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Monthly Archives: January 2013

US Pension Fund May Sell Oil Holdings Due to Climate Change

“A US pension fund with nearly $2 billion in assets is considering selling its holdings in some of the world’s biggest oil and gas companies because of the threat posed by climate change.

In what investor advocacy groups say would be the first divestment of its kind, the Seattle City Employees’ Retirement System is to discuss on Thursday a request from Mike McGinn, the city’s mayor, to sell out of companies including ExxonMobil and Chevron.

The move is one of the most visible results so far of a campaign spearheaded by Bill McKibben, the US environmental activist, modelled on the 1980s disinvestment movement that pressed South Africa to dismantle its apartheid system of racial segregation.

Mr McKibben, founder of the 350.org climate campaign group, wants universities, governments and churches to divest from what he calls “outlaw companies”, whose coal, gas and oil cannot be safely burnt if the world is to avoid potentially dangerous global warming, according to climate scientists.

“These are no longer normal companies,” he said in an interview. “There is no flaw in their business plans. The flaw is their business plans.”

ExxonMobil said it was trying to reduce its greenhouse gas emissions while providing the world with the energy it needs. “We take the issue of climate change seriously and the risks warrant action,” a spokesman said.

If the Seattle retirement scheme were to divest from such companies completely, it would be the first to take such a step, said Stephanie Pfeifer of the Institutional Investors Group on Climate Change, which represents some of Europe’s largest pension funds and asset managers….”

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NYT Saw a Constant Hacking Barrage by China for the Past Four Months

“For the last four months, Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees.

After surreptitiously tracking the intruders to study their movements and help erect better defenses to block them, The Times and computer security experts have expelled the attackers and kept them from breaking back in.

The timing of the attacks coincided with the reporting for a Times investigation, published online on October 25, that found that the relatives of Wen Jiabao, China’s prime minister, had accumulated a fortune worth several billion dollars through business dealings.

Security experts hired by The Times to detect and block the computer attacks gathered digital evidence that Chinese hackers, using methods that some consultants have associated with the Chinese military in the past, breached The Times’s network. They broke into the e-mail accounts of its Shanghai bureau chief, David Barboza, who wrote the reports on Mr. Wen’s relatives, and Jim Yardley, The Times’s South Asia bureau chief in India, who previously worked as bureau chief in Beijing….”

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The Eurozone’s Biggest Bank Posts A Stunning $26 Billion Write-Down

“Spanish bank Santander, the biggest in the eurozone by market value, said its net profit plunged in 2012 as it wrote off nearly 19 billion euros ($26 billion) on bad loans and property assets in Spain.

The charges slashed net profit last year by nearly 60 percent but left Santander’s balance sheet looking more secure.

The group said it made 12.7 billion euros in provisions for non-performing loans in Spain and another 6.1 billion euros for Spanish real estate exposure — 18.8 billion euros in total.

A property market collapse in 2008 left Spain’s banks awash with bad loans and destroyed millions of jobs….”

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Planned Layoffs Rise in January According to Challenger, Gray & Christmas

“NEW YORK (Reuters) – The number of planned layoffs at U.S. firms rose in the first month of the year, but that was more than offset by an increase in plans to hire, a report showed on Thursday.

Employers announced 40,430 job cuts this month, up 24.2 percent from 32,556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc.

But January’s job cuts were down almost the same amount from the same time a year ago, declining 24.4 percent from 53,486 in January 2011. It was the third lowest number of January lay-offs recorded by Challenger going back to 1993.

“The relatively low job-cut totals we have seen for the last couple of months indicate that employers do not foresee a prolonged decline in economic activity,” John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

The financial and retail sectors lost the most workers. Financial firms cut 8,578 workers, while retail companies dropped 6,676 jobs….”

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UPS Swings to Loss on Pension Charge

United Parcel Service Inc. UPS -1.21% swung to a fourth-quarter loss on a pension-accounting related charge of $3 billion, masking broad revenue growth.

Adjusted earnings missed Wall Street estimates and the company projected a weak 2013 profit. For the year, the package-delivery giant estimated per-share earnings of between $4.80 and $5.06, while analysts polled by Thomson Reuters recently expected $5.11.

UPS and other big transport companies are viewed as economic bellwethers because they transport everything from financial documents and pharmaceuticals to auto parts and electronic devices. The company recently abandoned its roughly $6.7 billion deal for Dutch rival TNT Express NV TNTE.AE -1.66% as it anticipated that the proposed merger would be blocked by European competition authorities.

For the latest quarter, the company reported international volume—viewed as an indicator of global trade—grew 2.2%.

Meanwhile, international export volume—a measure of how many packages cross national borders—was up 5.5% after increasing slightly during the third quarter, helped by growth out of Asia for the first time in several quarters.

Average revenue per package increased 1.4%. The measure had slipped in the third quarter despite higher volume as its handles an increasing number of lighter-weight, e-commerce related shipments….”

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$HMC Profits Jump 63%

“TOKYO (AP) — Honda’s quarterly profit surged nearly 63 percent as production recovered after disruptions from natural disasters, but the Japanese automaker slightly lowered its full-year profit forecast because of sales losses in China.

Tokyo-based Honda Motor Co. reported a 77.4 billion yen ($850 million) profit for the October-December period Thursday. Quarterly sales jumped nearly 25 percent to 2.4 trillion yen ($26 billion).

All the Japanese automakers are seeing a dramatic recovery from the quake and tsunami in northeastern Japan in 2011, which destroyed key suppliers.

Honda was also hurt by flooding in Thailand in late 2011. On top of the sales recovery, they are getting a perk from a weakening yen, which helps lift the value of overseas earnings.

Japanese automakers are reporting solid sales increases in the key U.S. market and in Asian countries such as India and Indonesia. The exception is China where anti-Japanese sentiment flared up last year over a territorial dispute, and Honda expects to lose sales of 20,000 vehicles compared with its earlier plan….”

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$DOW Gets Crushed by China Slowdown, Company Loses $0.61 Per share

“MIDLAND, Mich. (AP) — Dow Chemical saw significant deterioration in key markets during the fourth quarter, particularly in China, and posted a wider fourth-quarter loss Thursday.

The company lost $716 million, or 61 cents per share, compared with a loss of $20 million, or 2 cents per share, in the same quarter the year before.

Excluding restructuring and other charges, the Midland, Mich., company earned 33 cents per share, a penny shy of Wall Street estimates.

Revenue slipped about 1 percent to $13.92 billion from $14.1 billion, as sales slipped in North America, Europe, and Asia. That was still better than most analysts had expected, according to a poll by FactSet.

“The second half of 2012 saw significant deterioration in the markets we serve, particularly in China,” said Chairman and CEO Andrew Liveris. “In response, Dow identified and took aggressive action to mitigate the effects of a slow-to-no-growth global environment.”

China earlier this month showed some signs of a rebound, but it remains vulnerable economically. The economy grew by 7.8 percent, which was China’s weakest annual performance since the 1990s….”

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$AET Misses as Legal Costs Rise

“(Reuters) – Aetna Inc said on Thursday that fourth-quarter earnings fell sharply, as costs rose in parts of its employer-based insurance business and it took charges for settling litigation over payment practices for out-of-network care.

The health insurer also said Chief Financial Officer Joseph Zubretsky would lead a new business internally. Shawn Guertin, who has been with Aetna since 2011 and was previously CFO of Coventry Health Care Inc , which Aetna is buying, will replace Zubretsky on February 25.

The Hartford, Connecticut company announced plans in August for the $5.6 billion acquisition of Coventry, part of a strategy to expand in government-sponsored healthcare programs like Medicare.

Aetna said fourth-quarter net income declined to $190.1 million, or 56 cents per share, from $372.6 million, or $1.02 per share, a year earlier.

The latest results include a $78 million after-tax charge for the $120 million settlement reached in December for the class-action lawsuit. Patients and doctors had accused Aetna of systematically underpaying claims.

Excluding special items, the company reported earnings of 94 cents per share. Analysts on average were expecting 95 cents on that basis, according to Thomson Reuters I/B/E/S….”

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$NDAQ Profit Tops Expectations as Non-Trading Revs Rise

“NEW YORK (Reuters) – Nasdaq OMX Group reported a higher fourth-quarter profit on Thursday, as an increase in non-transaction-based revenues outweighed an industry-wide drop in trading volumes.

Net income attributable to the transatlantic exchange operator totaled $85 million, or 50 cents a share, up from $82 million, or 45 cents a share, a year earlier.

Stripping out one-time items including restructuring, merger, and legal expenses, Nasdaq said it earned 64 cents a share. That was 3 cents above analysts’ expectations, on average, according toThomson Reuters I/B/E/S.

Revenues, not including transaction rebates, brokerage, clearance and exchange fees, were $419 million, compared to $420 million a year earlier. Analysts had expected revenue of $412.01 million.

Nasdaq’s results were “driven by a significant pick-up in corporate activity coupled with solid performance in our U.S. options, U.S. proprietary data products and global index businesses,” Bob Greifeld, the company’s chief executive, said in a statement.

Nasdaq has been diversifying away from transaction-based revenues over the past several years, putting more of a focus on business units that provide a steadier income flow through providing services like technology and data to other companies….”

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$MA Posts Better Than Expected Numbers All Around, Global Spend Rises


(Reuters) – MasterCard Inc , the world’s second-largest credit and debit card network, reported a higher fourth-quarter profit as more people choose card payments over cash.

“For the quarter ended December 31, net income rose to $605 million, or $4.86 per share, from $19 million, or 15 cents per share, a year earlier.

The company took a $495 million litigation charge in the year-ago quarter.

Revenue rose 10 percent to $1.9 billion.

Cardholders made $727 billion of purchases worldwide, on a local currency basis, up 13 percent.”

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$PHM Beats Expectations


PulteGroup Inc. (PHM), the best performer in the Standard & Poor’s 500 Index (SPX) last year, said fourth- quarter profit quadrupled as the homebuilder’s sales increased amid a U.S. real estate revival.

Net income was $58.7 million, or 15 cents a share, compared with $13.8 million, or 4 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. Revenue climbed to $1.57 billion from $1.26 billion.

Demand for new houses is rising as inventories of existing properties tighten and mortgage rates hover near record lows. U.S. new-home sales jumped 20 percent last year to the highest since 2009. PulteGroup, the largest homebuilder by market value, has lowered costs to boost profitability as orders climb.

“They’re improving in line with the market,” Megan McGrath, an analyst at MKM Partners LLC inStamford, Connecticut, said by telephone yesterday. “They lagged it for a little bit, especially on the margin side. But the rising tide of housing has helped them out.”

McGrath has a neutral rating on the stock….”

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Black Gold Stays Near Highs as The Clam Continues to Buy Assets

“Oil traded near the highest price in more than four months in New York as the Federal Reservemaintained an asset-purchase program to boost the economy of the world’s largest crude-consuming nation.

West Texas Intermediate was little changed, heading for the biggest monthly gain since August. The Fed will keep buying securities at a rate of $85 billion a month, the Federal Open Market Committee said after a two-day meeting. German unemployment unexpectedly declined in January for the first time in 10 months, adding to signs that Europe’s largest economy is gathering pace. Oil gained a third day yesterday even after data showed U.S. crude stockpiles rose twice as much forecast.

“The Fed is still providing enough money,” said Andy Sommer a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland. “I’m pretty optimistic on the demand side. But there’s an ongoing supply overhang and prices should come down in the spring.”

WTI for March delivery was at $97.75 a barrel in electronic trading on the New York Mercantile Exchange, down 20 cents, as of 1:08 p.m. London time. The average volume of all contracts traded was 21 percent below the 100-day average. Futures gained 37 cents to $97.94 yesterday, the highest close since Sept. 14. Prices are up 6.5 percent in January and poised for a third monthly increase, the longest rising streak since April 2011.

Brent for March settlement on the London-based ICE Futures Europe exchange was at $114.85 a barrel, down 5 cents. The average volume of all contracts traded was 6.3 percent below the 100-day average. The European benchmark grade was at a premium of $17.04 to WTI futures, from $16.96 yesterday.

Crude Inventories..”

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$RDS-A Posts a Miss in Profits

Royal Dutch Shell Plc (RDSA)Europe’s biggest energy company, said investment will increase after fourth-quarter profit missed analyst estimates on weaker U.S. and Canadian fuel prices.

Excluding one-time items and inventory changes, profit was $5.6 billion. That was below the $6.2 billion average estimate of 11 analysts surveyed by Bloomberg. Net capital spending of about $33 billion this year compares with $30 billion in 2012…”

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$STM Said to Be Looking to Raise $500 Million for Restructuring Purposes

STMicroelectronics NV (STM)Intel Corp. (INTC)’s largest competitor in Europe, will spend as much as $500 million to exit its unprofitable wireless-chip venture with Ericsson AB (ERICB), as demand starts to recover in other segments.

The semiconductor manufacturer, based in Geneva, is finalizing plans to pull out of ST-Ericsson by the third quarter. Shutting down the venture is one of the options being considered, Stockholm-based Ericsson has said…”

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U.K. Borrowing Costs Rise as BoE Halts QE

“The U.K. government bond market is undermining Prime Minister David Cameron’s own test of economic credibility, with yields climbing relative to global peers ever since the Bank of England halted its debt-purchase program.

Gilts have lost 2.3 percent since the central bank said it would stop buying them in November. Only Sweden gave a worse return among 26 sovereign markets tracked by Bloomberg and the European Federation of Financial Analysts Societies. At 2.06 percent, the 10-year yield is close to a nine-month high, and up from the record-low 1.407 percent set on July 23. The average over the past decade is 3.96 percent.

Britain’s borrowing costs relative to global averages rose this month to the highest since October 2011, thwarting Cameron after he said on Jan. 6 that the “real test” of his economic policy is the interest rate investors demand to own U.K. debt. As the government cuts spending to reduce the deficit, the nation is on the brink of a triple-dip recession and the premier’sConservative Party trails the opposition Labour Party in opinion polls.

“Putting your credibility in the hands of the market is risky, if yields go higher then you’ve lost your main trump card,” saidAlan Clarke, an economist in London at Scotiabank Europe Plc, one of 21 financial institutions that trade directly with the U.K’s Debt Management Office. “The government is playing a dangerous game.”…”

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German Unemployment Unexpectedly Declined in January

German unemployment unexpectedly declined in January, adding to signs that a pick-up inEurope’s largest economy is gathering pace.

The number of people out of work fell a seasonally adjusted 16,000 to 2.92 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 8,000, the median of 31 estimates in a Bloomberg News survey shows. Joblessness declined by 2,000 in December instead of a previously reported gain. The adjusted jobless rate dropped to 6.8 percent this month, matching a two-decade low….”

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European Markets Fall Back on Poor Earnings Reports

European stocks fell for a second day, paring their biggest monthly advance since July, as companies from AstraZeneca Plc to Banco Santander SA (SAN) slid after reporting earnings. U.S. futures and Asian shares fluctuated.

AstraZeneca sank 5.1 percent after the drugmaker forecast that profit and sales will slide this year. Santander and Royal Dutch Shell Group Plc both declined more than 1.5 percent as fourth-quarter earnings missed analysts’ estimates.

The Stoxx Europe 600 Index (SXXP) retreated 0.4 percent to 287.46 at 12:45 p.m. in London, as about three stocks fell for every one that rose. The equity benchmark has still advanced 2.8 percent in January, its eighth month of gains and its longest winning streak since 1997. Futures on the Standard & Poor’s 500 Index expiring in March added less than 0.1 percent today, while the MSCI Asia Pacific Index was little changed.

“Over the last six months, we’ve had a big re-rating of stocks, but we haven’t had the earnings power coming through,” Toby Nangle, head of multi-asset allocation at Threadneedle Asset Management told Francine Lacqua on Bloomberg Television. “Earnings are going to be critical. We need to get delivery on what we’ve already paid for.”

The valuation for the Stoxx 600 has climbed to 12.2 times estimated earnings from a price-earnings ratio of 10.6 at the end of June. Some 19 companies on the Stoxx 600 report earnings today, according to data compiled by Bloomberg. In western Europe, 58 percent of companies reporting earnings since Jan. 8 have beaten analysts’ estimates. About 57 percent have exceeded projections for revenue.

Slowing Growth…”

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UN Said to Weigh Sending Peacekeeping Force to Mali

“United Nations peacekeepers may be deployed to Mali after French troops leave to ensure that Islamist militants don’t seek to reclaim the northern part of the country, according to UN officials.

The UN Security Council in New York will discuss in coming days whether to send as many as 5,000 troops to protect civilians and keep the land-locked West African country stable before peace talks and an election, according to two officials familiar with the discussions of the operations. They asked to not be named as the plans are preliminary….”

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