Donnerstag, 11. August 2011

Warren Buffett buying in down market: Fortune

NEW YORK (Reuters) - Warren Buffett has been buying amid this week's sharp declines in the market, and has not yet seen anything that suggests another downturn is emerging, the legendary investor told Fortune magazine.

In an interview published on Thursday, Buffett also told the magazine he understood why Standard & Poor's lowered its outlook on the credit rating of his conglomerate Berkshire Hathaway , but said he disagreed with the underlying premise - the downgrade of the United States' credit rating.

The 80-year-old "Oracle of Omaha" is known for his love of a good deal, which is why his company made an unsolicited offer below book value for reinsurance company Transatlantic Holdings last weekend, and why Berkshire sold $2 billion of senior unsecured notes this week at historically low rates.

In that vein, Buffett told Fortune Managing Editor Andy Serwer the market declines have not fazed him.

"The lower things go, the more I buy. We are in the business of buying," he said, adding that he had "never been better."

Buffett also told the magazine that he was not seeing fresh indications of the economy turning bad again, though things could change if market conditions do not improve.

"Up until right now, all of our businesses have been coming back -- even Europe isn't doing that badly -- except for businesses relating to home construction which is on its rear end," Buffett said.

(Reporting by Ben Berkowitz, editing by Dave Zimmerman)

Mittwoch, 10. August 2011

Obama Will Meet With Bernanke Later Wednesday

WASHINGTON - President Barack Obama and his top economic advisors will meet with Federal Reserve Chairman Ben Bernanke later on Wednesday, White House spokesman Jay Carney said. Carney said the economy has been weaker than White House economists had expected. He said there was no expectation of another recession. "We...continue to believe that the economy will keep growing," Carney said. On Tuesday, the Fed downgraded its assessment of the economic outlook and pledged to keep its benchmark rate near zero. Stocks have sunk in part on the Fed's gloomy outlook. Obama and Treasury Secretary Timothy Geithner remain in close touch with European leaders about the ongoing financial tensions in the U.S. and the euro-zone.

Copyright © 2011 MarketWatch, Inc.

Dienstag, 9. August 2011

MARKET SNAPSHOT: U.S. Stocks Higher In Rebound From Rout

NEW YORK (MarketWatch) -- U.S. stocks rose sharply Tuesday as Wall Street reclaimed a portion of the prior day's massive losses while waiting for what investors hope will be economic reassurances from the Federal Reserve.

Investors are "crossing their fingers that Ben is going to come to the rescue," said Nick Raich, director of research at Key Private Bank, referring to Federal Reserve Chairman Ben Bernanke.

The Fed will do what it can to "try to calm the markets," said Raich, who said one option would have the central bank opting to "continue to buy back Treasurys but not expand its balance sheets."

The Federal Open Market Committee's policy statement is scheduled for release Tuesday afternoon, with investors looking for any signs of what the Fed might do to bolster the U.S. economy. .

After relinquishing 634.76 points, or 5.6%, in Monday's battering -- the sixth-largest point loss in its history -- the Dow Jones Industrial Average (DJI) rallied back as much as 243 points, and was lately up 168.96 points, or 1.6%, to 10,978.81, with all but three of its 30 components rising.

Wall Street's recent havoc is "giving investors flashbacks to the nightmare of 2008. However, unlike Freddie Krueger, 2008 isn't back," said Matt Freund, senior vice president of investment-portfolio management at USAA Investment Management Co.

"Unlike three years ago, corporate balance sheets are healthy, liquidity is plentiful and the level of speculative investing is down dramatically," said Freund, who attributed the current market volatility to "the ongoing situation in Europe and the potential for a slowing global economy."

The S&P 500 Index (SPX) added 25.37 points, or 2.2%, to 1,144.42, with financial firms faring best of the index's 10 industry groups after getting socked the hardest on Monday.

The Nasdaq Composite Index (RIXF) climbed 73.05 points, or 3.1%, to 2,430.37.

For every stock falling nine gained on the New York Stock Exchange, where 1 billion shares exchanged hands as of 1:30 p.m.

The recent decline in equities, which last week had the market in a correction mode, followed by then Monday's stunning drop involves "a market pricing in increased chances of debt default out of Europe," said Raich at Key Private Bank.

"Economic activity will slow in Europe because of increased austerity measures, but right now the market is pricing in off the cliff. If we can avoid that, if the [European Central Bank] can manage to get through, then the market is oversold," said Raich.

Copyright © 2011 Dow Jones Newswires

Montag, 8. August 2011

Deja Vu: Dow Crumbles 635 After Economic, Debt Fears Engulf Wall Street

Deja Vu: Dow Crumbles 635 After Economic, Debt Fears Engulf Wall Street

Reuters

FOX Business: The Power to Prosper

After closing out the worst week since 2008, Wall Street was once again pummeled on Monday after global sovereign debt and economic fears sent traders fleeing equities with few shelters in sight.

Today's Markets

The Dow Jones Industrial Average plunged 635 points, or 5.6%, to 10,810, the S&P 500 tumbled 79.9 points, or 6.7%, to 1,119 and the Nasdaq Composite dipped 174.7 points, or 6.9%, to 2,358. The FOX 50 sank 50.7 points, or 5.9%, to 814.

Volatility has been extremely high in recent trading sessions. The selloff over the past two weeks has been so furious in fact that "its force now rivals almost anything we’ve seen in the post war era," according to Daniel Greenhaus, chief global strategist at BTIG. The VIX, often referred to as a fear gauge, spiked 45% to a 52-week high.

The selloff was broad, with every major sector taking deep losses. In a sign of the depth of the selling, 98% of the volume on the New York Stock exchange was in declining shares. The Dow closed below 11,000 for the first time since October 2010, and every blue chip ended in the red.

Financial shares like Dow-component Bank of America (BAC) and Citigroup (C) took the biggest hit. The cost to insure the debt of major banking institutions skyrocketed as concerns spread that the institutions may need to seek fresh capital. Bank of America quickly spoke out against the concerns, saying it has sufficient capital, but it couldn't stem the 19% slide its stock took.

Despite the steep retreat from equities, some market participants were optimistic that markets are in the process of bottoming out.

"We’re experiencing the market bottom right now," Paul Dietrich, CEO and co-chief investment officer at Foxhall Capital Management, told FOX Business. He cited leading indicators like auto sales and sales tax revenues.

"I think we’ll bounce around the bottom for a while but I believe over the next quarter or two you will start seeing a movement up of consumer spending."

For the first time in history, S&P cut America's top-notch credit rating one notch to AA-plus from AAA after the close of trading on Friday. The ratings company also said Monday it would slice Fannie Mae and Freddie Mac's debt rating because the mortgage companies directly rely on the U.S. government.

S&P's move came as a result of concerns over the country's substantial public debt burden and deep divides within Congress that almost sparked an unprecedented default on U.S. sovereign debt. Moody's Investor Service, another ratings company, affirmed American's AAA rating, while Fitch is still performing a review.

Many large investors noted the short-term impact of the downgrade may be muted, however, it could foreshadow deeper economic issues.

BlackRock said in a release the move by S&P "does not imply a fundamental increase in risk" and shouldn't prompt investors to "change their behavior solely on the downgrade." However, the company that manages $3.7 trillion in assets warned that "continued economic weakness and regulatory uncertainty ... may provide a signal to some investors to reassess their risk appetite."

A round of disappointing economic data, capped with a mixed monthly employment report has weighed heavily on sentiment in recent weeks. There are only a handful of data releases scheduled for the first half of the week, however, traders are expected to pay close attention to the Federal Reserve's statement on Tuesday to see if the central bank signals another round of quantitative easing.

Market participants will also be watching a slew of economic data slated for release by China overnight, according to Peter Boockvar, managing director at Miller Tabak+Co. China is one of the world's largest economies and can have a drastic impact on global markets.

Global Governments Act

Meanwhile, global governments acted on Sunday to try to stem market fears across the world. The European Central Bank said it was prepared to "actively implement" a program by which it would purchase Italian and Spanish debt. European credit markets have been rattled as debt worries have cascaded from smaller economies like Greece to more substantial ones like Italy.

The Group of 7 finance ministers also made a statement late Sunday, saying it was prepared to take whatever steps are necessary to calm global markets that were slammed last week.

Still, many market participants questioned what actions global governments would be able to take to tame tumultuous markets. The statement by G7 "sought to bolster confidence but offered only consoling words," analysts at Barclays Capital wrote in a note to clients.

The selloff on Monday comes on the heels of the steepest retreat for Wall Street since the financial crisis in 2008. The broad S&P 500 plunged 7.2%, the Dow shed 5.8%, and the Nasdaq plunged 8.1%.

In a sign of the uneasiness on Wall Street, gold, seen as a safe haven, has continually leaped to record highs. The precious metal soared $61.40, or 3.7%, to $1,713 a troy ounce -- breaking the $1,700-mark for the first time. In fact, gold prices surpasses platinum prices for the first time since 2008 on Monday.

Energy markets followed equity markets deep into the red.

Light, sweet crude dipped $5.57, or 6.4%, to a new 2011 closing low of $81.31 a barrel. Wholesale RBOB gasoline slid 11 cents, or 4.1%, to $2.69 a gallon.

The U.S. dollar gained 0.15% against a basket of world currencies, while the euro plummeted 1.2% against the greenback.

Prices at the pump moderated somewhat last week following the selloff in the futures markets. A gallon of regular costs $3.66 on average nationwide, down from $3.71 last month, but considerably more than the $2.78 drivers paid last year, according to the AAA Fuel Gauge report.

Corporate News

Berkshire Hathaway made a $3.3 billion bid for Transatlantic Holdings (TRH), topping two other takeover offers.

Foreign Markets

The English FTSE 100 slid 3.4% to 5,069, the French CAC 40 tumbled 4.7% to 3,125 and the German DAX plunged 5% 5,923.

In Asia, the Japanese Nikkei 225 plummeted 2.2% to 9,098 and the Chinese Hang Seng sank 2.2% to 20,491.

Sonntag, 7. August 2011

China Criticizes ConocoPhillips For Slowness On Oil Leaks

BEIJING -(Dow Jones)- China's State Oceanic Administration has criticized ConocoPhillips (COP) for moving slowly to block oil leaks at drilling platforms off China's northeast coast.

ConocoPhillips closed drilling platforms B and C as requested, but it has made slow progress on the SOA's requirements to fully investigate risky spots for oil leaks and to fully block sources of leaks, the SOA's North China Sea Branch said in a statement on Friday. ConocoPhillips also "has not kept its promise" of ensuring the leaked oil would not reach shore or affect sensitive environmental areas, the statement said.

SOA officials who inspected the oil platforms at the Penglai 19-3 field on Thursday ordered the company to fix the problems immediately, the statement said.

Platform B was still intermittently leaking oil blooms recently, and an area near platform C had continuous oil blooms and a belt of oil in the nearby water, the SOA branch said in a separate statement on Friday.

The Penglai 19-3 field, a joint venture between ConocoPhillips and Cnooc Ltd. (CEO, 0883.HK), was discovered in 1999. Its production averaged 56,000 barrels a day in 2010.

Copyright © 2011 Dow Jones Newswires

Samstag, 6. August 2011

U.S. government expecting debt downgrade: report

WASHINGTON (Reuters) - The U.S. government expects its debt to be downgraded from its current triple-A rating and is preparing for the event, ABC News said on Friday.

ABC cited an unnamed government official as its source and said it was uncertain whether the rating would drop from triple-A to AA+ or to AA.

(Reporting by Tim Ahmann and Glenn Somerville, Editing by Chizu Nomiyama)

Freitag, 5. August 2011

Italy Brings Forward Budget Plans as Crisis Mounts

Italy Brings Forward Budget Plans as Crisis Mounts

Italy buckled to world pressure in a bid to halt a market rout endangering the global economy, pledging to speed up austerity measures and social reforms in return for European Central Bank help with funding.

About $2.5 trillion has been wiped off world stocks this week on worries the euro zone debt crisis was spreading and the U.S. was slipping into recession. Better than expected U.S. jobs growth in July helped support Wall Street on Friday but stocks slipped back into the red in late trading.

After a frantic round of telephone diplomacy, Italian Prime Minister Silvio Berlusconi said his government would bring forward cuts to balance the budget in 2013, a year ahead of schedule, and rush through welfare and labour market reforms.

"We consider it appropriate to introduce an acceleration of the measures which we introduced recently in the fiscal planning law to give us the possibility of reaching our objective of balancing the budget early, by 2013 instead of 2014," Berlusconi told a news conference after a day of calls with world leaders including German Chancellor Angela Merkel and U.S. Treasury Secretary Tim Geithner.

Sources close to the matter told Reuters the European Central Bank had demanded such measures in exchange for buying bonds to ease the pressure on Italy, which has come under market attack.

There was no immediate reaction from the ECB but a European Commission spokesman said the measures responded to assessments set out earlier in the day by EU Economic and Monetary Affairs Commissioner Olli Rehn and "go in the right direction".

Investors have been unimpressed by a 48 billion euros austerity package passed by Berlusconi's government, partly because most of the measures were delayed until after elections scheduled for 2013, for clear political reasons.

The leaders of Germany, France and Spain conferred on the crisis by telephone during the day and French President Nicolas Sarkozy, who heads the Group of Seven industrialised powers and the G20 this year, said he would talk to U.S. President Barack Obama.

Discord among EU policymakers over how to stop a disastrous spread of the sovereign debt crisis to Italy and Spain, the euro zone's third and fourth biggest economies, has caused increasing frustration among investors.

The European Central Bank disappointed markets by buying Irish and Portuguese bonds but not government paper in Italy and Spain where bond yields have blown out this week on fears that they may need bailing out.

That now appears to have been a gambit to force Italy to act.

"In principle it is right to say that the ECB could start buying Spanish and Italian bonds if they made an extra effort with fiscal and structural reforms," a senior euro zone official told Reuters.

Bank of Spain governor Jose Manuel Gonazalez-Paramo, a member of the ECB's governing council, said he expected Spain to announce further measures on Aug. 19 to ensure it meets its budget austerity targets.

Earlier in the day, China and Japan called for coordinated action to avert a new worldwide crisis sourced to Europe and the United States, as did European Economic and Monetary Affairs Commissioner Olli Rehn.

"International policy coordination through the G7 and G20 is of critical importance," he told a news conference, having broken off his vacation and returned to Brussels.

Britain called for a "concerted international effort" to show governments would work together to avert a financial crisis and Brazil also urged unity, saying the world economy was "in a situation of stress."

ECB RIFT

The ECB reactivated its dormant bond-buying programme on Thursday in an attempt to address the euro zone's deepening sovereign debt crisis, but only bought Portuguese and Irish debt. Influential members of the ECB opposed even that.

Central bank sources told Reuters that four out of 23 ECB governing council members, including powerful German Bundesbank chief Jens Weidmann, voted against the decision to resume any bond purchases.

Traders said the central bank intervened for a second day on Friday, but was again only buying Portuguese and Irish paper. Pressure eased on Italian and other peripheral debt but Italy's 10-year-yields overtook those of Spain for the first time since May 2010 and both yields remained above 6 percent, confirming investors concerns about the lack of action.

Berlusconi's declaration may have broken the impasse.

"This will help overcome opposition by these ... figures in the governing council and facilitate ECB intervention, which is the only thing that can stabilise the market now. I don't see how we can survive another week like this one," one source involved in the talks said.

But more profound decisions will need to be taken, and soon.

Investors said policy differences among European Union governments and central bankers were heightening anxiety about Europe's will to stem the debt crisis.

To bail out Spain would test the fund's existing firepower to the limit while doing so for Italy would overwhelm it although Rehn insisted neither would require assistance.

In the first analyst comment on Berlusconi's announcement, Chiara Corsa, vice-president of Unicredit Research, said: "This is the response we were hoping to see and there are no doubts that the government pledged to deliver what has been called for, to say the least."

However she noted that Berlusconi and Economy Minister Giulio Tremonti had omitted to respond to EU calls for more liberalisation of the economy to boost growth, adding that whether they had done enough to calm market turmoil "depends on whether the market believes it or not".

CHINA, JAPAN SEEK ACTION

In Japan, Finance Minister Yoshihiko Noda said global policymakers needed to confront currency distortions, the debt crises and concerns about the U.S. economy.

Japan sold yen on Thursday to try to cap the currency's rise. It has become a popular safe-haven bet, as has the Swiss franc, as concerns about the United States and Europe grow.

Chinese Foreign Minister Yang Jiechi said U.S. debt risks were escalating and countries should step up cooperation on global economic risks.

Yang, who is visiting Poland, called on the United States to adopt "responsible" monetary policies and protect the dollar investments of other nations.

The U.S. Federal Reserve holds its next policy-setting meeting on Tuesday, and economists say there is little more it can do to try to spur growth.

Analysts said they would look to see if European leaders are willing to expand its emergency financial stability fund to an amount that would put a floor under the market panic. Currently at 440 billion euros, it would need to be doubled or tripled to cover economies as big as Italy and Spain.

Rehn said the EU should keep adapting its financial rescue fund and, in the longer term, consider common euro zone bonds.

EU heavyweights Germany and France have so far opposed any common debt issuance, arguing that it would remove a key driver of fiscal discipline in individual member states and push up their own borrowing costs as AAA-rated sovereigns.

In Washington, a similar sense of inertia to Europe has taken hold.

Just days after a bitterly fought, last-minute deal to raise the country's debt ceiling and avoid default, realisation has sunk in that many elements of the $2.1 trillion deficit reduction plan are not locked in place.

Doubt has spread through markets that Congress will stick to