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UPDATE 9-BofA profit drops as foreclosure delays hurt bank
Fri, Apr 15 2011
Glencore seeks up to $12.1 billion in IPO, names chair
Thu, Apr 14 2011
CORRECTED - Glencore IPO may topple Goldman in adviser rankings
Thu, Apr 14 2011
Glencore turns to familiar names for board roles
Thu, Apr 14 2011
Glencore set to detail plans for $10 billion listing
Wed, Apr 13 2011
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By Quentin Webb
LONDON | Sun Apr 17, 2011 8:50am EDT
(Reuters) - Glencore is already worth as much as $69 billion, with its earnings set to double in two years, according to research from two banks underwriting the commodity trader's potentially record-breaking listing.
Glencore's banks are distributing research to potential investors to help convince them to back the previously insular trader as it seeks to raise as much as $12.1 billion.
Research from Barclays Capital and Credit Suisse -- not distributed to the media but seen by Reuters -- also forecasts rapid growth in key measures of profitability, such as earnings before interest, tax, depreciation and amortization (EBITDA).
Barclays says Glencore's equity is now worth $52.5 billion to $69.2 billion, while Credit Suisse values the Swiss firm, led by former coal trader Ivan Glasenberg, at $53 billion to $68.6 billion.
Pre-flotation research typically excludes funds raised by selling new shares, in this case up to $8.8 billion.
If that is the situation here, it would mean the banks think that Glencore could ultimately be worth as much as $78 billion after a listing -- even more than the top of the $45-$73 billion range implied by Glencore's own figures.
The banks declined to comment.
Valuation is a challenge for a complex business that is part trader, part miner, and part investor -- a 34.5-percent stake in Xstrata Plc is Glencore's biggest listed holding.
Glencore is aiming to sell a 15 to 20 percent stake worth $9 to $11 billion, including $2.2 billion of existing shares and the option to sell an extra 10 percent.
Barclays says earnings will hit $8.86 billion in 2012 -- or more than double last year, when net profit was $3.8 billion.
Glencore's EBITDA will also far surpass 2007's record $7.7 billion by 2012, the duo forecast.
In the next two years, Barclays says it will more than double to hit $12.9 billion, while Credit Suisse predicts it will touch $11.76 billion. The rise far outstrips analysts' average forecast of a 48-percent rise at Xstrata.
LIMITED INFLUENCE?
The banks use a range of measures to value Glencore, including "sum of the parts" valuations and price-to-earnings and enterprise value to EBITDA ratios.
On an EV/EBITDA basis, Glencore should fetch a premium to European miners, because of a lower tax base and less volatile earnings thanks to its marketing business, Barclays says.
It says a long-mooted merger with Xstrata would make "a very attractive company" but the financing of such a deal "remains unclear" and would require significant debt or equity funding.
Credit Suisse's estimates earnings before interest and tax will more than treble in two years at the mines and smelters Glencore controls. However it warns the firm "does not have a proven track record in delivering significant, capex intensive project growth."
New investors will control less than a quarter of the company, the Swiss bank notes, and "their ability to influence significant/company transforming transactions may be limited."
The banks are among nine working on the IPO. Credit Suisse is one of the top three, known as joint global co-ordinators, while BarCap is a co-bookrunner.
(Reporting by Quentin Webb; editing by Sitaraman Shankar)
Apr 17, 2011
RIM studies bid for Nortel wireless patents: report
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CORRECTED - UPDATE 1-France Tel, Deutsche Tel cooperate more -sources
Fri, Apr 15 2011
Cost surge under new Google CEO unnerves Street
Fri, Apr 15 2011
Zoom to make 3G phones with Qualcomm chips
Wed, Apr 13 2011
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Tue, Apr 12 2011
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Mon, Apr 11 2011
Analysis & Opinion
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Research In Motion Ltd
RIM.TO
$51.16
-0.59-1.14%
04/15/2011
NEW YORK | Sun Apr 17, 2011 3:14pm EDT
(Reuters) - Research In Motion may attempt to top Google Inc's $900 million bid for Nortel Networks Corp.'s wireless technology patents, according to a Bloomberg report citing two people familiar with the plans.
Nortel, which filed for bankruptcy protection in January 2009, was a pioneer in wired and wireless network technology and the assets include some 6,000 patents and patent applications for wireless, data and optical networking, voice, Internet, semiconductors and other technologies.
Google established itself as a "stalking horse" for a suite of its patents with a $900 million bid earlier this month.
Google, which runs the world's most popular search engine, wants the Nortel patents to help it fight a growing wireless patent war against well-armed mobile superpowers. The company has pushed its Android mobile phone software to the top of the wireless heap, attracting litigation in the process.
Interest in the Nortel patents has been robust, but a deal has been delayed as Nortel's liquidators and potential buyers haggle over price.
Analysts have said other expected bidders could include Chinese telecom network company ZTE, Ericsson, which bought most of Nortel's wireless operations, and RPX, which licenses patents on behalf of member clients for a fee.
RIM was not immediately available for comment on the Bloomberg report.
(Reporting by Paul Thomasch, editing by Bernard Orr)
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Research In Motion Ltd
RIM.TO
$51.16
-0.59-1.14%
04/15/2011
NEW YORK | Sun Apr 17, 2011 3:14pm EDT
(Reuters) - Research In Motion may attempt to top Google Inc's $900 million bid for Nortel Networks Corp.'s wireless technology patents, according to a Bloomberg report citing two people familiar with the plans.
Nortel, which filed for bankruptcy protection in January 2009, was a pioneer in wired and wireless network technology and the assets include some 6,000 patents and patent applications for wireless, data and optical networking, voice, Internet, semiconductors and other technologies.
Google established itself as a "stalking horse" for a suite of its patents with a $900 million bid earlier this month.
Google, which runs the world's most popular search engine, wants the Nortel patents to help it fight a growing wireless patent war against well-armed mobile superpowers. The company has pushed its Android mobile phone software to the top of the wireless heap, attracting litigation in the process.
Interest in the Nortel patents has been robust, but a deal has been delayed as Nortel's liquidators and potential buyers haggle over price.
Analysts have said other expected bidders could include Chinese telecom network company ZTE, Ericsson, which bought most of Nortel's wireless operations, and RPX, which licenses patents on behalf of member clients for a fee.
RIM was not immediately available for comment on the Bloomberg report.
(Reporting by Paul Thomasch, editing by Bernard Orr)
Boehner visits Iraq, assures support for mission
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WASHINGTON | Sun Apr 17, 2011 4:34pm EDT
(Reuters) - House of Representatives Speaker John Boehner visited Iraq over the weekend to express U.S. commitment to the country's postwar success, despite a rancorous Washington budget debate over spending cuts.
The Ohio Republican lawmaker's office said on Sunday that Boehner led a delegation including four other House Republicans and a House Democrat. The group met with Iraqi Prime Minister Nuri al-Maliki, U.S. Ambassador James Jeffrey and senior military officials. It provided few other details.
The delegation focused on future cooperation between the U.S. and Iraqi governments and the need to protect both Iraq's sovereignty and U.S. interests.
"Our first priority must be ensuring that the remaining 46,000 U.S. forces and their civilian counterparts that are working with the government of Iraq and advising and assisting the Iraqi security forces have the resources and support they need to complete their mission," Boehner said in a statement.
"We must protect the economic, political, and security progress that has been made," he added.
The U.S. force in Iraq, which once numbered more than 150,000 troops, was reduced last year as part of a bilateral agreement under which the remaining military presence would withdraw by year's end.
But Washington has recently stepped up pressure on Iraq to decide whether troops should stay to help fend off a still-potent insurgency.
Boehner's statement did not mention the budget debate in Washington, where the threat of a government shutdown two weeks ago briefly raised concerns about delayed paychecks for U.S. troops in Iraq and Afghanistan.
On Friday, the speaker presided over House approval of a Republican plan for fiscal year 2012 that would slash spending by nearly $6 trillion over the next decade. The plan would increase Pentagon funding by $5 billion and includes $158 billion for U.S. military missions abroad. But it cuts $504 million for diplomatic efforts overseas.
U.S. forces invaded Iraq in 2003 on faulty intelligence suggesting that former Iraqi President Saddam Hussein had weapons of mass destruction that could endanger U.S. security after al Qaeda's September 11, 2001, attacks. U.S. officials found neither the weapons nor any credible al Qaeda link. But an anti-American insurgency later took shape, fueled in part by militants who became aligned with al Qaeda.
Accompanying Boehner were Republicans Mac Thornberry of Texas, Mike Conaway of Texas, Tom Rooney Florida, Joe Heck of Nevada and Democrat Dan Boren of Oklahoma.
(Reporting by David Morgan; Editing by Doina Chiacu)
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WASHINGTON | Sun Apr 17, 2011 4:34pm EDT
(Reuters) - House of Representatives Speaker John Boehner visited Iraq over the weekend to express U.S. commitment to the country's postwar success, despite a rancorous Washington budget debate over spending cuts.
The Ohio Republican lawmaker's office said on Sunday that Boehner led a delegation including four other House Republicans and a House Democrat. The group met with Iraqi Prime Minister Nuri al-Maliki, U.S. Ambassador James Jeffrey and senior military officials. It provided few other details.
The delegation focused on future cooperation between the U.S. and Iraqi governments and the need to protect both Iraq's sovereignty and U.S. interests.
"Our first priority must be ensuring that the remaining 46,000 U.S. forces and their civilian counterparts that are working with the government of Iraq and advising and assisting the Iraqi security forces have the resources and support they need to complete their mission," Boehner said in a statement.
"We must protect the economic, political, and security progress that has been made," he added.
The U.S. force in Iraq, which once numbered more than 150,000 troops, was reduced last year as part of a bilateral agreement under which the remaining military presence would withdraw by year's end.
But Washington has recently stepped up pressure on Iraq to decide whether troops should stay to help fend off a still-potent insurgency.
Boehner's statement did not mention the budget debate in Washington, where the threat of a government shutdown two weeks ago briefly raised concerns about delayed paychecks for U.S. troops in Iraq and Afghanistan.
On Friday, the speaker presided over House approval of a Republican plan for fiscal year 2012 that would slash spending by nearly $6 trillion over the next decade. The plan would increase Pentagon funding by $5 billion and includes $158 billion for U.S. military missions abroad. But it cuts $504 million for diplomatic efforts overseas.
U.S. forces invaded Iraq in 2003 on faulty intelligence suggesting that former Iraqi President Saddam Hussein had weapons of mass destruction that could endanger U.S. security after al Qaeda's September 11, 2001, attacks. U.S. officials found neither the weapons nor any credible al Qaeda link. But an anti-American insurgency later took shape, fueled in part by militants who became aligned with al Qaeda.
Accompanying Boehner were Republicans Mac Thornberry of Texas, Mike Conaway of Texas, Tom Rooney Florida, Joe Heck of Nevada and Democrat Dan Boren of Oklahoma.
(Reporting by David Morgan; Editing by Doina Chiacu)
Nigeria's Jonathan sure of victory in election
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Analysts View: Nigeria's Jonathan set for election victory
1:43pm EDT
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Nigeria's Jonathan set for victory in presidential vote
7:04pm EDT
1 / 10
By Matthew Tostevin and Nick Tattersall
ABUJA | Sun Apr 17, 2011 6:57pm EDT
(Reuters) - President Goodluck Jonathan secured election victory on Sunday as votes were tallied from around Nigeria, fuelling anger in the mainly-Muslim strongholds of rival Muhammadu Buhari.
Buhari, a former military ruler from the arid, dustblown north, had hoped to at least force a second round against Jonathan, the first head of state from the swamps and creeks of the oil-producing Niger Delta.
But a Reuters tally of results from 35 of 36 states across Africa's most populous nation showed Jonathan on 22 million votes to 12 million for Buhari. Nowhere near enough voters were registered in the remaining state for him to catch up.
Observers called the election the fairest for decades.
But Buhari's camp said some results looked suspicious, especially where turnout had been exceptionally high. In a sign of the growing tension in the north, youths set up burning barricades in several cities.
Jonathan's officials said there would be no victory claim until results were announced by the Independent National Electoral Commission. They were clearly upbeat.
"This is no time for triumphalism. It is a time for deep reflection, for strengthening the bond of our union and for all of us to work together," Oronto Douglas, a senior advisor to Jonathan, told Reuters.
With formal announcements of results still awaited from eight states, the electoral body adjourned until Monday, the earliest the winner is likely to be declared.
The president did particularly well in his predominantly Christian south, while Buhari swept many northern states in the country of 150 million people.
An outright win for Jonathan could ease worries over potential disruptions to crude exports from Africa's biggest oil producer and lift local financial markets awaiting the end of a series of elections.
CHALLENGES
But the voting made clear the challenge of ethnic and religious polarisation facing the election winner alongside the need for reforms to Africa's third-biggest economy, held back by poor infrastructure, mismanagement and corruption.
"While a near term relief rally is easily plausible in Nigerian financial markets, the political impetus behind real reform, and the extent to which theses challenges are met head-on, will be the determinant of longer term outcomes," Razia Khan, Standard Chartered's Africa economist, told Reuters.
Heading African Union observers, former Ghanaian President John Kufuor said Nigeria appeared to have ended its reputation for badly flawed elections and could set an example for Africa with at least a dozen more African polls due this year.
"I expect the developments here will have a very positive impact on the continent," he told Reuters
Nigeria's Jonathan sure of victory in election
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Analysts View: Nigeria's Jonathan set for election victory
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Nigeria's Jonathan set for victory in presidential vote
7:04pm EDT
1 / 10
By Matthew Tostevin and Nick Tattersall
ABUJA | Sun Apr 17, 2011 6:57pm EDT
(Reuters) - President Goodluck Jonathan secured election victory on Sunday as votes were tallied from around Nigeria, fuelling anger in the mainly-Muslim strongholds of rival Muhammadu Buhari.
Buhari, a former military ruler from the arid, dustblown north, had hoped to at least force a second round against Jonathan, the first head of state from the swamps and creeks of the oil-producing Niger Delta.
But a Reuters tally of results from 35 of 36 states across Africa's most populous nation showed Jonathan on 22 million votes to 12 million for Buhari. Nowhere near enough voters were registered in the remaining state for him to catch up.
Observers called the election the fairest for decades.
But Buhari's camp said some results looked suspicious, especially where turnout had been exceptionally high. In a sign of the growing tension in the north, youths set up burning barricades in several cities.
Jonathan's officials said there would be no victory claim until results were announced by the Independent National Electoral Commission. They were clearly upbeat.
"This is no time for triumphalism. It is a time for deep reflection, for strengthening the bond of our union and for all of us to work together," Oronto Douglas, a senior advisor to Jonathan, told Reuters.
With formal announcements of results still awaited from eight states, the electoral body adjourned until Monday, the earliest the winner is likely to be declared.
The president did particularly well in his predominantly Christian south, while Buhari swept many northern states in the country of 150 million people.
An outright win for Jonathan could ease worries over potential disruptions to crude exports from Africa's biggest oil producer and lift local financial markets awaiting the end of a series of elections.
CHALLENGES
But the voting made clear the challenge of ethnic and religious polarisation facing the election winner alongside the need for reforms to Africa's third-biggest economy, held back by poor infrastructure, mismanagement and corruption.
"While a near term relief rally is easily plausible in Nigerian financial markets, the political impetus behind real reform, and the extent to which theses challenges are met head-on, will be the determinant of longer term outcomes," Razia Khan, Standard Chartered's Africa economist, told Reuters.
Heading African Union observers, former Ghanaian President John Kufuor said Nigeria appeared to have ended its reputation for badly flawed elections and could set an example for Africa with at least a dozen more African polls due this year.
"I expect the developments here will have a very positive impact on the continent," he told Reuters
Nigeria's Jonathan sure of victory in election
Assad pledge fails to quell Syria anger; troops fire
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Assad fails to appease protesters
11:19am EDT
Syria's Assad pledges to lift emergency law
Syrian mass protests mount
Assad fails to appease protesters (01:16) Report
By Suleiman al-Khalidi
AMMAN | Sun Apr 17, 2011 3:32pm EDT
(Reuters) - Syrian security forces opened fire on protesters at a funeral on Sunday, witnesses said, and an announcement that President Bashar al-Assad would lift 48-years of emergency rule failed to quell fury on the streets.
Two witnesses said security forces killed three mourners when they opened fire on a funeral for a man killed the day before, which turned into a demonstration on a highway outside the town of Talbiseh, north of the central city of Homs.
One resident said he counted five tanks and saw soldiers wearing combat gear deployed around the town.
Chants at protests on Sunday, Syria's Independence Day holiday, more hostile toward Assad than at previous marches held in recent weeks, a sign that a promise to lift the country's hated emergency law had failed to appease the public.
Opposition figures say they believe new laws that will replace the emergency rule are likely to retain severe curbs on political freedoms.
Thousands of demonstrators called for Bashar's overthrow at another funeral, held in Hirak town northeast of the southern city of Deraaa, for soldier Mohammad Ali Radwan al-Qoman, whose relatives believe he was tortured by the security forces.
"Freedom, freedom Syria, Bashar get out," people chanted, their slogans audible in a telephone call with one of the mourners at the funeral.
A relative, who declined to be named, said Qoman's family were told he had been accidentally electrocuted at his unit, but the 20-year-old conscript had signs of beating to his feet and doctors at the local hospital said there were signs of torture.
DEATH TOLL RISING
Assad named a new cabinet last week, and in a speech to his ministers on Saturday said legislation to replace the emergency law should be ready by next week. But he did not address protesters' demands to curb Syria's security apparatus and dismantle its authoritarian system.
Protests against Assad's authoritarian rule began in Deraa after teenagers were arrested for scrawling pro-democracy graffiti more than a month ago. Demonstrations have spread across large parts of the country of 20 million people, inspired by uprisings in other parts of the Arab world this year.
The death toll, which rights groups put at more than 200 people, continues to rise. Assad says Syria is the target of a conspiracy and authorities blame the violence on armed gangs and "infiltrators" supplied with weapons from Lebanon and Iraq.
The unprecedented unrest has spread across the authoritarian state, posing the sternest challenge yet to Assad, who assumed the presidency in 2000 when his father, Hafez al-Assad, died after 30 years in power.
In the coastal city of Banias, around 2,000 people marched with some chanting "the people want the overthrow of Bashar."
"No Sunni, no Alawite: freedom is what we want," they chanted. Assad is a member of the Alawite minority sect in a country that is predominately Sunni Muslim.
They called for the arrest of pro-Assad militia members, known as "al-shabbiha." Residents say they killed five people Banias last week following demonstration against Assad's rule.
Funerals were also held on Sunday in the port city of Latakia for two protesters who were killed in a confrontation with security forces at a protest on Friday, a rights activist in contact with Latakia said.
The funerals turned into protests and two mourners were injured by bullets when security forces intervened to stop the demonstrations, the activist said.
In rallies elsewhere, thousands of Syrians chanted slogans calling for political freedoms at independence day celebrations.
"The people want freedom," several hundred people shouted at the grave of independence leader Ibrahim Hananu in Syria's second city Aleppo, which has been mostly free of pro-democracy protests that erupted more than a month ago in the south.
Hundreds also turned out in the southern city of Suweida, in the heart of the country's Druze heartland. They chanted "God, Syria, freedom, that's all," before coming under attack from Assad loyalists, a woman at the demonstration said.
"They came at us with sticks and also hit us with the pictures they were carrying of Bashar -- the same president who was talking about freedom yesterday," she said.
The head of Germany's intelligence service was quoted on Sunday as saying the Assad dynasty's history of crushing dissent meant a North Africa-style uprising was unlikely.
"Remember that the father of the current president a few decades back murdered as many as 30,000 supporters of the Muslim Brotherhood in Hama," Ernst Uhrlau told Hamburger Abendblatt newspaper, referring to Hafez al-Assad's crushing of an uprising led by the Muslim Brotherhood in 1982.
(Writing by Dominic Evans and Khaled Yacoub Oweis; Editing by Peter Graff)
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Syrian forces fire at protesters and kill 3: witnesses
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Assad fails to appease protesters
11:19am EDT
Syria's Assad pledges to lift emergency law
Syrian mass protests mount
Assad fails to appease protesters (01:16) Report
By Suleiman al-Khalidi
AMMAN | Sun Apr 17, 2011 3:32pm EDT
(Reuters) - Syrian security forces opened fire on protesters at a funeral on Sunday, witnesses said, and an announcement that President Bashar al-Assad would lift 48-years of emergency rule failed to quell fury on the streets.
Two witnesses said security forces killed three mourners when they opened fire on a funeral for a man killed the day before, which turned into a demonstration on a highway outside the town of Talbiseh, north of the central city of Homs.
One resident said he counted five tanks and saw soldiers wearing combat gear deployed around the town.
Chants at protests on Sunday, Syria's Independence Day holiday, more hostile toward Assad than at previous marches held in recent weeks, a sign that a promise to lift the country's hated emergency law had failed to appease the public.
Opposition figures say they believe new laws that will replace the emergency rule are likely to retain severe curbs on political freedoms.
Thousands of demonstrators called for Bashar's overthrow at another funeral, held in Hirak town northeast of the southern city of Deraaa, for soldier Mohammad Ali Radwan al-Qoman, whose relatives believe he was tortured by the security forces.
"Freedom, freedom Syria, Bashar get out," people chanted, their slogans audible in a telephone call with one of the mourners at the funeral.
A relative, who declined to be named, said Qoman's family were told he had been accidentally electrocuted at his unit, but the 20-year-old conscript had signs of beating to his feet and doctors at the local hospital said there were signs of torture.
DEATH TOLL RISING
Assad named a new cabinet last week, and in a speech to his ministers on Saturday said legislation to replace the emergency law should be ready by next week. But he did not address protesters' demands to curb Syria's security apparatus and dismantle its authoritarian system.
Protests against Assad's authoritarian rule began in Deraa after teenagers were arrested for scrawling pro-democracy graffiti more than a month ago. Demonstrations have spread across large parts of the country of 20 million people, inspired by uprisings in other parts of the Arab world this year.
The death toll, which rights groups put at more than 200 people, continues to rise. Assad says Syria is the target of a conspiracy and authorities blame the violence on armed gangs and "infiltrators" supplied with weapons from Lebanon and Iraq.
The unprecedented unrest has spread across the authoritarian state, posing the sternest challenge yet to Assad, who assumed the presidency in 2000 when his father, Hafez al-Assad, died after 30 years in power.
In the coastal city of Banias, around 2,000 people marched with some chanting "the people want the overthrow of Bashar."
"No Sunni, no Alawite: freedom is what we want," they chanted. Assad is a member of the Alawite minority sect in a country that is predominately Sunni Muslim.
They called for the arrest of pro-Assad militia members, known as "al-shabbiha." Residents say they killed five people Banias last week following demonstration against Assad's rule.
Funerals were also held on Sunday in the port city of Latakia for two protesters who were killed in a confrontation with security forces at a protest on Friday, a rights activist in contact with Latakia said.
The funerals turned into protests and two mourners were injured by bullets when security forces intervened to stop the demonstrations, the activist said.
In rallies elsewhere, thousands of Syrians chanted slogans calling for political freedoms at independence day celebrations.
"The people want freedom," several hundred people shouted at the grave of independence leader Ibrahim Hananu in Syria's second city Aleppo, which has been mostly free of pro-democracy protests that erupted more than a month ago in the south.
Hundreds also turned out in the southern city of Suweida, in the heart of the country's Druze heartland. They chanted "God, Syria, freedom, that's all," before coming under attack from Assad loyalists, a woman at the demonstration said.
"They came at us with sticks and also hit us with the pictures they were carrying of Bashar -- the same president who was talking about freedom yesterday," she said.
The head of Germany's intelligence service was quoted on Sunday as saying the Assad dynasty's history of crushing dissent meant a North Africa-style uprising was unlikely.
"Remember that the father of the current president a few decades back murdered as many as 30,000 supporters of the Muslim Brotherhood in Hama," Ernst Uhrlau told Hamburger Abendblatt newspaper, referring to Hafez al-Assad's crushing of an uprising led by the Muslim Brotherhood in 1982.
(Writing by Dominic Evans and Khaled Yacoub Oweis; Editing by Peter Graff)
Earnings stumbles could awaken bears
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Wall Street rises on economic data but minefields loom
Fri, Apr 15 2011
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Thu, Apr 14 2011
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Alcoa Inc
AA.N
$16.52
-0.03-0.18%
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Google Inc
GOOG.O
$530.70
-47.81-8.26%
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Yahoo! Inc
YHOO.O
$16.62
-0.07-0.42%
04/15/2011
By Caroline Valetkevitch
NEW YORK | Sun Apr 17, 2011 12:40pm EDT
(Reuters) - Earnings could make for a bumpy ride in stocks this week if more key companies undershoot expectations, possibly causing a spike in volatility.
Disappointments from Alcoa (AA.N), Google (GOOG.O) and others in the first week of earnings have dampened some of the enthusiasm about results, ensuring that eyes will be glued to reports in the coming days.
On tap this week are top technology and financial company results, including Yahoo (YHOO.O), Intel (INTC.O), IBM (IBM.N), Texas Instruments (TXN.N), Goldman Sachs (GS.N) and Citigroup (C.N). This blitz of numbers will come during a holiday-shortened week. U.S. financial markets will be closed on April 22 in observance of Good Friday.
Market watchers also will be anxious to hear how much tech companies may have been affected by the disaster in Japan.
"We've all been lulled to sleep here lately. This earnings season will hopefully be a telling point to try to give people conviction to go one way or the other," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis.
"There are potential land mines out there that could create a little bit more volatile trading," he said.
The CBOE Volatility Index, a barometer of investor anxiety known as the VIX .VIX, briefly fell on Friday to its lowest level since July 2007. It ended at 15.32, well below its mid-March high of 31.28.
Others agreed that more disappointments could stir up volatility.
"If earnings disappoint greatly from any of the major players (this week) in the financials or technical sector, this could be a catalyst for a return of volatility into the market," said Joe Kinahan, TD Ameritrade chief derivatives strategist in Chicago.
For the past week, the Dow Jones industrial average .DJI slipped 0.3 percent, while the Standard & Poor's 500 Index .SPX and the Nasdaq Composite Index .IXIC each shed 0.6 percent.
BEWARE OF "DUAL HEADWINDS"
Whether the earnings season will be strong enough to propel the market higher is the question on investors' minds.
The Standard & Poor's 500 index .SPX is up 25.8 percent since the start of September, roughly when the recent rally began.
But sharp gains in the price of oil and other commodities, especially in the first quarter, have fueled worries about the impact on consumers and companies. Moreover, Japan's massive earthquake and tsunami, which triggered a nuclear crisis, have prompted other concerns.
Equity strategists at JPMorgan Chase cut their U.S. earnings estimates by $1 -- but for second-quarter and full-year results -- because of these "dual headwinds."
One popular view is that the market stays in sideways motion during earnings season.
"Earnings are just going to be enough to keep this market bipolar," said Mark Lamkin, CEO and chief investment strategist of Louisville, Kentucky-based Lamkin Wealth Management, with more than $200 million in assets under management.
They "are going to be good enough to keep this market toward the high end of this trading range, but they're not going to be good enough to break out of a range and set the next big leg higher."
FINANCIALS' FORECAST REVISED DOWN
In aggregate, analysts' mean earnings forecast for the S&P financial sector for the first quarter is down 3.4 percent in the past 14 days, according to Thomson Reuters StarMine data.
It was the biggest negative change for any S&P 500 sector, while energy has seen the biggest positive change, the data showed.
The mean change in earnings estimates for Goldman Sachs (GS.N) is down 42.8 percent in the last two weeks, while the mean change in estimates for Citigroup Inc (C.N) is down 6 percent in the last 14 days, it showed.
Analysts' mean earnings forecast for the S&P information technology sector is down 0.1 percent in the past 14 days.
Among other tech disappointments, Infosys Technologies Ltd (INFY.O), India's No. 2 software services exporter, on Friday forecast annual sales lower than expected.
BEARS CIRCLE THE OIL PATCH
Among others expected to report this week are several oil services companies.
Data suggests those stocks could be vulnerable to more declines as earnings expectations have come down and bearish options bets have increased lately, according to Reuters Insider quantitative analyst Mike Tarsala. Deepwater projects in the Gulf of Mexico are being approved at a slow pace.
Earnings sentiment for the group is waning, he said. Two of the sector's biggest names, Halliburton Co. (HAL.N) and Schlumberger Ltd (SLB.N) are due to report this week.
To be sure, many analysts still see many upside surprises ahead in this earnings reporting period, repeating the trend of recent earnings seasons.
"What's happened is the global macro noise has overshadowed the fundamental earnings stories ... beneath the covers, things are actually better than people believe," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.
Based on his own research model, he ranks industrials .GSPI at the top of his earnings expectations among the S&P 500's 10 sectors, followed by telecommunications.
Thomson Reuters data shows S&P 500 earnings are expected to have risen 11.7 percent from a year earlier. That estimate is roughly unchanged in recent weeks.
(Reporting by Caroline Valetkevitch in New York, with additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)
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By Caroline Valetkevitch
NEW YORK | Sun Apr 17, 2011 12:40pm EDT
(Reuters) - Earnings could make for a bumpy ride in stocks this week if more key companies undershoot expectations, possibly causing a spike in volatility.
Disappointments from Alcoa (AA.N), Google (GOOG.O) and others in the first week of earnings have dampened some of the enthusiasm about results, ensuring that eyes will be glued to reports in the coming days.
On tap this week are top technology and financial company results, including Yahoo (YHOO.O), Intel (INTC.O), IBM (IBM.N), Texas Instruments (TXN.N), Goldman Sachs (GS.N) and Citigroup (C.N). This blitz of numbers will come during a holiday-shortened week. U.S. financial markets will be closed on April 22 in observance of Good Friday.
Market watchers also will be anxious to hear how much tech companies may have been affected by the disaster in Japan.
"We've all been lulled to sleep here lately. This earnings season will hopefully be a telling point to try to give people conviction to go one way or the other," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis.
"There are potential land mines out there that could create a little bit more volatile trading," he said.
The CBOE Volatility Index, a barometer of investor anxiety known as the VIX .VIX, briefly fell on Friday to its lowest level since July 2007. It ended at 15.32, well below its mid-March high of 31.28.
Others agreed that more disappointments could stir up volatility.
"If earnings disappoint greatly from any of the major players (this week) in the financials or technical sector, this could be a catalyst for a return of volatility into the market," said Joe Kinahan, TD Ameritrade chief derivatives strategist in Chicago.
For the past week, the Dow Jones industrial average .DJI slipped 0.3 percent, while the Standard & Poor's 500 Index .SPX and the Nasdaq Composite Index .IXIC each shed 0.6 percent.
BEWARE OF "DUAL HEADWINDS"
Whether the earnings season will be strong enough to propel the market higher is the question on investors' minds.
The Standard & Poor's 500 index .SPX is up 25.8 percent since the start of September, roughly when the recent rally began.
But sharp gains in the price of oil and other commodities, especially in the first quarter, have fueled worries about the impact on consumers and companies. Moreover, Japan's massive earthquake and tsunami, which triggered a nuclear crisis, have prompted other concerns.
Equity strategists at JPMorgan Chase cut their U.S. earnings estimates by $1 -- but for second-quarter and full-year results -- because of these "dual headwinds."
One popular view is that the market stays in sideways motion during earnings season.
"Earnings are just going to be enough to keep this market bipolar," said Mark Lamkin, CEO and chief investment strategist of Louisville, Kentucky-based Lamkin Wealth Management, with more than $200 million in assets under management.
They "are going to be good enough to keep this market toward the high end of this trading range, but they're not going to be good enough to break out of a range and set the next big leg higher."
FINANCIALS' FORECAST REVISED DOWN
In aggregate, analysts' mean earnings forecast for the S&P financial sector for the first quarter is down 3.4 percent in the past 14 days, according to Thomson Reuters StarMine data.
It was the biggest negative change for any S&P 500 sector, while energy has seen the biggest positive change, the data showed.
The mean change in earnings estimates for Goldman Sachs (GS.N) is down 42.8 percent in the last two weeks, while the mean change in estimates for Citigroup Inc (C.N) is down 6 percent in the last 14 days, it showed.
Analysts' mean earnings forecast for the S&P information technology sector is down 0.1 percent in the past 14 days.
Among other tech disappointments, Infosys Technologies Ltd (INFY.O), India's No. 2 software services exporter, on Friday forecast annual sales lower than expected.
BEARS CIRCLE THE OIL PATCH
Among others expected to report this week are several oil services companies.
Data suggests those stocks could be vulnerable to more declines as earnings expectations have come down and bearish options bets have increased lately, according to Reuters Insider quantitative analyst Mike Tarsala. Deepwater projects in the Gulf of Mexico are being approved at a slow pace.
Earnings sentiment for the group is waning, he said. Two of the sector's biggest names, Halliburton Co. (HAL.N) and Schlumberger Ltd (SLB.N) are due to report this week.
To be sure, many analysts still see many upside surprises ahead in this earnings reporting period, repeating the trend of recent earnings seasons.
"What's happened is the global macro noise has overshadowed the fundamental earnings stories ... beneath the covers, things are actually better than people believe," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.
Based on his own research model, he ranks industrials .GSPI at the top of his earnings expectations among the S&P 500's 10 sectors, followed by telecommunications.
Thomson Reuters data shows S&P 500 earnings are expected to have risen 11.7 percent from a year earlier. That estimate is roughly unchanged in recent weeks.
(Reporting by Caroline Valetkevitch in New York, with additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)
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Five years from U.S. housing peak, still no bottom
U.S. vs China: which economy is bigger, better?
By Emily Kaiser
WASHINGTON | Sun Apr 17, 2011 3:03pm EDT
(Reuters) - The U.S. economy appears to be running dangerously close to stall speed, and the rest of the world may not have enough oomph to compensate.
At the start of 2011, growth looked solid. The U.S. unemployment rate was finally dropping, consumers were in a spending mood, and economists were busily upgrading first-quarter growth projections to the range of 4 percent.
Those forecasts are falling fast. Many economists now think the U.S. economy grew at a sluggish 1.5 percent to 2 percent pace over the first three months of the year, and one forecaster even raised the possibility of a negative reading.
Whether this is a short-lived blip or a more worrisome dip depends largely on which way oil prices move, and how consumers and businesses around the world respond.
Goldman Sachs economist Andrew Tilton said downside risk was "unfortunately a phrase we have been using a lot lately."
A quiet week for economic data probably won't bring much, if any, good news. The highlights include a clutch of U.S. housing reports, which will serve as yet another reminder that the real estate slump persists.
Emerging markets have been the strongest global growth engine, giving advanced economies an export boost. But rising inflation pressures mean many countries will be clamping down on credit conditions, which would curb growth. Barclays Capital called inflation the "predominant risk" facing China.
GLASS HALF FULL
As for the United States, Barclays cut its first-quarter growth forecast to a rate of 2 percent from 3.5 percent, not quite as gloomy a forecast as some other Wall Street banks have published.
But Barclays economist Michael Gapen said the forces holding back first-quarter growth would likely prove "temporary" and the firm raised its second-quarter growth forecast -- a rarity these days.
Gapen said economic measures such as industrial production and employment "have all been moving in a way that is consistent with strong, not weak, economic growth."
American consumers have kept up spending on durable goods, including buying autos which should be sensitive to rising oil prices, and that bodes well for growth, Gapen said.
The flip side of that argument is that consumer confidence faded as oil and gasoline prices spiked, and if that translates into slower consumption the economy will suffer. Consumer spending accounts for some 70 percent of the U.S. economy.
"The extra cost of about 70 cents per gallon, relative to prices at the end of 2010, is siphoning off household income at a run rate equivalent to $100 billion per year -- income that otherwise could have been spent on other goods and services," Goldman's Tilton said.
His firm is still forecasting that consumer spending will pick up in the second quarter, but he said that "will require a fortuitous combination of circumstances."
Those circumstances include further labor market improvement, lower gasoline prices, and strong financial markets that encourage households to pare savings.
GLASS HALF EMPTY
If oil prices don't cooperate, all bets are off.
Not only would expensive oil exacerbate inflation pressures in emerging markets, pushing them to tighten credit conditions even further, it would also sap U.S. discretionary spending.
Capital Economics holds one of the most bearish views on the U.S. economy, predicting first-quarter growth at just a 1 percent annual rate.
"There is now even a decent outside chance that the economy contracted outright," economist Paul Ashworth said, adding that the surge in energy and food prices "changed everything."
If first-quarter growth was indeed as weak as Ashworth predicts, that would mean employment growth outpaced economic growth, leading to weaker productivity and weaker corporate profits. That in turn would cause slower business spending and hiring -- and an even weaker growth trajectory.
(Editing by Andrea Ricci)
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Palin returns with feisty, anti-establishment speech
16 Apr 20111UPDATE 3-Death toll at 43 as tornadoes, storms rake South
6:01pm EDT2Assad pledge fails to quell Syria anger; troops fire|
3:32pm EDT3Death toll at 43 as tornadoes, storms rake South|
7:37pm EDT4A soft patch or something worse?
3:03pm EDT5
DISCUSSED
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Obama to lay out deficit plan with focus on tax, spending
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Analysis & Opinion
Five years from U.S. housing peak, still no bottom
U.S. vs China: which economy is bigger, better?
By Emily Kaiser
WASHINGTON | Sun Apr 17, 2011 3:03pm EDT
(Reuters) - The U.S. economy appears to be running dangerously close to stall speed, and the rest of the world may not have enough oomph to compensate.
At the start of 2011, growth looked solid. The U.S. unemployment rate was finally dropping, consumers were in a spending mood, and economists were busily upgrading first-quarter growth projections to the range of 4 percent.
Those forecasts are falling fast. Many economists now think the U.S. economy grew at a sluggish 1.5 percent to 2 percent pace over the first three months of the year, and one forecaster even raised the possibility of a negative reading.
Whether this is a short-lived blip or a more worrisome dip depends largely on which way oil prices move, and how consumers and businesses around the world respond.
Goldman Sachs economist Andrew Tilton said downside risk was "unfortunately a phrase we have been using a lot lately."
A quiet week for economic data probably won't bring much, if any, good news. The highlights include a clutch of U.S. housing reports, which will serve as yet another reminder that the real estate slump persists.
Emerging markets have been the strongest global growth engine, giving advanced economies an export boost. But rising inflation pressures mean many countries will be clamping down on credit conditions, which would curb growth. Barclays Capital called inflation the "predominant risk" facing China.
GLASS HALF FULL
As for the United States, Barclays cut its first-quarter growth forecast to a rate of 2 percent from 3.5 percent, not quite as gloomy a forecast as some other Wall Street banks have published.
But Barclays economist Michael Gapen said the forces holding back first-quarter growth would likely prove "temporary" and the firm raised its second-quarter growth forecast -- a rarity these days.
Gapen said economic measures such as industrial production and employment "have all been moving in a way that is consistent with strong, not weak, economic growth."
American consumers have kept up spending on durable goods, including buying autos which should be sensitive to rising oil prices, and that bodes well for growth, Gapen said.
The flip side of that argument is that consumer confidence faded as oil and gasoline prices spiked, and if that translates into slower consumption the economy will suffer. Consumer spending accounts for some 70 percent of the U.S. economy.
"The extra cost of about 70 cents per gallon, relative to prices at the end of 2010, is siphoning off household income at a run rate equivalent to $100 billion per year -- income that otherwise could have been spent on other goods and services," Goldman's Tilton said.
His firm is still forecasting that consumer spending will pick up in the second quarter, but he said that "will require a fortuitous combination of circumstances."
Those circumstances include further labor market improvement, lower gasoline prices, and strong financial markets that encourage households to pare savings.
GLASS HALF EMPTY
If oil prices don't cooperate, all bets are off.
Not only would expensive oil exacerbate inflation pressures in emerging markets, pushing them to tighten credit conditions even further, it would also sap U.S. discretionary spending.
Capital Economics holds one of the most bearish views on the U.S. economy, predicting first-quarter growth at just a 1 percent annual rate.
"There is now even a decent outside chance that the economy contracted outright," economist Paul Ashworth said, adding that the surge in energy and food prices "changed everything."
If first-quarter growth was indeed as weak as Ashworth predicts, that would mean employment growth outpaced economic growth, leading to weaker productivity and weaker corporate profits. That in turn would cause slower business spending and hiring -- and an even weaker growth trajectory.
(Editing by Andrea Ricci)
China's yuan nearly "freely usable": central bank's Yi
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By Wanfeng Zhou
WASHINGTON | Sun Apr 17, 2011 2:56pm EDT
(Reuters) - China's yuan is close to being a freely usable currency, one of two key tests for it to be included in the International Monetary Fund's currency basket, the deputy governor of China's central bank said on Sunday.
The most widely used emerging market currencies should be considered for the basket, Yi Gang, deputy governor of the People's Bank of China told reporters.
He was speaking on the sidelines of a twice-yearly meeting of the International Monetary Fund where expanding the IMF's so-called Special Drawing Rights was discussed.
"The most obvious candidates are the BRICS," Yi said, referring to Brazil, Russia, India, China and South Africa.
He added that the Chinese yuan is "very close to being freely usable."
The SDR now comprises the dollar, euro, yen and sterling and is a synthetic quasi-currency that is mainly used as an accounting tool for the IMF's internal operations.
Some experts believe the SDR could increasingly play a role akin to that of a global reserve currency.
Expanding the SDR basket would help support global growth, reduce imbalances and provide a financial safety net during times of financial troubles, Yi said, adding it would also make the international monetary system more representative.
Yi emphasized that a currency that is freely usable may not necessarily be "freely convertible," pointing to currencies that joined the SDR basket in the 1960s and 1970s.
The other criteria for a currency to be included in the SDR basket is that the country must be a major exporter and China fully satisfies this requirement, Yi said.
Adding the yuan to the basket would be a recognition of China's growing economic clout. It could also be a way of encouraging Beijing to speed up reform of its foreign exchange system.
Some countries, especially the United States, have been frustrated with the slow pace of the yuan's appreciation, saying its low value unfairly helps China's exporters. Those calls were repeated at the IMF meetings this weekend.
The IMF completed its latest SDR review in November and did not open it up to any new currencies. It said the Chinese yuan was not used widely enough be to included in the SDR basket.
China has promoted the international use of the yuan in the past two years, highlighted by the rapid development of the Hong Kong offshore yuan market. Earlier this year, state-owned Bank of China Ltd. offered yuan trading to its U.S. customers.
Cross-border yuan transactions are growing rapidly. The BRICS' development banks agreed in principle on Thursday to establish mutual credit lines denominated in their currencies, not dollars, to strengthen business and trade ties.
Yi said China is not in a hurry to have the yuan included in the IMF basket. Chinese officials have repeatedly said Beijing will take steps to make the yuan more flexible but reforms will be carried out in a gradual manner.
The IMF is due to conduct its next review in 2015. Some analysts, such as Jim O'Neill, chairman of Goldman Sachs Asset Management, speculated that the IMF might not wait until then to change the SDR's make-up.
(Editing by William Schomberg)
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By Wanfeng Zhou
WASHINGTON | Sun Apr 17, 2011 2:56pm EDT
(Reuters) - China's yuan is close to being a freely usable currency, one of two key tests for it to be included in the International Monetary Fund's currency basket, the deputy governor of China's central bank said on Sunday.
The most widely used emerging market currencies should be considered for the basket, Yi Gang, deputy governor of the People's Bank of China told reporters.
He was speaking on the sidelines of a twice-yearly meeting of the International Monetary Fund where expanding the IMF's so-called Special Drawing Rights was discussed.
"The most obvious candidates are the BRICS," Yi said, referring to Brazil, Russia, India, China and South Africa.
He added that the Chinese yuan is "very close to being freely usable."
The SDR now comprises the dollar, euro, yen and sterling and is a synthetic quasi-currency that is mainly used as an accounting tool for the IMF's internal operations.
Some experts believe the SDR could increasingly play a role akin to that of a global reserve currency.
Expanding the SDR basket would help support global growth, reduce imbalances and provide a financial safety net during times of financial troubles, Yi said, adding it would also make the international monetary system more representative.
Yi emphasized that a currency that is freely usable may not necessarily be "freely convertible," pointing to currencies that joined the SDR basket in the 1960s and 1970s.
The other criteria for a currency to be included in the SDR basket is that the country must be a major exporter and China fully satisfies this requirement, Yi said.
Adding the yuan to the basket would be a recognition of China's growing economic clout. It could also be a way of encouraging Beijing to speed up reform of its foreign exchange system.
Some countries, especially the United States, have been frustrated with the slow pace of the yuan's appreciation, saying its low value unfairly helps China's exporters. Those calls were repeated at the IMF meetings this weekend.
The IMF completed its latest SDR review in November and did not open it up to any new currencies. It said the Chinese yuan was not used widely enough be to included in the SDR basket.
China has promoted the international use of the yuan in the past two years, highlighted by the rapid development of the Hong Kong offshore yuan market. Earlier this year, state-owned Bank of China Ltd. offered yuan trading to its U.S. customers.
Cross-border yuan transactions are growing rapidly. The BRICS' development banks agreed in principle on Thursday to establish mutual credit lines denominated in their currencies, not dollars, to strengthen business and trade ties.
Yi said China is not in a hurry to have the yuan included in the IMF basket. Chinese officials have repeatedly said Beijing will take steps to make the yuan more flexible but reforms will be carried out in a gradual manner.
The IMF is due to conduct its next review in 2015. Some analysts, such as Jim O'Neill, chairman of Goldman Sachs Asset Management, speculated that the IMF might not wait until then to change the SDR's make-up.
(Editing by William Schomberg)
Analysis: Why smart investors made money on the BP oil spill
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By Edward Krudy
NEW YORK | Sun Apr 17, 2011 2:08pm EDT
(Reuters) - Investors who bought BP's stock and bonds when oil was spewing out of its well in the Gulf of Mexico a year ago made a killing in a classic example of turning panic into profit. And in this case it was probably more about smart risk-taking than contrarian luck.
If you had invested in BP at its low point on June 25 -- the day British Prime Minister David Cameron suggested the company could be destroyed by the spill -- you would now be looking at a return of more than 65 percent in U.S. dollar terms. It would be even greater but for a dispute threatening its $18 billion tie-up with Russia's Rosneft.
Yields on the company's short-term unsecured notes blew out beyond junk levels to more than 15 percent from less than 1 percent in early 2011 but are now back below 1 percent.
It is a similar story with other companies linked to the disaster. Rig owner Transocean is up 80 percent, Halliburton , which provided the cement work for the well, has soared 121 percent, while the manufacturer of the rig's blowout preventer, Cameron, is up 64 percent.
Minority shareholders in the BP well are also higher -- with Anadarko Petroleum gaining 123 percent, and Mitsui up 45 percent in dollar terms.
It is not unusual, of course, for investors who seek out stocks that have been hammered more than they deserve to jump in during a crisis like this one.
But knowing when to buy and when to leave well alone takes a strong stomach. If investors call it right they end up with a stake in a valuable brand at a ridiculously low price, but get it wrong and they are stuck in a so-called value trap -- a cheap stock that is going to get a lot cheaper as the news worsens.
"There were a lot of things working right in this one and what was working against investors was investor psychology," said Glenn Tongue, a portfolio manager at T2 Partners, a hedge fund that made several large bets on BP during the crisis.
Tongue argues that buying BP's shares as they went into free-fall was not just a roll of the dice but a calculated risk.
He said that was far different from the investors who lost their shirts by buying cheaper bank and financial stocks in the months before the financial crisis destroyed some of them.
An estimate of costs based on other spills, BP's profitability and asset base, its importance as one of the world's largest companies, and the chance it could hive off U.S. assets during litigation made BP a good bet, says Tongue.
A year after the spill, BP estimates its likely liability to be $42 billion, far less than the $100 billion that was wiped off its market value at the height of the crisis.
But when the panic was in full swing most people were not prepared to take the risk. BP's shares fell more than 55 percent as the crisis worsened following the explosion on the Deepwater Horizon rig on April 20.
Talk of bankruptcy, years of litigation from local businesses and property owners, and irreversible environmental damage sent most investors scurrying for the door. But there were pickings for the hardy.
UNCERTAINTY AND FEAR
In June, Bill Gross, the co-chief investment officer of PIMCO, the bond giant, said he had bought $100 million of short-maturing BP notes and some Anadarko Petroleum debt, capitalizing on widespread distress in the sector.
At the time Mark Kiesel, head of the corporate bond portfolio management group at PIMCO, argued that the junk yields on investment-grade stock reflected uncertainty and fear of political intervention rather than credit-worthiness.
T2 Partners scaled into BP's stock, buying half when it hit the mid-$30 range around June and using call options to pick up the remainder in the high $20s. That makes for a gain of around 60 percent on the lowest-priced buys to its post-crisis highs.
"Basically our calculus was to look at comparable situations, see what the costs of those were, then look at what the market capitalization loss of BP was," said Tongue. "In our estimate they were out of sync."
Tongue says they also had a "second bite of the cherry" when the stock fell into the mid-$30s for a second time in late August after the well had been capped.
Tongue has scaled back his BP position but says he is holding out for north of $50 per share that he believes is its intrinsic value. BP's stock is now trading at around $45.
T2 Partners also bought General Electric Co stock when it slid in the wake of the Japanese earthquake on fear it could face liability over reactors it designed at the beleaguered Fukushima nuclear plant, but they have steered clear of plant operator Tokyo Electric Power Co (TEPCO).
"In a nuclear crisis it is hard to get your hands around the true facts of what is happening," Tongue said.
TEPCO's shares plunged more than 80 percent after Japan's earthquake on March 11, but recovered part of those losses in the past week and a half.
"I think we had a pretty good handle on what's leaking in the Gulf. I don't know what's leaking in Asia and I don't know what the ultimate liability profile will be," Tongue added.
In the case of GE, it is different. Its risks are seen as limited as Japanese law channels liability for nuclear accidents to the plant operator, and U.S. courts are often reluctant to award damages for accidents that happen overseas.
Barry Ritholtz, director of equity research at Fusion IQ, said buying BP was a far cry from trying to catch falling knives like Lehman Brothers and Bear Stearns as in those cases toxic assets and leverage made wipeouts possible.
"These were ... risk-embracing daredevils and the amazing thing is that they all didn't crash and burn sooner," he said. "Every bubble leaves behind a usable infrastructure which is what value players buy, the exception is financials."
Ritholtz says investors need to do more than look at value. BP may have seemed extraordinarily cheap with a price-to-earnings ratio of 5.5 compared to more than 11 before the crisis, but that does not mean it cannot get any cheaper.
"There is no magic answer to it, it is a qualitative decision," he said.
"There are always these three factors: figuring out what's going on in the world, identifying the variants versus what everybody else believes, and then wondering when will people figure out they're wrong and here's the right analysis."
(Editing by Martin Howell and Dale Hudson)
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By Edward Krudy
NEW YORK | Sun Apr 17, 2011 2:08pm EDT
(Reuters) - Investors who bought BP's stock and bonds when oil was spewing out of its well in the Gulf of Mexico a year ago made a killing in a classic example of turning panic into profit. And in this case it was probably more about smart risk-taking than contrarian luck.
If you had invested in BP at its low point on June 25 -- the day British Prime Minister David Cameron suggested the company could be destroyed by the spill -- you would now be looking at a return of more than 65 percent in U.S. dollar terms. It would be even greater but for a dispute threatening its $18 billion tie-up with Russia's Rosneft.
Yields on the company's short-term unsecured notes blew out beyond junk levels to more than 15 percent from less than 1 percent in early 2011 but are now back below 1 percent.
It is a similar story with other companies linked to the disaster. Rig owner Transocean is up 80 percent, Halliburton , which provided the cement work for the well, has soared 121 percent, while the manufacturer of the rig's blowout preventer, Cameron, is up 64 percent.
Minority shareholders in the BP well are also higher -- with Anadarko Petroleum gaining 123 percent, and Mitsui up 45 percent in dollar terms.
It is not unusual, of course, for investors who seek out stocks that have been hammered more than they deserve to jump in during a crisis like this one.
But knowing when to buy and when to leave well alone takes a strong stomach. If investors call it right they end up with a stake in a valuable brand at a ridiculously low price, but get it wrong and they are stuck in a so-called value trap -- a cheap stock that is going to get a lot cheaper as the news worsens.
"There were a lot of things working right in this one and what was working against investors was investor psychology," said Glenn Tongue, a portfolio manager at T2 Partners, a hedge fund that made several large bets on BP during the crisis.
Tongue argues that buying BP's shares as they went into free-fall was not just a roll of the dice but a calculated risk.
He said that was far different from the investors who lost their shirts by buying cheaper bank and financial stocks in the months before the financial crisis destroyed some of them.
An estimate of costs based on other spills, BP's profitability and asset base, its importance as one of the world's largest companies, and the chance it could hive off U.S. assets during litigation made BP a good bet, says Tongue.
A year after the spill, BP estimates its likely liability to be $42 billion, far less than the $100 billion that was wiped off its market value at the height of the crisis.
But when the panic was in full swing most people were not prepared to take the risk. BP's shares fell more than 55 percent as the crisis worsened following the explosion on the Deepwater Horizon rig on April 20.
Talk of bankruptcy, years of litigation from local businesses and property owners, and irreversible environmental damage sent most investors scurrying for the door. But there were pickings for the hardy.
UNCERTAINTY AND FEAR
In June, Bill Gross, the co-chief investment officer of PIMCO, the bond giant, said he had bought $100 million of short-maturing BP notes and some Anadarko Petroleum debt, capitalizing on widespread distress in the sector.
At the time Mark Kiesel, head of the corporate bond portfolio management group at PIMCO, argued that the junk yields on investment-grade stock reflected uncertainty and fear of political intervention rather than credit-worthiness.
T2 Partners scaled into BP's stock, buying half when it hit the mid-$30 range around June and using call options to pick up the remainder in the high $20s. That makes for a gain of around 60 percent on the lowest-priced buys to its post-crisis highs.
"Basically our calculus was to look at comparable situations, see what the costs of those were, then look at what the market capitalization loss of BP was," said Tongue. "In our estimate they were out of sync."
Tongue says they also had a "second bite of the cherry" when the stock fell into the mid-$30s for a second time in late August after the well had been capped.
Tongue has scaled back his BP position but says he is holding out for north of $50 per share that he believes is its intrinsic value. BP's stock is now trading at around $45.
T2 Partners also bought General Electric Co stock when it slid in the wake of the Japanese earthquake on fear it could face liability over reactors it designed at the beleaguered Fukushima nuclear plant, but they have steered clear of plant operator Tokyo Electric Power Co (TEPCO).
"In a nuclear crisis it is hard to get your hands around the true facts of what is happening," Tongue said.
TEPCO's shares plunged more than 80 percent after Japan's earthquake on March 11, but recovered part of those losses in the past week and a half.
"I think we had a pretty good handle on what's leaking in the Gulf. I don't know what's leaking in Asia and I don't know what the ultimate liability profile will be," Tongue added.
In the case of GE, it is different. Its risks are seen as limited as Japanese law channels liability for nuclear accidents to the plant operator, and U.S. courts are often reluctant to award damages for accidents that happen overseas.
Barry Ritholtz, director of equity research at Fusion IQ, said buying BP was a far cry from trying to catch falling knives like Lehman Brothers and Bear Stearns as in those cases toxic assets and leverage made wipeouts possible.
"These were ... risk-embracing daredevils and the amazing thing is that they all didn't crash and burn sooner," he said. "Every bubble leaves behind a usable infrastructure which is what value players buy, the exception is financials."
Ritholtz says investors need to do more than look at value. BP may have seemed extraordinarily cheap with a price-to-earnings ratio of 5.5 compared to more than 11 before the crisis, but that does not mean it cannot get any cheaper.
"There is no magic answer to it, it is a qualitative decision," he said.
"There are always these three factors: figuring out what's going on in the world, identifying the variants versus what everybody else believes, and then wondering when will people figure out they're wrong and here's the right analysis."
(Editing by Martin Howell and Dale Hudson)
FAA issues new rules to keep controllers awake
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WASHINGTON | Sun Apr 17, 2011 1:58pm EDT
(Reuters) - The U.S. Federal Aviation Administration on Sunday issued new work rules aimed at preventing air traffic controllers from falling asleep on the job during overnight hours.
Six separate incidents have alarmed regulators and safety advocates in recent weeks, including a lone controller at Washington's Reagan National Airport who fell asleep on March 23 with two jetliners en route.
The new rules give controllers an extra hour of rest time between shifts and require FAA managers to work more early-morning and late-night hours.
The changes, which the FAA said would be fully in force by the end of this week, do not reduce tower operations or alter airline flight schedules.
"I don't know when I've ever been madder," U.S. Transportation Secretary Ray LaHood told "Fox News Sunday".
"On my watch, controllers will not be paid to take naps. They are going to be paid for the job they are trained to do, which is to guide planes safely."
The scandal prompted the resignation last week of the FAA official responsible for overseeing the day-to-day operations of the 15,000 air traffic controllers at more than 400 airports.
The biggest airports, including in New York, Chicago and Los Angeles, have more than one controller on duty at all times. But some of those have not been immune to problems, including Miami, where one of 12 controllers on duty one night was found sleeping.
The new FAA rules give air traffic controllers at least nine hours of rest between shifts, instead of the current eight hours.
"Research shows us that giving people the chance for even an additional one hour of rest during critical periods in a schedule can improve work performance and reduce the potential for fatigue," FAA Administrator Randy Babbitt said in a statement.
The rules prevent controllers from swapping midnight shifts unless the updated schedule includes an adequate period of rest. Controllers also will no longer be able to take an unscheduled midnight shift after a day off.
Babbitt and Paul Rinaldi, president of the National Air Traffic Controllers Association union, were scheduled to follow up the rules' release this week with visits to six airports beginning in Atlanta on Monday.
Senior FAA and union officials were scheduled to visit other airports over the next few weeks.
As part of the new effort to keep controllers awake, the FAA said it would also develop a fatigue education program and commission an independent review of the training curriculum and qualifications required of controllers.
The union was expected to expand its focus on peer-to-peer education for controllers.
(Reporting by David Morgan; editing by Mohammad Zargham)
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WASHINGTON | Sun Apr 17, 2011 1:58pm EDT
(Reuters) - The U.S. Federal Aviation Administration on Sunday issued new work rules aimed at preventing air traffic controllers from falling asleep on the job during overnight hours.
Six separate incidents have alarmed regulators and safety advocates in recent weeks, including a lone controller at Washington's Reagan National Airport who fell asleep on March 23 with two jetliners en route.
The new rules give controllers an extra hour of rest time between shifts and require FAA managers to work more early-morning and late-night hours.
The changes, which the FAA said would be fully in force by the end of this week, do not reduce tower operations or alter airline flight schedules.
"I don't know when I've ever been madder," U.S. Transportation Secretary Ray LaHood told "Fox News Sunday".
"On my watch, controllers will not be paid to take naps. They are going to be paid for the job they are trained to do, which is to guide planes safely."
The scandal prompted the resignation last week of the FAA official responsible for overseeing the day-to-day operations of the 15,000 air traffic controllers at more than 400 airports.
The biggest airports, including in New York, Chicago and Los Angeles, have more than one controller on duty at all times. But some of those have not been immune to problems, including Miami, where one of 12 controllers on duty one night was found sleeping.
The new FAA rules give air traffic controllers at least nine hours of rest between shifts, instead of the current eight hours.
"Research shows us that giving people the chance for even an additional one hour of rest during critical periods in a schedule can improve work performance and reduce the potential for fatigue," FAA Administrator Randy Babbitt said in a statement.
The rules prevent controllers from swapping midnight shifts unless the updated schedule includes an adequate period of rest. Controllers also will no longer be able to take an unscheduled midnight shift after a day off.
Babbitt and Paul Rinaldi, president of the National Air Traffic Controllers Association union, were scheduled to follow up the rules' release this week with visits to six airports beginning in Atlanta on Monday.
Senior FAA and union officials were scheduled to visit other airports over the next few weeks.
As part of the new effort to keep controllers awake, the FAA said it would also develop a fatigue education program and commission an independent review of the training curriculum and qualifications required of controllers.
The union was expected to expand its focus on peer-to-peer education for controllers.
(Reporting by David Morgan; editing by Mohammad Zargham)
Gaddafi presses Libyan rebels, West says no troops
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By Alexander Dziadosz
AJDABIYAH, Libya | Sun Apr 17, 2011 8:37pm EDT
(Reuters) - Forces loyal to Libyan leader Muammar Gaddafi kept up an offensive on the rebels' eastern frontline outpost of Ajdabiyah, while the West again ruled out sending ground troops to help the rebel cause.
One witness said he saw around a dozen rockets land near the western entrance to Ajdabiyah, which rebels wanted to use as a staging post to retake the oil port of Brega. Many fled on Sunday as loud explosions boomed across the town.
"There are still some guys out there at the western gate but the situation isn't very good," said Wassim el-Agouri, a 25-year-old rebel volunteer waiting at Ajdabiyah's eastern gate.
"We want weapons, modern weapons," said rebel Ayman Aswey, 21. "If we had those, we could advance against them."
Sunday marked a month since the U.N. Security Council passed a resolution authorising force to protect civilians in Libya, leading to an international air campaign.
But despite NATO air strikes against Gaddafi's armor, rebels have been unable to hold gains in weeks of back-and-forth fighting over the coastal towns in eastern Libya.
With NATO troops bogged down in Afghanistan, Western countries have ruled out sending ground troops, a position reinforced by the British prime minister on Sunday.
"What we've said is there is no question of invasion or an occupation -- this is not about Britain putting boots on the ground," David Cameron told Sky News in an interview.
He said outside powers would help in every other way to stop Gaddafi "unleashing this hell on people in Misrata" and other towns up and down the Libyan coast, including providing "non-lethal equipment" to the rebels.
European Council President Herman van Rompuy said he viewed the Libyan rebel council as "a valuable discussion partner ... that embodies the Libyan people's aspirations," a political vote of confidence for a force that has struggled militarily.
STREETS DESERTED
Ajdabiyah's streets were almost deserted by mid-afternoon and rebels barricaded the roads with concrete blocks, tree branches and anything else they could find.
Rebel pick-ups patrolled the streets and men took up positions across the town with machineguns and rocket-propelled grenade launchers. Others returned to positions at the western gate with their weapons pointed west and south into the desert.
"We are ready for a street war. We are prepared. We have got dynamite and we've got grenades," said rebel fighter Emtar el-Farjany, who was holding a stick of dynamite.
Some rebels on Saturday made it into the outskirts of Brega, 50 miles to the west, but many others retreated to Ajdabiyah after six were killed by rockets fired by Gaddafi loyalists on the exposed coastal road joining the two towns.
By Sunday, scores of volunteer fighters and civilian cars carrying men, women and children streamed east from Ajdabiyah up the coast road toward Benghazi, where the popular revolt against Gaddafi's 41-year rule began on February 17.
In western Libya, the rebel-held city of Misrata has been under government siege for seven weeks, leading to a growing humanitarian crisis. Hundreds of civilians are believed to have been killed in the fighting and shelling of the city.
A rebel spokesman said Gaddafi's forces bombarded Misrata again on Sunday, killing at least six people. Abdel Basset Mezerik said at least 47 people were also wounded.
The United States, France and Britain said last week they would not stop bombing Gaddafi's forces until he left power, although when or if that would happen was unclear.
The rebels pushed hundreds of kilometres toward the capital Tripoli in late March after foreign warplanes began bombing Gaddafi's positions to protect civilians, but proved unable to hold territory and were pushed back as far as Ajdabiyah.
"From a military point of view, one can currently see there is a stalemate," the head of Germany's intelligence service, Ernst Uhrlau, told the Hamburger Abendblatt newspaper.
"One cannot predict at the moment how much longer Gaddafi can hold onto power. The area around Tripoli is much stronger in terms of the population and the tribes than the east," he said.
Earlier on Sunday a sandstorm obscured the flat expanse of desert stretching west from Ajdabiyah to Brega. Rebel Ahmed al-Zuwaihi blamed the weather for a lack of NATO air strikes.
"The weather is no good today. NATO hasn't hit anything," he said. "It's a big opportunity for Gaddafi and he's taking advantage of it. He might enter Ajdabiyah today. Today the planes are not going to hit anything."
NATO warplanes instead bombed the area of Al-Hira, 50 km (30 miles) southwest of the capital Tripoli and also hit the city of Sirte, Libyan state television said. Bursts of anti-aircraft fire were heard in Tripoli on Sunday evening.
SNIPERS
In Misrata, rebels say they have faced daily bombardment from Gaddafi's forces. The U.S.-based rights group Human Rights Watch has accused Gaddafi's forces of using cluster bombs -- which scatter bomblets over a wide area, increasing civilian casualties. The Libyan government has rejected the allegations.
A rebel spokesman, called Abdelsalam, said there was fighting around Misrata's main thoroughfare Tripoli Street.
"Snipers are firing in all directions," he said. "For three days, it was very tough. Gaddafi troops were launching powerful attacks. They have been firing artillery, mortars."
Food was running short and long queues formed outside bakeries. Some streets were fast becoming unrecognizable.
The Libyan government blames militants allied to al Qaeda for the fighting. Foreign Minister Abdelati Obeidi held talks with U.N. envoy Abdelilah Al-Khatib in Tripoli and condemned "the unjustified crusader colonial aggression on Libya."
He said Libya was ready to comply with U.N. resolutions to implement a ceasefire and allow the delivery of humanitarian aid, according to the Jana state news agency.
(Additional reporting by Mussab Al-Khairalla in Tripoli, Mary-Louise Gumuchian in Sfax and Sami Aboudi in Cairo; Writing by Michael Roddy; Editing by Alex Richardson)
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3:05pm EDT
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By Alexander Dziadosz
AJDABIYAH, Libya | Sun Apr 17, 2011 8:37pm EDT
(Reuters) - Forces loyal to Libyan leader Muammar Gaddafi kept up an offensive on the rebels' eastern frontline outpost of Ajdabiyah, while the West again ruled out sending ground troops to help the rebel cause.
One witness said he saw around a dozen rockets land near the western entrance to Ajdabiyah, which rebels wanted to use as a staging post to retake the oil port of Brega. Many fled on Sunday as loud explosions boomed across the town.
"There are still some guys out there at the western gate but the situation isn't very good," said Wassim el-Agouri, a 25-year-old rebel volunteer waiting at Ajdabiyah's eastern gate.
"We want weapons, modern weapons," said rebel Ayman Aswey, 21. "If we had those, we could advance against them."
Sunday marked a month since the U.N. Security Council passed a resolution authorising force to protect civilians in Libya, leading to an international air campaign.
But despite NATO air strikes against Gaddafi's armor, rebels have been unable to hold gains in weeks of back-and-forth fighting over the coastal towns in eastern Libya.
With NATO troops bogged down in Afghanistan, Western countries have ruled out sending ground troops, a position reinforced by the British prime minister on Sunday.
"What we've said is there is no question of invasion or an occupation -- this is not about Britain putting boots on the ground," David Cameron told Sky News in an interview.
He said outside powers would help in every other way to stop Gaddafi "unleashing this hell on people in Misrata" and other towns up and down the Libyan coast, including providing "non-lethal equipment" to the rebels.
European Council President Herman van Rompuy said he viewed the Libyan rebel council as "a valuable discussion partner ... that embodies the Libyan people's aspirations," a political vote of confidence for a force that has struggled militarily.
STREETS DESERTED
Ajdabiyah's streets were almost deserted by mid-afternoon and rebels barricaded the roads with concrete blocks, tree branches and anything else they could find.
Rebel pick-ups patrolled the streets and men took up positions across the town with machineguns and rocket-propelled grenade launchers. Others returned to positions at the western gate with their weapons pointed west and south into the desert.
"We are ready for a street war. We are prepared. We have got dynamite and we've got grenades," said rebel fighter Emtar el-Farjany, who was holding a stick of dynamite.
Some rebels on Saturday made it into the outskirts of Brega, 50 miles to the west, but many others retreated to Ajdabiyah after six were killed by rockets fired by Gaddafi loyalists on the exposed coastal road joining the two towns.
By Sunday, scores of volunteer fighters and civilian cars carrying men, women and children streamed east from Ajdabiyah up the coast road toward Benghazi, where the popular revolt against Gaddafi's 41-year rule began on February 17.
In western Libya, the rebel-held city of Misrata has been under government siege for seven weeks, leading to a growing humanitarian crisis. Hundreds of civilians are believed to have been killed in the fighting and shelling of the city.
A rebel spokesman said Gaddafi's forces bombarded Misrata again on Sunday, killing at least six people. Abdel Basset Mezerik said at least 47 people were also wounded.
The United States, France and Britain said last week they would not stop bombing Gaddafi's forces until he left power, although when or if that would happen was unclear.
The rebels pushed hundreds of kilometres toward the capital Tripoli in late March after foreign warplanes began bombing Gaddafi's positions to protect civilians, but proved unable to hold territory and were pushed back as far as Ajdabiyah.
"From a military point of view, one can currently see there is a stalemate," the head of Germany's intelligence service, Ernst Uhrlau, told the Hamburger Abendblatt newspaper.
"One cannot predict at the moment how much longer Gaddafi can hold onto power. The area around Tripoli is much stronger in terms of the population and the tribes than the east," he said.
Earlier on Sunday a sandstorm obscured the flat expanse of desert stretching west from Ajdabiyah to Brega. Rebel Ahmed al-Zuwaihi blamed the weather for a lack of NATO air strikes.
"The weather is no good today. NATO hasn't hit anything," he said. "It's a big opportunity for Gaddafi and he's taking advantage of it. He might enter Ajdabiyah today. Today the planes are not going to hit anything."
NATO warplanes instead bombed the area of Al-Hira, 50 km (30 miles) southwest of the capital Tripoli and also hit the city of Sirte, Libyan state television said. Bursts of anti-aircraft fire were heard in Tripoli on Sunday evening.
SNIPERS
In Misrata, rebels say they have faced daily bombardment from Gaddafi's forces. The U.S.-based rights group Human Rights Watch has accused Gaddafi's forces of using cluster bombs -- which scatter bomblets over a wide area, increasing civilian casualties. The Libyan government has rejected the allegations.
A rebel spokesman, called Abdelsalam, said there was fighting around Misrata's main thoroughfare Tripoli Street.
"Snipers are firing in all directions," he said. "For three days, it was very tough. Gaddafi troops were launching powerful attacks. They have been firing artillery, mortars."
Food was running short and long queues formed outside bakeries. Some streets were fast becoming unrecognizable.
The Libyan government blames militants allied to al Qaeda for the fighting. Foreign Minister Abdelati Obeidi held talks with U.N. envoy Abdelilah Al-Khatib in Tripoli and condemned "the unjustified crusader colonial aggression on Libya."
He said Libya was ready to comply with U.N. resolutions to implement a ceasefire and allow the delivery of humanitarian aid, according to the Jana state news agency.
(Additional reporting by Mussab Al-Khairalla in Tripoli, Mary-Louise Gumuchian in Sfax and Sami Aboudi in Cairo; Writing by Michael Roddy; Editing by Alex Richardson)
Congress will raise debt limit: Geithner
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By David Lawder
WASHINGTON | Sun Apr 17, 2011 12:59pm EDT
(Reuters) - Congressional Republicans have assured President Barack Obama that they would not hold the economy hostage over raising the debt ceiling, Treasury Secretary Timothy Geithner said on Sunday.
But Republicans appearing on television news shows insisted they would not support an increase of the $14.3 trillion borrowing limit without an accompanying deal to rein in future deficits.
"I want to make it perfectly clear that Congress will raise the debt ceiling," Geithner told ABC's "This Week with Christiane Amanpour."
"They recognize it and they told the president that on Wednesday in the White House and I sat there with them and they said, 'We recognize we have to do this and we're not going to play around with it, because we know the risk would catastrophic.'"
After Congress approved a deal last week to fund the government through September, U.S. lawmakers are now focusing on the looming debt limit battle and a July 8 final deadline that could halt Treasury borrowing. As of Thursday, the Treasury was just $76 billion below the limit.
The Treasury estimates that the federal government will reach the borrowing limit by May 16, prompting the Treasury to take some extraordinary cash flow measures, such as dipping into government pension funds, that could delay the day of reckoning for up to eight more weeks.
But failure to raise the debt by July 8 would likely cause the United States to begin defaulting on obligations such as Social Security payments and ultimately, interest payments on Treasury debt, Geithner warned. This would devastate investor confidence in the United States and throw financial markets back into crisis, he said.
Geithner said it may not be possible to cut a deal on future spending by the debt limit deadline, so Congress may need to approve a stand-alone increase.
"I think you can do these things in parallel," he told NBC's "Meet the Press." "But if by the time we need to raise the debt limit, we haven't worked all that out, Congress still has to raise the debt limit."
HIGHER CEILING WITH CUTS, NOT WITHOUT
Representative Paul Ryan, who heads the House Budget Committee, was one of several Republicans saying on Sunday that a debt limit could only be reached as part of a comprehensive deal on future spending.
"In addition to raising the debt limit we want financial controls, we want cuts in spending accompanying a raising of the debt ceiling. And that is what I believe they (Republican congressional leaders) told the president," Ryan said.
The Republican-led House on Friday approved a plan authored by Ryan to slash spending by nearly $6 trillion over a decade and cut benefits for the elderly and poor. Obama has offered a competing vision to curb deficits by $4 tGeithner claimed that, politics aside, there is less difference than many claim between the deficit-cutting objectives of the Obama administration and Republicans.
"What we would like Congress to do is, before we get too far into June ... agree on concrete targets, deadlines, timelines and an enforcement mechanism that will force Congress to live within its means over the next three to five years," he said on "Meet the Press".
Republican Tom Coburn, a member of a bipartisan "gang of six" senators working on a spending-cut plan based on the work of last year's deficit commission, also said he thought there was room for some middle ground.
"There is a good chance that we are going to come up with a bipartisan agreement that people can swallow," he said. "I think there is a good likelihood that we can get there."
(Additional reporting by Glenn Somerville, Laura MacInnis and David Morgan; Editing by Doina Chiacu)rillion over 12 years.
Some Republican freshmen backed by the conservative Tea Party movement also said they would not support a stand-alone debt ceiling plan.
"They are pushing for a single subject vote, a clean debt ceiling vote and I'm not for that," said Rep. Steve Southerland of Florida. "Look, we've got to have some guarantees going forward -- caps, some guarantees that if we raise that debt ceiling, we get this economy on a trajectory where we service our debt."
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By David Lawder
WASHINGTON | Sun Apr 17, 2011 12:59pm EDT
(Reuters) - Congressional Republicans have assured President Barack Obama that they would not hold the economy hostage over raising the debt ceiling, Treasury Secretary Timothy Geithner said on Sunday.
But Republicans appearing on television news shows insisted they would not support an increase of the $14.3 trillion borrowing limit without an accompanying deal to rein in future deficits.
"I want to make it perfectly clear that Congress will raise the debt ceiling," Geithner told ABC's "This Week with Christiane Amanpour."
"They recognize it and they told the president that on Wednesday in the White House and I sat there with them and they said, 'We recognize we have to do this and we're not going to play around with it, because we know the risk would catastrophic.'"
After Congress approved a deal last week to fund the government through September, U.S. lawmakers are now focusing on the looming debt limit battle and a July 8 final deadline that could halt Treasury borrowing. As of Thursday, the Treasury was just $76 billion below the limit.
The Treasury estimates that the federal government will reach the borrowing limit by May 16, prompting the Treasury to take some extraordinary cash flow measures, such as dipping into government pension funds, that could delay the day of reckoning for up to eight more weeks.
But failure to raise the debt by July 8 would likely cause the United States to begin defaulting on obligations such as Social Security payments and ultimately, interest payments on Treasury debt, Geithner warned. This would devastate investor confidence in the United States and throw financial markets back into crisis, he said.
Geithner said it may not be possible to cut a deal on future spending by the debt limit deadline, so Congress may need to approve a stand-alone increase.
"I think you can do these things in parallel," he told NBC's "Meet the Press." "But if by the time we need to raise the debt limit, we haven't worked all that out, Congress still has to raise the debt limit."
HIGHER CEILING WITH CUTS, NOT WITHOUT
Representative Paul Ryan, who heads the House Budget Committee, was one of several Republicans saying on Sunday that a debt limit could only be reached as part of a comprehensive deal on future spending.
"In addition to raising the debt limit we want financial controls, we want cuts in spending accompanying a raising of the debt ceiling. And that is what I believe they (Republican congressional leaders) told the president," Ryan said.
The Republican-led House on Friday approved a plan authored by Ryan to slash spending by nearly $6 trillion over a decade and cut benefits for the elderly and poor. Obama has offered a competing vision to curb deficits by $4 tGeithner claimed that, politics aside, there is less difference than many claim between the deficit-cutting objectives of the Obama administration and Republicans.
"What we would like Congress to do is, before we get too far into June ... agree on concrete targets, deadlines, timelines and an enforcement mechanism that will force Congress to live within its means over the next three to five years," he said on "Meet the Press".
Republican Tom Coburn, a member of a bipartisan "gang of six" senators working on a spending-cut plan based on the work of last year's deficit commission, also said he thought there was room for some middle ground.
"There is a good chance that we are going to come up with a bipartisan agreement that people can swallow," he said. "I think there is a good likelihood that we can get there."
(Additional reporting by Glenn Somerville, Laura MacInnis and David Morgan; Editing by Doina Chiacu)rillion over 12 years.
Some Republican freshmen backed by the conservative Tea Party movement also said they would not support a stand-alone debt ceiling plan.
"They are pushing for a single subject vote, a clean debt ceiling vote and I'm not for that," said Rep. Steve Southerland of Florida. "Look, we've got to have some guarantees going forward -- caps, some guarantees that if we raise that debt ceiling, we get this economy on a trajectory where we service our debt."
US storms and tornado death toll rises
Click to play
Governor of North Carolina Beverly Perdue: "This evening I declared a state of emergency for North Carolina"
Continue reading the main story
Related Stories
In pictures: Storms hit US
Amateur video of storm
How a tornado is formed
The death toll from three days of severe weather across several southern US states has risen to at least 43.
The latest state to be hit was North Carolina, where 62 tornadoes left a trail of destruction in the worst storm to hit the state in two decades.
The governor declared a state of emergency after deaths were reported in four counties.
Oklahoma, Arkansas, Mississippi, Alabama, Georgia and Virginia have also been hit.
Continue reading the main story
“
Start Quote
Our thoughts and prayers are with everybody in North Carolina who has been through this horrible day”
Beverly Perdue
North Carolina governor
Officials say the number of victims will increase further as rescue teams search damaged areas.
Hailstones the size of grapefruit were reported as the storms swept through the region, creating flash floods as well as tornadoes.
The storms first struck Oklahoma on Thursday before sweeping eastward through other states.
Roofs ripped off
North Carolina Governor Beverly Perdue said the number of tornadoes was the highest since 1984.
"Our thoughts and prayers are with everybody in North Carolina who has been through this horrible day," Gov Perdue said.
Dozens of tornadoes ripped through North Carolina
She did not confirm the number of people killed, but an official in Bertie County said 11 people had died in that county alone, bringing deaths so far in the state to 21, according to AP news agency.
County manager Zee Lamb told the news agency the tornado had moved through Bertie County about 1900 local time (2300 GMT) on Saturday, causing extensive damage.
About 21,000 people live in the county, which is located about 130 miles east of the city of Raleigh.
Austin Moss, a delivery driver for a major pizza chain in Raleigh, told the BBC he had heard first-hand accounts of the damage where one of the tornadoes touched down.
"Most hotels had no vacancy as they were filled with victims of the storm, and one family had been completely dislodged from their home, which no longer existed," he said.
But, he added, "while the damage is extensive, the general attitude seems optimistic in the face of widespread adversity".
An estimated 200,000 homes in North Carolina were without power on Sunday, Reuters reported.
Fatalities have also been reported in Alabama, Arkansas, Oklahoma and Mississippi.
Trees and power lines have been felled by the storms, which have torn roofs off houses and overturned cars.
A mother and her two children were among those who died in Alabama, officials said.
The trio had been sheltering inside their their double-wide trailer when it was thrown about 500 ft by the winds, landing on its roof.
The governor of Alabama visited several of the devastated areas on Saturday, and declared the entire state a disaster area.
The storms have now moved out over the Atlantic.
Have you been affected by the storms? You can send us your experiences using the form below.
Send your pictures and videos to yourpics@bbc.co.uk or text them to 61124 (UK) or +44 7725 100 100 (International). If you have a large file you can upload here.
Click to play
Governor of North Carolina Beverly Perdue: "This evening I declared a state of emergency for North Carolina"
Continue reading the main story
Related Stories
In pictures: Storms hit US
Amateur video of storm
How a tornado is formed
The death toll from three days of severe weather across several southern US states has risen to at least 43.
The latest state to be hit was North Carolina, where 62 tornadoes left a trail of destruction in the worst storm to hit the state in two decades.
The governor declared a state of emergency after deaths were reported in four counties.
Oklahoma, Arkansas, Mississippi, Alabama, Georgia and Virginia have also been hit.
Continue reading the main story
“
Start Quote
Our thoughts and prayers are with everybody in North Carolina who has been through this horrible day”
Beverly Perdue
North Carolina governor
Officials say the number of victims will increase further as rescue teams search damaged areas.
Hailstones the size of grapefruit were reported as the storms swept through the region, creating flash floods as well as tornadoes.
The storms first struck Oklahoma on Thursday before sweeping eastward through other states.
Roofs ripped off
North Carolina Governor Beverly Perdue said the number of tornadoes was the highest since 1984.
"Our thoughts and prayers are with everybody in North Carolina who has been through this horrible day," Gov Perdue said.
Dozens of tornadoes ripped through North Carolina
She did not confirm the number of people killed, but an official in Bertie County said 11 people had died in that county alone, bringing deaths so far in the state to 21, according to AP news agency.
County manager Zee Lamb told the news agency the tornado had moved through Bertie County about 1900 local time (2300 GMT) on Saturday, causing extensive damage.
About 21,000 people live in the county, which is located about 130 miles east of the city of Raleigh.
Austin Moss, a delivery driver for a major pizza chain in Raleigh, told the BBC he had heard first-hand accounts of the damage where one of the tornadoes touched down.
"Most hotels had no vacancy as they were filled with victims of the storm, and one family had been completely dislodged from their home, which no longer existed," he said.
But, he added, "while the damage is extensive, the general attitude seems optimistic in the face of widespread adversity".
An estimated 200,000 homes in North Carolina were without power on Sunday, Reuters reported.
Fatalities have also been reported in Alabama, Arkansas, Oklahoma and Mississippi.
Trees and power lines have been felled by the storms, which have torn roofs off houses and overturned cars.
A mother and her two children were among those who died in Alabama, officials said.
The trio had been sheltering inside their their double-wide trailer when it was thrown about 500 ft by the winds, landing on its roof.
The governor of Alabama visited several of the devastated areas on Saturday, and declared the entire state a disaster area.
The storms have now moved out over the Atlantic.
Have you been affected by the storms? You can send us your experiences using the form below.
Send your pictures and videos to yourpics@bbc.co.uk or text them to 61124 (UK) or +44 7725 100 100 (International). If you have a large file you can upload here.
Nationalist True Finns make gains in Finland vote
Timo Soini's True Finns have more than quadrupled their support since 2007
Continue reading the main story
Related Stories
Profile: Finland's Timo Soini
Anti-immigration party woos voters
Mid-May target for Portugal aid
A nationalist party has taken nearly a fifth of votes in Finland's general election, the electoral commission says.
The True Finns finished just behind the conservative NCP and the Social Democrats on around 19%.
While the Social Democrats have called for changes on EU bail-outs, including the planned Portuguese rescue, True Finns opposes the plans altogether.
A hostile Finnish government could theoretically veto the package.
Unlike other eurozone countries, Finland's parliament can vote on whether to approve the measures.
Correspondents say the increased sway of Euro-sceptics in Finland's parliament could hold up any further bail-out deals.
As the biggest party, the NCP is tipped to lead the next government with former Finance Minister Jyrki Katainen likely to become prime minister of whatever coalition emerges, replacing Mari Kiviniemi of the Centre Party.
'Invitation to talks'
The anti-immigration True Finns won 39 seats in the 200-member parliament, final results showed.
The conservatives' Jyrki Katainen is tipped to be the next prime minister
That put it five seats behind the conservative National Coalition Party (NCP) - part of the current centre-right government and a strong advocate for European integration - and just three behind the opposition Social Democrats.
The Centre Party - previously the largest party in parliament - won just 35 seats, down 16 from the last election in 2007.
The strong showing for the True Finns meant the anti-euro party would at least "get an invitation to talks" on a new government, Reuters quoted party leader Timo Soini as saying.
Celebrating the NCP's success, Jyrki Katainen played down suggestions that Finland would now cause difficulties for the eurozone.
"Finland has always been a responsible problem solver, not causing problems," he said.
"This is about a common European cause. After the elections, the biggest parties will begin to look for common ground."
EU 'squanderers'
Tampere University political analyst Ilkka Ruostetsaari told AFP news agency the election outcome was astonishing.
Continue reading the main story
Predicted seats in parliament
National Coalition Party - 44
Social Democrats - 42
True Finns - 39
Centre Party - 35
"The True Finns' victory, surpassing every poll and every expectation of a drop on election day... plus the total collapse of the Centre - the whole thing is historic," he said.
Opinion polls had predicted a strong result for the True Finns but were giving the party around 15%, not 19%. In the 2007 election, the party had won just 4%.
With its charismatic leader Mr Soini, the party rejects rescue funds for EU "squanderers", as well as opposing immigration.
Speaking on Finnish TV, the True Finns' leader said he wanted to change the terms of the bail-out for Portugal.
"The package that is there, I do not believe it will remain," he said.
Analysts attribute much of his party's success to disenchantment with the big three mainstream parties who have run Finland for decades.
Some Finns expressed concern about the surge in support for the True Finns.
"They have strict opinions about everything," one young woman voter, who gave her name as Eevi, told Reuters.
"Finnish people have always been very open, I wonder why we are now pulling off, closing up again."
Timo Soini's True Finns have more than quadrupled their support since 2007
Continue reading the main story
Related Stories
Profile: Finland's Timo Soini
Anti-immigration party woos voters
Mid-May target for Portugal aid
A nationalist party has taken nearly a fifth of votes in Finland's general election, the electoral commission says.
The True Finns finished just behind the conservative NCP and the Social Democrats on around 19%.
While the Social Democrats have called for changes on EU bail-outs, including the planned Portuguese rescue, True Finns opposes the plans altogether.
A hostile Finnish government could theoretically veto the package.
Unlike other eurozone countries, Finland's parliament can vote on whether to approve the measures.
Correspondents say the increased sway of Euro-sceptics in Finland's parliament could hold up any further bail-out deals.
As the biggest party, the NCP is tipped to lead the next government with former Finance Minister Jyrki Katainen likely to become prime minister of whatever coalition emerges, replacing Mari Kiviniemi of the Centre Party.
'Invitation to talks'
The anti-immigration True Finns won 39 seats in the 200-member parliament, final results showed.
The conservatives' Jyrki Katainen is tipped to be the next prime minister
That put it five seats behind the conservative National Coalition Party (NCP) - part of the current centre-right government and a strong advocate for European integration - and just three behind the opposition Social Democrats.
The Centre Party - previously the largest party in parliament - won just 35 seats, down 16 from the last election in 2007.
The strong showing for the True Finns meant the anti-euro party would at least "get an invitation to talks" on a new government, Reuters quoted party leader Timo Soini as saying.
Celebrating the NCP's success, Jyrki Katainen played down suggestions that Finland would now cause difficulties for the eurozone.
"Finland has always been a responsible problem solver, not causing problems," he said.
"This is about a common European cause. After the elections, the biggest parties will begin to look for common ground."
EU 'squanderers'
Tampere University political analyst Ilkka Ruostetsaari told AFP news agency the election outcome was astonishing.
Continue reading the main story
Predicted seats in parliament
National Coalition Party - 44
Social Democrats - 42
True Finns - 39
Centre Party - 35
"The True Finns' victory, surpassing every poll and every expectation of a drop on election day... plus the total collapse of the Centre - the whole thing is historic," he said.
Opinion polls had predicted a strong result for the True Finns but were giving the party around 15%, not 19%. In the 2007 election, the party had won just 4%.
With its charismatic leader Mr Soini, the party rejects rescue funds for EU "squanderers", as well as opposing immigration.
Speaking on Finnish TV, the True Finns' leader said he wanted to change the terms of the bail-out for Portugal.
"The package that is there, I do not believe it will remain," he said.
Analysts attribute much of his party's success to disenchantment with the big three mainstream parties who have run Finland for decades.
Some Finns expressed concern about the surge in support for the True Finns.
"They have strict opinions about everything," one young woman voter, who gave her name as Eevi, told Reuters.
"Finnish people have always been very open, I wonder why we are now pulling off, closing up again."
Nigeria election: Goodluck Jonathan 'to win outright'
New transparency has been introduced to the electoral process
Continue reading the main story
Nigeria votes: 2011
Voting round-up
Free vote challenge
Explore Nigeria: Chaos amid oil
Q&A: Nigeria elections
Goodluck Jonathan is set for election as Nigeria's president with almost double the vote of his main rival, partial results suggest.
Figures provided by regional officials suggest he has garnered enough votes to avoid a run-off.
A BBC correspondent says there is a sense of relief and jubilation that the vote and count have been relatively calm, unlike in past years.
However, some results in individual states have been suspiciously high.
Mr Jonathan had staked his reputation on the election, repeatedly promising it would be free and fair.
Unless the national electoral commission declares a large chunk of the votes to be invalid, he is now on track to become Nigeria's first elected president from the oil-producing Niger Delta region.
The Christian politician was appointed to the presidency last year, upon the death of incumbent Umaru Yar'Adua, whom he had served as vice-president.
'99.63%'
To win at the first round, a candidate needs at least 25% of the vote in two-thirds of Nigeria's 36 states.
Continue reading the main story
Analysis
Caroline Duffield
BBC News, Lagos
I'm inside Nigeria's election collation offices in Abuja and this is the nerve centre of the election.
It's where officials scrutinise results for fraud before declaring them. Election Commission Chairman Professor Jega is sitting on a raised platform, slowly reading out results. Behind him is a glass office where official paperwork is being matched and compared with data captured at 120,000 polling stations.
It's only when officials are all agreed on what they're seeing that they can confirm the authenticity of the results. It's a painfully slow process but it's designed to expose any tampering or fraud with either the computer records or the paperwork.
And this building itself is under massive security. We came through several military cordons to get inside. People here are grimly determined to get through the next six to 10 hours of this count without violent incidents.
According to regional results, Mr Jonathan has passed that threshold in at least 24 states. He polled 20.3m votes to the 10.4m cast for his nearest rival, General Muhammadu Buhari.
In Akwa Ibom state, he was credited with winning 95% percent and in Anambra it was 99%. In his home state, Bayelsa, he took 99.63%.
"Figures of 95% and above for one party suggest that these are fabricated figures and, personally, they worry me because they pose serious questions on the credibility of the election," Jibrin Ibrahim of the Centre for Democracy and Development told AFP news agency.
Former government minister Nasir el-Rufai, a supporter of Gen Buhari, told Reuters: "In most of the south-east and south-south, no real elections took place.
"In the south-west and the north, the results have no relation to what happened at the polling units and we will prove it in due course."
A spokesman for the general, Yinka Odumakin, also said irregularities had taken place but any challenge would come after the vote count.
Mr Jonathan's campaign team have said they will not publicly comment until the election commission has formally declared all the results in the capital Abuja, an announcement expected later on Monday.
"This is no time for triumphalism," Oronto Douglas, a senior adviser to Mr Jonathan, told Reuters news agency.
"It is a time for deep reflection, for strengthening the bond of our union and for all of us to work together."
'True democracy'
Previous polls were marred by widespread violence and vote-fixing but Saturday's election was reported to have generally gone smoothly, after violence in the run-up left dozens of people dead.
Continue reading the main story
Election Season
20 presidential candidates
74 million registered voters
Parliament, president and local elections on three consecutive weekends
Ruling PDP dominated every vote since end of military rule in 1999
Previous elections plagued by corruption and violence
New election commission head has promised clean vote
In pictures: Nigerians vote
Viewpoint: Bloody politics
Maiduguri: City of fear
A woman is said to have been killed in the central city of Jos on polling day and two bomb explosions hit the north-eastern city of Maiduguri.
Casting his vote in Bayelsa, Niger Delta, Mr Jonathan said the election was a "new dawn in Nigeria's political evolution".
"Nigeria is now experiencing true democracy where we the politicians have to go to the people," he added.
In Daura, home to Gen Buhari, crowds waited for hours despite the intense heat to cast their votes.
The general predicted the ruling party would try to rig the election in a "sophisticated way", he told the BBC.
But he added that he had more faith in the national electoral commission this time round, adding that "probably 60% of the election" would be credible.
Other challengers for the presidency included former anti-corruption chief Nuhu Ribadu and Kano state governor Ibrahim Shekarau.
Nigeria: A nation divided
PoliticsEthnicWealthHealthLiteracyOil
The People's Democratic Party (PDP) has won all elections since the end of military rule in 1999. It won two-thirds of Nigeria's 36 states last time. But having a southerner - President Goodluck Jonathan - as its candidate in the presidential elections may lose it some votes in the north.
New transparency has been introduced to the electoral process
Continue reading the main story
Nigeria votes: 2011
Voting round-up
Free vote challenge
Explore Nigeria: Chaos amid oil
Q&A: Nigeria elections
Goodluck Jonathan is set for election as Nigeria's president with almost double the vote of his main rival, partial results suggest.
Figures provided by regional officials suggest he has garnered enough votes to avoid a run-off.
A BBC correspondent says there is a sense of relief and jubilation that the vote and count have been relatively calm, unlike in past years.
However, some results in individual states have been suspiciously high.
Mr Jonathan had staked his reputation on the election, repeatedly promising it would be free and fair.
Unless the national electoral commission declares a large chunk of the votes to be invalid, he is now on track to become Nigeria's first elected president from the oil-producing Niger Delta region.
The Christian politician was appointed to the presidency last year, upon the death of incumbent Umaru Yar'Adua, whom he had served as vice-president.
'99.63%'
To win at the first round, a candidate needs at least 25% of the vote in two-thirds of Nigeria's 36 states.
Continue reading the main story
Analysis
Caroline Duffield
BBC News, Lagos
I'm inside Nigeria's election collation offices in Abuja and this is the nerve centre of the election.
It's where officials scrutinise results for fraud before declaring them. Election Commission Chairman Professor Jega is sitting on a raised platform, slowly reading out results. Behind him is a glass office where official paperwork is being matched and compared with data captured at 120,000 polling stations.
It's only when officials are all agreed on what they're seeing that they can confirm the authenticity of the results. It's a painfully slow process but it's designed to expose any tampering or fraud with either the computer records or the paperwork.
And this building itself is under massive security. We came through several military cordons to get inside. People here are grimly determined to get through the next six to 10 hours of this count without violent incidents.
According to regional results, Mr Jonathan has passed that threshold in at least 24 states. He polled 20.3m votes to the 10.4m cast for his nearest rival, General Muhammadu Buhari.
In Akwa Ibom state, he was credited with winning 95% percent and in Anambra it was 99%. In his home state, Bayelsa, he took 99.63%.
"Figures of 95% and above for one party suggest that these are fabricated figures and, personally, they worry me because they pose serious questions on the credibility of the election," Jibrin Ibrahim of the Centre for Democracy and Development told AFP news agency.
Former government minister Nasir el-Rufai, a supporter of Gen Buhari, told Reuters: "In most of the south-east and south-south, no real elections took place.
"In the south-west and the north, the results have no relation to what happened at the polling units and we will prove it in due course."
A spokesman for the general, Yinka Odumakin, also said irregularities had taken place but any challenge would come after the vote count.
Mr Jonathan's campaign team have said they will not publicly comment until the election commission has formally declared all the results in the capital Abuja, an announcement expected later on Monday.
"This is no time for triumphalism," Oronto Douglas, a senior adviser to Mr Jonathan, told Reuters news agency.
"It is a time for deep reflection, for strengthening the bond of our union and for all of us to work together."
'True democracy'
Previous polls were marred by widespread violence and vote-fixing but Saturday's election was reported to have generally gone smoothly, after violence in the run-up left dozens of people dead.
Continue reading the main story
Election Season
20 presidential candidates
74 million registered voters
Parliament, president and local elections on three consecutive weekends
Ruling PDP dominated every vote since end of military rule in 1999
Previous elections plagued by corruption and violence
New election commission head has promised clean vote
In pictures: Nigerians vote
Viewpoint: Bloody politics
Maiduguri: City of fear
A woman is said to have been killed in the central city of Jos on polling day and two bomb explosions hit the north-eastern city of Maiduguri.
Casting his vote in Bayelsa, Niger Delta, Mr Jonathan said the election was a "new dawn in Nigeria's political evolution".
"Nigeria is now experiencing true democracy where we the politicians have to go to the people," he added.
In Daura, home to Gen Buhari, crowds waited for hours despite the intense heat to cast their votes.
The general predicted the ruling party would try to rig the election in a "sophisticated way", he told the BBC.
But he added that he had more faith in the national electoral commission this time round, adding that "probably 60% of the election" would be credible.
Other challengers for the presidency included former anti-corruption chief Nuhu Ribadu and Kano state governor Ibrahim Shekarau.
Nigeria: A nation divided
PoliticsEthnicWealthHealthLiteracyOil
The People's Democratic Party (PDP) has won all elections since the end of military rule in 1999. It won two-thirds of Nigeria's 36 states last time. But having a southerner - President Goodluck Jonathan - as its candidate in the presidential elections may lose it some votes in the north.
Fridman's Altimo to scrap Vimpelcom investor deal
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Telenor ASA
TEL.OL
kr89.40
+0.10+0.11%
04/15/2011
Vimpelcom Ltd
VIP.N
$14.55
+0.16+1.11%
04/15/2011
Orascom Telecom Holding SAE
ORTE.CA
£4.32
-0.12-2.70%
8:36pm GMT+0700
MOSCOW | Sun Apr 17, 2011 11:23am EDT
(Reuters) - Russian billionaire Mikhail Fridman's Altimo said it wants to scrap its 2009 shareholder agreement with Norway's Telenor (TEL.OL) in Vimpelcom (VIP.N) to reflect the Russian telecom group's recent blockbuster merger.
Vimpelcom on Friday closed a $6 billion cash-and-shares deal for 51.7 percent of Orascom Telecom (ORTE.CA) and 100 percent of Italy's Wind, giving their Egyptian owner Naguib Sawiris 30.6 percent of voting shares in the united group.
"With the closing of the Wind transaction... there are three major shareholders with approximately equal stakes in the company. In light of these developments, Altimo believes that the current Shareholders' Agreement is no longer appropriate," Altimo said in a statement late on Friday.
Altimo and Telenor thrashed out the shareholder agreement in the autumn of 2009 after years of corporate brawling, striking a deal that sparked an uneasy and short-lived era of peace between the two then 40 percent co-owners.
That came to an abrupt end when the Norwegian group announced its opposition to the Wind deal, claiming it made no financial or strategic sense for Vimpelcom, before being outvoted at a special shareholder meeting on March 17.
DESTABILSING
The shareholder agreement saw the appointment of three independent directors onto Vimpelcom's board. These were intended to act as an arbiter in the event of a deadlock over strategic decisions between Altimo and Telenor.
Both Altimo and Telenor are allowed to nominate a further three directors to the board.
The deal also gives Altimo and Telenor pre-emptive rights to new shares, allowing them to avoid stake dilution in the case of Vimpelcom issuing new shares to a third party.
Telenor is currently pursuing an arbitration trying to restore its pre-emptive rights after the Wind deal was classified as a related transaction giving no such rights to any of the shareholders.
The deal saw Telenor's and Alfa's voting stakes fall to 25 percent and 31 percent from 36 percent and 44.7 percent respectively.
Having been forced to give up on trying to stop the Wind deal from going ahead, Telenor is instead trying to restore the former size of its stake, which would in turn leave Altimo as the smallest party.
"We will continue the London arbitration and will work to regain the position we had (before the Wind deal)," Telenor spokesman Dag Melgaard told Reuters, adding Telenor's commitment to staying in Vimpelcom has not changed.
In the Friday statement Altimo said the termination of the agreement was aimed to "ensure proportional rights for all minority shareholders" and "avoid further destabilising conflicts between major shareholders."
It plans to sell part of its preferred shares in Vimpelcom that will be enough to reduce its voting rights to below 25 percent, triggering a clause that will spark the termination of the agreement.
(Reporting by Maria Kiselyova, Editing by John Bowker and Mike Nesbit)
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Telenor ASA
TEL.OL
kr89.40
+0.10+0.11%
04/15/2011
Vimpelcom Ltd
VIP.N
$14.55
+0.16+1.11%
04/15/2011
Orascom Telecom Holding SAE
ORTE.CA
£4.32
-0.12-2.70%
8:36pm GMT+0700
MOSCOW | Sun Apr 17, 2011 11:23am EDT
(Reuters) - Russian billionaire Mikhail Fridman's Altimo said it wants to scrap its 2009 shareholder agreement with Norway's Telenor (TEL.OL) in Vimpelcom (VIP.N) to reflect the Russian telecom group's recent blockbuster merger.
Vimpelcom on Friday closed a $6 billion cash-and-shares deal for 51.7 percent of Orascom Telecom (ORTE.CA) and 100 percent of Italy's Wind, giving their Egyptian owner Naguib Sawiris 30.6 percent of voting shares in the united group.
"With the closing of the Wind transaction... there are three major shareholders with approximately equal stakes in the company. In light of these developments, Altimo believes that the current Shareholders' Agreement is no longer appropriate," Altimo said in a statement late on Friday.
Altimo and Telenor thrashed out the shareholder agreement in the autumn of 2009 after years of corporate brawling, striking a deal that sparked an uneasy and short-lived era of peace between the two then 40 percent co-owners.
That came to an abrupt end when the Norwegian group announced its opposition to the Wind deal, claiming it made no financial or strategic sense for Vimpelcom, before being outvoted at a special shareholder meeting on March 17.
DESTABILSING
The shareholder agreement saw the appointment of three independent directors onto Vimpelcom's board. These were intended to act as an arbiter in the event of a deadlock over strategic decisions between Altimo and Telenor.
Both Altimo and Telenor are allowed to nominate a further three directors to the board.
The deal also gives Altimo and Telenor pre-emptive rights to new shares, allowing them to avoid stake dilution in the case of Vimpelcom issuing new shares to a third party.
Telenor is currently pursuing an arbitration trying to restore its pre-emptive rights after the Wind deal was classified as a related transaction giving no such rights to any of the shareholders.
The deal saw Telenor's and Alfa's voting stakes fall to 25 percent and 31 percent from 36 percent and 44.7 percent respectively.
Having been forced to give up on trying to stop the Wind deal from going ahead, Telenor is instead trying to restore the former size of its stake, which would in turn leave Altimo as the smallest party.
"We will continue the London arbitration and will work to regain the position we had (before the Wind deal)," Telenor spokesman Dag Melgaard told Reuters, adding Telenor's commitment to staying in Vimpelcom has not changed.
In the Friday statement Altimo said the termination of the agreement was aimed to "ensure proportional rights for all minority shareholders" and "avoid further destabilising conflicts between major shareholders."
It plans to sell part of its preferred shares in Vimpelcom that will be enough to reduce its voting rights to below 25 percent, triggering a clause that will spark the termination of the agreement.
(Reporting by Maria Kiselyova, Editing by John Bowker and Mike Nesbit)
Analysis: Google's Page and Wall Street: Who needs who?
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Google co-founder Larry Page is seen at the Sun Valley Inn in Sun Valley, Idaho in this July 8, 2010 file photograph. Google Inc Chief Executive Eric Schmidt will hand over the reins to Page, the company said on January 20, 2011. REUTERS/Mario Anzuoni/Files
By Alexei Oreskovic
SAN FRANCISCO | Sun Apr 17, 2011 12:06pm EDT
(Reuters) - It took fewer than 400 words for freshman Google Inc CEO Larry Page to set the tone for a strained relationship with Wall Street that could haunt him for years.
The 38-year-old tech visionary -- who with Sergey Brin created the algorithm that today powers the world's most-used search engine -- risks alienating a powerful investor constituency that will be crucial to his efforts to ensure Google remains at the top of its game, say some industry observers.
Investors had hoped to hear Page sketch out his vision during a Thursday post-earnings conference call. Instead, Page came on the line for a few minutes, expressed his optimism in the company, then signed off without entertaining questions on a stunning 54 percent cost spike.
Wall Street promptly responded by selling the stock down more than 8 percent on Friday, wiping out $15 billion in value -- devaluing Page's own holdings in the company -- and setting a record for the biggest single-day decline since December 2008.
Of course, there are plenty of CEOs who do not pander to Wall Street, including Apple Inc's Steve Jobs. But RCM Capital Management portfolio manager Walt Price said even the Silicon Valley icon tackles shareholder concerns head on.
"He hits them head on and he hits them on a competitive basis. He talks about why he's superior to Android and other tablets," Price said. "That's probably a better model than saying I'm enthusiastic about the outlook and departing."
"Maybe (Google) doesn't want to talk about it, but their multiple is going to go down until they do," Price said. "Larry Page's vision would be a good place to start, and I think people are worried that Facebook is a giant sucking sound on the valuation of Google and the future of Google."
The cold shoulder to investors seems in character for Page, who is famously averse to media appearances and has a long-professed commitment to long-term goals rather than to the short-term results Wall Street is known to crave.
The fact that Google generates billions of dollars in cash gives Page a fair degree of independence, since he does not need to raise money on Wall Street, said Daniel Niles, senior portfolio manager of Alpha One Capital Partners, a hedge fund that has a position in Google shares.
Still, as Page seeks to revamp Google and fend off growing threats from Facebook and Apple, critics say he will need to get along better with Wall Street.
In a rare downgrade of Google's stock, Citi analyst Mark Mahaney cited the "token appearance" by Page as being among the negative points from the company's quarter.
"We would have wanted Larry to stick around for Q&A," Mahaney wrote in a note to investors on Friday.
THE PRICE OF IGNORANCE
Ignoring Wall Street exacted an immediate toll on Google's share price, which represents an increasingly important weapon for Google.
"In some sense the stock price determines the morale of the employees. So you do need to care of the stock price or you're going to lose your employees," Price said.
With Google having lost a string of key executives and engineers to Facebook, Twitter and other rivals, retaining talent is a key priority -- particularly for a company whose main currency is its people.
Last year, the company announced it would give a 10 percent pay raise to all its employees, hoping to staunch a flow of prime talent to Facebook, which had the edge in terms of an upcoming IPO that might just turn its top employees into multi-millionaires.
Of course, the fact that Google is being led by a CEO eager to invest in long-term projects represents a benefit that can serve as its own lure for many engineers.
Shareholders have long griped about Google's relationship with investors. The company offers no financial guidance and does not break out results for of its various business units, including mobile and display advertising. In recent years, Google even stopped briefing analysts in person at its Mountain View, California, headquarters.
But some say Google's need to boost its Silicon Valley credibility need not come at the expense of Wall Street bragging rights.
"Longer term it doesn't build any kind of support from the analysts. It's an asset. Your reputation is always an asset. And when you do stuff like this you damage the reputation. You're wasting an asset in a sense," said James Post, a professor at Boston University School of Management.
"If you insult the party asking the questions, all you do is piss them off for the long term and then they're not going to cut Google any slack six months from now, or a year from now."
(Editing by Ken Li, Bernard Orr and Maureen Bavdek)
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Google co-founder Larry Page is seen at the Sun Valley Inn in Sun Valley, Idaho in this July 8, 2010 file photograph. Google Inc Chief Executive Eric Schmidt will hand over the reins to Page, the company said on January 20, 2011. REUTERS/Mario Anzuoni/Files
By Alexei Oreskovic
SAN FRANCISCO | Sun Apr 17, 2011 12:06pm EDT
(Reuters) - It took fewer than 400 words for freshman Google Inc CEO Larry Page to set the tone for a strained relationship with Wall Street that could haunt him for years.
The 38-year-old tech visionary -- who with Sergey Brin created the algorithm that today powers the world's most-used search engine -- risks alienating a powerful investor constituency that will be crucial to his efforts to ensure Google remains at the top of its game, say some industry observers.
Investors had hoped to hear Page sketch out his vision during a Thursday post-earnings conference call. Instead, Page came on the line for a few minutes, expressed his optimism in the company, then signed off without entertaining questions on a stunning 54 percent cost spike.
Wall Street promptly responded by selling the stock down more than 8 percent on Friday, wiping out $15 billion in value -- devaluing Page's own holdings in the company -- and setting a record for the biggest single-day decline since December 2008.
Of course, there are plenty of CEOs who do not pander to Wall Street, including Apple Inc's Steve Jobs. But RCM Capital Management portfolio manager Walt Price said even the Silicon Valley icon tackles shareholder concerns head on.
"He hits them head on and he hits them on a competitive basis. He talks about why he's superior to Android and other tablets," Price said. "That's probably a better model than saying I'm enthusiastic about the outlook and departing."
"Maybe (Google) doesn't want to talk about it, but their multiple is going to go down until they do," Price said. "Larry Page's vision would be a good place to start, and I think people are worried that Facebook is a giant sucking sound on the valuation of Google and the future of Google."
The cold shoulder to investors seems in character for Page, who is famously averse to media appearances and has a long-professed commitment to long-term goals rather than to the short-term results Wall Street is known to crave.
The fact that Google generates billions of dollars in cash gives Page a fair degree of independence, since he does not need to raise money on Wall Street, said Daniel Niles, senior portfolio manager of Alpha One Capital Partners, a hedge fund that has a position in Google shares.
Still, as Page seeks to revamp Google and fend off growing threats from Facebook and Apple, critics say he will need to get along better with Wall Street.
In a rare downgrade of Google's stock, Citi analyst Mark Mahaney cited the "token appearance" by Page as being among the negative points from the company's quarter.
"We would have wanted Larry to stick around for Q&A," Mahaney wrote in a note to investors on Friday.
THE PRICE OF IGNORANCE
Ignoring Wall Street exacted an immediate toll on Google's share price, which represents an increasingly important weapon for Google.
"In some sense the stock price determines the morale of the employees. So you do need to care of the stock price or you're going to lose your employees," Price said.
With Google having lost a string of key executives and engineers to Facebook, Twitter and other rivals, retaining talent is a key priority -- particularly for a company whose main currency is its people.
Last year, the company announced it would give a 10 percent pay raise to all its employees, hoping to staunch a flow of prime talent to Facebook, which had the edge in terms of an upcoming IPO that might just turn its top employees into multi-millionaires.
Of course, the fact that Google is being led by a CEO eager to invest in long-term projects represents a benefit that can serve as its own lure for many engineers.
Shareholders have long griped about Google's relationship with investors. The company offers no financial guidance and does not break out results for of its various business units, including mobile and display advertising. In recent years, Google even stopped briefing analysts in person at its Mountain View, California, headquarters.
But some say Google's need to boost its Silicon Valley credibility need not come at the expense of Wall Street bragging rights.
"Longer term it doesn't build any kind of support from the analysts. It's an asset. Your reputation is always an asset. And when you do stuff like this you damage the reputation. You're wasting an asset in a sense," said James Post, a professor at Boston University School of Management.
"If you insult the party asking the questions, all you do is piss them off for the long term and then they're not going to cut Google any slack six months from now, or a year from now."
(Editing by Ken Li, Bernard Orr and Maureen Bavdek)
Boehner visits Iraq and assures support for U.S. mission
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WASHINGTON | Sun Apr 17, 2011 11:52am EDT
(Reuters) - House of Representatives Speaker John Boehner visited Iraq over the weekend to express U.S. commitment to the country's postwar success, despite a rancorous Washington budget debate over spending cuts.
The Ohio Republican lawmaker's office said on Sunday that Boehner led a five-member House delegation that met with Iraqi Prime Minister Nuri al-Maliki and senior military officials. It provided few other details.
The delegation focused on future cooperation between the U.S. and Iraqi governments and the need to protect both Iraq's sovereignty and U.S. interests.
"Our first priority must be ensuring that the remaining 46,000 U.S. forces and their civilian counterparts that are working with the government of Iraq and advising and assisting the Iraqi security forces have the resources and support they need to complete their mission," Boehner said in a statement.
"We must protect the economic, political, and security progress that has been made," he added.
The U.S. force in Iraq, which once numbered more than 150,000 troops, was reduced last year as part of a bilateral agreement under which the remaining military presence would withdraw by year's end.
But Washington has recently stepped up pressure on Iraq to decide whether troops should stay to help fend off a still-potent insurgency.
Boehner's statement did not mention the budget debate in Washington, where the threat of a government shutdown two weeks ago briefly raised concerns about delayed paychecks for U.S. troops in Iraq and Afghanistan.
On Friday, the speaker presided over House approval of a Republican plan for fiscal year 2012 that would slash spending by nearly $6 trillion over the next decade. The plan would increase Pentagon funding by $5 billion and includes $158 billion for U.S. military missions abroad. But it cuts $504 million for diplomatic efforts overseas.
U.S. forces invaded Iraq in 2003 on faulty intelligence suggesting that former Iraqi President Saddam Hussein had weapons of mass destruction that could endanger U.S. security after al Qaeda's September 11, 2001, attacks. U.S. officials found neither the weapons nor any credible al Qaeda link. But an anti-American insurgency later took shape, fueled in part by militants who became aligned with al Qaeda.
(Reporting by David Morgan; Editing by Doina Chiacu)
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WASHINGTON | Sun Apr 17, 2011 11:52am EDT
(Reuters) - House of Representatives Speaker John Boehner visited Iraq over the weekend to express U.S. commitment to the country's postwar success, despite a rancorous Washington budget debate over spending cuts.
The Ohio Republican lawmaker's office said on Sunday that Boehner led a five-member House delegation that met with Iraqi Prime Minister Nuri al-Maliki and senior military officials. It provided few other details.
The delegation focused on future cooperation between the U.S. and Iraqi governments and the need to protect both Iraq's sovereignty and U.S. interests.
"Our first priority must be ensuring that the remaining 46,000 U.S. forces and their civilian counterparts that are working with the government of Iraq and advising and assisting the Iraqi security forces have the resources and support they need to complete their mission," Boehner said in a statement.
"We must protect the economic, political, and security progress that has been made," he added.
The U.S. force in Iraq, which once numbered more than 150,000 troops, was reduced last year as part of a bilateral agreement under which the remaining military presence would withdraw by year's end.
But Washington has recently stepped up pressure on Iraq to decide whether troops should stay to help fend off a still-potent insurgency.
Boehner's statement did not mention the budget debate in Washington, where the threat of a government shutdown two weeks ago briefly raised concerns about delayed paychecks for U.S. troops in Iraq and Afghanistan.
On Friday, the speaker presided over House approval of a Republican plan for fiscal year 2012 that would slash spending by nearly $6 trillion over the next decade. The plan would increase Pentagon funding by $5 billion and includes $158 billion for U.S. military missions abroad. But it cuts $504 million for diplomatic efforts overseas.
U.S. forces invaded Iraq in 2003 on faulty intelligence suggesting that former Iraqi President Saddam Hussein had weapons of mass destruction that could endanger U.S. security after al Qaeda's September 11, 2001, attacks. U.S. officials found neither the weapons nor any credible al Qaeda link. But an anti-American insurgency later took shape, fueled in part by militants who became aligned with al Qaeda.
(Reporting by David Morgan; Editing by Doina Chiacu)
Egypt puts top ex-ministers on trial in graft crackdown
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By Dina Zayed and Marwa Awad
CAIRO | Sun Apr 17, 2011 1:04pm EDT
(Reuters) - Egypt put two former top ministers on trial on Sunday, widening a crackdown on graft as the ruling generals seek to show their seriousness about ending the corruption that led to President Hosni Mubarak's ouster.
No date has yet been set for the trial of former prime minister Ahmed Nazif and finance minister Youssef Boutros-Ghali, but the decision is likely to further appease the pro-democracy protesters who ended Mubarak's 30-year rule in February and demanded the administration be punished.
Many investors and businessmen highly regarded Nazif and Boutros-Ghali for spearheading free-market reforms that helped boost economic growth to around an annual 7 percent in the three years before the 2008 global economic crisis.
But many Egyptians see the ministers as corrupt, just like a raft of other senior officials being interrogated or already on trial, over a range of graft-related charges.
The prosecution said the two ex-ministers were charged with irregularities in procuring vehicle licences, costing the state about 92 million Egyptian pounds ($16 million) in lost revenue.
Last week, the prosecutor ordered Mubarak, 82, and his two sons, Gamal and Alaa, detained for questioning on corruption allegations, a move that won Egypt's military rulers respite from the protests that had challenged their authority.
Mubarak's sons are now in prison, along with several other senior ministers and aides.
But the former president was admitted to a hospital in the Red Sea resort of Sharm el-Sheikh with an unspecified illness the day he was ordered detained, raising suspicions the military was trying to shield its former commander-in-chief from justice.
MUBARAK TRIAL NOT IMMINENT
On Friday the prosecutor's office ordered the transfer of Mubarak to a military hospital in Cairo, saying he would stay there until he was well enough to be interrogated again.
But medical and security sources in Sharm el-Sheikh said on Sunday Mubarak was already in good health, and that there were no immediate plans to move him to Cairo any time soon.
"Everyone knows he is supposed to be transferred but we have no specific orders or instructions of when that would happen," a security source in Sharm El-Sheikh said.
"It is quite believable those in power do not want to rush the former president to trial right away."
Mubarak is accused of abusing power, embezzling funds and of being responsible for the deaths of some protesters.
He has denied any wrongdoing, but many Egyptians see him as a repressive autocrat whose lengthy rule benefited only a few, while perpetuating the grinding poverty of the majority of the country's 80 million people.
The ex-president is still under investigation, and judicial sources said it could take at least six months before a case is built up against him.
"Until now there are no official charges against Mubarak and he has not been referred to trial," said a judicial source at the Supreme Criminal Court in Cairo.
"Next week, Mubarak will listen and respond to witnesses and then it will be decided whether his 15-day detention period will be renewed to continue the investigation," the source said.
The current detention period ends on April 28.
Egypt's ruling generals have tried to show their commitment to taking to task the former administration, even though some senior officers believe prosecuting Mubarak would be a humiliation for a man they see as a war hero.
On Saturday, a court ordered the dissolution of Mubarak's political party, meeting a demand of the pro-democracy movement.
The National Democratic Party had dominated Egyptian politics since it was founded by Mubarak's predecessor, Anwar Sadat, in 1978 and for many in Egypt, it epitomised the graft and abuse of power that helped ignite the protests which forced Mubarak to quit in February.
The NDP headquarters were torched during the protests that led to Mubarak's ouster, and its supporters were blamed for some acts of thuggery against demonstrators. Nearly 400 people were killed in the protests that erupted in late January.
In a sign of the challenges facing the ruling military council, Muslims in southern Egypt protested for a third day on Sunday over the appointment of a Christian governor, saying his predecessor, also a Christian, had failed to solve their problems.
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By Dina Zayed and Marwa Awad
CAIRO | Sun Apr 17, 2011 1:04pm EDT
(Reuters) - Egypt put two former top ministers on trial on Sunday, widening a crackdown on graft as the ruling generals seek to show their seriousness about ending the corruption that led to President Hosni Mubarak's ouster.
No date has yet been set for the trial of former prime minister Ahmed Nazif and finance minister Youssef Boutros-Ghali, but the decision is likely to further appease the pro-democracy protesters who ended Mubarak's 30-year rule in February and demanded the administration be punished.
Many investors and businessmen highly regarded Nazif and Boutros-Ghali for spearheading free-market reforms that helped boost economic growth to around an annual 7 percent in the three years before the 2008 global economic crisis.
But many Egyptians see the ministers as corrupt, just like a raft of other senior officials being interrogated or already on trial, over a range of graft-related charges.
The prosecution said the two ex-ministers were charged with irregularities in procuring vehicle licences, costing the state about 92 million Egyptian pounds ($16 million) in lost revenue.
Last week, the prosecutor ordered Mubarak, 82, and his two sons, Gamal and Alaa, detained for questioning on corruption allegations, a move that won Egypt's military rulers respite from the protests that had challenged their authority.
Mubarak's sons are now in prison, along with several other senior ministers and aides.
But the former president was admitted to a hospital in the Red Sea resort of Sharm el-Sheikh with an unspecified illness the day he was ordered detained, raising suspicions the military was trying to shield its former commander-in-chief from justice.
MUBARAK TRIAL NOT IMMINENT
On Friday the prosecutor's office ordered the transfer of Mubarak to a military hospital in Cairo, saying he would stay there until he was well enough to be interrogated again.
But medical and security sources in Sharm el-Sheikh said on Sunday Mubarak was already in good health, and that there were no immediate plans to move him to Cairo any time soon.
"Everyone knows he is supposed to be transferred but we have no specific orders or instructions of when that would happen," a security source in Sharm El-Sheikh said.
"It is quite believable those in power do not want to rush the former president to trial right away."
Mubarak is accused of abusing power, embezzling funds and of being responsible for the deaths of some protesters.
He has denied any wrongdoing, but many Egyptians see him as a repressive autocrat whose lengthy rule benefited only a few, while perpetuating the grinding poverty of the majority of the country's 80 million people.
The ex-president is still under investigation, and judicial sources said it could take at least six months before a case is built up against him.
"Until now there are no official charges against Mubarak and he has not been referred to trial," said a judicial source at the Supreme Criminal Court in Cairo.
"Next week, Mubarak will listen and respond to witnesses and then it will be decided whether his 15-day detention period will be renewed to continue the investigation," the source said.
The current detention period ends on April 28.
Egypt's ruling generals have tried to show their commitment to taking to task the former administration, even though some senior officers believe prosecuting Mubarak would be a humiliation for a man they see as a war hero.
On Saturday, a court ordered the dissolution of Mubarak's political party, meeting a demand of the pro-democracy movement.
The National Democratic Party had dominated Egyptian politics since it was founded by Mubarak's predecessor, Anwar Sadat, in 1978 and for many in Egypt, it epitomised the graft and abuse of power that helped ignite the protests which forced Mubarak to quit in February.
The NDP headquarters were torched during the protests that led to Mubarak's ouster, and its supporters were blamed for some acts of thuggery against demonstrators. Nearly 400 people were killed in the protests that erupted in late January.
In a sign of the challenges facing the ruling military council, Muslims in southern Egypt protested for a third day on Sunday over the appointment of a Christian governor, saying his predecessor, also a Christian, had failed to solve their problems.
Earnings stumbles could awaken bears
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Traders work on the floor of the New York Stock Exchange March 22, 2011. REUTERS/Brendan McDermid
By Caroline Valetkevitch
NEW YORK | Sun Apr 17, 2011 12:40pm EDT
(Reuters) - Earnings could make for a bumpy ride in stocks this week if more key companies undershoot expectations, possibly causing a spike in volatility.
Disappointments from Alcoa (AA.N), Google (GOOG.O) and others in the first week of earnings have dampened some of the enthusiasm about results, ensuring that eyes will be glued to reports in the coming days.
On tap this week are top technology and financial company results, including Yahoo (YHOO.O), Intel (INTC.O), IBM (IBM.N), Texas Instruments (TXN.N), Goldman Sachs (GS.N) and Citigroup (C.N). This blitz of numbers will come during a holiday-shortened week. U.S. financial markets will be closed on April 22 in observance of Good Friday.
Market watchers also will be anxious to hear how much tech companies may have been affected by the disaster in Japan.
"We've all been lulled to sleep here lately. This earnings season will hopefully be a telling point to try to give people conviction to go one way or the other," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis.
"There are potential land mines out there that could create a little bit more volatile trading," he said.
The CBOE Volatility Index, a barometer of investor anxiety known as the VIX .VIX, briefly fell on Friday to its lowest level since July 2007. It ended at 15.32, well below its mid-March high of 31.28.
Others agreed that more disappointments could stir up volatility.
"If earnings disappoint greatly from any of the major players (this week) in the financials or technical sector, this could be a catalyst for a return of volatility into the market," said Joe Kinahan, TD Ameritrade chief derivatives strategist in Chicago.
For the past week, the Dow Jones industrial average .DJI slipped 0.3 percent, while the Standard & Poor's 500 Index .SPX and the Nasdaq Composite Index .IXIC each shed 0.6 percent.
BEWARE OF "DUAL HEADWINDS"
Whether the earnings season will be strong enough to propel the market higher is the question on investors' minds.
The Standard & Poor's 500 index .SPX is up 25.8 percent since the start of September, roughly when the recent rally began.
But sharp gains in the price of oil and other commodities, especially in the first quarter, have fueled worries about the impact on consumers and companies. Moreover, Japan's massive earthquake and tsunami, which triggered a nuclear crisis, have prompted other concerns.
Equity strategists at JPMorgan Chase cut their U.S. earnings estimates by $1 -- but for second-quarter and full-year results -- because of these "dual headwinds."
One popular view is that the market stays in sideways motion during earnings season.
"Earnings are just going to be enough to keep this market bipolar," said Mark Lamkin, CEO and chief investment strategist of Louisville, Kentucky-based Lamkin Wealth Management, with more than $200 million in assets under management.
They "are going to be good enough to keep this market toward the high end of this trading range, but they're not going to be good enough to break out of a range and set the next big leg higher."
FINANCIALS' FORECAST REVISED DOWN
In aggregate, analysts' mean earnings forecast for the S&P financial sector for the first quarter is down 3.4 percent in the past 14 days, according to Thomson Reuters StarMine data.
It was the biggest negative change for any S&P 500 sector, while energy has seen the biggest positive change, the data showed.
The mean change in earnings estimates for Goldman Sachs (GS.N) is down 42.8 percent in the last two weeks, while the mean change in estimates for Citigroup Inc (C.N) is down 6 percent in the last 14 days, it showed.
Analysts' mean earnings forecast for the S&P information technology sector is down 0.1 percent in the past 14 days.
Among other tech disappointments, Infosys Technologies Ltd (INFY.O), India's No. 2 software services exporter, on Friday forecast annual sales lower than expected.
BEARS CIRCLE THE OIL PATCH
Among others expected to report this week are several oil services companies.
Data suggests those stocks could be vulnerable to more declines as earnings expectations have come down and bearish options bets have increased lately, according to Reuters Insider quantitative analyst Mike Tarsala. Deepwater projects in the Gulf of Mexico are being approved at a slow pace.
Earnings sentiment for the group is waning, he said. Two of the sector's biggest names, Halliburton Co. (HAL.N) and Schlumberger Ltd (SLB.N) are due to report this week.
To be sure, many analysts still see many upside surprises ahead in this earnings reporting period, repeating the trend of recent earnings seasons.
"What's happened is the global macro noise has overshadowed the fundamental earnings stories ... beneath the covers, things are actually better than people believe," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.
Based on his own research model, he ranks industrials .GSPI at the top of his earnings expectations among the S&P 500's 10 sectors, followed by telecommunications.
Thomson Reuters data shows S&P 500 earnings are expected to have risen 11.7 percent from a year earlier. That estimate is roughly unchanged in recent weeks.
(Reporting by Caroline Valetkevitch in New York, with additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)
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Traders work on the floor of the New York Stock Exchange March 22, 2011. REUTERS/Brendan McDermid
By Caroline Valetkevitch
NEW YORK | Sun Apr 17, 2011 12:40pm EDT
(Reuters) - Earnings could make for a bumpy ride in stocks this week if more key companies undershoot expectations, possibly causing a spike in volatility.
Disappointments from Alcoa (AA.N), Google (GOOG.O) and others in the first week of earnings have dampened some of the enthusiasm about results, ensuring that eyes will be glued to reports in the coming days.
On tap this week are top technology and financial company results, including Yahoo (YHOO.O), Intel (INTC.O), IBM (IBM.N), Texas Instruments (TXN.N), Goldman Sachs (GS.N) and Citigroup (C.N). This blitz of numbers will come during a holiday-shortened week. U.S. financial markets will be closed on April 22 in observance of Good Friday.
Market watchers also will be anxious to hear how much tech companies may have been affected by the disaster in Japan.
"We've all been lulled to sleep here lately. This earnings season will hopefully be a telling point to try to give people conviction to go one way or the other," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis.
"There are potential land mines out there that could create a little bit more volatile trading," he said.
The CBOE Volatility Index, a barometer of investor anxiety known as the VIX .VIX, briefly fell on Friday to its lowest level since July 2007. It ended at 15.32, well below its mid-March high of 31.28.
Others agreed that more disappointments could stir up volatility.
"If earnings disappoint greatly from any of the major players (this week) in the financials or technical sector, this could be a catalyst for a return of volatility into the market," said Joe Kinahan, TD Ameritrade chief derivatives strategist in Chicago.
For the past week, the Dow Jones industrial average .DJI slipped 0.3 percent, while the Standard & Poor's 500 Index .SPX and the Nasdaq Composite Index .IXIC each shed 0.6 percent.
BEWARE OF "DUAL HEADWINDS"
Whether the earnings season will be strong enough to propel the market higher is the question on investors' minds.
The Standard & Poor's 500 index .SPX is up 25.8 percent since the start of September, roughly when the recent rally began.
But sharp gains in the price of oil and other commodities, especially in the first quarter, have fueled worries about the impact on consumers and companies. Moreover, Japan's massive earthquake and tsunami, which triggered a nuclear crisis, have prompted other concerns.
Equity strategists at JPMorgan Chase cut their U.S. earnings estimates by $1 -- but for second-quarter and full-year results -- because of these "dual headwinds."
One popular view is that the market stays in sideways motion during earnings season.
"Earnings are just going to be enough to keep this market bipolar," said Mark Lamkin, CEO and chief investment strategist of Louisville, Kentucky-based Lamkin Wealth Management, with more than $200 million in assets under management.
They "are going to be good enough to keep this market toward the high end of this trading range, but they're not going to be good enough to break out of a range and set the next big leg higher."
FINANCIALS' FORECAST REVISED DOWN
In aggregate, analysts' mean earnings forecast for the S&P financial sector for the first quarter is down 3.4 percent in the past 14 days, according to Thomson Reuters StarMine data.
It was the biggest negative change for any S&P 500 sector, while energy has seen the biggest positive change, the data showed.
The mean change in earnings estimates for Goldman Sachs (GS.N) is down 42.8 percent in the last two weeks, while the mean change in estimates for Citigroup Inc (C.N) is down 6 percent in the last 14 days, it showed.
Analysts' mean earnings forecast for the S&P information technology sector is down 0.1 percent in the past 14 days.
Among other tech disappointments, Infosys Technologies Ltd (INFY.O), India's No. 2 software services exporter, on Friday forecast annual sales lower than expected.
BEARS CIRCLE THE OIL PATCH
Among others expected to report this week are several oil services companies.
Data suggests those stocks could be vulnerable to more declines as earnings expectations have come down and bearish options bets have increased lately, according to Reuters Insider quantitative analyst Mike Tarsala. Deepwater projects in the Gulf of Mexico are being approved at a slow pace.
Earnings sentiment for the group is waning, he said. Two of the sector's biggest names, Halliburton Co. (HAL.N) and Schlumberger Ltd (SLB.N) are due to report this week.
To be sure, many analysts still see many upside surprises ahead in this earnings reporting period, repeating the trend of recent earnings seasons.
"What's happened is the global macro noise has overshadowed the fundamental earnings stories ... beneath the covers, things are actually better than people believe," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.
Based on his own research model, he ranks industrials .GSPI at the top of his earnings expectations among the S&P 500's 10 sectors, followed by telecommunications.
Thomson Reuters data shows S&P 500 earnings are expected to have risen 11.7 percent from a year earlier. That estimate is roughly unchanged in recent weeks.
(Reporting by Caroline Valetkevitch in New York, with additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)
Analysis: Behind rhetoric, finance leaders wary of MEast change
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Protesters shout slogans during a demonstration demanding the ouster of Yemen's President Ali Abdullah Saleh in the southern city of Taiz April 17, 2011. REUTERS/Khaled Abdullah
By Missy Ryan and Manuela Badawy
WASHINGTON | Sun Apr 17, 2011 1:09pm EDT
(Reuters) - Finance leaders may be vowing to support Arab nations on the cusp of a new political era, but behind the rhetoric they remain reluctant to charge into a region whose future leaders might shun their advice.
Finance ministers from a number of big economies met on Thursday with officials from some nations in the Middle East and North Africa to discuss the upheaval in the region, where protests have swept some leaders out of office and have others fighting to stay in power.
"We recognize that these transitions are about expanding the freedoms and opportunities of people," France and the United States said on behalf of the meetings' participants.
"We stand ready to support these countries with responses coordinated with the international institutions, who can bring significant resources and expertise to aid the transitions."
The statement did not offer pledges of stepped-up monetary aid, but instead called for a "joint action plan" for development banks to steer investment in ways that support job creation, improved governance and economic reforms.
The careful wording may reflect fears about what comes next in places like Egypt, where interim military leaders are promising credible polls whose results are hard to predict, and in nations like Syria and Yemen, where longtime leaders are struggling to contain popular unrest of their own.
"If you want a solution, then talk is not going to be enough," said Fariborz Ghadar, a Middle East finance expert at the U.S. Center for Strategic and International Studies.
Mohsin Khan, the former Middle East director at the International Monetary Fund, said the profession of support was likely left vague because donors and lenders do not know who will lead these countries in the future, and were examining what they can offer to a region not so much in need of cash as it is of expertise and investment.
"The people who are in D.C. right now from Egypt and Tunisia aren't the people that are going to be (around) in six months," Khan said. "And you don't know what the economic strategy is going to be, so it's very difficult to commit."
A U.S. Treasury official said some bilateral aid was expected but that finance leaders who attended Thursday's meeting, including from the United States, France, Canada, Japan, Russia, Egypt and Tunisia, agreed global lenders were best poised to quickly help the region accelerate growth.
"I think the institutions are in a place where they want to strike a balance" between hustling to help and moving with caution amid uncertainty, he said on condition of anonymity.
GLOBAL MARSHALL PLAN
World Bank President Robert Zoellick has spoken strongly about the need to move swiftly to support the region, and the bank has already approved a $500 million loan to Tunisia.
In a speech last week, he also suggested the bank could begin working directly with local civic groups with direct knowledge and experience of the situation on the ground.
"Waiting for the situation to stabilize will mean lost opportunities. In revolutionary moments, the status quo is not a winning hand," Zoellick said.
But the interim government in Egypt, which came to Washington seeking $10 billion in funding and a declaration of support, extracted few commitments from finance ministers during weekend meetings due to concerns that Egypt lacks a comprehensive reform plan that would reassure the international community the country is moving in the right direction.
IMF chief Dominique Strauss-Kahn on Saturday said the fund would make $35 billion in loans available to oil-importing countries in the Middle East and North Africa if asked.
There are also fears that leaders, sensing their own political vulnerability in a still-volatile situation, could roll back economic reforms or resort to populist measures economists believe would sabotage long-term growth.
"There's going to be an anti-market feeling in these countries," Khan said. "I can see why donors are walking on egg-shells, because they don't know what role they can play if ... these countries turn away from Western liberal policies."
Ghadar said a fragile Middle East requires a "global Marshall Plan," with help from regional oil producers and Asian nations like China that are reliant on Middle East oil.
Aid and investment might also come from Europe, fearful of a wave of immigration across the Mediterranean, and the United States, keen to both avoid spikes in global oil markets and ensure instability doesn't give militants a breeding ground.
But Molly Williamson, a senior former U.S. diplomat, warned that Western governments grappling with their own fiscal woes would be unlikely to be able to provide major new assistance.
President Barack Obama, for example, is facing a fierce battle over Republican plans to slash trillions of dollars from the U.S. budget.
"We don't have it, and we're the moneybags," she said.
(Additional reporting by Lesley Wroughton and Mark Felsenthal; Writing by Missy Ryan; editing by Tim Ahmann)
Share this
inShare5
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Related News
IMF countries try to bridge economic policy rift
Sat, Apr 16 2011
G20 backs early-warning plan against future crises
Sat, Apr 16 2011
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Protesters shout slogans during a demonstration demanding the ouster of Yemen's President Ali Abdullah Saleh in the southern city of Taiz April 17, 2011. REUTERS/Khaled Abdullah
By Missy Ryan and Manuela Badawy
WASHINGTON | Sun Apr 17, 2011 1:09pm EDT
(Reuters) - Finance leaders may be vowing to support Arab nations on the cusp of a new political era, but behind the rhetoric they remain reluctant to charge into a region whose future leaders might shun their advice.
Finance ministers from a number of big economies met on Thursday with officials from some nations in the Middle East and North Africa to discuss the upheaval in the region, where protests have swept some leaders out of office and have others fighting to stay in power.
"We recognize that these transitions are about expanding the freedoms and opportunities of people," France and the United States said on behalf of the meetings' participants.
"We stand ready to support these countries with responses coordinated with the international institutions, who can bring significant resources and expertise to aid the transitions."
The statement did not offer pledges of stepped-up monetary aid, but instead called for a "joint action plan" for development banks to steer investment in ways that support job creation, improved governance and economic reforms.
The careful wording may reflect fears about what comes next in places like Egypt, where interim military leaders are promising credible polls whose results are hard to predict, and in nations like Syria and Yemen, where longtime leaders are struggling to contain popular unrest of their own.
"If you want a solution, then talk is not going to be enough," said Fariborz Ghadar, a Middle East finance expert at the U.S. Center for Strategic and International Studies.
Mohsin Khan, the former Middle East director at the International Monetary Fund, said the profession of support was likely left vague because donors and lenders do not know who will lead these countries in the future, and were examining what they can offer to a region not so much in need of cash as it is of expertise and investment.
"The people who are in D.C. right now from Egypt and Tunisia aren't the people that are going to be (around) in six months," Khan said. "And you don't know what the economic strategy is going to be, so it's very difficult to commit."
A U.S. Treasury official said some bilateral aid was expected but that finance leaders who attended Thursday's meeting, including from the United States, France, Canada, Japan, Russia, Egypt and Tunisia, agreed global lenders were best poised to quickly help the region accelerate growth.
"I think the institutions are in a place where they want to strike a balance" between hustling to help and moving with caution amid uncertainty, he said on condition of anonymity.
GLOBAL MARSHALL PLAN
World Bank President Robert Zoellick has spoken strongly about the need to move swiftly to support the region, and the bank has already approved a $500 million loan to Tunisia.
In a speech last week, he also suggested the bank could begin working directly with local civic groups with direct knowledge and experience of the situation on the ground.
"Waiting for the situation to stabilize will mean lost opportunities. In revolutionary moments, the status quo is not a winning hand," Zoellick said.
But the interim government in Egypt, which came to Washington seeking $10 billion in funding and a declaration of support, extracted few commitments from finance ministers during weekend meetings due to concerns that Egypt lacks a comprehensive reform plan that would reassure the international community the country is moving in the right direction.
IMF chief Dominique Strauss-Kahn on Saturday said the fund would make $35 billion in loans available to oil-importing countries in the Middle East and North Africa if asked.
There are also fears that leaders, sensing their own political vulnerability in a still-volatile situation, could roll back economic reforms or resort to populist measures economists believe would sabotage long-term growth.
"There's going to be an anti-market feeling in these countries," Khan said. "I can see why donors are walking on egg-shells, because they don't know what role they can play if ... these countries turn away from Western liberal policies."
Ghadar said a fragile Middle East requires a "global Marshall Plan," with help from regional oil producers and Asian nations like China that are reliant on Middle East oil.
Aid and investment might also come from Europe, fearful of a wave of immigration across the Mediterranean, and the United States, keen to both avoid spikes in global oil markets and ensure instability doesn't give militants a breeding ground.
But Molly Williamson, a senior former U.S. diplomat, warned that Western governments grappling with their own fiscal woes would be unlikely to be able to provide major new assistance.
President Barack Obama, for example, is facing a fierce battle over Republican plans to slash trillions of dollars from the U.S. budget.
"We don't have it, and we're the moneybags," she said.
(Additional reporting by Lesley Wroughton and Mark Felsenthal; Writing by Missy Ryan; editing by Tim Ahmann)
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