A Podcast On Sweden: “The Good Life” & Their Model of Capitalism

What brand of capitalism is best ?

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Scrolling Headlines From Yahoo In Play

ALTR  Reports 0.16 cents per shares…revenues up 6% on new product launch

SAN JOSE, Calif.–(BUSINESS WIRE)–Altera Corporation (NASDAQ:ALTR – News) today announced second quarter sales of $279.2 million, up 6 percent from the first quarter of 2009 and down 22 percent from the second quarter of 2008. New products grew 16 percent sequentially.

Second quarter net income was $47.4 million, $0.16 per diluted share, up from net income of $44.0 million, $0.15 per diluted share, in the first quarter of 2009 and down from $98.0 million, $0.32 per diluted share, in the second quarter of 2008. Second quarter 2009 tax expense includes an additional $11.5 million charge as a result of a United States court ruling announced during the quarter related to worldwide equity compensation cost sharing. Altera was not a party to the case. The additional tax expense reduced second quarter earnings by $0.04 per diluted share.

Year-to-date cash flow from operating activities was $90.9 million. Altera ended the quarter with $1.3 billion in cash and short-term investments.

Altera’s board of directors has declared a quarterly cash dividend of $0.05 per share payable on September 1, 2009 to stockholders of record on August 10, 2009.

“With a more than doubling of our 40-nm sales and surging 65-nm sales, new products resumed sequential growth and drove our top line results this quarter,” said John Daane, president, chief executive officer, and chairman of the board. “Combined, our three 40-nm FPGA families continue to set design win value records. We believe that these newest Altera FPGAs will be our most successful ever.”

Several recent accomplishments mark the company’s continuing progress……

Yum Brands Comes in @ .50 cents per share on revenues of $2.54bln… Forecasting growth performance going forward

Fast-food restaurateur Yum Brands(YUM Quote) exceeded Wall Street earnings targets for its second quarter, but ratcheted down guidance for same-store sales growth for the rest of the year.

In an aftermarket press release otherwise marked by excitement over the expansion of its chains in China and the launch of new products at KFC, Yum said “constrained consumer spending” has dampened traffic worldwide, prompting it to cut same-store growth targets for 2009.

In a separate “guidance update” press release, the company said it now expects Chinese same-store sales to come in flat for 2009, as opposed to original targets of a 5% gain year-over-year. For its U.S. division, Yum said same-store sales will likely be “down slightly” compared with early guidance of a 3% increase.

Still, because Yum expects declining commodities prices to increase its restaurant profit margins “significantly,” the company said its EPS target for the full-year 2009 remains unchanged at $2.10. Analysts polled by Thompson Financial are forecasting per-share earnings of $2.12.

The company — franchiser of KFC, Taco Bell and Long John Silvers among others — posted per-share earnings for its second quarter of 50 cents (which excludes one-time items), seven cents above analysts’ expectations. In the year-ago period, Yum earned 45 cents a share.

Sales in the quarter fell to $2.48 billion from $2.66 billion in the corresponding 2008 period.

As for its international growth, Yum said it added 328 restaurants worldwide, with 118 of those in China. Eventually the company wants to open “at least” 500 restaurants in China.

In aftermarket trading, investors bid down Yum shares by $1.38, or about 4%, from their regular session close of $36.23.

INTC  Comes in @ .18 cents per share (GAP Basis ) or 0.07 cents (Non Gap)  Per Share Beating the Street by .10 cents…Revenues @ $8 bln….Margins @ 53%

By Benjamin Pimentel

GS- Reports $3.44 bln on $13.76 bln in Revenues…$4.93 – Smoking Street Estimates of $3.65

By Christine Harper

July 14 (Bloomberg) — Goldman Sachs Group Inc.’s second- quarter profit exceeded analysts’ estimates as record trading and stock underwriting led the company to its highest quarterly profit.

Net income in the three months ended June 26 was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement. That surpassed the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg and compared with $2.09 billion, or $4.58 per share, in last year’s second quarter.

Chief Executive Officer Lloyd Blankfein, 54, made Goldman Sachs the highest-paying Wall Street firm in history before last year’s credit freeze led him to convert to a bank, accept government funds and report the first quarterly loss as a public company. This year Goldman Sachs has issued new stock, returned $10 billion to the U.S. Treasury and reaped fees from selling stocks and bonds.

“Goldman’s got a sweet spot in here, they were the go-to players,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which oversees $13.8 billion including Goldman shares, before earnings were released. “For the time being, they’ve got kind of an open playing field all to themselves.”

Goldman Sachs, the fifth-biggest U.S. bank by assets, climbed 77 percent in New York Stock Exchange trading this year to close yesterday at $149.44. That’s almost triple the low of $52 on Nov. 20.

Goldman Bonds

The difference between the yield on Goldman Sachs’s bonds and U.S. Treasuries, known as the spread, has narrowed this year, indicating investors have regained comfort in lending to the company. The spread on $3.2 billion of 5.95 percent senior unsecured notes maturing in 2018 was 268 basis points yesterday, compared with 472 basis points on March 31. A basis point is one-hundredth of a percentage point.

The results follow the U.S. bank-rescue effort that funneled about $200 billion from taxpayers to financial firms, including $10 billion to Goldman Sachs, after the bankruptcy of Lehman Brothers Holdings Inc. and near-failure of American International Group Inc.

Investors will receive earnings reports later this week from JPMorgan Chase & Co., Citigroup Inc., and Bank of America Corp. Morgan Stanley, which was the second-biggest U.S. securities firm behind Goldman Sachs before both firms converted to banks last year, said it will report next week.

JNJ

NEW BRUNSWICK, N.J., July 14 /PRNewswire-FirstCall/ — Johnson & Johnson (NYSE: JNJ – News) today announced sales of $15.2 billion for the second quarter of 2009, a decrease of 7.4% as compared to the second quarter of 2008. Operational results declined 1.4% and the negative impact of currency was 6.0%. Domestic sales declined 6.7%, while international sales declined 8.0%, reflecting operational growth of 3.9% and a negative currency impact of 11.9%.

Net earnings and diluted earnings per share for the second quarter of 2009 were $3.2 billion and $1.15, respectively. The second quarter of 2008 included an after-tax in-process research and development charge of $40 million. Excluding this charge, net earnings for the quarter and diluted earnings per share represent decreases of 4.7% and 2.5%, respectively, as compared to the same period in 2008.* The Company confirmed its earnings guidance for full-year 2009 of $4.45 – $4.55 per share, which excludes the impact of special items.

“I am proud of the accomplishments of our people in continuing to deliver very solid operational results in light of the significant impacts of patent expirations and the economic environment,” said William C. Weldon, Chairman and Chief Executive Officer. “Our investments through internal research and development, strategic partnerships and acquisitions have allowed us to build what is considered by many to be one of the best pipelines in our industry. We will continue to invest in our portfolio of innovative products to meet the needs of patients and consumers around the world.”

Worldwide Consumer sales of $3.9 billion for the second quarter represented a decrease of 4.5% versus the prior year with an increase of 3.1% operationally and a negative impact from currency of 7.6%. Domestic sales increased 0.8%; while international sales decreased 8.4%, which reflected an operational increase of 4.7% and a negative currency impact of 13.1%…..

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Class Warfare Begins

WASHINGTON (Reuters) – The healthcare overhaul proposal offered on Tuesday by U.S. House of Representatives’ Democrats will include an extra 5.4 percent tax on those earning more than $1 million.

One congressional aide said that would bring the top tax rate for the wealthy to 45 percent.

The 1,000-page healthcare legislation will be considered by three House committees with an aim to finish work in the House by August.

President Barack Obama, who has made the healthcare overhaul his signature domestic policy issue, voiced his support for the proposal and said it would help control skyrocketing costs that have reached $2.5 trillion a year.

The legislation calls for an additional tax of 1 percent levied on those couples earning more than $350,000. Those with $500,000 in income would pay an extra 1.5 percent, according to the legislative documents. Increases could be triggered in 2013 to 2.0 percent and 3.0 percent, respectively. The millionaires’ tax would remain at 5.4 percent, according to legislative documents.

The additional taxes would bring in $544 billion over 10 years to pay for the estimated $1 trillion cost of the healthcare overhaul, including bringing coverage to the estimated 45 million uninsured.

The cornerstone of the plan is a public-financed health insurance option that would compete with private insurers. The legislation includes subsidies to help people buy insurance, and requires all individuals to purchase insurance or face a tax penalty.

Among the sweeping changes in the health insurance industry, it would bar insurers from denying coverage to anyone based on pre-existing medical conditions. It would also cap the amount the insured would have to pay on “out-of-pocket” healthcare expenses.

Among the changes for the Medicare program for the elderly and disabled, is a focus on ways to use reimbursement rates to improve quality of care rather than reward quantity of care. The legislation would establish a commission to examine reducing disparities in reimbursements in different regions of the country.

Drug manufacturers would be required to give rebates to those eligible for Medicare and Medicaid, the health program for the poor.

Morti’ Zuckerman Says The Economy is Worse Than You Think

The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.

The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:

– June’s total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.

– More companies are asking employees to take unpaid leave. These people don’t count on the unemployment roll.

– No fewer than 1.4 million people wanted or were available for work in the last 12 months but were not counted. Why? Because they hadn’t searched for work in the four weeks preceding the survey.

– The number of workers taking part-time jobs due to the slack economy, a kind of stealth underemployment, has doubled in this recession to about nine million, or 5.8% of the work force. Add those whose hours have been cut to those who cannot find a full-time job and the total unemployed rises to 16.5%, putting the number of involuntarily idle in the range of 25 million.

– The average work week for rank-and-file employees in the private sector, roughly 80% of the work force, slipped to 33 hours. That’s 48 minutes a week less than before the recession began, the lowest level since the government began tracking such data 45 years ago. Full-time workers are being downgraded to part time as businesses slash labor costs to remain above water, and factories are operating at only 65% of capacity. If Americans were still clocking those extra 48 minutes a week now, the same aggregate amount of work would get done with 3.3 million fewer employees, which means that if it were not for the shorter work week the jobless rate would be 11.7%, not 9.5% (which far exceeds the 8% rate projected by the Obama administration).

– The average length of official unemployment increased to 24.5 weeks, the longest since government began tracking this data in 1948. The number of long-term unemployed (i.e., for 27 weeks or more) has now jumped to 4.4 million, an all-time high.

– The average worker saw no wage gains in June, with average compensation running flat at $18.53 an hour.

– The goods producing sector is losing the most jobs — 223,000 in the last report alone.

– The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time. Many unemployed workers looking for jobs once the recovery begins will discover that jobs as good as the ones they lost are almost impossible to find because many layoffs have been permanent. Instead of shrinking operations, companies have shut down whole business units or made sweeping structural changes in the way they conduct business. General Motors and Chrysler, closed hundreds of dealerships and reduced brands. Citigroup and Bank of America cut tens of thousands of positions and exited many parts of the world of finance.

Job losses may last well into 2010 to hit an unemployment peak close to 11%. That unemployment rate may be sustained for an extended period.

Can we find comfort in the fact that employment has long been considered a lagging indicator? It is conventionally seen as having limited predictive power since employment reflects decisions taken earlier in the business cycle. But today is different. Unemployment has doubled to 9.5% from 4.8% in only 16 months, a rate so fast it may influence future economic behavior and outlook.

How could this happen when Washington has thrown trillions of dollars into the pot, including the famous $787 billion in stimulus spending that was supposed to yield $1.50 in growth for every dollar spent? For a start, too much of the money went to transfer payments such as Medicaid, jobless benefits and the like that do nothing for jobs and growth. The spending that creates new jobs is new spending, particularly on infrastructure. It amounts to less than 10% of the stimulus package today.

About 40% of U.S. workers believe the recession will continue for another full year, and their pessimism is justified. As paychecks shrink and disappear, consumers are more hesitant to spend and won’t lead the economy out of the doldrums quickly enough.

It may have made him unpopular in parts of the Obama administration, but Vice President Joe Biden was right when he said a week ago that the administration misread how bad the economy was and how effective the stimulus would be. It was supposed to be about jobs but it wasn’t. The Recovery Act was a single piece of legislation but it included thousands of funding schemes for tens of thousands of projects, and those programs are stuck in the bureaucracy as the government releases the funds with typical inefficiency.

Another $150 billion, which was allocated to state coffers to continue programs like Medicaid, did not add new jobs; hundreds of billions were set aside for tax cuts and for new benefits for the poor and the unemployed, and they did not add new jobs. Now state budgets are drowning in red ink as jobless claims and Medicaid bills climb.

Next year state budgets will have depleted their initial rescue dollars. Absent another rescue plan, they will have no choice but to slash spending, raise taxes, or both. State and local governments, representing about 15% of the economy, are beginning the worst contraction in postwar history amid a deficit of $166 billion for fiscal 2010, according to the Center on Budget and Policy Priorities, and a gap of $350 billion in fiscal 2011.

Households overburdened with historic levels of debt will also be saving more. The savings rate has already jumped to almost 7% of after-tax income from 0% in 2007, and it is still going up. Every dollar of saving comes out of consumption. Since consumer spending is the economy’s main driver, we are going to have a weak consumer sector and many businesses simply won’t have the means or the need to hire employees. After the 1990-91 recessions, consumers went out and bought houses, cars and other expensive goods. This time, the combination of a weak job picture and a severe credit crunch means that people won’t be able to get the financing for big expenditures, and those who can borrow will be reluctant to do so. The paycheck has returned as the primary source of spending.

This process is nowhere near complete and, until it is, the economy will barely grow if it does at all, and it may well oscillate between sluggish growth and modest decline for the next several years until the rebalancing of excessive debt has been completed. Until then, the economy will be deprived of adequate profits and cash flow, and businesses will not start to hire nor race to make capital expenditures when they have vast idle capacity.

No wonder poll after poll shows a steady erosion of confidence in the stimulus. So what kind of second-act stimulus should we look for? Something that might have a real multiplier effect, not a congressional wish list of pet programs. It is critical that the Obama administration not play politics with the issue. The time to get ready for a serious infrastructure program is now. It’s a shame Washington didn’t get it right the first time.

Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report.

Goldman Explains Why Its Hoarding Cash

Goldman Sachs has a remarkably high capital ratio, with far more cash than it needs to pay off any debt maturities coming due or meet any regulatory capital requirements on the books. So what is Goldman planning to do with its $172 billion of excess capital?

It’s planning on hanging on to it.

On the earnings call going on right now Goldman explained why it isn’t more actively deploying its capital in the markets.

1. Sellers still have unrealistically high prices. Although we’ve been hearing for over a year that this is the buying opportunity of a lifetime for distressed debt, Goldman has mainly focused on buying plain-vanilla triple As and government securities. It says it would like to buy up some riskier paper, but the sellers are still demanding price levels that Goldman thinks don’t make sense.
2. Government might raise capital levels, so we’d better hold on to cash. The plans to reform the regulation of the security sector have created an uncertainty about what the new capital rules may be. To prepare for more stringent capital requirements, Goldman is holding on to excess capital.
3. “We’re way far away from out of the woods.” The world is still a scary place, with markets and economies still on the rocks. Goldman wants to keep up its liquidity just in case things stay ugly or get uglier.

In short, Goldman Sachs is just like the rest of us. It’s saving up for rainy days ahead and it still thinks sellers are charging too much for their crappy assets.

Palin Criticizes Current Administration, But Misunderstands Issues @ Hand

Sarah Palin wades into the debate on cap and trade, or as she prefers to call it, cap and tax, today in the Washington Post’s editorial pages. Predictably she doesn’t like it, but it doesn’t appear as though she understands the issue at hand.

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn’t lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America’s economy.

Cap and trade isn’t about “foreign energy sources.” It’s about staving off global warming. At no point does Palin mention CO2 emissions, rising global temperatures or anything that’s at the core of the legislation.

Instead she prefers to talk about the “mountains of oil” we sit on and our “abundant” coal and “the resources that God created right underfoot on American soil.” No mention of the resources God provides above us, like solar, or God blows on us, like wind. And, incidentally, where are these mountains of oil? The Rockies? Good luck pulling it.

She just uses the usual talking points about jobs being lost, and electric bills rising. It’s a possibility those things will happen, just as it’s a possibility that continued CO2 emissions will lead to catastrophic climate change. The question she needs to answer is which is worse.

JAVA Forecasts A Worse Than Expected  Q

Sun Microsystems, the computer server maker being acquired by Oracle, issued a revenue forecast that fell short of Wall Street estimates.

Paul Sakuma / AP

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Sun, which also forecast a net loss, said Tuesday it expects to report revenue in the range of $2.58 billion to $2.68 billion for the fourth quarter ended June 30 —shy of analysts’ view of $3.058 billion, according to Reuters Estimates. Sun posted revenue of $3.78 billion for the fourth quarter of fiscal 2008.

Sun expects a net loss per share for the fourth quarter in the range of 24 to 34 cents a share. Excluding special items, it sees a loss of 6 to 16 cents a share.

Separately, Oracle said the Sun acquisition is expected to add to Oracle’s earnings before special items by at least 15 cents a share in the first full year after the deal closes. In all, the acquisition is seen adding over $1.5 billion to Oracle’s operating profit.

San Francisco’s Fed Economist Expects a “Painful Gradual Recovery”

CHICAGO (Reuters) – A “painfully gradual” U.S. recovery should start in the third quarter, even as the job market is still weakening, said an economist with the San Francisco Federal Reserve Bank.

The recent vicious cycle, in which losses by banks lead to tighter credit availability and then lower household and business spending, “has begun to slow,” economist Mary Daly said in the bank’s latest “FedViews” newsletter.

Whether that improved trend continues, however, “depends in part on the labor markets, which continue to deteriorate,” Daly said in the report, which was dated July 9 but posted on the bank’s website on Tuesday.

The official jobless rate plus those involuntarily working only part-time add up to more labor market slack than in the 1982 recession, and the measure will rise even higher by year end, she said.

The bank’s economic team said real GDP should grow by about 1 percent in the third quarter, and continue to creep higher through the end of 2010. Core inflation, meanwhile, could fall toward 1 percent during 2010, they said.

World Indices Rise Following Wall Streets Rally

By Daniel Hauck

July 14 (Bloomberg) — Stocks rose around the world and bonds fell on speculation earnings from Goldman Sachs Group Inc. will suggest that the worst of the financial crisis is over.

The MSCI World Index advanced 0.8 percent at 10:12 a.m. in London, posting a two-day gain for the first time this month. Futures on the Standard & Poor’s 500 Index rose 0.3 percent. Russia’s Micex Index climbed 3.6 percent and the ruble strengthened the most in a month against the dollar on better- than-estimated earnings from OAO Sberbank, the nation’s biggest financial institution. Treasuries declined, sending the yield on the benchmark 10-year note 4 basis points higher to 3.39 percent.

Goldman Sachs will post the largest profit since a record set in 2007 when it reports second-quarter earnings today, according to analysts’ estimates compiled by Bloomberg. U.S. Treasury Secretary Timothy Geithner, speaking in Jeddah, Saudi Arabia, said the global economy may suffer setbacks during its recovery and credit conditions will remain “unusually tight.”

“Caution may well prevail in the financial markets until key earnings reports are released, some coming today like Goldman Sachs,” Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd., wrote in a report today. “If key earnings reports at least meet expectations, a clearer recovery in risk appetite may be imminent.”

Oil, Copper Rise

Crude oil for August delivery rose for the first time in three days, gaining 1.8 percent to $60.76 a barrel on the New York Mercantile Exchange. The Organization of Petroleum Exporting Countries will outline its expectations for a possible rebound in demand next year in a monthly report today. Copper for three-month delivery rose 2.2 percent on the London Metal Exchange to $5,000 a metric ton.

The rally in commodities helped push a gauge of European raw-material producers up 3.6 percent, leading the Dow Jones Stoxx 600 Index’s 1.2 percent advance. The MSCI Asia Pacific Index climbed 2.3 percent, the steepest rise in a month.

The MSCI World Index of 23 developed countries, which posted its biggest rally in a decade last quarter, still is down 2.2 percent since the start of July on speculation that earnings will signal the first global recession since World War II has not yet run its course.

Profits fell an average 35 percent at Standard & Poor’s 500 Index companies in the second quarter and will drop 21 percent from July through September, according to analyst projections compiled by Bloomberg. That would extend the streak of quarterly profit declines to a record nine, Bloomberg data show.

Goldman Sachs Gains

Goldman Sachs advanced 1.4 percent in Germany, extending yesterday’s 5.3 percent gain in New York. The bank will probably say it earned $2.2 billion in the three months through June, according to the average estimate of analysts surveyed by Bloomberg.

CIT Group Inc. surged 27 percent in Germany. The century- old lender that’s been unable to persuade the government to back its debt sales said it’s in “active discussions” with regulators about a rescue before $1 billion of bonds mature next month.

The Micex posted its first back-to-back gains in a month after Sberbank said first-quarter net income was 600 million rubles ($18.4 million), topping estimates from Moscow-based brokerages Troika Dialog and KIT Finance. Financial shares led a rally in the MSCI Emerging Markets Index, which climbed 2.5 percent for the steepest intraday gain since June 24.

Ruble Rallies

The ruble strengthened 1 percent against the U.S. currency, bolstered by oil’s rise. The won appreciated 1.8 percent versus the dollar after a rally in U.S. stocks yesterday and faster- than-expected economic growth in Singapore fueled speculation investors will purchase more higher-yielding assets.

The yen declined against 16 major currencies, dropping 0.4 percent versus the euro and 0.2 percent against the dollar. The euro advanced 0.2 percent compared with the dollar for a second day of gains.

U.K. and Australian bonds fell the most among major fixed- income markets. The yield on the benchmark 10-year gilt rose as much as 6 basis points to 3.73 percent after the Royal Institution of Chartered Surveyors reported that more London real-estate agents and surveyors said home values increased rather than fell for the first time in 20 months.

The yield on the Australian bond due 2019 climbed 7 basis points to 5.28 percent after a National Australian bank survey showed business sentiment turned positive in June for the first time since December 2007.

The U.S., Europe and Japan are grappling with their first simultaneous recessions since World War II after the collapse of subprime mortgages froze credit markets and spurred almost $1.5 trillion in losses and writedowns at financial firms. The World Bank said last month that the global economy will shrink 2.9 percent this year, a deeper slump than the 1.7 percent contraction forecast in March.

Oil Rises Above $60 pb

SINGAPORE – Oil prices climbed back above $60 a barrel Tuesday in Asia on signs the region be may emerging from an economic slump.

Benchmark crude for August delivery was up 70 cents to $60.39 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 20 cents to settle at $59.69.

Singapore said Tuesday its economy surged an annualized, seasonally adjusted 20.4 percent in the second quarter, adding to hopes that Asia could lead the world out of recession and fuel crude demand.

Crude prices have flirted with $60 a barrel for the last few days — pausing after a drop from an eighth-month intraday high of $73.38 on June 30 — as concern about a struggling U.S. economy undermined investor optimism.

“There’s evidence that Asia, led by China, is turning around quite quickly,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “That’s where the demand growth potentially will be.”

Singapore was the first major Asian country to report second quarter gross domestic product. China, the world’s third-largest economy, is scheduled to announce GDP later this week.

Moore said crude will likely average about $60 a barrel in the third quarter as signs of economic recovery in Asia are offset by weaker results in the U.S. and Europe.

“We might see quite strong GDP from China, and then some U.S. data that’s pretty subdued,” Moore said. “I think that’s the game we’re in for during the next few months.”

An attack by Nigerian militants on oil installations in Lagos also bolstered prices. Rebels set fire to an oil depot and loading tankers on Sunday, killing five people in the group’s first attack outside the southern oil-rich Delta region.

In other Nymex trading, gasoline for August delivery rose 1.66 cents to $1.66 a gallon and heating oil gained 1.52 cents to $1.519. Natural gas for August delivery jumped 7.3 cents to $3.34 per 1,000 cubic feet.

In London, Brent prices rose 77 cents to $61.45 a barrel on the ICE Futures exchange.

CIT To be In Advanced Talks With The Government Cheese Dispenser

By Pierre Paulden and Caroline Salas

July 14 (Bloomberg) — CIT Group Inc. rose in European trading after the corporate lender said it’s in “active discussions” with regulators about a rescue before $1 billion of bonds mature next month.

CIT jumped 27 percent to $1.71 at 11:30 a.m. in Frankfurt. The New York-based company has so far been unable to persuade the U.S. government to back its debt sales and said July 12 that it’s in discussions with regulators on a “series of measures to improve the company’s near-term liquidity position.” Those talks continued yesterday, Curt Ritter, a CIT spokesman said.

“They’re on life support right now,” said David Hendler, an analyst at debt research firm CreditSights Inc. in New York. The financial system is in a “once in a lifetime meltdown” and CIT “went into it in a weakened position,” he said.

Bond investors stepped up bets that CIT won’t be able to come up with enough cash in time to honor its debts. CIT’s $1 billion of floating-rate notes maturing in August plummeted 14.375 cents to 80 cents on the dollar yesterday, their worst performance since the notes were issued three years ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The Federal Deposit Insurance Corp. is concerned that standing behind CIT’s debt would put taxpayer money at risk because the company’s credit quality is worsening, people familiar with the regulator’s thinking said last week. One of those people said yesterday the FDIC’s view hasn’t changed.

Funds Transfer….

Starwood Bidding For Corus Bancshares

By LINGLING WEI and NICK TIMIRAOS

Barry Sternlicht’s Starwood Capital Group, a private-equity firm specializing in real-estate investments, is bidding on assets of Corus Bankshares Inc., according to people familiar with the matter.

“We’re bidding on a bank,” Mr. Sternlicht said during a conference call with investors in Starwood funds on Monday. Without naming the bank, he said it is heavily concentrated in real-estate lending and has more than 110 construction loans. People with knowledge of the matter identified the bank as Corus.

Starwood is one of several companies that have shown interest in Corus, concentrated heavily on condominium construction lending in South Florida and other now-troubled housing markets. Investors don’t appear to be interested in buying the entire bank, but instead are looking at buying the bank’s assets out of receivership if regulators take over….

Dell Leaves An Earnings Smell in Pc Market

By JUSTIN SCHECK

Dell Inc. said a tough technology market and high component prices will lower its profit margins for its current quarter, deflating investors’ hopes for a quick turnaround in the struggling personal-computer industry.

The announcement, which came a day before Dell’s annual meeting Tuesday with financial analysts, was the latest bad news for the sector. PC sales have dropped in the recession and consumers have shifted away from expensive notebook computers in favor of netbooks, small laptops that cost $500 or less.

The state of the PC industry should become clearer Tuesday, when chip maker Intel Corp. releases quarterly results. Last month, Gartner Inc. forecast PC shipments will decline 6% this year, though the estimate was an improvement from a previous forecast of a 6.6% decline.

Dell’s announcement marked the latest sign of weakness for the Round Rock, Texas, giant. It has been struggling to revive growth since early 2007, when founder Michael Dell returned as chief executive. Dell has tried to streamline its production process, and has moved into new areas like retail PC sales.

Ashok Kumar, an analyst at Collins Stewart, said Dell has been particularly affected by customers moving to cheap, low-profit PCs. The trend toward “the low end is impacting the profitability,” he said.

The company said Monday “higher component costs, a competitive pricing environment, and an unfavorable mix of product and business-segment demand” would hit its gross margins for its fiscal quarter ending July 31. The company, which has stopped giving financial guidance, didn’t disclose numbers.

Dell’s stock price fell 3.5% to $12.56 in after-hours trading on the news, after ending at 4 p.m. at $13.02 on the Nasdaq Stock Market…..

U.S. Considers Mortgage Help for Unemployed

By Patrick Rucker and David Lawder

NEW YORK/WASHINGTON (Reuters) – President Barack Obama is mulling new ways to delay foreclosure for jobless homeowners who are unable to keep up with monthly payments, an administration official said on Monday.

The official told Reuters it was reasonable for policymakers to consider options for loan forbearance — allowing borrowers to delay, defer or skip payments — that are more effective than those currently available in the private sector.

The number of failing home loans has been climbing for three years as risky borrowers have defaulted on their easy-to-get loans, property values have sunk and the unemployment rate has climbed.

But the official said the idea, which is still evolving, was difficult from a policy perspective and carries potential hazards. It could help more people struggling with economic difficulty, but it also could create perverse incentives that distort the housing market, said the official, who did not want to speak on the record about internal administration debates.

The official said such a program would be in keeping with other measures to help workers who have lost jobs in the current recession.

CONTINUED SLIDE…

GS Insiders Sell $700 mln of Stock Since LEH Debacle & B4 Today’s High Profile Q

NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) executives sold almost $700 million worth of stock since the collapse of rival Lehman Brothers last year, the Financial Times said on Monday.

The newspaper said that most of the stock sales took place while the biggest U.S. investment bank was bailed out by the government with $10 billion of taxpayer money, according to filings with the Securities and Exchange Commission.

A Goldman Sachs spokeswoman declined to comment.

Goldman executives sold stock worth $691 million between September 2008 and April 2009, more than the $438 million in stock sold between September 2007 and April 2008, when the average share price was substantially higher, the Financial Times said.

The stock sales peaked between December and February, when Goldman Sachs’ shares traded near record lows, the newspaper said…..

Geithner Pitches U.S. Stability To Middle East

By Glenn Somerville

JEDDAH (Reuters) – U.S. Treasury Secretary Timothy Geithner said on Tuesday he saw signs of confidence returning to the U.S. financial sector and pledged that the United States would pursue policies that preserve the dollar’s value.

“The policies of the United States are designed to lay the conditions for a strong dollar for more stability in the international monetary system and among the major economies,” he said at the Jeddah Chamber of Commerce.

Geithner, who arrived in Saudi Arabia overnight from London, is aiming to reassure Gulf Arab states that the United States wants their investments and that their U.S. dollar assets are safe. He travels to Abu Dhabi in the United Arab Emirates on Wednesday and will also make a stop in Paris on Thursday.

Signs of strength were also returning to the economy, he said. “We are seeing very active issuance in corporate bonds and equity markets and the banking system itself in the United States shows signs of more confidence,” Geithner said.

Geithner said aggressive efforts to counter a global financial crisis were starting to work and acknowledged the United States had a special duty to help spur a recovery.

“Given the dollar’s role in the international financial system and the significant impact of the U.S. economy on global economic conditions, we fully recognize that the United States has a special responsibility to play,” he said.

Five of the six Arab states that comprise the Gulf Cooperation Council — Saudi Arabia, the UAE, Bahrain, Qatar and Oman — peg their currencies to the dollar. The sixth, Kuwait, uses a basket heavily weighted in dollars….

Former Congressmnan Sues Carlyle Group

(Reuters) – Former Republican Congressman Michael Huffington has filed a lawsuit against Carlyle Group alleging the private-equity firm misrepresented the safety of Carlyle Capital Corp, the publicly traded mortgage-securities fund that collapsed last spring, the Wall Street Journal reported.

Huffington lost his entire $20 million investment in the fund, the paper said.

The lawsuit, filed Monday in Massachusetts state court, claims Carlyle deceived Huffington into thinking that the fund was “conservative” and “low risk,” the WSJ said.

It said Huffington also named David Rubenstein, Carlyle’s co-founder responsible for fund-raising at the firm, in the lawsuit. Carlyle has about $85 billion under management.

Carlyle and Huffington could not be immediately reached for comment by Reuters.

CSX Posts a 20% Drop in Profits, But Stock Rises on Positive Comments

NEW YORK – Railroad operator CSX said Monday that second-quarter earnings fell 20 percent as it collected fewer fuel surcharges and shipments continued to drop.

The results still topped Wall Street’s expectations, as the company slashed expenses by 27 percent.

The Jacksonville, Fla.-based company, which runs its signature blue and yellow locomotives from Canada to Florida and west to the Mississippi River, said Monday it earned $308 million, or 78 cents per share, compared with $385 million, or 93 cents a share, last year.

Excluding charges related to the money-losing Greenbrier resort the company sold, earnings from continuing operations were 72 cents per share versus 95 cents per share last year.

Revenue fell 25 percent to $2.19 billion.

Thomson Reuters says analysts expected profit of 62 cents per share on revenue of $2.27 billion.

CSX’s shipping volume fell 21 percent in the period, compared with 22 percent industrywide. Railroad shipping volumes are viewed as a key economic indicator because so many consumer and manufactured goods are moved on the tracks.

“While the economy continues to significantly impact our business, there are some signs that we may be seeing the bottom in many markets,” CEO Michael Ward said. “Even in this difficult business environment, we are still strengthening our operations, optimizing our resources and making the right investments to prepare our network for the future.”

CSX said it saved millions of dollars in the second quarter as it furloughed employees and benefited from the falling price of fuel. But the decline in fuel prices also meant fuel surcharges — fees it collects from customers that vary with the price of diesel — dropped.

Labor costs fell 11 percent to $654 million, while fuel prices sank 66 percent compared with last year.

Still, the cost savings weren’t enough to offset steep declines across many of CSX’s biggest segments. Metal shipping volume fell by 53 percent, as steel demand in the automotive and construction markets continued to slide.

In the automotive segment, bankruptcy filings from General Motors Corp. and Chrysler LLC, as well as the ongoing downturn in consumer demand, drove volume down 41 percent. General Motors has been CSX’s biggest customer among the Detroit Three.

Coal shipments, used to produce electricity and steel, dropped 21 percent.

CSX shares rose 91 cents, or 2.8 percent, to $33.45 in aftermarket trading. The stock closed up 51 cents during the regular session to finish at $32.54.

XOM Makes A Splash in A Pool of Algae

HOUSTON (AP) – Exxon Mobil Corp. said Tuesday it will make its first major investment in greenhouse-gas reducing biofuels in a $600 million partnership with biotech company Synthetic Genomics Inc. to develop transportation fuels from algae.

Despite record-breaking profits in recent years, the oil and gas giant has been criticized by environmental groups, members of Congress and even shareholders for not spending enough to explore alternative energy options.

One of the company’s requirements was finding a biofuel source that could be produced on a large scale. It says photosynthetic algae appears to be a viable, long-term candidate. If the alliance is successful, pumping algae-based gasoline at Exxon service stations is still several years away and will mean additional, multibillion-dollar investments for mass production.

“This is not going to be easy, and there are no guarantees of success,” Emil Jacobs, a vice president at Exxon Mobil Research and Engineering Co., said in an interview with The Associated Press. “But we’re combining Exxon Mobil’s technical and financial strength with a leader in bioscientific genomics.”

Jacobs said the project involves three critical steps: identifying algae strains that can produce suitable types of oil quickly and at low costs, determining the best way to grow the algae and developing systems to harvest enough for commercial purposes.

Besides the potential for large-scale production, algae has other benefits, Jacobs said. It can be grown using land and water unsuitable for other crop and food production; it consumes carbon dioxide, the greenhouse gas blamed for climate change; and it can produce an oil with molecular structures similar to the petroleum products – gasoline, diesel, jet fuel – Exxon already makes.

That means the Irving, Texas-based company will be able to convert the bio-oil into fuels at its own refineries and use existing pipelines and tanker trucks to get it to consumers.

The $600 million price tag includes $300 million for Exxon’s internal costs and $300 million or more to La Jolla, Calif.-based Synthetic Genomics – if research and development milestones are successfully met.

“Even though this is a multiyear program, we both still consider it a very aggressive timetable, and it involves a lot of basic research,” said J. Craig Venter, founder and CEO of the privately held company. “As a result, you don’t know the answers until you’ve done these tests and experiments.”

Algae is considered a sustainable source for second-generation biofuels, which go beyond corn-based ethanol into nonfood sources such as switchgrass and wood chips.

Royal Dutch Shell PLC said earlier this year it would scale back large investments in wind and solar in favor of next-generation biofuels. The European oil giant is working with Canadian company Iogen Corp. on a method to produce ethanol from wheat straw, and partnering with Germany-based Choren Industries to develop a synthetic biofuel from wood residue.

Another oil major, BP PLC (BP.), plans to team up with Verenium Corp. to build a $300 million cellulosic ethanol plant in Highlands County, Fla.

For Exxon Mobil, the world’s largest publicly traded oil company, the biofuels investment is tiny compared with its spending to find new supplies of crude and natural gas.

CEO Rex Tillerson said earlier this year Exxon’s 2009 spending on capital and exploration projects is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. The company said those levels are likely to remain in the $25 billion to $30 billion range through 2013.

CPI Tumbles Below BofE’s Target

Inflation tumbled below the Bank of England’s 2 per cent target for the first time in nearly 2 years as the recession continued to take its toll on prices.

The Consumer Price Index (CPI) gauge of inflation fell from 2.2 per cent in May to 1.8 per cent in June — the first time it has been under 2 per cent since September 2007, when the credit crisis began to grip the country.

CPI was dragged down by food and non-alcoholic drink prices which fell below May and June but increased over the same period last year.

Inflation soared to a 16-year high of 5.2 per cent last year as higher oil prices fed through into higher prices for consumer goods. But lower oil costs and falling consumer demand are now putting downward pressure on prices.

German Confidence Slips

BERLIN (AP) – Investor confidence in Germany, Europe’s biggest economy, slipped in July after an eight-month rise as worries over bank lending clouded optimism over improving industrial data, a closely watched survey showed Tuesday.

The ZEW institute said its monthly index, which measures investors’ outlook for the next six months, slipped to 39.5 points this month from 44.8 in June.

Germany’s export-dependent economy sank into recession last year as the global downturn dried up demand for its manufactured goods.

However, recent data have shown industrial orders and production beginning to recover – even as worries persist over banks’ reluctance to lend.

“A considerable risk for the future development of the German economy is whether lending to firms and households works out,” ZEW said in a statement.

Investors’ view of Germany’s current situation was barely changed this month, the institute said. A subindex measuring that assessment increased by just 0.4 points to minus 89.3 in July.

Economists had expected a slight increase, or at worst a smaller dip, in the overall index.

Still, “it is unlikely in our view that this setback signals a trend reversal downwards,” economists at Commerzbank AG in Frankfurt wrote in a research note.

“Firstly, the movement can hardly be described as significant given the high volatility of the index,” they added. “Secondly, the ‘hard’ economic data should increasingly turn upwards in the coming months, so the current doubts on the sustainability of the emerging turnaround should abate.”

ZEW described the decline as only a “slight correction of economic expectations,” but said the latest reading confirmed forecasts by the government and others that gross domestic product will shrink by about 6 percent this year – by far the worst performance since World War II.

“Growth rates are likely to move around zero percent until the first months of 2010,” ZEW president Wolfgang Franz said. Official second-quarter growth figures are due on Aug. 13.

The index is based on a monthly survey of up to 350 financial experts by the Mannheim-based ZEW, or Center for European Economic Research.

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