said Laura Furgione, deputy director of the National Weather Service.

“We’re already feeling May-like warmth in parts of the country this week,” Furgione said in a conference call by U.S. weather agencies with reporters.

Warmer temperatures across the U.S. in the last three months has “decimated the market” for natural gas, said Stephen Schork, president of Schork Group in Villanova, Pennsylvania, and reduced the need for all types of energy for heating. The trend is expected to continue through May in the eastern U.S. as well as the Southwest.

The natural gas market looks for cold air in Illinois during the winter and hot weather in Texas during the summer when gauging weather impact, said Teri Viswanath, director of commodity markets strategy at BNP Paribas in New York.

Watching Natural Gas

Those two areas make good barometers because natural gas is their primary fuel for heating and cooling, she said. In the mid-Atlantic region and Northeast, a wider variety of fuels is used to heat homes.

Natural gas for April delivery fell 0.5 cent, or 0.2 percent, to settle at $2.279 per million British thermal units on the New York Mercantile Exchange. The futures, which are down 24 percent this year, fell to $2.204 on March 13, the lowest intraday price since Feb. 15, 2002.

“We obviously have a glut in the supply,” said Schork. “Without any significant cooling demand or air-conditioning demand, the glut will persist through this summer and will continue to weigh on price.”

A snowstorm in the Northeast at the end of October bolstered predictions by some forecasters that the U.S. would be in for a frigid winter. The cold weather never materialized, and with increasing production and weak industrial demand, gas inventories soared.

Warm Winter

This winter in the contiguous U.S. was the warmest since the record winter of 2000, the climate center said. Meteorologists designate winter as being from Dec. 1 to Feb. 29. The calendar start to spring is based on the equinox.

Winter wheat has begun to break out of dormancy across the Midwest and Plains, and corn planting is ahead of schedule in the South, said MDA EarthSat Weather in Gaithersburg, Maryland.

Less snow across the contiguous U.S. and drier soil mean most of the U.S. faces a normal or below-normal risk of spring flooding, Furgione said.

“This is the first time in four years without a high risk of major flooding,” Furgione said.

The Ohio River Valley and Louisiana have an elevated risk of high water, Furgione said. They aren’t expected to face anything close to the record flooding that swept down the Ohio and Mississippi rivers last year.

The report also said parts of northeastern Texas, Oklahoma and Kansas may get some relief from a severe drought. However, a large part of the southern U.S. from California to Florida is still struggling with drought and that is expected to continue, said David Brown, director of NOAA’s Southern Regional Climate Services.

“The historic magnitude means recovery from the drought will be a very slow process,” Brown said on the conference call.

Brown said the drought caused $6.5 billion in agricultural losses in Texas and Oklahoma last year and led to wildfires that burned 4 million acres in Texas alone.

To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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Trump Goes Bottom-Fishing for Golf Courses

By Christine Harvey - Mar 16, 2012 3:16 AM GMT+0700

Mirek Towski/FilmMagic for Laura Davidson Public Relations/Getty Images

Trump International Golf Course, Raffles Resort.

Investors from Donald Trump to luxury homebuilder Toll Brothers Inc. (TOL) are wagering there’s money to be made buying golf courses after a building boom fueled by Tiger Woods’s popularity led to a glut.

Standalone 18-hole golf properties in the U.S. sold for a median price of $3 million through the third quarter of 2011, which is about the threshold for a luxury apartment in Manhattan. That’s down from $4.5 million in 2006, according to data from real-estate broker Marcus & Millichap.

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Donald Trump, chairman and president of The Trump Organization. Photographer: Mannie Garcia/Bloomberg

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Tiger Woods hits his approach shot on the sixth hole during the final round of the World Golf Championships-Cadillac Championship on the TPC Blue Monster at Doral Golf Resort And Spa on March 11, 2012 in Miami. Photographer: Scott Halleran/Getty Images

“Lack of financing is really causing a discount to value and investors are taking advantage,” Steven Ekovich, Florida- based director of Marcus & Millichap National Golf & Resort Properties Group, said in a telephone interview. “Golf courses may never be as cheap as they are today.”

Prices slumped after lenders including General Electric Co. (GE) stopped financing courses and investors in commercial mortgage backed securities retreated amid losses on deals made at the height of the property bubble. The number of courses in the U.S. has declined every year since 2006, according to the National Golf Foundation. That follows two decades of expansion, including a surge starting in the late-1990s fueled by excitement about the emergence and dominance of Woods over the sport.

“They built too many courses during the Tiger Boom and now they’re closing and disappearing,” said Trump, who announced last month he’s purchasing the Doral Golf Resort & Spa in Miami for $150 million out of bankruptcy. The resort features five courses on 800 acres, including the Blue Monster, and about 700 hotel rooms. “At some point enough will disappear that golf will be a really good business.”

Tiger Wins Masters

There are about 16,000 golf courses in the U.S. and approximately 1,100 of those opened since 2000, according to the Jupiter, Florida-based National Golf Foundation.

The sport’s popularity soared after Woods won the 1997 Masters Tournament at Augusta National Golf Club in Augusta, Georgia. In 2000, when an unprecedented 400 courses were opened, Woods captured the U.S. Open in Pebble Beach, California, by a record 15 strokes. When Woods, 36, is in contention to win a tournament, television ratings typically surge by as much as 50 percent, according to Nielsen Co. figures.

The golfer hasn’t won a U.S. PGA Tour event since September 2009 as his career has been derailed by extramarital affairs and injuries. He withdrew from the Cadillac Championship at the Doral Golf Resort in Miami last weekend with a strained left knee and Achilles.

Building Boom

The number of U.S. courses overall has declined by about 350 since 2006 with closures outpacing new development, according to National Golf Foundation figures.

The building boom in the 1990s was fueled primarily by increasing demand for golf, rising American affluence and entrepreneurs that built thousands of high-end real estate and premium public courses, Greg Nathan, a senior vice president for the National Golf Foundation, said in an e-mailed statement. Woods’s popularity and sporting success “has only marginal validity,” as an explanation for the building surge, he said.

Peter Nanula, a former corporate lawyer and member of private-equity firm Warburg Pincus LLC, has up to $50 million to buy golf properties that he intends to revamp and sell within five to seven years.

Nanula Bids

Nanula, the former chief executive officer of Arnold Palmer Golf Management, started Concert Golf Partners in 2010. The investment firm made its first course purchase in July when it bought Heathrow Country Club’s golf course and racquet club for $4.5 million. The Lake Mary, Florida club, located in Northern Orlando, was previously sold in 1996 for $20 million, the Orlando Sentinel reported, citing Seminole County court records.

“Mortgages are gone, so buyers are paying in cash and the value of properties keeps getting lower and lower,” said Nanula, who’s currently bidding on four properties.

Declining home values also are pushing the price of golf courses lower as many are attached to housing developments where homeowners are delinquent on their loans or in foreclosure, Marcus & Millichap’s Ekovich said.

Homes values fell 4 percent in December from a year earlier and are down 34 percent from a July 2006 peak, according to the S&P/Case-Shiller index of property values in 20 cities.

Toll Brothers, the largest U.S. luxury homebuilder, is buying private golf clubs as an alternative until the residential real estate market improves, according to David Richey, president of Toll Golf, a division of the Horsham, Pennsylvania-based company.

Toll plans to buy three golf properties in cash at “distressed prices” between $3 million and $4 million by the end of this year, Richey said.

The homebuilder rose 49 cents, or 2 percent, to $24.88 as of 4:02 p.m. in New York. It’s gained about 22 percent this year and is at the highest level since October 2008.

Lending Dried Up

Lending to buy the properties has dried up after Textron Inc., GE Capital and Capmark Financial Group Inc., once “the go-to financiers” for golf mortgages, pulled out of the business, according to Don Rhodes, a former manager of Textron’s golf credit business, and now head of investment at Florida- based CNL Lifestyle Company LLC, a property group.

CMBS investors, who buy bonds backed by loans tied to shopping centers, hotels and apartment buildings, are also shunning debt linked to the sport, after suffering losses from deals made before 2007.

Trump Buying Doral

Trump is buying the Doral Golf Resort & Spa out of bankruptcy five years after Morgan Stanley (MS) acquired it as part of the $6.7 billion purchase of CNL Hotels & Resorts Inc.

A $1 billion loan tied to the property was parceled inside a commercial mortgage bond in 2006, according to data compiled by Bloomberg. A lender group including New York-based hedge fund Paulson & Co. and Winthrop Realty Trust (FUR) seized control of the CNL Hotel & Resort properties including the Doral from New York- based Morgan Stanley last year before putting it into Chapter 11 bankruptcy.

Bundling loans on golf courses into CMBS isn’t “likely” to be repeated because too many investors realized “huge losses” and “don’t want to make that bet again,” according to Chuck Elfsten, president and chief executive officer of commercial real estate lender Ocean Pacific Capital.

“Ninety percent of golf CMBS investors will not touch golf courses with a 10 foot pole, maybe even with a 20 foot pole,” Elfsten of Irvine, California-based Ocean Pacific Capital, said in a telephone interview.

Seller Financing

About 80 percent of golf course deals recorded last year were paid for in cash or with private equity, according to Ekovich of Marcus & Millichap. Course purchasing re-emerged in the other 20 percent in special circumstances such as seller financing and localized lending, Ekovich said.

Bobby Silva, vice president of business development at Texas-based Escalante Golf, has acquired eight 18-hole golf courses since 2008 and said he purchased one course through seller financing. If sellers give that option, they usually carry up to 75 percent of loan value with an interest rate between five and seven percent, according to Silva.

“It’s not what you could get from a local institution but it’s still pretty competitive,” Silva said in a telephone interview.

Few lenders take this route because they don’t want to finance their own foreclosed assets, Marcus & Millichap Golf & Resort Properties wrote in a semi-annual report.

‘Taken a Hit’

Wells Fargo & Co. (WFC) has taken back “a dozen or so golf courses since 2008,” according to Ken Kasten, asset manager within a bank unit that oversees some real estate. Some of them have been sold while the others are managed and operated by Wells Fargo, Kasten said. Whatever the case, the San Francisco- based lender doesn’t offer any type of seller financing for golf-course assets, according to Kasten.

“We’ve taken a hit on those properties once so we’re not going to make that risk again,” Kasten said.

Last year, median gross revenue per course increased by 1.4 percent, according to PGA PerformanceTrak, a golf data collection service, in cooperation with National Golf Course Owners Association.

Golf course investment is also expected to increase this year, though it’s predicted to be a “cash heavy,” market until financing returns on a national platform, according to Marcus & Millichap.

Until then Trump, Nanula and other investors are seeking out properties.

“I’m only able to do it because I can write a check,” said Trump, the real-estate investor and reality TV star who last year said he may run for President of the U.S.

“Banks aren’t so generous these days so if you can’t pay with cash you might as well forget about it.”

To contact the reporter on this story: Christine Harvey in New York at Charvey32@bloomberg.net

To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net

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S&P 500 Tops 1,400 on Better-Than-Estimated Economic Data

By Rita Nazareth - Mar 16, 2012 4:30 AM GMT+0700

U.S. stocks advanced, sending the Standard & Poor’s 500 Index above 1,400 for the first time in almost four years, as data showed manufacturing in the New York region unexpectedly increased and jobless claims declined.

Financial (S5FINL), industrial and commodity shares rose the most among 10 groups in the S&P 500. Bank of America Corp., General Electric Co. and Dow Chemical Co. added at least 1.6 percent. International Business Machines Corp. rallied for a seventh day to an all-time high. Apple Inc. (AAPL) reversed earlier gains after topping $600 for the first time. The Dow Jones Transportation Average, a proxy for economic growth, increased 3.3 percent.

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March 15 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. U.S. stocks advanced, sending the Standard & Poor’s 500 Index above 1,400 for the first time in almost four years, as data showed manufacturing in the New York region unexpectedly increased and jobless claims declined. (Source: Bloomberg)

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March 15 (Bloomberg) -- William Cohan, author of "Money and Power: How Goldman Sachs Came to Rule the World" and a Bloomberg View columnist, and Bloomberg's Christine Harper talk about Goldman Sachs Group Inc.'s corporate culture and departing executive Greg Smith's op-ed piece attacking the firm. They speak with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Cohan is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)

The S&P 500 advanced 0.6 percent to 1,402.60 at 4 p.m. New York time, exceeding the median 2012 projection of strategists surveyed by Bloomberg of 1,400. The Dow Jones Industrial Average increased 58.66 points, or 0.4 percent, to 13,252.76, gaining for a seventh straight day, the longest winning streak in 13 months. About 7.1 billion shares changed hands on U.S. exchanges, or 7.5 percent above the three-month average.

“It’s been a smooth ride,” said Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc. His firm oversees $3.51 trillion as the world’s largest asset manager. “The economy is doing better than people thought. The buying is justified.”

The S&P 500 closed at its highest level since June 5, 2008. (SPX) On that date, the index climbed 2 percent to 1,404.05, led by a 7.8 percent rally in Lehman Brothers Holdings Inc. The securities firm had lost a third of its value in the previous month and filed for bankruptcy in September 2008. The S&P 500 went on to plunge 52 percent before bottoming in March 2009.

Best Since 1998

The benchmark gauge is on pace for the best first quarter since 1998, after rallying 12 percent, amid better-than- estimated economic and corporate reports. It trades at 14.5 times reported earnings, the highest valuation level since July while still below the average since 1954 of 16.4 times earnings.

Equities rose today as manufacturing in the New York region expanded in March at the fastest pace since June 2010. Claims for jobless benefits fell last week, matching the lowest level in four years, more evidence the labor market is improving. Separate data showed that the Federal Reserve Bank of Philadelphia’s general economic index increased to 12.5 in March from 10.2 last month, beating economists’ estimates.

“The U.S. economic numbers are quite encouraging,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “People who haven’t gotten into the market might be drawn in because the economy is improving and there are some relative good values out there.”

GE, Dow Chemical

More than two stocks gained for each falling on U.S. exchanges today. The Morgan Stanley (MS) Cyclical Index of companies most-dependent on economic growth advanced 1.6 percent. GE added 1.9 percent to $20.16. Dow Chemical rose 1.6 percent to $35.

Bank of America rallied the most in the Dow, surging 4.5 percent to $9.24. The KBW Bank Index (BKX) jumped 2.7 percent as all of its 24 stocks advanced. The gauge has climbed 8.8 percent in three days following dividend increases this week by banks including JPMorgan Chase & Co. (JPM) Shares of the New York-based bank added 2.6 percent to $44.70.

S&P 500 companies have never paid more dividends, according to Howard Silverblatt, S&P’s senior index analyst. Announced payouts imply an annual dividend rate of $29.02 per index share, he said. The prior record was $28.96 in June 2008 before the figure slid 26 percent to $21.44 in August 2009. It has since risen 35 percent. S&P 500 companies are paying out 30 percent of profits, less than the average of 52 percent, S&P data show.

‘Back in Fashion’

“Companies have the money, they have the ability, and dividends are back in fashion,” he said in a telephone interview today. “We would expect to see more banks.”

Technology shares, which comprise more than 20 percent of the S&P 500, rose 0.3 percent. IBM (IBM) advanced to a record, adding 0.6 percent to $206. Apple Inc. fell 0.7 percent to $585.56, snapping a six-day rally. The company will start selling a new iPad tablet tomorrow and cut the price of the previous version, helping widen its lead over competitors.

Advanced Micro Devices Inc. (AMD) gained 6.3 percent to $8.25. The second-largest maker of processors for personal computers was moved to buy from hold at Jefferies, which increased the 12- month price estimate to $10.50 from $7.

Cisco Systems Inc. (CSCO) dropped 1.4 percent, the most in the Dow, to $19.91. The maker of equipment for computer networks agreed to buy NDS Group Ltd. in a deal valued at about $5 billion to add software used in next-generation video services.

Transportation Stocks

A measure of transportation shares in the S&P 500 had the biggest gain among 24 industries, adding 3.2 percent. The Bloomberg U.S. Airlines Index jumped 3.8 percent. FedEx Corp. (FDX) increased 2.6 percent to $94.61.

CSX Corp. (CSX) rose 8.5 percent, the most in the S&P 500, to $21.92. The biggest eastern-U.S. railroad expects record first- quarter earnings even with a drop of as much as 30 percent in domestic utility coal shipments.

Scholastic Corp. (SCHL) surged 13 percent to $36.36, the highest level since February 2008. The children’s book publisher boosted its full-year forecast, saying it now expects to earn at least $2.60 a share from continuing operations. The company had projected $2.10 at most.

Nucor Corp. (NUE) fell 1.1 percent to $43.45. The largest U.S. steelmaker by market value forecast first-quarter profit that missed analysts’ estimates after an increase in imports and domestic production.

EBay Inc. (EBAY) slumped 2.1 percent to $36.83. The largest Internet marketplace was downgraded to neutral from outperform at Credit Suisse Group AG.

Guess? Inc. (GES) tumbled 10 percent, the most in the Russell 1000 Index, to $32.97. The clothing retailer forecast fiscal 2013 earnings of no more than $2.65 a share, below the average analyst estimate of $3.16 a share, according to a Bloomberg survey.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

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

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Treasuries Drop in Longest Losing Streak Since 2006

By Emma Charlton and Masaki Kondo - Mar 15, 2012 6:26 PM GMT+0700

Treasuries fell, with 10-year notes dropping for a seventh day in the longest losing streak in more than five years, before U.S. reports forecast to show jobless claims decreased and a regional index of manufacturing advanced.

Benchmark yields climbed to the highest level since October as a gauge of the inflation outlook increased to a seven-month high, damping demand for fixed-income securities. Government bonds around the world slumped after the Federal Reserve raised its assessment of the U.S. economy two days ago and said strains in global financial markets have eased.

“The market is on the back foot, so if the data is strong then Treasuries could decline more,” said Charles Diebel, head of market strategy at Lloyds TSB Bank Plc in London. “We’ve seen a fairly sharp move in a short space of time. The catalyst seemed to be the Fed acknowledging the better growth.”

Yields on 10-year notes advanced two basis points, or 0.02 percentage point, to 2.29 percent at 7:17 a.m. in New York, according to Bloomberg Bond Trader prices. The 2 percent securities maturing in February 2022 dropped 1/8, or $1.25 per $1,000 face amount, to 97 15/32.

The 10-year note yields touched 2.35 percent, the highest level since Oct. 28. The seven days of yield gains is the longest stretch of increases since the nine-day period ended June 26, 2006.

Last Year’s High

While 10-year note yields are rising, they are still below last year’s high of 3.77 percent and the average over the past 10 years of 3.87 percent.

Two-year Treasury yields were little changed at 0.38 percent after increasing to 0.41 percent, the highest level since July 29. Thirty-year bond yields advanced one basis point to 3.42 percent after reaching 3.49 percent, the highest level since Sept. 2.

Fed policy makers refrained at their March 13 meeting from new actions to lower borrowing costs, saying the U.S. labor market is gathering strength.

German 10-year bunds slid for a third day, with the yield rising two basis points to 1.97 percent. Ten-year gilt yields advanced three basis points to 2.37 percent. Standard & Poor’s 500 Index futures expiring in June gained 0.1 percent.

Applications in the U.S. for jobless benefits fell to 357,000 last week from 362,000 in the previous period, according to the median forecast in a Bloomberg News survey before today’s Labor Department report. The Philadelphia Fed’s general economic index rose to 12 this month, from 10.2 in February, a separate survey showed. Readings greater than zero signal expansion in eastern Pennsylvania, southern New Jersey and Delaware.

‘Recovery Path’

“The U.S. economy is on a recovery path,” said Yoshinori Shigemi, a strategist for non-yen debt at RBS Securities Japan Ltd. in Tokyo, a unit of Royal Bank of Scotland Group Plc. “We see an upward trend in Treasury yields in the near term.”

The Labor Department is also forecast to report that the producer-price index rose 0.5 percent in February, the most since September, according to another Bloomberg News survey.

The 10-year break-even rate, a gauge of the outlook for consumer prices derived from the difference between yields on conventional and inflation-linked notes, increased to as much as 2.40 percentage points, the highest level since Aug. 2.

Ten-year yields have more room to rise, said Societe Generale SA, citing technical indicators.

The 10-year note yield may reach the October high of 2.415 percent, after breaching a 2.175 percent technical level, Hugues Naka, an analyst in Paris, wrote in a research note today. The 10-year yield reached 2.4176 percent on Oct. 28, according to data compiled by Bloomberg.

Treasury Losses

Treasuries maturing in more than a year have lost 1.7 percent in 2012, according to an index compiled by the European Federation of Financial Analysts Societies and Bloomberg. The gauge had posted three consecutive quarterly gains since March last year.

The extra yield, or spread, investors receive from holding 10-year U.S. Treasury notes instead of similar-maturity German debt widened to as much as 39 basis points. That’s the most since Feb. 21, 2011, based on closing price data compiled by Bloomberg.

The Fed is scheduled to buy as much as $4.25 billion of Treasuries maturing from March 2018 to February 2020 today under its program to replace holdings of shorter-term securities with longer-term bonds. The central bank bought $2.3 trillion of securities in two rounds of quantitative easing from December 2008 to June 2011 to spur economic growth through lower borrowing costs.

Bernanke on Recovery

“Despite some recent signs of improvement, the recovery has been frustratingly slow,” Fed Chairman Ben S. Bernanke said yesterday at a convention in Nashville, Tennessee.

RBS’s Shigemi recommended investors hold debt due in five to seven years to profit from so-called roll-down gains. As a bond nears maturity or “rolls down” the yield curve, it is valued at successively lower yields and higher prices. Using the strategy, the security is held for a period of time as it rises in price and is sold to realize the gain. The strategy works when longer maturities yield more than shorter-dated ones.

To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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China Trade Hub Guangzhou Booms as New Area Rises From Dirt

By Kelvin Wong - Mar 15, 2012 1:32 PM GMT+0700

Guangzhou, a trading hub for China since the Ming Dynasty in the 16th century, is in the midst of the biggest commercial real estate boom in its history.

Developers including Guangzhou R&F Properties Co. (2777) and Poly Real Estate Group Co. (600048) plan to add more than 1.7 million square meters (18.3 million square feet) of prime office space to the city this year -- enough for about 120,000 workers. Almost 90 percent of the new space will be built in Zhujiang Xincheng, a zone twice the size of the City of London that Guangzhou’s government earmarked as its new central business district almost a decade ago, according to Cushman & Wakefield Inc.

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People discuss baby strollers in the Ningbo Shenma Childrens Products Co. Ltd. booth during the 110th China Import and Export Fair in Guangzhou. Guangzhou, named Canton by Portuguese traders in the 16th century, hosts the China Import and Export Fair, or Canton Fair, in April every year. Photographer: Forbes Conrad/Bloomberg

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Guangzhou, with a population of more than 12 million, is China’s third-largest city behind Shanghai and Beijing and is the capital of the Guangdong province. Photographer: Nelson Ching/Bloomberg

“Back in 2004, out there it was all just dirt,” said Adrian Chan, assistant to the chairman at Guangzhou R&F, which has completed five office projects in the area since then, including the 160,000-square-meter, 54-story R&F Center, where the interview took place. “Today, it turns out to be a good winner.”

Guangzhou R&F and its rivals will be seeking to fill the space at a time of slowing economic growth, with the nation’s expansion target for 2012 this month set at 7.5 percent, down from an 8 percent goal in place since 2005. China last week reported its biggest trade deficit in at least 22 years, the weakest January-February factory-production gain since 2009, and retail sales that trailed the median of economist estimates.

The new developments may push the prime office vacancy rate in the city to above 20 percent by 2015, from 12 percent now, according to Chicago-based Jones Lang LaSalle Inc.

“With that amount of new supply coming in, I don’t care how fast the absorption rate is, it will pull up vacancy,” said Alvin Lau, managing director for Southern China at CBRE Group Inc. “And if there isn’t enough demand, then rents will fall, though I don’t think there’ll be a crash.”

Opium Trade

Guangzhou, named Canton by Portuguese traders in the 16th century, hosts the China Import and Export Fair, or Canton Fair, in April every year. In the 19th century, British traders imported opium into China through the city until the Chinese government sought to ban it, triggering the Opium War that resulted in the ceding of Hong Kong.

Guangzhou’s government in 2003 decided to turn the Zhujiang Xincheng district into a financial center rivaling Shanghai and Shenzhen. That was followed two years later by a 200 billion yuan ($32 billion) plan to upgrade the whole city’s infrastructure.

GM, Tesco

While finance firms didn’t respond, export and domestic- industrial companies have. The 6.6 square kilometer-district features the regional headquarters of China Mobile Ltd., the world’s biggest phone carrier by users, General Motors Co., the largest foreign automaker in China, and Tesco Plc, the U.K.’s biggest retailer.

“It was never going to work as Guangzhou doesn’t even have a capital market,” said Eric Lam, managing director for Southern China at property adviser Colliers International. “The ones who ended up here are the South China or regional headquarters of companies, not banks. At the end it was the market that directed the district’s positioning.”

Even with the new office supply, Lam said rents in top tier buildings will rise because of “very strong” demand.

Average monthly rent at Zhujiang Xincheng was 279 yuan per square meter in the fourth quarter, compared with 255 yuan a square meter at Tianhe, Guangzhou’s former central business district, New York-based Cushman said. That compares with 507 yuan in Beijing and 414 yuan in Shanghai.

Trading Hub

China will overtake the U.S. as the world’s biggest trading nation by 2016 as intra-Asia commerce and rising demand from emerging markets boosts shipments, according to a report from HSBC Holdings Plc last month.

“The government has always wanted to create a hub for trade operators,” said Donald Choi, managing director of Hong Kong-based Nan Fung Development Ltd., which is spending 6 billion yuan building commercial projects in the city. “So everything here, the excellent infrastructure, the policies, are all being backed by the government.”

Zhujiang Xincheng, which means Pearl River New Town in Mandarin, is home to the Guangzhou Opera House, the biggest performing center in Southern China, and the 1,969-foot Canton Tower, an observation tower that was the world’s tallest when it was completed in 2010.

Guangzhou, with a population of more than 12 million, is China’s third-largest city behind Shanghai and Beijing and is the capital of the Guangdong province. Nearby Foshan was identified by the World Health Organization as the probable source of outbreak of the 2003 Severe Acute Respiratory Syndrome epidemic, or SARS.

Recovery Project

While its economy was recovering from that outbreak, Guangzhou’s government began awarding land in Zhujiang Xincheng to developers including Guangzhou R&F, with the aim of building a financial hub that could replace the city’s existing downtown area of Tianhe.

To encourage investment from developers, Guangzhou, a two- hour train ride north of Hong Kong, went on to spend about 200 billion yuan to build roads and subways in Zhujiang Xincheng and the city. That includes a nine-stop, 4-kilometer long automated people mover similar to the light-rail system in Singapore.

“If some guys say they’re going to put in $10 and ask you to put in only $2, that’s a good bargain,” said Guangzhou R&F’s Chan. “They were drilling all these subways and roads and they ask whether you want to be part of this. And we said OK, though back then it was a pretty big risk to take.”

Guangzhou R&F’s shares have risen 61 percent in Hong Kong this year, while Poly Real Estate has advanced 8 percent in Shanghai.

Zhujiang Xincheng

Investment in real estate in Guangzhou jumped about 40 percent last year, according to estimates by Cushman. Guangzhou’s gross domestic product grew 11 percent in 2011 to 1.24 trillion yuan, ranking it third among all Chinese cities, according to the city government’s website.

Guangzhou heeded central government calls in late 2010 to restrict foreigners from buying homes and offices in the city. It said this month the curbs on foreigners purchasing retail real estate remained in place, according to Zhai Zhongqi, a Centaline Property Agency Ltd. analyst based in the city.

Almost 80 percent of the 2.8 million square meters of prime office space already under construction in Guangzhou is at Zhujiang Xincheng, Cushman said. The district had prime office space of about 1.2 million square meters at the end of 2011, over 50 percent more than the Tianhe district.

Beijing-Style Boom

“If domestic companies’ expansion continues, rental growth will probably be stable over the next few years,” said Marcos Chan, head of research for Greater Pearl River Delta at Jones Lang, the world’s second-biggest commercial broker by market value. “We’re talking about a market that hasn’t seen anything like this before. So when the new buildings are all in place, we may see a boom like what happened in Beijing last year.”

Beijing’s central business district’s prime office rent surged 73 percent in 2011 to be Asia’s third most-expensive office market after Hong Kong and Tokyo, according to Cushman.

Government-led commercial districts in some of China’s second-tier cities, including Chengdu and Hangzhou, “may face a market supply glut” because of over-building fueled by developers wanting to diversify from residential development, according to Cushman.

Pazhou District

The expectation of growing demand for office space in Zhujiang Xincheng has prompted the government to plan the development of another business district in Guangzhou’s Pazhou, the district where the venue of the Canton Fair is. Companies including Nan Fung are building at least 4.5 million square meters of commercial space there in addition to the 335,000 square meters already there.

“Guangzhou’s market for convention and exhibition is still developing,” said Nan Fung’s Choi. “It’s the center of trading of southern China and we’re very confident in its future.”

The company, one of Hong Kong’s two biggest closely held builders, is investing at least HK$6 billion ($773 million) building a hotel, exhibition venue, and an office building in the district.

“The next five years in Pazhou will be like Zhujiang Xincheng five years ago,” said Colliers’ Lam. “At the moment there’ll still land available, but that’ll change fast.”

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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Treasuries Extend Longest Drop Since 2006

By Stephen Kirkland and Lynn Thomasson - Mar 15, 2012 6:40 PM GMT+0700

Treasuries fell for a seventh day, the longest run of declines since June 2006, before data that may show U.S. manufacturing expanded and fewer Americans filed for unemployment benefits. U.S. stock-index futures rose, European shares were little changed and the pound weakened.

The 10-year Treasury yield climbed two basis points to 2.29 percent at 7:35 a.m. in New York, with the similar-maturity German bund yield advancing one basis point. Standard & Poor’s 500 Index futures rose 0.2 percent and the Stoxx Europe 600 Index (SXXP) was little changed near the highest level since July. The pound depreciated against 11 of its 16 most-traded peers, while the euro snapped a two-day drop versus the dollar. Soybeans jumped to a six-month high.

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The number of Americans applying for jobless benefits fell last week while manufacturing in the Philadelphia region expanded, economists said before reports today. Photographer: Paul Taggart/Bloomberg

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March 15 (Bloomberg) -- Sarat Sethi, a principal and portfolio manager at Douglas C. Lane & Associates, talks about the outlook for U.S. Treasuries and investment strategy. Sethi speaks with Sara Eisen and Scarlet Fu on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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March 15 (Bloomberg) -- Brinda Jagirdar, general manager and head of economic research at the State Bank of India, discusses the Reserve Bank of India's decision to leave interest rates unchanged at 8.5 percent and growth expectations for the country. She speaks from Mumbai with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)

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March 12 (Bloomberg) -- Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks about the outlook for the euro, dollar and currency market volatility. He speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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March 15 (Bloomberg) –- Craig Ferguson, a currency hedge fund manager at Antipodean Capital Management in Melbourne, talks about U.S. stocks. Ferguson also talks about Federal Reserve monetary policy, the U.S. bond market and the outlook for the dollar. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

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March 9 (Bloomberg) -- Liran Blum, head of foreign exchange and local market trading at Nomura Holdings Inc., talks about the February U.S. employment report and its impact on the value of the dollar. Liran, speaks with Stephanie Ruhle on Bloomberg Television's "In Business With Margaret Brennan." (Source: Bloomberg)

The number of Americans applying for jobless benefits fell last week while manufacturing in the Philadelphia region expanded, economists said before reports today. U.K. borrowing costs rose at the sale of 30-year bonds after Fitch Ratings said Britain risks losing its top investment-grade status.

“The U.S. economy is undoubtedly getting better,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $71 billion in Tokyo. “The bond market is likely to remain weak.”

The yield on the 10-year U.S. Treasury bond rose to as high as 2.35 percent, the most since Oct. 28. The average yield on 1,277 government debt securities in Merrill Lynch’s Global Sovereign Broad Market Plus Index climbed to 1.743 percent yesterday from 1.647 percent on March 7. The yield was 2.274 percent a year ago.

Average Rate

While Treasury yields are rising, the 10-year rate is about 1.5 percentage points less than last year’s high of 3.77 percent reached on Feb. 9. The yield averaged 3.87 percent in the past decade.

The gain in S&P 500 futures indicated the U.S. equities gauge will rebound from yesterday’s 0.1 percent drop. The Dow Jones Industrial Average (INDU) has risen for the past six days, its longest rally in more than a year.

A government report at 8:30 a.m. in Washington may show the number of Americans applying for jobless benefits fell by 5,000 to 357,000 last week, according to the median forecast in a Bloomberg survey of economists. Other data may show manufacturing in the Philadelphia region expanded in March, while growth in New York factory output slowed.

The Stoxx 600 fell less than 0.1 percent. HeidelbergCement AG, the world’s third-largest maker of cement, jumped 3.5 percent after predicting operating profit and sales will rise this year. Pernod-Ricard SA declined 2.7 percent as Groupe Bruxelles Lambert SA sold a 499 million-euro ($651 million) stake in the producer of wines and spirits.

Gilts Fall

The 10-year U.K. gilt yield climbed two basis points to 2.36 percent, while sterling depreciated 0.3 percent against the euro. The U.K. sold 2 billion pounds ($3.1 billion) of bonds maturing in December 2042 at an average yield of 3.431 percent, up from 3.287 percent at an auction of similar-maturity debt in December.

The Spanish 10-year bond yield fell one basis points as the government sold 3 billion euros of bonds, compared with a maximum target of 3.5 billion euros it set for the sale. The bid-to-cover ratio for notes maturing in April 2016 was 4.13, compared with 2.21 when the notes were sold in January.

The 10-year French bond declined for the second day, with the yield rising three basis points, as the debt office auctioned sold 8.46 billion euros of notes, at the top end of the 8.5 billion euros targeted.

Swiss Central Bank

The Swiss franc strengthened 0.4 percent against the dollar and 0.2 percent versus the euro as the Swiss central bank kept its cap on the franc unchanged and said deflation still threatens the economy even as growth shows signs of stabilizing.

The Swiss National Bank, led by interim Chairman Thomas Jordan, maintained the franc ceiling at 1.20 francs per euro, as forecast by all 14 economists in a Bloomberg News survey. The Zurich-based central bank said in an e-mailed statement today that it also kept its benchmark interest rate at zero.

The MSCI Emerging Markets Index (MXEF) fell less than 0.1 percent, halting a two-day, 1.6 percent advance. The Shanghai Composite Index slipped 0.7 percent after foreign direct investment in China dropped for a fourth straight month, taking its two- decline to 3.3 percent, the most since Aug. 9. The BSE India Sensitive Index lost 1.4 percent, its first retreat in five days, as the central bank kept rates on hold. The Micex Index (MICEX) lost 0.3 percent in Moscow, snapping two days of gains.

Soybeans rose as much as 1 percent to $13.635 a bushel, the highest price since Sept. 16. Natural gas dropped 1.3 percent to $2.3866 per a million British thermal units. Oil rose 0.3 percent to $105.78 a barrel, and copper gained 0.5 percent.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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Obama Praises Cameron’s Strength Over Death of His Son

By Robert Hutton and Kate Andersen Brower - Mar 15, 2012 6:49 PM GMT+0700

Barack Obama praised David Cameron for the strength he showed following the death of his son, Ivan, and the British prime minister responded by comparing the U.S. president to Franklin Roosevelt.

The leaders toasted each other at a banquet on the White House lawn last night that capped two days of bonding between the Democratic president and Conservative prime minister. Obama, after talking about Cameron’s “commitment to human dignity” and “resolve” over Libya, went on to talk about his British counterpart’s experience as a parent.

“I will say something else, David,” Obama said. “All of us have seen how you as a parent along with Samantha have shown a measure of strength that few of us will ever know. Tonight I thank you for bringing that same strength and solidarity to our partnership.”

Ivan, who had suffered from cerebral palsy and life- threatening epileptic fits since birth, died at the age of six in February 2009 after being rushed to hospital in the night. Cameron, 45, was in the opposition at the time. His son’s illness often caused him to sleep on hospital floors after emergency admissions. The couple had two younger children then and in 2010 had a daughter.

The prime minister responded by all but endorsing Obama’s re-election in his own nine-minute toast. He cited the U.S.-led coalition effort in Libya, the surge in Afghanistan and the troop withdrawal from Iraq. The president “has pressed the reset button on the moral authority of the entire free world,” he said.

Oil Prices

Obama and Cameron talked during their meeting yesterday about releasing oil from strategic petroleum reserves without reaching a decision, according to a U.K. official who spoke on condition of anonymity because the talks were confidential.

Democrats in the U.S. Congress have called on Obama to use the oil stockpile to fight an increase in gasoline prices spurred by tensions with Iran over its nuclear program. Regular gasoline at the pump, averaged nationwide, rose 0.6 cents yesterday to $3.811 a gallon, according to AAA data. Prices are 7.2 percent higher than a year earlier.

The U.S. has withdrawn oil 18 times since 1985, including in 2008 after hurricanes struck the Gulf Coast. The U.S. reserve was used in July and August last year, under an International Energy Agency effort to ease shortages of Middle East supply.

U.K. Chancellor of the Exchequer George Osborne said yesterday that rising oil prices are something “all economies will be concerned about.”

A Different Feeling

“It’s doesn’t quite have the same spike feeling that it did a year ago,” Osborne said in an interview on the “Charlie Rose” show broadcast on PBS and Bloomberg Television. “It seems more like a sustained increase, partly driven by demand.”

Cameron, who has made attracting businesses to Britain the main focus of his foreign policy, will conclude his U.S. trip today with visits to the New York Stock Exchange (NYX) and the Sept. 11 memorial.

On the prime minister’s first stop in Newark, he’ll meet Mayor Cory Booker to discuss his experience trying to regenerate the New Jersey city and view urban renewal projects. Cameron is trying to increase the number of directly elected mayors in Britain.

In New York, the premier will host a lunch with business leaders, including billionaire investor George Soros; Blackstone Group LP Chief Executive Officer Stephen Schwarzman; Morgan Stanley CEO James Gorman and Goldman Sachs Group Inc. CEO Lloyd Blankfein, according to the prime minister’s office.

‘Inevitable’ Policies

With banks facing costs of as much as 7 billion pounds ($11 billion) as a result of plans in the U.K. to make them insulate consumer units from investment banking, Cameron may look to reassure financial institutions they can continue to base themselves in London.

Osborne said that such policies are “inevitable.”

“In the United States, you’ve had Dodd-Frank,” Osborne said on the “Charlie Rose” show. “We’ve got to get away from a situation where the U.S. Treasury secretary or the British chancellor has no other option on the night but to bail out a financial institution.”

The prime minister will also take questions today from students at New York University after visiting the Sept. 11 memorial. Cameron’s wife, Samantha, who is traveling with him, was in New York when the terrorists struck, and he spoke last year of the five hours he spent trying to get through to her mobile phone to find out if she was safe.

“I remember exactly where I was when I finally did get through and how pleased I was to hear her voice,” the prime minister told Al Jazeera television.

To contact the reporters on this story: Robert Hutton in Washington at rhutton1@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; James Hertling at jhertling@bloomberg.net

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Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says

By Weiyi Lim - Mar 15, 2012 2:45 PM GMT+0700

China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist.

“If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” His team was a runner-up for best Asian equity strategists in a 2011 Institutional Investor magazine poll.

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Wen Jiabao, China's premier, said home prices are still far from reasonable levels. Photographer: Nelson Ching/Bloomberg

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March 15 (Bloomberg) -- Adrian Mowat, chief Asian and emerging-market strategist at JPMorgan Chase & Co., talks about the outlook for the Chinese economy. He speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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March 14 (Bloomberg) -- Lu Ting, a Hong Kong-based economist at Bank of America Corp., talks about the outlook for China's economic growth and government leadership change. Lu speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

The Shanghai Composite Index fell 2.6 percent yesterday, the most since Nov. 30, after Premier Wen Jiabao said home prices are still “far from a reasonable level.” His comments fueled concern the government will maintain restrictions on the property market for an extended period even as the curbs threaten to slow economic growth.

Wen announced at the beginning of a national lawmakers’ congress on March 5 an economic growth target of 7.5 percent for this year, down from 8 percent over the past seven years. Data last week showed China’s factory output in the first two months of the year rose the least since 2009, while retail sales increased less than economists predicted and inflation eased to the slowest pace in 20 months. A report today showed foreign direct investment in China fell in February.

Mowat said in May the risk of a hard landing was building in China as fixed-asset investment in real estate had increased even as property demand remained weak. That meant residential inventories will increase and lead to a contraction in construction activity, he said in a May 17 interview.

Excessive Decline

“One should be concerned about what’s happening in the China property market,” Mowat said at yesterday’s conference. “People are too complacent that the government can turn what’s going on in this market.”

The slump in Chinese stocks to Wen’s speech yesterday was “overdone” as his comments on property were only a reiteration and don’t reflect consensus in the government, Jason Todd, global head of equity strategy at Religare Capital Markets Ltd., wrote in a report. The Shanghai Composite (SHCOMP) slid 0.7 percent today for the biggest two-day loss since August.

Wen, set to leave office next year after a decade in power, also said yesterday his nation must adopt political change to support an economic transformation that has produced rapid development at the cost of a widening wealth gap.

‘Vastly Overblown’

Gary Shilling, president of A. Gary Shilling & Co., a Springfield, New Jersey-based consultancy firm, said on Feb. 2 that China’s economy is headed for a “hard landing” this year as weaker demand overseas chokes off exports. Shilling, who correctly forecast the U.S. recession that began in December 2007, defines a hard landing as a growth rate below 6 percent.

Shilling and Mowat’s views are in contrast with Yale University Professor Stephen Roach, a former non-executive chairman for Morgan Stanley in Asia, who said on March 8 that concerns China will enter a hard landing are “vastly overblown.”

“I don’t think the banking system will collapse and the property bubble will burst,” Roach said at a conference in Shanghai. “These are all exaggerations.”

China is easing restrictions on lending capacity at three of the nation’s four biggest banks after new loans dropped to a four-year low, officials at the banks with knowledge of the matter said. The government’s two-year effort to control the property market helped spur a 25 percent drop in home sales in the first two months of the year after surging 26 percent in January and February of 2011.

“What you can look forward to is to see a pickup in property demand that will clear up the inventory; that doesn’t appear likely,” Mowat said in an interview after the conference yesterday. “I don’t see any evidence of a policy move that will cause the economy to reaccelerate.”

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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