Goldman Op-Ed Writer Got $150 for Unsolicited Critique

By Edmund Lee - Mar 17, 2012 2:38 AM GMT+0700

The New York Times (NYT), drawing criticism for running an op-ed by a former Goldman Sachs Group Inc. (GS) executive attacking the bank, said the piece was one of thousands of unsolicited submissions it receives weekly.

“We got it by e-mail,” New York Times editorial page editor Andrew Rosenthal said in a telephone interview. Smith was paid about $150 for his submission, a typical amount, said a person with direct knowledge of the situation who declined to be identified because the information isn’t public. The newspaper pays varying amounts for its op-eds, except to public figures or politicians, the person said.

Wall Street, including Morgan Stanley (MS) Chief Executive Officer James Gorman, has faulted the newspaper for publishing an op-ed piece based on the view of one among more than 30,000 Goldman Sachs employees. All the facts that could be checked were checked in Smith’s submission, Rosenthal said.

“The purpose of the op-ed page is to air an important position,” Rosenthal said. “We’re saying, ‘This is interesting,’ and by the way, ‘interesting,’ very often means it’ll make you crazy.”

In the March 14 op-ed that explained why he was quitting, Greg Smith called Goldman Sachs’s culture “toxic and destructive.”

Goldman Sachs Chairman and CEO Lloyd Blankfein rebutted Smith’s claims in a letter to employees the same day, saying his assertions didn’t reflect the New York-based bank’s values and how the “vast majority” of its employees think about their firm.

Piece Merited Publication

Morgan Stanley’s Gorman said he told staff not to circulate the op-ed.

“I was surprised that anyone would run an op-ed piece based upon the view of a single employee,” Gorman said today at an event in New York hosted by Fortune magazine.

Smith was identified by the newspaper as an executive director and head of the bank’s U.S. equity derivatives business in Europe. While Smith wasn’t among the most senior executives at Goldman Sachs, his screed against the firm’s culture merited publication, Rosenthal said.

Rosenthal declined to say when Smith’s letter was received and how long it took for the editorial staff to verify the submission. The majority of op-ed pieces are commissioned, or from writers who have previously written for the section, he said.

“Very few come over the transom queue,” Rosenthal said. “Some of them famously have -- this is one of them.”

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net

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George Clooney Arrested at Sudan Protest in Washington

By Tom Schoenberg - Mar 17, 2012 11:01 AM GMT+0700

George Clooney, the Academy Award- winning movie actor, was arrested outside the Sudanese Embassy in Washington while protesting attacks by the African nation’s government on its southern regions and blocking of humanitarian aid.

Clooney, 50, was taken into custody yesterday and charged with crossing a police line, a misdemeanor, according to George Ogilvie, a Secret Service spokesman. He was taken to a police station for processing, Ogilvie said.

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Actor and activist George Clooney is handcuffed by a member of the US Secret Service for trespassing upon the Sudanese Embassy in Washington, D.C. on March 16, 2012. Photographer: Paul J. Richards/AFP/Getty Images

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March 16 (Bloomberg) -- Actor George Clooney was arrested today during a protest outside the Sudanese embassy in Washington. He’s been charged with crossing a police line, a misdemeanor, according to George Ogilvie, a Secret Service spokesman. (Source: Bloomberg)

He paid a $100 penalty and was released, according to Gwendolyn Crump, a police spokeswoman.

Sixteen others arrested in the group that was protesting included NAACP President Benjamin Jealous, Martin Luther King III and Democratic U.S. representatives Jim Moran and Jim McGovern, according to Ogilvie.

The Hollywood star testified March 14 before the Senate Foreign Relations Committee claiming the Sudanese government was killing its own people and blocking aid to the Nuba mountains and the Blue Nile regions.

That evening, he was among the guests invited by President Barack Obama to a state dinner honoring U.K. Prime Minister David Cameron.

Clooney, at the Senate hearing, described a visit this month to southern Sudan where he witnessed hundreds of people seeking to hide in caves from Sudanese bombings.

Senate Testimony

“The south has all of its oil and the north has the pipelines and refineries,” he told senators. “For years, the north has been taking the oil and keeping most of the profits, buying bombs and rockets and using them on Darfur, the Blue Nile, Abyei and the Nuba mountains.”

Clooney won the Oscar for best actor in a supporting role in 2005 for his performance in “Syriana.” He has been nominated once for directing, twice for screenwriting and three times for best actor in a leading role, according to the motion picture Academy.

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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Dow Halts Seven-Day Rally as Oil Gain Bolsters Concern

By Rita Nazareth - Mar 17, 2012 3:36 AM GMT+0700

The Dow Jones Industrial Average (INDU) snapped a seven-day gain after an increase in oil and consumer prices sparked inflation concern as the economy improves.

Energy (S5ENRS) shares had the biggest advance among 10 groups in the Standard & Poor’s 500 Index. Noble Corp. and Chesapeake Energy Corp. (CHK) increased more than 2.5 percent. The Bloomberg U.S. Airlines Index slumped 3 percent amid expectations about higher fuel prices. Bank of America Corp. jumped 6.1 percent, surging 23 percent in four days. Apple Inc. ended almost unchanged as the company started selling the new iPad.

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Traders work at the New York Stock Exchange (NYSE) on March 15, 2012. Photographer: Scott Eells/Bloomberg

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March 16 (Bloomberg) -- Bloomberg's Pimm Fox and Deborah Kostroun report on the performance of the U.S. equity market today. The Dow Jones Industrial Average snapped a seven-day gain after an increase in oil and consumer prices sparked inflation concern as the economy improves. (Source: Bloomberg)

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March 16 (Bloomberg) -- Robert Doll, chief equity strategist at BlackRock Inc., talks about the outlook for U.S. stocks and his investment strategy. He speaks with Trish Regan, Adam Johnson and Stephanie Ruhle on Bloomberg Television's "Street Smart." (Source: Bloomberg)

The S&P 500 advanced 0.1 percent to 1,404.17 at 4 p.m. New York time, capping a fifth week of gains. The benchmark measure has risen 2.4 percent since March 9, the biggest weekly advance in 2012. The Dow dropped 20.14 points, or 0.2 percent, to 13,232.62, after rallying to the highest level since December 2007. About 8.1 billion shares changed hands on U.S. exchanges today, or 21 percent above the three-month average.

“The bugaboo in the background is oil prices,” said Madelynn Matlock, who helps oversee about $14.6 billion at Huntington Asset Advisors in Cincinnati. “I filled up my car yesterday and it hurts. Things are improving at a slow, but steady pace. If oil prices pop up, it will be different story.”

Equities were little changed as the cost of living rose in February by the most in 10 months, reflecting a jump in gasoline. Confidence among consumers unexpectedly fell in March, a sign rising fuel costs may be starting to weigh on economic prospects. Treasury Secretary Timothy F. Geithner said yesterday rising oil prices show “we still face a dangerous and uncertain world” and there’s no easy way to lower gasoline costs.

Best Since 1998

The S&P 500 is still on pace for the best first quarter since 1998 (SPX), 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.

“It’s a bit of acrophobia,” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York, citing potential investors’ fear after the S&P 500 rose to the highest level since 2008. His firm oversees $209 billion. “The market has just gone up pretty quickly. Meantime, slow and slightly improving has been the way to look at the economy.”

Energy shares gained, while airlines slumped as oil traded above $107 a barrel. Noble (NE) surged 4.8 percent to $41.25. Chesapeake Energy added 2.5 percent to $25.06. Exxon Mobil Corp. (XOM) advanced 0.4 percent to $86.44. US Airways Group Inc. (LCC) lost 5.7 percent to $7.15. United Continental Holdings Inc. (UAL) declined 2.2 percent to $19.95.

Financial Shares

Financial (S5FINL) shares in the S&P 500 rose 0.3 percent as a group. The index surged 6.2 percent in four days following dividend increases by banks including JPMorgan Chase & Co. Bank of America jumped 6.1 percent, the most in the Dow, to $9.80. Wells Fargo & Co. lost 0.5 percent to $33.89.

American International Group Inc. (AIG) fell 0.2 percent to $28.03, after rising as much as 1.1 percent earlier today. The insurer’s repayment of $1.6 billion to the U.S. Treasury Department pushed the government’s portion of recouped financial-bailout money to 80 percent, said a Treasury official familiar with the matter.

Apple (AAPL) ended almost unchanged at $585.57, after briefly rising above $600 yesterday. The 9.7-inch iPad, unveiled on March 7, is the biggest upgrade yet to Apple’s tablet before Microsoft Corp. (MSFT) introduces new software for competing devices.

Generating demand with the model is important for Apple to fend off competition from devices using Google Inc. (GOOG)’s Android operating system and the $199 Kindle Fire from Amazon.com Inc. (AMZN) that’s popular among cost-conscious buyers.

Higher Forecasts

The S&P 500, which yesterday rose above 1,400 for the first time in almost four years amid better-than-estimated economic data, may extend its gain to 1,470, according to Credit Suisse Group AG’s Andrew Garthwaite. He lifted his forecast for the index at the end of 2012 from a previous projection of 1,400, citing increasing risks for bonds and momentum in global earnings.

“The prospects for economic growth are pretty good,” Michelle Gibley, director of international research at San Francisco-based Charles Schwab Corp., said in a telephone interview. Her firm has $1.81 trillion in client assets. “Near term, you could see some volatility in stocks because the run has been so strong. Longer term, the outlook looks good.”

The benchmark measure has “healthy intermediate-term momentum” that helped it recover from a slump at the beginning of the month and may drive it higher, MKM Partners LP’s chief market technician said.

‘Breakout’

The market may be staging a “breakout” after matching its 2011 highs last week, MKM Partners’ Katie Stockton said, citing the momentum indicator known as Moving Average Convergence/Divergence. A second-straight weekly close above 1,370 today would confirm the trend and open the way to an increase to 1,440, Stockton said in a phone interview yesterday.

“I’m bullish on the market from an intermediate perspective based largely on momentum and this breakout that appears to be under way,” Stockton said. “The fact that the S&P 500 has managed to exceed resistance at the 2011 high tells us that breakout should overrule any negative set-up otherwise.”

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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Sears To Close 62 Stores by July to Reduce Costs

By Leslie Patton and Lauren Coleman-Lochner - Mar 17, 2012 3:32 AM GMT+0700

Sears Holdings Corp. (SHLD), the department-store chain controlled by hedge fund executive Edward Lampert, plans to close 62 retail stores in the first half of this year to reduce expenses.

The closings include 43 Sears Hometown stores, 10 Sears Hardware stores and 9 The Great Indoors stores, the Hoffman Estates, Illinois-based company said in a filing with the U.S. Securities and Exchange Commission on March 14. The company, which also owns the Kmart chain, had 4,010 stores as of Jan. 28.

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A customer enters a Sears store in Peru, Illinois. Photographer: Daniel Acker/Bloomberg

Lampert, who is Sears’s chairman and controls about 60 percent of its shares, is spinning off units to generate cash and closing stores after the company posted its largest quarterly loss in at least nine years. Sears said last month it planned to raise as much as $770 million by selling 11 store sites and separating some smaller-format businesses.

Chris Brathwaite, a Sears spokesman, declined to provide a list of the 62 stores to be closed or specify when the stores will shut down. Brathwaite said in an e-mail that he didn’t know how many jobs may be affected because most of the closing stores are independently owned and operated.

Sears fell 1.1 percent to $82.55 at the close in New York. The shares have more than doubled this year after plunging 56 percent in 2011.

Sears also disclosed in the filing that Lampert’s ESL Investments Inc. agreed with an undisclosed financial institution to buy a stake in contracts that pay suppliers for their accounts receivable with Sears should the company seek protection from creditors.

Planned Closings

The retailer last year announced a plan to close 120 Kmart and Sears full-line stores that would generate as much as $170 million in cash from sales of inventory and leasing or sales of the locations.

The company had $747 million in cash and near-cash items at the end of the fourth quarter, about 45 percent less than a year earlier.

To contact the reporters on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net; Lauren Coleman-Lochner in New York at llochner@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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Afghan Shooting Suspect Bales Arrives at U.S. Prison

By Gopal Ratnam and Tony Capaccio - Mar 17, 2012 11:20 AM GMT+0700

Spc. Ryan Hallock, 28th Public Affairs/U.S. Army

Staff Sgt. Robert Bales, 1st platoon sergeant, Blackhorse Company, 2nd Battalion, 3rd Infantry Regiment, 3rd Stryker Brigade Combat Team, 2nd Infantry Division, in 2011.

U.S. Army Staff Sergeant Robert Bales, the suspect in the killings of at least 16 Afghan civilians, arrived yesterday at the U.S. military’s prison in Kansas, the Army said.

The Pentagon for the first time named the 38-year-old sniper, without indicating he has yet to be charged in the case. After being held in Afghanistan and then Kuwait, Bales was flown to Fort Leavenworth in Kansas, where he will be placed in special housing in his own cell, according to an e-mailed Army statement.

Women and children were among the victims of the March 11 shootings in two villages in southern Afghanistan. The attacks threaten to erode U.S.-Afghan relations, drain remaining U.S. and European popular and political support for the war and add pressure to speed troop withdrawals.

Bales was on his first tour in Afghanistan after three in Iraq. He serves in the Army’s 2-3 Infantry, 3rd Stryker Brigade Combat Team of the 2nd Infantry Division, based at Joint Base Lewis-McChord in Washington state.

Bales served a total of 37 months during his three tours in Iraq and has been awarded three Army Good Conduct medals, six Army Commendation medals and two Meritorious Unit Commendations, according to the Army’s statement. He completed a two-year associate degree, qualified as a sniper in 2008, and also completed a Warrior Leaders Course that year, the Army said.

He arrived in Afghanistan on Dec. 3 after his last Iraq tour ended in June 4, 2010. His time at home was about average for troops who have deployed to Iraq and Afghanistan. Increasing such “dwell time” has been an Army goal since the Iraq war began.

Generally ‘Mild-Mannered’

The soldier’s Seattle lawyer, John Henry Browne, described his client at a news conference on March 15 without naming him. He portrayed a soldier who was “in general mild-mannered” with “a very strong marriage” and two children. Browne, who couldn’t be reached for comment yesterday, was quoted by the Associated Press as confirming that Bales is his client.

After sustaining a concussive head injury and losing part of a foot during his tours in Iraq, the soldier and his family were disappointed when he was sent to Afghanistan in December, Browne said.

“It would be fair to say that he and the family were not happy that he was going back,” Browne told reporters yesterday at his office in Seattle. “The brigade was told that they would not be redeployed.”

A soldier in the same unit in southern Afghanistan had been “gravely injured” a day before the shootings, an incident that affected everyone in the unit, Browne said.

The stress of a fourth combat deployment, a troubled marriage and alcohol use may have triggered the killing spree, according to a U.S. official briefed on the case who spoke on condition of anonymity during the investigation.

Browne denied that alcohol use or domestic discord played a role.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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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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March 16 (Bloomberg) -- Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, talks about the outlook for U.S. stocks and allocation strategy. McCain speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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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March 15 (Bloomberg) -- Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd., talks about currency strategy for the yen, dollar and Swiss franc. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

“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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