U.S. Stocks Rise Amid Speculation Central Banks May Act

By Rita Nazareth - Jun 16, 2012 3:45 AM GMT+0700

U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back weekly rally since April, on speculation central banks will act to boost the economy as investors awaited Greek elections this weekend.

Microsoft Corp. (MSFT) gained 2.3 percent as a person familiar with the matter said the company will announce plans next week to sell a tablet computer running the next version of Windows. IntercontinentalExchange Inc. added 4.7 percent as its bid for the London Metal Exchange was rejected in favor of Hong Kong Exchanges & Clearing Ltd.’s offer. Facebook Inc. (FB) jumped 6.1 percent and capped the first weekly gain since it went public.

The S&P 500 rose 1 percent to 1,342.84 at 4 p.m. New York time, the highest since May 11. The Dow Jones Industrial Average climbed 115.26 points, or 0.9 percent, to 12,767.17. Trading volume for exchange-listed stocks in the U.S. was about 7.5 billion shares, 11 percent above the three-month average.

“Ahead of Sunday’s election in Greece, central bankers stand ready,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote today. “With all the water central banks have expended out of their fire hoses in their attempt to ‘do something,’ I can only think of magic candles. Those candles you blow out that only flare up again immediately after.”

Expectations for global policy action grew as central banks intensified warnings that Europe’s failure to tame its crisis threatens the economy. European Central Bank policy makers have overcome a key concern about taking the benchmark rate below 1 percent, two euro-area central bank officials said. The June 17 vote will turn on whether Greeks accept open-ended austerity to stay in the euro or reject the conditions of a bailout and risk becoming the first to exit the 17-member currency.

Fed Action

Stocks also rose on speculation the Federal Reserve may join central banks in taking steps to boost growth. Data today showed that industrial production unexpectedly fell and consumer confidence slid, adding to evidence of U.S. economic weakness. U.S. policy makers meet June 19-20.

“There’s hope of some coordinated action if bad news does occur,” said Tim Ghriskey, who oversees about $2 billion as chief investment officer of Solaris Group in Bedford Hills, New York. He spoke in a telephone interview. “There’s the Greek election. It could be an ongoing process.”

David Bianco, Deutsche Bank AG’s chief U.S. equity strategist, withdrew a forecast that the S&P 500 (SPX) will post a near-term gain of 5 percent or more, citing uncertainty before Greece’s elections. While Bianco maintained his year-end projection of 1,475 for the index, he said he’s no longer convinced the next 5 percent move in the gauge is higher.

Least-Tied

Concern about Europe’s debt crisis and a global slowdown put the S&P 500 on the brink of a so-called correction this month. It fell 9.9 percent from an almost four-year high in April through
June 1. Since then, the lowest valuation in six months and bets on policy action drove the gauge up 5.1 percent. The S&P 500 rose 1.3 percent this week.

All 10 groups in the S&P 500 rose today as energy and technology shares had the biggest rallies. Chevron Corp. (CVX), the second-largest U.S. energy company, added 2.4 percent to $104.33. Oracle Corp. (ORCL), the biggest maker of database software, added 2.9 percent to $27.70 after ThinkEquity LLC recommended buying the shares.

Microsoft jumped 2.3 percent to $30.02. The company may demonstrate the tablet computer at an event scheduled in Los Angeles on June 18, said a person familiar with the plans. The company has said it aims to release the new Windows 8 operating system in time for the holiday season. Frank Shaw, a spokesman for Microsoft, declined to comment.

Bidding Process

IntercontinentalExchange, the second-largest U.S. futures market, rallied 4.7 percent to $134.80. ICE (ICE) and Hong Kong Exchanges were the two parties left in a bidding process announced by the LME in September. The LME said today it would no longer be seeking competing takeover offers.

Facebook rose 6.1 percent to $30.01, extending its weekly advance to 11 percent. The company asked a court to consolidate more than 40 shareholder lawsuits over its initial public offering last month. Investors sued Facebook and Nasdaq OMX Group Inc. over problems in trading company shares on May 18, the first day they were publicly available.

Navistar International Corp. (NAV) soared 7.6 percent to $29.95. MHR Fund Management LLC disclosed a 13.6 percent stake in the truckmaker, more than billionaire investor Carl Icahn’s 11.9 percent holding. MHR is run by Mark Rachesky, a former protege of Icahn’s. MHR “may seek to engage in discussions with management,” according to a regulatory filing.

Financial Shares

Financial shares in the S&P 500 advanced 1.4 percent. Bank of America Corp. (BAC) added 3.1 percent to $7.90, after slumping as much as 1.4 percent earlier today.

David Trone, an analyst at JMP Securities LLC, expects some of the largest financial institutions to underperform as recent developments in Europe increase concern the region will experience “significant” damage.

SAIC Inc. (SAI) jumped 5.1 percent to $12.24. The defense contractor specializing in computer services was raised to overweight from neutral at JPMorgan Chase & Co.

The Bloomberg U.S. Airlines Index (BUSAIRL) of 10 stocks slumped 2.2 percent. AMR Corp. Chief Executive Officer Tom Horton asked an ad hoc bondholder group to study his plan for a stand-alone American Airlines before reviewing a possible merger for the bankrupt carrier, two people familiar with the matter said. Horton expressed frustration with attention being given to a pending US Airways Group Inc. (LCC) merger bid, the people said.

US Airways

US Airways tumbled 3.6 percent to $12.03. Southwest Airlines Co. (LUV) dropped 2.9 percent to $8.93.

Any multiyear rally in U.S. stocks may depend on a signal that the bond market has yet to send, according to Michael Hartnett, Bank of America’s chief global equity strategist.

Bond yields have to reach “an inflection point” before shares can move into what’s known as a secular bull market if history is any guide, Hartnett wrote this week.

Hartnett highlighted three inflection points in the past century that foreshadowed stock-market booms during the 1920s, after World War II, and throughout most of the 1980s and 1990s.

A comparable surge in share prices is unlikely, he wrote, “until Treasury yields rise in response to stronger growth and a healthier global economy.” The 10-year yield fell to a record 1.4387 percent this month.

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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Torres Helps Spain Rout Ireland at Euro 2012; Croatia Ties Italy

By Bob Bensch - Jun 15, 2012 5:01 AM GMT+0700

Fernando Torres had two goals as Spain routed Ireland 4-0 to move into a tie atop Group C at the European soccer championship with Croatia, which rallied to draw 1-1 against Italy.

David Silva and Cesc Fabregas also scored last night in defending champion Spain’s win in Gdansk, Poland. Mario Mandzukic’s 72nd-minute score earned Croatia the point with Italy in Poznan.

Spain and Croatia have four points ahead of their meeting in the final round of group matches on June 18. The top two teams in each group advance to the quarterfinals.

“After two matches this is a really good situation,” Croatia coach Slaven Bilic said on UEFA’s website. “Six points would have been better, but this is pretty good.”

Italy has two points and Ireland, which was eliminated by its second straight loss, has none. They meet in the final game, with the Italians still in contention to advance.

Today, co-host Ukraine plays France in Donetsk and England meets Sweden in Kiev in the second round of games in Group D.

In Gdansk, Torres scored twice in his return to the lineup after starting on the bench for the 1-1 draw with Italy as manager Vicente del Bosque elected to play the opening game without a recognized striker.

“You have to enjoy every moment,” Torres said on UEFA’s website. “I had the luck to start the match and score goals and enjoy it with the team.”

Spain Domination

Spain dominated with 66 percent of possession and had 26 shot attempts, 20 on target, compared to six for Ireland, which becomes the first team eliminated from the 16-team tournament.

“For the vast majority we were chasing shadows,” Irish midfielder Keith Andrews told ITV. “We just couldn’t get near them.”

Torres needed four minutes to put Spain in front as he picked up the loose ball after Richard Dunne’s tackle on Silva at the edge of the area, moved to his right and fired a shot by goalkeeper Shay Given.

Given also made saves against Silva, Andres Iniesta, Xavi Hernandez and Alvaro Arbeloa to keep the Irish within a goal at halftime.

Silva doubled the lead four minutes after the break as he got the rebound after Given saved Torres’s shot and slid a left- footed effort through three defenders into the net.

Torres added his second goal in the 70th minute as he took a pass from Silva between two defenders and slotted past Given. Fabregas replaced Torres in the 74th minute and closed the scoring nine minutes later by powering a shot past Given after a short corner kick.

Mandzukic’s Third

In Poznan, Mandzukic’s goal wiped out a first-half score from Andrea Pirlo. It was the striker’s third goal to tie Germany’s Mario Gomez and Russia’s Alan Dzagoev for the tournament lead.

“We can get through,” Italy coach Cesare Prandelli said on UEFA’s website. “We are mathematically still in it, but we have missed an opportunity here.”

Italy controlled play early as Mario Balotelli took a pass from Emanuele Giaccherini, turned near the penalty spot and shot wide of goal after three minutes. Claudio Marchisio fired over goal and Balotelli’s shot was punched away by Stipe Pletikosa.

Italy goalkeeper Gianluigi Buffon went down to grab Darijo Srna’s cross at the near post and also caught Ivan Perisic’s header.

Antonio Cassano and Balotelli shot wide and Pletikosa then made two saves off Marchisio after the midfielder turned Srna in the area. Italy took the lead in the 39th minute when Pirlo curled a free kick between Pletikosa and the near post.

Croatia started quickly in the second half as Luka Modric forced a save from Buffon in the opening minute, then sent a shot over goal. Balotelli also shot over from just outside the area after finding space.

Croatia drew even with 18 minutes remaining as Ivan Strinic lofted a cross from the left for Mandzukic, who knocked it down and fired a shot in off the right post.

To contact the reporter on this story: Bob Bensch in London at bbensch@bloomberg.net.

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net.

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Central Banks Warn Greek-Led Euro Stress Threatens World

By Simon Kennedy - Jun 15, 2012 6:34 AM GMT+0700

Central banks intensified warnings that Europe’s failure to tame its debt crisis threatens to roil the world’s financial markets and economy as Greece’s election in two days looms as the next flashpoint for investors.

Monetary policy makers from the U.K. to Japan and Canada sounded the alert about potential fallout from the single currency bloc’s troubles. They spoke as Group of 20 leaders prepare to meet in Mexico next week amid the weakest international economy since the 2009 recession.

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A supporter of Alexis Tsipras, leader of Greece's Syriza party. international economy since the 2009 recession. A victory by Syriza, the party that promises to renege on Greece’s end of the bailout deal, could speed the nation’s exit from the euro. Photographer: Chris Ratcliffe/Bloomberg

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June 15 (Bloomberg) -- Eric Fishwick, head of economic research at CLSA Ltd., talks about the outlook for a solution to Europe's debt crisis, and its similarities with Asia's currency crisis more than a decade ago. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

A victory by Syriza, the party that promises to renege on Greece’s end of the bailout deal, could speed the nation’s exit from the euro. Absent a quick fix from divided European governments, central bankers may have to engage in fresh crisis- fighting of their own to ensure markets operate and their economies grow if the election jolts investors. Spain’s 10-year bond yield vaulted above 7 percent yesterday in a fresh sign of the stress that has plagued the region for two years.

The crisis has created a “large black cloud of uncertainty hanging over not only the euro area, but our economy too, and indeed the world economy,” Bank of England Governor Mervyn King said in London late yesterday.

Canada faces a “major shock,” and global financial conditions could deteriorate significantly if Europe’s crisis worsens, the country’s central bank said yesterday. Bank of Japan (8301) Governor Masaaki Shirakawa said June 13 that the euro area poses the biggest challenge to the world’s No. 3 economy.

Sufficient Liquidity

“It will be very important for central banks over the next few weeks to articulate what their role is,” said Lawrence Goodman, president of the Center for Financial Stability in New York, a research group focused on financial markets. “The key goal will be to provide sufficient liquidity in the event of a freeze.”

U.S. stocks advanced after Reuters reported that central banks are prepared to coordinate actions if needed to boost liquidity in financial markets, citing officials linked to the G-20 nations. The Standard & Poor’s 500 Index added 1.1 percent to 1,329.10 at the close of trading in New York.

Central bankers have been at the forefront of efforts to insulate their economies from the financial crises that began to rage in August 2007. In October 2008, they cut interest rates in unison, and at the end of last year, six of them made it cheaper for banks to borrow dollars in emergencies. Dollar swap lines have been repeatedly augmented since the 2008 collapse of Lehman Brothers Holdings Inc.

Coordinated Response

Investors want global leaders to take action on reviving economic growth, Institute of International Finance Managing Director Charles Dallara said in a letter yesterday to the G-20. He said markets “will be looking expectantly for evidence of a globally coordinated policy response targeted to revive growth prospects.”

Europe’s turmoil this week forced Spain to ask for a bailout of its banks that may run as high as 100 billion euros ($126 billion), making it the fourth and largest euro-zone economy to seek aid. The record yield on Spanish bonds has fueled speculation the world’s 12th-biggest economy may need a full rescue.

Attention is turning to Greece, which votes a second time in six weeks after a May 6 ballot failed to yield a government. The Syriza party, led by Alexis Tsipras, is vying for first place in the opinion polls with a promise to abrogate the terms of the 240 billion-euro bailout from the European Commission, European Central Bank and International Monetary Fund. That’s drawn warnings that it could cost Greece the aid it needs and ultimately its place within the euro.

China’s Cut

Monetary policy makers are already leaning toward greater stimulus a week after China cut borrowing costs for the first time in four years. King said yesterday that more aid may be needed in the U.K., and a new plan to spur bank lending may be in place in a few weeks.

ECB President Mario Draghi last week left the door open for an interest-rate cut, while Federal Reserve Chairman Ben S. Bernanke says U.S. policy makers will discuss next week whether to do more to spur growth. Both have pointed to the limitations of repeated monetary support.

While the G-20 could consider coordinated monetary stimulus, it’s unlikely given neither the U.K. nor European central banks acted when they had a chance a week ago, Andrew Kenningham, an economist at Capital Economics Ltd. in London, said in a report yesterday.

Unlikely to Agree

“In fact, we think the central banks which matter most are unlikely to agree to further significant policy stimulus this year unless and until the crisis in the euro-zone deteriorates further,” he said.

G-20 governments are also indicating they will use the June 18-19 summit in Los Cabos, Mexico, to again demand Europe pursue fresh measures. It’s the fourth consecutive such meeting at which Europe’s strains have topped the agenda and comes seven months after talks in Cannes, France, were dominated by the prospect Greece could be forced from the euro.

Canadian Finance Minister James Flaherty said June 13 that “a disruptive moment” could occur if Greeks back anti-bailout parties, which may end up costing the country membership in the euro. U.S. Treasury Secretary Timothy F. Geithner said the same day that European leaders “recognize they’re going to have to do a bunch more.”

Less Incremental

“Countries outside of Europe have been consistent in calling for bolder, less incremental measures to stem the crisis,” said Daniel Price, who organized the first G-20 summit for President George W. Bush in 2008 and is now managing director of Rock Creek Global Advisors, a Washington-based consultancy. “They are losing patience with the apparent inability of Europe to implement reforms all recognize as necessary.”

Chancellor Angela Merkel, leader of Europe’s biggest economy, said yesterday Germany is willing to help resolve the regional strains though cannot tackle the global fallout alone.

Acknowledging that Germany, as “the engine of growth and anchor of stability in Europe,” will be asked to do more in Mexico, she said Germany would do so because “we are convinced that Europe is our destiny and our future.”

Merkel still rejected all “seemingly easy” solutions, such as issuing joint debt. European leaders are preparing for their own summit in Brussels this month aimed at devising ways to better integrate the euro area.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

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

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Asian Stocks, Commodities Gain on Stimulus Bets; Dollar Declines

By Glenys Sim and Jonathan Burgos - Jun 15, 2012 9:55 AM GMT+0700

Asian stocks rose, poised for its biggest weekly gain in five months, and commodities climbed for a second day on expectations that central banks may increase measures to boost economies as Europe’s debt crisis hurts growth. Credit risk in the region fell and the dollar declined.

The MSCI Asia Pacific Index added 0.5 percent at 10:50 a.m. in Hong Kong, where the Hang Seng Index rallied 1 percent. Standard & Poor’s 500 Index futures advanced 0.2 percent after the gauge surged 1.1 percent yesterday. The S&P GSCI index of commodities climbed 0.7 percent to the highest level in a week. Asian credit risk dropped for a fifth day in the longest run since March 19. The Dollar Index lost 0.2 percent.

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Mervyn King, governor of the Bank of England. Photographer: Chris Ratcliffe/Bloomberg

U.S. stocks were buoyed yesterday after jobless claims and inflation data supported the case for more stimulus by the Federal Reserve, which meets for two days from June 19. Data today may show U.S. industrial production slowed and consumer confidence fell. Greek elections on June 17 may determine if the country upholds austerity conditions attached to international aid, and could lead to the first ouster from the euro bloc.

“We’re likely to see increasing talk from governments about how they can encourage the growth agenda,” said Angus Gluskie, who helps manages more than $350 million at White Funds Management in Sydney. “There’s plenty of uncertainties out there. We may still see investors continue to be nervous about Spain and Italy in the aftermath of Greece’s election.”

Monetary policy makers from the U.K. to Japan and Canada stepped up warnings about the threat to world financial markets should Europe fail to contain its debt crisis. Bank of England Governor Mervyn King said the central bank will activate a sterling liquidity facility to aid banks, and plans to have a form of credit easing operating to boost lending as the case for looser policy “is growing.”

Oil Gains

Crude in New York climbed 0.7 percent to $84.53 a barrel, extending yesterday’s 1.6 percent jump as the Organization of Petroleum Exporting Countries kept its output quota unchanged amid calls for members to reduce production to comply with current targets. Copper futures advanced 0.9 percent in London, set for its first weekly increase in seven. Gold for immediate delivery added 0.1 percent in its sixth consecutive advance.

“It would appear the weaker U.S. dollar and rallying U.S. equity markets in response to speculation that global leaders would intervene after this weekend’s election in Greece, were supportive,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note.

China, the biggest consumer of most commodities including steel and aluminum, can further cut its reserve requirement ratio as M2 growth is “relatively slow” this year, according to a report by researchers at the Chinese Academy of Social Sciences published in the People’s Daily.

Chinese Yuan

The People’s Bank of China raised its daily yuan fixing by 0.16 percent, the most since May 2, to 6.3089 per dollar today. That’s 0.97 percent stronger than yesterday’s closing spot in Shanghai and the currency is allowed to trade as much as 1 percent on either side of the fixing.

The yuan strengthened 0.07 percent to 6.3657 per dollar in Shanghai, heading for the first weekly gain in six weeks, according to the China Foreign Exchange Trade System.

Three stocks rose in the MSCI Asia Pacific Index (MXAP) for each one that fell. China Railway Group Ltd. (390) advanced 2 percent in Hong Kong after the Economic Information Daily said the Chinese government plans to build six coal transport railways. DeNA Co., Japan’s biggest social-gaming operator, surged 14 percent on a stock buy-back plan.

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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

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Baidu to Share Revenue With Apple on China IPhone Deal

By Mark Lee - Jun 15, 2012 6:33 AM GMT+0700

Baidu Inc. (BIDU) said Apple Inc. (AAPL) will be entitled to a share of advertising sales after the Chinese company’s search engine was added as part of a software upgrade for iPhones in China.

The revenue-sharing agreement with Apple follows similar accords between Baidu and manufacturers of handsets that use Google Inc. (GOOG)’s Android operating system, Wang Jing, vice president at Beijing-based Baidu, said in a phone interview yesterday. He declined to disclose the commercial terms.

Apple said this week it will offer Baidu’s search engine as an option for iPhone and iPad customers and add Chinese-language support for its Siri voice technology, as the world’s most valuable company tailors its products for Chinese consumers. Baidu, which fields about 80 percent of China’s Web searches, is prepared to incur costs to add smartphone users by offering services such as music streaming for free, Wang said.

“Previously they were sharing revenue with websites to bring in search-engine traffic, and now they are sharing it with smartphone manufacturers,” said Eric Wen, who rates Baidu buy at Mirae Asset Securities in Hong Kong. He estimates Baidu distributes less than 10 percent of revenue generated from smartphones to device makers.

Baidu rose 0.8 percent to $117.64 at the close in New York. The stock has gained 1 percent this year, underperforming the 44 percent gain in the Hong Kong-traded shares of Tencent Holdings Ltd. (700), China’s biggest Internet company.

Carolyn Wu, a spokeswoman at Apple in Beijing, didn’t immediately return messages to her office and mobile phones seeking comment.

Focus on Smartphones

Baidu and Tencent both need to invest in their mobile Internet operations as more people in China access services on smartphones instead of computers, according to Mirae’s Wen.

Baidu is sharing advertising revenue with hardware partners to encourage them to install its search engine on their products before shipping. About 80 percent of branded phones based on the Android technology have Baidu preloaded, billionaire Chief Executive Officer Robin Li said in April.

Users of the new iOS 6 operating system that runs iPhones and iPads will have increased access to Chinese Internet services including Baidu, Sina Corp. (SINA)’s Weibo microblog, and online videos from Youku Inc., (YOKU) Apple said this week. The Cupertino, California-based company tripled its revenue in China last quarter, making the Asian country its biggest market outside the U.S.

Baidu introduced its “Cloud ROM” software for download by users of Android devices this month, giving them access to services including remote data storage and free music streaming.

“We are very willing to pay the costs, we are happy these services are free,” Wang said.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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Pelosi Joins Cantor Among Wealthiest U.S. House Leaders

By Heidi Przybyla - Jun 15, 2012 1:41 AM GMT+0700

House Minority Leader Nancy Pelosi and her Republican counterpart, Majority Leader Eric Cantor, are the wealthiest members of the U.S. House leadership, according to financial disclosure forms.

Pelosi, 72, of California tops the list of House leaders, with $40 million to $187 million in financial assets she reports with her husband, San Francisco commercial real estate investor Paul Pelosi. Most of their assets are listed as rental properties in California and partnership income in companies including investment management and restaurants.

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House Minority Leader Nancy Pelosi in the Capitol Visitor Center. Photographer: Tom Williams/CQ Roll Call/Getty Images

Cantor, 49, of Virginia listed financial assets including stocks and real estate holdings valued at almost $4 million to $9.6 million on his annual financial disclosure statement released today.

In the Senate, Minority Leader Mitch McConnell of Kentucky stands far above all his leadership counterparts, listing assets valued between at least $9.9 million and $44.5 million. Much of the wealth is held by his wife, Elaine Chao, who served as labor secretary throughout former President George W. Bush’s eight years in office.

Arizona Senator Jon Kyl, the chamber’s second-ranking Republican, reported assets between $467,000 and $1.08 million, with the bulk of it in individual retirement accounts.

Domino’s Pizza

Among Cantor’s biggest stock holdings is an investment of $500,000 to $1 million in Domino’s Pizza Inc. (DPZ) His wife, Diana, a former Goldman, Sachs & Co. (GS) vice president who is chairman of the board of the Virginia Retirement System, is a director of Domino’s Pizza and Media General Inc. (MEG), a Richmond-based newspaper and broadcast company.

The Cantors also own an Arlington, Virginia, condominium valued at between $500,001 and $1 million. He listed between $500,000 and $1 million in Bank of America bank accounts.

Maryland Democrat Steny Hoyer, the minority whip, is among the least wealthy House leaders.

He cited assets of $30,000 to $100,000. Hoyer reported he owes at least $100,000 and as much as $250,000 in a mortgage on his home in Mechanicsville, Maryland, to SunTrust Banks in Richmond.

Financial disclosure forms filed by members of Congress require lawmakers to state the value of holdings in broad ranges. Precise figures aren’t made public.

Mutual Funds

House Speaker John Boehner, an Ohio Republican who once owned a small business, listed unearned income of at least $10,116 and as much as $46,700 from mutual-fund dividends or capital-gains distributions.

Boehner listed assets valued between $1.8 million and $5.4 million. All of his stock and bond investments in companies including Intel Corp., Home Depot Inc., Honeywell International Inc., Pfizer Inc. and JPMorgan Chase & Co. (JPM) were through individual retirement accounts. He and his wife, Debbie, who works as a real estate agent, didn’t report a mortgage on their home near a golf course in suburban Cincinnati.

Pelosi, who yielded the speakership to Boehner after Republicans won control of the House, and her husband own a vineyard in St. Helena, California, valued between $5 million and $25 million.

Reid’s Assets

In the Senate, Majority Leader Harry Reid of Nevada is the wealthiest Democratic leader, listing assets between $2.78 million to $6.19 million, with much of his net worth in real estate holdings in his home state of Nevada and in Arizona. Reid, the son of a Nevada hard-rock miner, has holdings in bonds and stock mutual funds and other investments.

Patty Murray of Washington state, the fourth-ranking Senate Democrat and the only woman in the chamber’s leadership, listed assets between $564,000 and $1.5 million. Senator Charles Schumer of New York, the chamber’s third-ranking Democrat, listed assets of $320,000 to $950,000.

About 20 percent of U.S. House members applied for filing extensions this year.

Members of Congress are required to report details of mortgages on their personal residences for the first time this year, a provision included as part of a congressional ethics law. While the Senate required members to list the terms of their mortgage -- including interest rates, length and points used to pay down their rates -- the House didn’t.

Mortgage Rates

Among lawmakers paying the highest home-mortgage interest rates is Schumer, who has a 15-year mortgage taken out in 2002 at 6.85 percent.

House Financial Services Committee Chairman Spencer Bachus, an Alabama Republican who will preside over a hearing on JPMorgan next week, has 2 mortgages with the bank, according to federal disclosure documents. JPMorgan chief executive Jamie Dimon is scheduled to testify before the committee on June 19.

Senate Democrat Jay Rockefeller of West Virginia reported among the best interest rates on a 1998 loan from the United National Bank of Charleston. It is listed as New York Prime minus 1 percent. As of June 13, the prime rate was 3.25 percent.

Today’s filings also show what gifts lawmakers have received. Representative Gary Ackerman, a New York Democrat, acknowledged exceeding legal limits. Ackerman, who is retiring at the end of the year, accepted a “priceless” gift, according to his personal financial disclosure form. What did the Long Islander get?

“The blessed opportunity for 30 years to pay back, in some small measure, the good things that happened to me.” And who gave it to him? “The people,” his form said.

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider in Washington at jschneider50@bloomberg.net.

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U.S. Stocks Rise on Reports Policy Makers May Take Action

By Inyoung Hwang - Jun 15, 2012 4:36 AM GMT+0700

U.S. stocks advanced, erasing a weekly loss for the Standard & Poor’s 500 Index, amid reports policy makers may take steps to assist economies battered by Europe’s sovereign debt crisis.

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Traders work at the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg

All 10 groups in the S&P 500 rose, led by telephone service providers. Home Depot Inc. and Walt Disney Co. added at least 2.1 percent after data on inflation and jobless claims fueled bets the Federal Reserve will act to spur growth. Exxon Mobil Corp. (XOM), the largest energy producer by market value, increased 1.9 percent as oil rallied. Travelers Cos. and Bank of America Corp. (BAC) gained at least 2.1 percent as financial companies jumped.

The S&P 500 gained 1.1 percent to 1,329.10 at 4 p.m. in New York. The benchmark index for American equities is up 0.3 percent for the week. The Dow Jones Industrial Average rose 155.53 points, or 1.2 percent, to 12,651.91 today. Trading volume for exchange-listed stocks in the U.S. was about 6.6 billion shares, 2.5 percent below the three-month average.

“It’s a sign that they’re talking and that’s good,” Rod Smyth, the Richmond, Virginia-based chief investment strategist of Riverfront Investment Group, which manages $3 billion, said in a telephone interview. “Equity investors are poised with the knowledge that if European policy makers can figure out a way to stem the vicious cycle that’s been building, then stocks look really cheap and bonds look expensive.”

The S&P 500 tumbled as much a 9.9 percent from a four-year high in April through June 1 amid lower-than-forecast economic data and concern Europe’s debt crisis was spreading. The index has rebounded 4 percent since, and trades at 13.4 times its companies’ reported earnings, below the average of 16.4 since 1954, according to data compiled by Bloomberg. The S&P 500 fell yesterday as borrowing costs rose in Italy and Germany before elections in Greece on June 17 that may determine whether the Mediterranean nation will leave the euro area.

Central Banks

Stocks extended gains today amid reports of plans by central banks. Bloomberg News reported that U.K. Chancellor of the Exchequer George Osborne and Bank of England Governor Mervyn King are preparing two programs to increase the flow of credit. Reuters said that central banks are prepared to take action if needed to boost liquidity in financial markets if the Greek elections cause tumultuous trading, citing officials linked to the Group of 20 nations.

Speculation grew that the Federal Reserve will discuss stimulus efforts at its meeting next week after reports showed jobless claims unexpectedly climbed by 6,000 to 386,000 last week and the cost of living fell by the most in more than three years.

‘Good Stage’

“Good inflation data and weak employment is a good stage for a Fed policy response,” Kevin Shacknofsky, who helps manage about $5 billion for Alpine Mutual Funds in Purchase, New York, said in an e-mail. “We are at the stage where bad news is good news in terms of a policy response. Jobs will be the critical factor that influences the Fed.”

Home Depot (HD), the largest U.S. home-improvement retailer, climbed 2.3 percent to $52.16 and Disney, the world’s largest entertainment company, advanced 2.1 percent to $47.18. Exxon Mobil increased 1.9 percent to $82.13 and Cabot Oil & Gas Corp. (COG) jumped 8.6 percent to $35.04 as energy shares in the S&P 500 gained 1.7 percent as a group.

Travelers added 2.4 percent to $63.12, the biggest gain in the Dow, while Bank of America, the second-biggest U.S. lender, climbed 2.1 percent to $7.66 as financial stocks rallied 1.3 percent.

Telephone companies jumped 1.9 percent as a group. Consumer discretionary stocks, which include retailers, hotel chains and restaurant companies, climbed 1.4 percent. An S&P index of homebuilders advanced 4.1 percent, as Lennar Corp. (LEN) increased 3.6 percent to $25.55 and PulteGroup Inc. (PHM) added 5.2 percent to $8.85.

Casino Machines

International Game Technology (IGT) rose 14 percent, the most in the S&P 500, to $15.12. The maker of casino machines announced a share buyback plan of as much as $1 billion in an effort to reward investors after a 23 percent stock drop this year.

Kroger Co. (KR) climbed 6.1 percent to $22.58. The largest U.S. grocery-store chain said profit for the year ending Jan. 31 will be as much as $2.40 a share, up from a prior forecast of as much as $2.38. Kroger also said its board approved a new $1 billion share buyback program, replacing an authorization that was exhausted on June 12.

Family Dollar Stores Inc. (FDO) advanced 4 percent to a record $72.85. The discount retailer was raised to buy from neutral at Cleveland Research Co. on expectation new merchandising is driving up sales.

Edwards Lifesciences Corp. (EW) rose 7 percent to $96.88 for the third-biggest advance in the S&P 500. The company won the backing of U.S. advisers for an expanded use of its Sapien heart valve as an alternative to open-heart surgery.

Fed Meeting

The Fed, which will gather two days after the Greek election, has identified the country’s exit from the euro as an outcome that would deepen the crisis and threaten the U.S. expansion. The central banks bought $2.3 trillion of bonds in two rounds of so-called quantitative easing from 2008 through 2011 to stimulate growth through lower borrowing costs.

Chairman Ben S. Bernanke told lawmakers last week the “central question” confronting the Fed at its June 19-20 meeting is whether growth is fast enough to make “material progress” reducing unemployment. Fed officials, including Vice Chairman Janet Yellen, have said there’s scope for further easing at some point to reduce a jobless rate persisting above 8 percent.

“We’re still on the fence right now whether there is going to be another round of quantitative easing,” Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston, said in a phone interview. “We’re going to be cautious for the foreseeable future. There’s so many banana peels on the floor right now you can slip on any one of them at any time.”

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

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

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N.Z. Signals Rates May Stay at Record Low to 2013 Amid EU Risks

By Tracy Withers - Jun 14, 2012 6:22 AM GMT+0700

New Zealand’s central bank signaled it may keep interest rates at a record low for another year, extending a 15-month pause as weaker growth eases inflation and Europe’s fiscal crisis clouds the outlook.

“It remains appropriate for monetary policy to remain stimulatory, with the official cash rate being held at 2.5 percent,” Reserve Bank of New Zealand Governor Alan Bollard said in a statement in Wellington today. The central bank lowered its forecasts for economic growth in the next three years, citing falling commodity prices and spending restraint.

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Alan Bollard, governor of the Reserve Bank of New Zealand. Photographer: Mark Coote/Bloomberg

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Alan Bollard, governor of the Reserve Bank of New Zealand. Photographer: Mark Coote/Bloomberg

The RBNZ’s next step may depend on what happens in Europe, where a Greek election June 17 will influence whether it exits the euro, causing greater financial-market turmoil. The New Zealand dollar rose after today’s language lacked any specific signal Bollard will reduce borrowing costs, even as interest- rate swaps reflect a 69 percent chance of a cut by September.

“If you were to see a real euro-zone meltdown, that’s going to be reflected through in our forecasts,” Bollard said at a news conference. “Absolutely that would be a core issue we would be thinking about in terms of monetary policy.”

New Zealand’s dollar bought 77.62 U.S. cents at 11:05 a.m. in Wellington compared with 77.30 cents immediately before the statement. There was a 20 percent chance of a rate cut late yesterday, according to interest-rate swaps data compiled by Bloomberg. Today’s decision was forecast by all 16 economists in a Bloomberg News survey.

Bollard’s Exit

Bollard, 61, has announced he won’t seek to extend his term as governor beyond late September, and said today the Sept. 13 policy decision will be his last.

The central bank forecasts the three-month bank bill yield will be 2.7 percent in the first quarter next year, down from 3.1 percent in its March projections, according to the monetary policy statement also published today. The forecasts are seen as a guide to the direction of the cash rate.

The yield will rise to 3.1 percent by the fourth quarter of 2013, and 3.3 percent a year later, the RBNZ said.

The bank bill forecast “is consistent with not having to push the OCR up for some time,” Bollard said.

Fourteen of the economists surveyed by Bloomberg forecast no change in the cash rate until 2013. Two predicted a quarter- point rate rise in December.

“We see little reason to disagree with an outlook that has the RBNZ on hold until some time in 2013, unless the worst case does occur in Europe in which case the RBNZ will be easing policy,” said Darren Gibbs, chief New Zealand economist at Deutsche Bank AG in Auckland.

Quake Damage

Bollard has left the cash rate unchanged since March last year to allow the economy to recover after the nation’s deadliest earthquake in 80 years in Christchurch, its second- largest city, and the surrounding Canterbury province, which killed 185 people and closed the central city.

The recovery has been slow amid concern that Europe’s debt crisis would spill over into weak global demand for exports, which make up 30 percent of New Zealand’s economy.

Unlike counterparts in Australia and China, Bollard hasn’t cut borrowing costs because quake rebuilding is expected to boost growth and stoke inflation in coming years.

“Political and economic stresses in Europe, along with a run of weaker-than-expected data, have seen New Zealand’s trading partner outlook weaken,” he said today. “There is a small but growing risk that conditions in the euro area deteriorate more markedly than is projected. The bank is monitoring euro-area developments carefully given the potential for rapid change.”

Rate Cutting

Australia’s central bank on June 5 cut its overnight cash rate target to 3.5 percent, the lowest since 2009, on concern about Europe’s fiscal problems and slowing Chinese growth. China also last week reduced borrowing costs for the first time since 2008.

New Zealand’s economy is growing at a slower pace than previously projected, reflecting falling commodity prices and modest household consumption, Bollard said. The New Zealand currency has slumped 5.4 percent this quarter after a 5.3 percent gain in the first quarter.

“Increased agricultural production and the weakened global outlook have driven export commodity prices lower,” he said. “The resulting moderation in export incomes although partially offset by depreciation in the exchange rate, will weigh on economic activity.”

Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, last month said it will pay its New Zealand farmers less for their milk as global prices moderate.

Growth Outlook

The economy will probably grow 2 percent in the year ending March 31, 2013, down from 3.1 percent predicted in the March policy statement, the RBNZ said.

Growth will improve to 3 percent in the 12 months through March 2014, slower than the 3.7 percent pace projected in March, it said. The main impetus to the expansion is coming from residential investment and the Christchurch rebuilding, the central bank said. Growth is forecast to slow to 1.6 percent in the year through March 2015.

Inflation in the year through June will slow to 1.1 percent and accelerate thereafter, the RBNZ forecast. It will reach the midpoint of the 1 percent to 3 percent range that Bollard is required to target by mid-2013, a year earlier than previously projected, after the government announced new tobacco taxes.

“Current spare capacity in the economy will be absorbed as domestic activity increases, leading to some inflationary pressures,” the RBNZ said. “The removal of some monetary stimulus will offset this.”

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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Oil Falls From Eight-Month Low Before OPEC Meets on Production

By Ben Sharples - Jun 14, 2012 8:58 AM GMT+0700

Oil fell from the lowest close in eight months in New York before OPEC meets to discuss production quotas amid speculation the group won’t cut output as the global economy weakens.

Futures declined as much as 0.4 percent today, dropping for the fifth time in six days. The Organization of Petroleum Exporting Countries, which meets in Vienna today, will probably maintain its output ceiling as concern that global growth is shrinking outweighs calls for supply cuts to stem sliding crude prices, three of the cartel’s oil ministers said. U.S. retail sales fell and Spain’s debt rating was cut by Moody’s Investors Service.

“OPEC is the top news at the moment and that’s going to be the driver,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said in a telephone interview. “OPEC is opaque at times and one of the issues that they grapple with, given that they are such a large and global organization, is compliance with quotas.”

Oil for July delivery slid as much as 35 cents to $82.27 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.37 a barrel, down 25 cents, at 11:55 a.m. Sydney time. The contract fell 0.8 percent yesterday to $82.62, the lowest close since Oct. 6. Prices are down 17 percent this year.

Brent oil for July settlement, which expires today, slipped 23 cents to $96.90 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded August future slid 37 cents to $96.31. The European benchmark contract’s premium to West Texas Intermediate was at $14.52, from $14.51 yesterday.

OPEC Output

Ministers from Ecuador, Kuwait and Nigeria said yesterday that OPEC is set to keep its 30 million barrel-a-day limit. Venezuela, Iran, Iraq, Angola, Ecuador and Libya have argued that crude supplies are excessive.

While an increase of as much as 1 million barrels a day suggested by some Gulf Arab countries would help Europe weather its slowdown, the 12-member group will probably settle on the status quo, according to two Middle Eastern delegates who declined to be identified because a decision hasn’t been made.

The International Energy Agency reduced its forecast for 2012 crude consumption to 89.9 million barrels a day, the Paris- based energy adviser said yesterday. That’s revised down by 100,000 barrels from May and reflects an increase of 820,000 barrels from last year.

U.S. retail sales fell 0.2 percent in May, matching the revised decrease for April, Commerce Department figures showed yesterday in Washington. Spain was cut three steps to Baa3 from A3 by Moody’s, which cited the nation’s increased debt burden, weakening economy and limited access to capital markets.

Oil Stockpiles

U.S. crude-oil supplies dropped 191,000 barrels last week, a report from the Energy Department showed yesterday. They were forecast to slip 1.5 million barrels, according to the median estimate from 12 analysts in a Bloomberg News survey.

Gasoline stockpiles declined 1.7 million barrels, the report showed. They were projected to rise 1.4 million barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, slid 63,000 barrels compared with a forecast 1.2 million barrel gain.

Companies operated refineries at 92 percent of capacity last week, up 1 percentage point from the prior week and the highest level since August 2007, the report showed.

Demand for fuels averaged 18.7 million barrels a day over the past four weeks, the Department reported. That’s down 1.9 percent from a year ago. This is “reflecting the ongoing weakness in macro data,” according to a report yesterday from Michael Wittner, global head of oil market research at Societe Generale SA in New York.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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BSkyB, BT Win Rights to English Soccer Games for Record Amount

By Jonathan Browning and Tariq Panja - Jun 14, 2012 6:00 AM GMT+0700

British Sky Broadcasting Group Plc (BSY) and BT Group Plc (BT/A) won the bidding to show 154 English Premier League soccer matches, paying almost double the current price for the broadcast rights to the sport’s richest domestic competition.

BSkyB’s pay-TV Sky channel will show 116 matches starting in the 2013-14 season, with the phone and broadband company BT getting 38 matches. The sale of the seven packages raises 3.02 billion pounds ($4.7 billion), compared with 1.77 billion in the current pact, the league said yesterday. BT will pay 246 million pounds a season. Walt (DIS) Disney Co.’s ESPN sports channel lost the right to show Premier League matches.

BSkyB, the U.K.’s largest pay-TV broadcaster, in which Rupert Murdoch’s New Corp. owns 39 percent, increased spending to keep the rights to show most matches as it relies on sport broadcasts to lure subscribers. BT, trying to sell more broadband connections, will use the matches to start a new sports channel. The phone company hadn’t broadcast games before.

“It’s a decent commercial increase. We have a competition. It has value,” Premier League Chief Executive Officer Richard Scudamore said at a press conference. “We had numerous bidders in this commercial procedure.”

The new deal means for the first time a broadcaster outside of Sky will show matches between Arsenal, Liverpool, Manchester United and Chelsea. The teams had been known as the ’Big Four’ prior to the emergence of Manchester City and Tottenham. The Premier League has increased the total number of live matches shown to a record in the new contracts, which cover the 2013-14 to 2015-16 campaigns.

Newcomer BT

The previous deal involved 138 matches. BSkyB paid 1.62 billion pounds over three years and ESPN paid the rest.

BSkyB’s Sky Sports channel has held rights to Britain’s top soccer games since the Premier League’s inception in 1992. Rival broadcaster Setanta collapsed in 2009 and paved the way for ESPN, which shares rights to England’s F.A. Cup competition with ITV Plc (ITV) and also screens Italian, German and Dutch league matches.

“Because Sky is now so deeply entrenched, it’s all the more hard for a newcomer to buy their way into the market,” said Tim Westcott, an analyst at IHS Screen Digest.

BT said it will pay a deposit of 22 million pounds this month followed by six installments of 120 million pounds. The phone company kept its outlook for the 12 months through March 2013 while saying that earnings before interest, taxes, depreciation and amortization will be cut by about 100 million pounds and free cash flow by 200 million pounds in the fiscal year through March 2014.

Investments

“BT is already investing 2.5 billion pounds in fiber broadband,” the company’s CEO Ian Livingston said. “Securing Premier League rights fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider.”

BT said it expects normalized free cash flow of about 2.5 billion pounds in the 12 months through March 2015.

Sky will pay 760 million pounds a year for the 5 packages of live rights for each of the three years of the new Premier League agreement.

Cost Efficiency

“In what was a very competitive tender process, we are pleased to have secured the combination of rights that we wanted, providing certainty for us and our customers,” said BSkyB CEO Jeremy Darroch. “While the cost is higher, we have capacity for this increase through the combination of excellent work on cost efficiency across the business and choices over other future spending.”

Premier League teams including record 19-time English champion Manchester United, Arsenal, Chelsea and Liverpool draw millions of viewers from around the world. The April 30 match between United and Manchester City was available to more than 650 million homes in 212 territories, according to the league.

“It makes it much easier for everyone, it makes the clubs less reliant on benefactor funding,” Scudamore said.

The existing global rights are worth 1.4 billion pounds, more than some rival leagues make from their domestic contracts.

The bidding forced broadcasters to compete for the different groups of games, including packages that allowed selection of matches between teams near the top of the league, Scudamore said. BT is taking 18 first picks out of total of 38 available.

“BT have secured highly attractive highly competitive games,” Scudamore said. “That’s a game changer.”

In April, BSkyB’s German affiliate Sky Deutschland (SKYD) paid a record 2.5 billion euros ($3.1 billion), a 53 percent increase on the previous contract, to buy Bundesliga soccer rights for the four years through 2017.

The massive increase income will probably lead to a spike in player salaries. All previous revenue increases have been followed by almost an exact rise in player income.

The result is also a boost to English teams’ efforts to meet European soccer governing body UEFA’s new fiscal regulations that from 2014 will penalise clubs that fail to meet its break-even criteria.

To contact the reporters on this story: Jonathan Browning in London at jbrowning9@bloomberg.net; Tariq Panja in London at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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Armstrong Says He May Be Stripped of Tour Titles in Doping Probe

By Mason Levinson and Michael Buteau - Jun 14, 2012 5:52 AM GMT+0700

The U.S. Anti-Doping Agency brought doping charges against Lance Armstrong that may cost him his record seven Tour de France titles, the cyclist said.

Armstrong also is banned immediately from competing in triathlons organized by the World Triathlon Corp., which runs the Ironman series, because of the investigation.

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Lance Armstrong during the 2010 Tour de France. Photographer: Nathalie Magniez/AFP/Getty Images

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Armstrong, three doctors and two officials from the cyclist’s former U.S. Postal Service team were notified of the doping allegations yesterday, USADA Chief Executive Officer Travis Tygart said in an e-mailed statement. The letter is the first step in the legal process for alleged doping violations, Tygart said.

“USADA only initiates matters supported by the evidence,” Tygart said. “We do not choose whether or not we do our job based on outside pressures, intimidation or for any reason other than the evidence.”

Armstrong called the charges “baseless.”

“I have been notified that USADA, an organization largely funded by taxpayer dollars but governed only by self-written rules, intends to again dredge up discredited allegations dating back more than 16 years to prevent me from competing as a triathlete and try and strip me of the seven Tour de France victories I earned,” Armstrong said.

The USADA charges, first reported today by the Washington Post (WPO), come after Armstrong’s attorney said the cyclist failed to meet with the agency by June 8, four days after receiving a letter offering him an “opportunity to talk about drug use in cycling.” Robert Luskin, Armstrong’s attorney, wrote in a letter to USADA that the meeting was a “demand wrapped in a threat” seeking Armstrong’s confession.

‘This Charade’

“We will not be party to this charade,” Luskin wrote in the June 8 letter. “Lance has publicly and repeatedly made clear that he never doped.”

Armstrong, who has endorsement agreements with Nike Inc. (NKE), Trek Bicycle Corp. and Oakley Inc., was scheduled to race his first professional full Ironman event June 24 in Nice, France, to try to qualify for the Ironman World Championship in Hawaii on Oct. 13. World Triathlon has an agreement with Armstrong’s Texas-based Livestrong charity.

Comcast Corp. (CMCSA)’s NBC network said last week it planned to air this year’s championship race on Oct. 27, six weeks earlier than usual, and expand the coverage to two hours from 90 minutes. The network said the coverage was expected to focus heavily on Armstrong.

UCI Statement

Cycling’s world governing body, the International Cycling Union or UCI, said in a statement that it had been notified of USADA’s probe. It didn’t identify any of the people involved.

USADA made previously unpublicized allegations against Armstrong, saying it collected blood samples from him in 2009 and 2010 that were “fully consistent with blood manipulation including EPO use and/or blood transfusions,” the Post said. The newspaper cited what it said was a 15-page charging letter that was sent to Armstrong and several others yesterday, a copy of which it obtained.

EPO is the abbreviation for erythropoietin, which can add energy-boosting properties to blood. Doping authorities say that drug, and transfused blood, have been used by athletes in endurance sports such as cycling and cross-country skiing to increase performance.

No Tests

Armstrong never has been publicly identified as testing positive for performance-enhancing drugs. On Feb. 4, the U.S. attorney in Los Angeles ended a criminal drug probe involving Armstrong and his professional bicycle racing team without filing charges.

USADA also alleges that Armstrong and five former cycling team associates engaged in a massive doping conspiracy from 1998 to 2011, the Post said.

“These are the very same charges and the same witnesses that the Justice Department chose not to pursue after a two-year investigation,” Armstrong said in his statement. “These charges are baseless, motivated by spite and advanced through testimony bought and paid for by promises of anonymity and immunity. Although USADA alleges a wide-ranging conspiracy extended over more than 16 years, I am the only athlete it has chosen to charge. USADA’s malice, its methods, its star-chamber practices and its decision to punish first and adjudicate later all are at odds with our ideals of fairness and fair play.”

Tour Streak

Armstrong, 40, won the Tour de France, cycling’s most prestigious event, each year from 1999 to 2005 after surviving testicular cancer that had spread to his brain and lungs.

He also has helped bring more attention to triathlon since he returned to the sport on Feb. 12 in Panama, where he finished second in his first half Ironman 70.3-mile (113-kilometer) race. He won his last two half Ironman events, which feature a 1.2- mile swim, 56-mile bike ride and 13.1-mile run. Armstrong competed as a professional triathlete at 18 before focusing on cycling.

World Triathlon Corp. rules “dictate an athlete is ineligible to compete during an open investigation,” the agency said in an e-mailed statement.

“Armstrong is therefore suspended from competing in WTC- owned and licensed races pending further review,” according to the statement.

To contact the reporter on this story: Mason Levinson in New York at mlevinson@bloomberg.net; Mike Buteau in Atlanta at mbuteau@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net.

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Dimon Fires Back at ‘Complex’ System in U.S. Senate Grilling

By Dawn Kopecki, Phil Mattingly and Clea Benson - Jun 14, 2012 12:33 AM GMT+0700

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon spent much of his time at a hearing where U.S. senators aimed to put him on the defensive firing back at the federal regulatory system.

During more than two hours before the Senate Banking Committee, Dimon described a $2 billion loss in the bank’s chief investment office as a hedge that “morphed into something I can’t justify,” and largely blamed subordinates for a trading strategy gone wrong. The bank is looking at clawing back some of the compensation earned by those responsible, he said.

At the same time, Dimon, one of the most vocal bankers in challenging stricter regulation, said it would be hard for federal agencies to decide on a final version of the so-called Volcker rule, which bans proprietary trading for a bank’s own account.

“It’s going to be very hard to make a bright-line distinction between proprietary trading and hedging, because you can look at almost anything we do and call it one or the other,” Dimon said at the hearing in Washington.

‘Complex’ System

The regulatory system in the wake of the 2010 Dodd-Frank overhaul is “really complex,” he said. “No one can adjudicate between all the various regulatory agencies and it’s not clear to me who has regulatory authority.”

It was the first of two appearances Dimon will make on Capitol Hill to face lawmakers probing how the largest and most profitable U.S. bank, often praised for its “fortress” balance sheet, could have taken such risks after coming through the 2008 financial crisis largely unscathed.

The hearing didn’t answer some basic questions the Senate has about the details of the New York-based bank’s loss, Senator Richard Shelby, the ranking Republican on the committee, said afterward: “We’ll find that out in due time and we’ll be able to tell if they were managing risk or just seeking profits.”

Senator Tim Johnson, the panel’s chairman, a South Dakota Democrat, said the hearing “is a good reminder that we can’t let down our guard, and we must remain vigilant so we can continue to have a sound financial system.”

Amid chants from protesters, Dimon arrived shortly before 10 a.m. and began answering questions about the causes of the loss, which he described as part of a hedging strategy.

VaR Shift

Dimon said a new formula for estimating possible losses, implemented in January, failed to properly account for risk. On April 13, when he downplayed the risks of trades on a call with analysts, “we were still unaware that the model might have contributed to the problem,” Dimon said. “So when we found out later on, we went back to the old model.”

The switch -- and the timing of the firm’s disclosures -- are the focus of an inquiry by the Securities and Exchange Commission as the government examines how long senior executives knew about the CIO’s swelling bets and losses. Dimon said May 10 that the bank had reviewed the effectiveness of a new VaR model, deemed it “inadequate” and decided to return to the previous version. On that basis, the unit’s VaR doubled.

The bank’s board of directors is looking into events leading to the loss, Dimon said.

Clawbacks Expected

“When the board finishes its review, which is the appropriate time to make those decisions, you can expect that we will take proper corrective action and it is likely there will be clawbacks,” Dimon said.

As Dimon, 56, took his seat in the Senate hearing room, Tighe Barry, 50, a protester with activist group CodePink who works handling props on movie sets in Los Angeles, yelled, “This man is a crook and he needs to go to jail.” A few minutes later, several people rose out of the audience and started yelling, “Stop foreclosures now.” Senators delayed the hearing for a few minutes as Capitol police removed the protesters from the room.

Dimon told the committee that the bank let traders take risks they didn’t understand.

[To read Dimon’s prepared testimony, click here.]

He expressed regret over losses in the bank’s chief investment office, saying that its trading strategy was “poorly conceived and vetted” by senior managers who were “in transition” and not paying adequate attention.

“This portfolio morphed into something that, rather than protect the firm, created new and potentially larger risks,” Dimon said. “We have let a lot of people down, and we are sorry for it.”

Dimon said that the risk committee structures and processes were not as robust in the CIO as they should have been. The division’s London team built up a book of credit derivatives that became so large that employees couldn’t unwind it without roiling markets or incurring large losses.

London ‘Cowboys’

“I don’t want to see consumer lenders in Columbus losing their jobs because cowboys in London make too many risky bets,” said Senator Sherrod Brown, an Ohio Democrat, referring to 19,000 JPMorgan employees in his state.

Dimon defended the bank by saying lawmakers needed to put the losses “into perspective,” noting that no client, customer or taxpayer money was impacted. He said the second quarter would be “solidly profitable.”

Shares of JPMorgan advanced 2.3 percent to $34.55 at 11 a.m. in New York, the most in the 24-company KBW Bank Index, which climbed 0.7 percent. Shares of the bank have dropped 17 percent from May 10, when Dimon disclosed the losses, through yesterday, lopping about $26.5 billion from the firm’s market value.

Capital Rules

Dimon explained that the bank instructed the CIO in December to reduce its risk-weighted assets to prepare for new international capital rules. Instead, the office in mid-January “embarked on a complex strategy that entailed adding positions that it believed would offset the existing ones,” Dimon said. The portfolio grew and the problem got worse.

U.S. Senator Jeff Merkley, the Oregon Democrat pushing for stronger restrictions on banks’ bets with their own money through proprietary trading, said JPMorgan’s hedges were too risky.

“Portfolio hedging is just a name for saying anything goes, and we’ll continue proprietary trading,” Merkley said in an interview on Bloomberg Television.

Merkley, who co-wrote the Volcker provision in the Dodd- Frank Act along with Senator Carl Levin of Michigan, has said that the draft rule released by regulators in 2011 had loopholes that would allow banks to maintain much of their proprietary trading operations.

Five U.S. agencies are working to complete the Volcker rule, which is named for former Fed Chairman Paul Volcker and is intended to reduce risky trading by banks with federally insured deposits and access to the central bank’s discount window.

To contact the reporters on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net; Clea Benson in Washington at cbenson20@bloomberg.net

To contact the editors responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net; David Scheer at dscheer@bloomberg.net

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U.S. Stocks Drop Amid Lower Retail Sales, Europe Concern

By Rita Nazareth - Jun 14, 2012 3:35 AM GMT+0700

U.S. stocks slid, after yesterday’s gain, as retail sales fell and concern about Europe’s debt crisis grew amid higher borrowing costs in Italy and Germany.

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A trader works at the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during a Senate Banking Committee hearing in Washington, D.C. on June 13, 2012. Photographer: Andrew Harrer/Bloomberg

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June 13 (Bloomberg) -- European stocks fell from a two-week high and U.S. equity-index futures declined. German bund yields climbed to a one month high before a debt sale while Italy’s 10- year bonds stayed higher after the government sold bills. (Source: Bloomberg)

Nine out of 10 groups in the Standard & Poor’s 500 Index retreated as consumer discretionary, commodity and industrial shares had the biggest losses. Home Depot Inc. (HD), Caterpillar (CAT) Inc. and DuPont (DD) Co. dropped at least 1.5 percent. JPMorgan Chase & Co. (JPM) rose 1.6 percent as Chief Executive Officer Jamie Dimon testified about his bank’s practices to lawmakers. Dell Inc. (DELL) advanced 2.6 percent after saying it will pay a dividend.

The S&P 500 fell 0.7 percent to 1,314.88 at 4 p.m. New York time. It rose 1.2 percent yesterday. The Dow Jones Industrial Average declined 77.42 points, or 0.6 percent, to 12,496.38. Trading volume for exchange-listed stocks in the U.S. was about 6.1 billion shares, 10 percent below the three-month average.

“It’s a tough recipe,” Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “Consumers are starting to question the validity of this recovery and beginning to plan for tougher times. At the same time you have global austerity. You’re getting more recessionary pressures throughout Europe and borrowing costs are moving higher. Things are deteriorating.”

Equities fell as retail sales dropped in May for a second month, as limited job and income gains hold back consumers. Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. The Group of 20 nations meeting in Mexico next week probably won’t announce significant progress on Europe’s debt crisis, a U.S. official said.

Greece’s Election

Investors also watched the latest developments ahead of Greece’s elections on June 17. Alexis Tsipras, whose Syriza party in Greece is vying for first place in pre-election polls, said he expects the European Union will do all it can to keep the nation in the euro even if he wins elections and carries out his promise to repeal the austerity measures required to receive emergency loans.

The S&P 500 (SPX) briefly rose as banks rallied. JPMorgan jumped 1.6 percent to $34.30 as Chief Executive Officer Jamie Dimon testified about his bank’s $2 billion trading loss. He said a switch to a new risk model in the first quarter may have helped fuel the loss, and the bank has shifted back to the old system.

“Dimon is not putting his foot in his mouth,” said Rick Fier, director of equity trading at Conifer Securities LLC in New York. His firm oversees more than $12 billion. “The bid in JPMorgan today is more because he didn’t say anything to get into him into any more trouble. Still, we’re not really seeing people chase this market. What managers are talking about the most is: where’s the growth going to come from?”

Most-Tied

The Morgan Stanley Cyclical Index (CYC) of companies most-tied to the economy lost 1.5 percent. Home Depot, the largest U.S. home- improvement retailer, lost 2.4 percent to $50.97. Caterpillar, the world’s largest maker of construction equipment, dropped 2 percent to $85.29. DuPont, a chemicals producer, fell 1.6 percent to $49.11.

Progressive Corp. (PGR) slumped 4.4 percent to $20.74. The fourth-largest U.S. auto insurer fell as claims costs rose above the company’s target.

Global Payments Inc. (GPN) retreated 4.1 percent to $40.48. The bank-card processor disclosed that “intruders” may have hacked into company servers containing personal information.

Casey’s General Stores Inc. (CASY) tumbled 13 percent, the most since 2008, to $52.18. The operator of convenience stores in the U.S. Midwest reported fourth-quarter earnings that trailed analysts’ estimates, citing a decline in gasoline profits.

Cut Costs

Dell rallied 2.6 percent to $12.28. The quarterly payout of 8 cents a share will begin in the period that ends in October. The dividend’s yield would be 2.7 percent, based on the stock’s closing price yesterday. The company will focus on data-center gear as well as computing software and services while seeking to cut costs by more than $2 billion over the next three years.

Johnson & Johnson (JNJ) gained 2.2 percent to $64.45. The company said its $19.7 billion purchase of Synthes Inc., the largest acquisition in its 126-year history, will add 3 cents to 5 cents a share to 2012 earnings as it gained U.S. clearance for the deal. Separately, the shares were upgraded at Jefferies Group Inc. and Raymond James Financial Inc.

The S&P 500 may decline more than 5 percent by the end of July before starting a rebound that may continue into the third quarter, according to technical analysts at UBS AG.

Third Wave

The analysts cited the average directional index indicator, or ADX, approaching the end of a third wave -- the momentum top of a trend. The ADX is the moving average of the directional movement indicator, a theory developed by J. Welles Wilder in 1978 that measures how far a security moves from an average price range calculated from second to second.

“We still see the risk of another setback towards 1,250 into the second half of July as the basis for a longer lasting corrective rebound into at least September,” Michael Riesner and Marc Mueller in Zurich wrote in a note dated yesterday. “On the back of our overbought momentum work we see further upside to be limited towards a maximum 1,358” for the rally.

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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