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Joined Feb 3, 2009
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Another Scandal to Contemplate
Comments »The man at the center of a fraud scandal at the Treasury Department has been allowed to quietly quit and retire from his job as a government regulator, despite allegations that he allowed a bank to falsify financial records and amidst outcries from investigators who say the case shows how cozy government regulators have become with the banks and savings and loans they are supposed to be checking on.
Darrel Dochow, the West Coast regional director at the Office of Thrift Supervision who investigators say allowed IndyMac to backdate its deposits to hide its ill health, quit last Friday. Prior to his leaving, Dochow was removed from his position but remained on the government payroll while the Inspector General’s Office investigates the allegations against him.
MCD Feels The Pain and Warns For the First Q
MCD begins to see the slowdown
Comments »OAK BROOK, Ill. – McDonald’s Corp., the nation’s No. 1 hamburger chain, cautioned Monday that the stronger dollar and commodity costs will likely squeeze its first-quarter revenue results and margins.
The fast-food chain anticipates quarterly sales to be off by at least $600 million and earnings to be hurt by 7 cents to 9 cents per share if foreign-currency rates stay at current levels.
The results are also expected to include a 3 cents to 4 cents-per-share gain from McDonald’s sale of its minority stake in Redbox Automated Retail LLC. Redbox, the company’s last non-McDonald’s venture, rents DVDs for $1 a night out of vending machines.
While cautious on the first quarter, McDonald’s Chief Executive Jim Skinner said he’s still confident in the company’s fundamental strength.
“We have the right strategies in place to grow the business for the long-term and we have the operating experience to manage through the current environment,” Skinner said in a statement.
McDonald’s managed solid same-store sales results for February, with U.S. sales up partly on its chicken offerings and core menu items.
Global same-store sales climbed 1.4 percent for the month. The increase came despite having one fewer day in February 2009 compared with leap year in 2008, which cut four percentage points from same-store sales. Adjusted for the calendar shift, global same-store sales jumped 5.4 percent.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
U.S. same-store sales increased 2.8 percent. Aside from the boost provided by its chicken offerings, McDonald’s said core items like the Quarter Pounder and beverages and breakfast products helped lift results.
European same-store sales dipped 0.2 percent in February, but climbed 4 percent when adjusted for the calendar shift. Same-store sales for Asia/Pacific, Middle East and Africa grew 0.7 percent, or 4.1 percent when adjusted.
Shares of McDonald’s fell 37 cents to $51.75 in premarket trading on Monday.
Get Your Stem Cell Rally Caps On
Hopefully we can catch up to the rest of the world
Comments »March 9 (Bloomberg) — President Barack Obama will reverse the U.S. government’s ban on funding stem-cell research today and pledge to “use sound, scientific practice and evidence, instead of dogma” to guide federal policy, an adviser said.
Harold Varmus, co-chair of a science advisory group to the President, said Obama will ask the White House Office of Science and Technology to create guidelines to incorporate ‘scientific integrity’ into decision-making by U.S. agencies. The action on stem cells, which can grow into any kind of tissue, may help speed research into cures for major illness.
Academic laboratories, led by Harvard University in Cambridge, Massachusetts, and companies already using stem-cell technology, led by Geron Corp., of Menlo Park, California, could gain tens of millions of dollars in funding because of the decision. A “significant amount” of $10 billion given the National Institutes of Health in Obama’s stimulus plan will go to this area of research, Varmus said.
“We view what happened with stem-cell research in the last administration as one manifestation of the failure to think carefully about how government use of scientific advice occurs,” said Varmus, a Nobel prize winner who is president of the Memorial Sloan-Kettering Cancer Center in New York, in a conference call with reporters yesterday. “Public policy must be guided by sound, scientific advice.”
The order involving embryonic stem cells will reverse a decision by former President George W. Bush to ban federal support for all but 21 cell colonies created before 2001.
Derived From Embryos
Stem cells derived from days-old human embryos have the potential to form any of the body’s 200 or so cell types, such as nerve cells or brain cells, and to repair or replace damaged tissue or organs. Adult stem cells, found in living tissue, have a more limited potential to become other cell types.
Bush said it was morally wrong to destroy embryos to develop stem cells. Researchers say that policy held back scientific advances and the development of cures.
“The Obama announcement will energize the stem-cell research community,” said George Daley, a member of the Harvard Stem-Cell Institute and researcher at Children’s Hospital in Boston. “The infusion of NIH funding from the stimulus package and the President’s endorsement will allow us to jump-start our projects. I am already getting e-mails from patients and colleagues applauding the decision.”
The elevation of science will extend beyond stem-cell research and into policies on health, energy and environmental programs, including global warming, said Melody C. Barnes, director of the White House Domestic Policy Council, who joined Varmus on the call with reporters.
120 Days
The National Institutes of Health, the government’s chief health-research agency, will have 120 days to develop new rules on stem cells, the White House said. Officials of the NIH have said they can prepare the guidelines more quickly than that.
The NIH has already begun requesting proposals for research projects using some of the $10 billion it was awarded from the economic stimulus.
“It’s fully anticipated that much of the stimulus money, a significant amount of it, will go to support work in this broad area,” said Varmus, who was director of the NIH from 1993 to 1999. Varmus was co-recipient of a Nobel in 1989 with J. Michael Bishop for their work on cancer genes.
Shares of stem-cell companies, which rallied in extended trading on March 6, after news of Obama’s decision became public, may gain further in today’s trading.
Company Gains
Geron gained $1.51, or 39 percent, to $5.38. Cytori Therapeutics Inc. of San Diego gained 14 cents, or 6 percent, to $2.31. StemCells Inc. of Palo Alto, California, rose 92 cents, or 66 percent, to $2.30 in extended trading on the Nasdaq Stock Market.
Opponents of the research consider embryos to be human life and research that destroys them to be immoral. They say stem cells from adult tissue and umbilical-cord blood are available without harming embryos and already in clinical use, while treatments from embryonic cells are years off.
Bush used the first televised address of his presidency, on August 9, 2001, to announce his policy banning the use of federal funds to support research on cell colonies, or lines, created after that date. Hundreds of newer lines can be used only by researchers funded from private sources.
Congress voted twice to overturn the Bush restrictions and Bush vetoed the measures both times.
Three-Year-Old Advance
A three-year-old advance allowed researchers to turn ordinary skin cells into powerful stem cells similar to those made from embryos. These cells, known as induced pluripotent stem cells, or IPS cells, were first created by Shinya Yamanaka, a researcher at Kyoto University in Japan.
Yamanaka left Japan on March 7 to fly to Washington to attend the signing ceremony today. Reached by telephone during a stopover in San Francisco, he said he supported President Obama’s decision.
“I thought I should accept this invitation because many people seem to think that because of IPS cells, embryonic stem cells are no longer required,” he said. “That is not the case.”
For Lauren Stanford, a 17-year-old high school student who was diagnosed with Type 1 diabetes at the age of 6, Obama’s order was the culmination of years of personal lobbying that has included testifying before the U.S. Senate and speaking at last summer’s Democratic National Convention.
‘Signing Hope’
“It’s like he’s signing hope for people with diabetes and other diseases into law,” Stanford said in a telephone interview. “I think hope can be a medicine too, it goes a long way in helping a kid whose life is very difficult to just feel a little better.”
Like most people with the Type 1 form of diabetes, Stanford must continuously monitor her blood-sugar level and inject herself with insulin several times a day to control her sugar levels. Type I diabetics don’t produce insulin, a naturally occurring hormone, and researchers have reported progress in their efforts to turn stem cells into insulin-producing cells that could be transplanted into the body.
Jonathan Slaek, director of the Stem Cell Institute at the University of Minnesota, said Obama’s action will enable researchers to use a wider range of cell lines, and also “improves the image of the USA.”
Diabetes Research
Researchers in Minnesota are studying insulin-secreting cells for treatment of diabetes, among other projects.
“The international perception is that there’s no stem-cell research allowed in America,” said Slaek, who is British. “In terms of scientific reputation and business climate, I think that message will probably be the most important.”
Still, bringing products to the market “is quite a ways away,” perhaps 10 years to 20 years, he said.
“We recognize there are a range of” religious beliefs concerning stem cell research and “a constant back-and-forth here,” said the White House’s Barnes. There is also a “a broad swath of the American public that does support the steps we’re going to take.”
The issue has become a key issue for some pro-life supporters.
“Taxpayer dollars should not aid destruction of innocent human life,” said House Republican leader John Boehner.
Vatican Response
In Rome, the Vatican’s newspaper deplored Obama’s reversal, repeating Catholic doctrine that such research in the eyes of the church is “deeply immoral,” the Associated Press reported.
Tony Perkins, president of the Family Research Council, called Obama’s planned reversal “a slap in the face” to Americans opposed to the destruction of human embryos.
“I believe it is unethical to use human life, even young embryonic life, to advance science,” Perkins said in a statement March 6. “While such research is unfortunately legal, taxpayers should not have to foot the bill for experiments that require the destruction of human life.”
Market Movers
European Insurers Create Ripples Again
Credit default swap costs rise again
Comments »March 9 (Bloomberg) — Aviva Plc, Scor SE and ING Verzekeringen NV led a jump in the cost of protecting debt sold by European insurers from default, according to traders of credit-default swaps.
Contracts on the senior debt of London-based Aviva, the U.K.’s biggest insurer, climbed 97 basis points to a record 525, according to CMA Datavision prices. Contracts on senior bonds of Scor SE, France’s largest reinsurer, surged 46 basis points to an all-time high of 230, and the insurance unit of ING Groep NV climbed 40 to 350.
Investors are concerned rising corporate defaults and plummeting share prices will undermine the reserves of insurance companies, which together with banks and other financial firms are struggling under $1.2 trillion of losses and writedowns worldwide. Aviva posted a 2008 net loss of 915 million pounds ($1.3 billion) last week and Paris-based Scor said fourth- quarter profit fell 68 percent.
“Every asset class the insurers have invested in, except perhaps government bonds, has been hammered,” said Philip Gisdakis, a credit strategist at UniCredit SpA in Munich.
The benchmark Markit iTraxx Financial index of credit- default swaps on 25 European banks and insurers jumped 7 basis points to 208, close to the record 212 set March 6, according to JPMorgan Chase & Co. The subordinated index surged 20 basis points to 395, compared with the March 6 record of 400.l
Credit-default swaps on Royal & Sun Alliance Insurance Group Plc, the U.K.’s second-largest non-life insurer, increased 6.5 basis points to 125.5, according to CMA.
Hannover Re, Germany’s second-biggest, climbed 26 basis points to an all-time high of 240 because the company may report a fourth-quarter loss due to writedowns on investments.
Hannover’s Loss
Hannover Re probably had a net loss of 2 million euros ($2.5 million) in last year’s final quarter after a profit of 144 million euros a year earlier, according to the median estimate of 12 analysts surveyed by Bloomberg News. The Hanover, Germany-based reinsurer may have lost 144 million euros in 2008, its first-ever full-year loss.
The cost of protecting high-risk, high-yield corporate bonds also rose, with the benchmark Markit iTraxx Crossover index of 50 sub-investment-grade companies in Europe jumping 13 basis points to 1,163, JPMorgan prices show.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality.
A basis point on a credit-default swap contract protecting 10 million euros ($12.6 million) of debt from default for five years is equivalent to 1,000 euros a year.
