Saturday, March 27, 2010
KKR Said to Plan IPO for NXP in Year’s Biggest Deal
March 27 (Bloomberg) -- NXP BV, the Dutch chipmaker bought by KKR & Co. four years ago, plans to raise at least $1 billion to cut debt in what could be this year’s largest initial public offering, two people with knowledge of the matter said.
NXP hired Morgan Stanley, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG and Goldman Sachs Group Inc. to run the stock sale, according to the people, who asked not to be identified because the talks are private. KKR, Silver Lake, AlpInvest Partners NV, Bain Capital and Apax Partners acquired an 80.1 percent stake in the firm from Royal Philips Electronics NV in 2006, in a multistage deal valuing the company at 8.3 billion euros ($11.1 billion), including debt. KKR said in December its NXP investment was worth 30 cents on the dollar.
Kristi Huller, a KKR spokeswoman in New York, declined to comment on the potential IPO. Spokesmen for the five banks also declined to comment. NXP spokeswoman Lieke de Jong-Tops said in a text message the company declined to comment because it doesn’t react to rumor and speculation.
Buyout shops have been trying to take companies public, using the proceeds to pay down debt. The group of sponsors borrowed $4.5 billion to fund the takeover four years ago. The semiconductor company’s debt rose to $6.4 billion by the start of 2009. NXP cut that by $1.3 billion through bond exchanges, buy-backs and “privately negotiated” deals last year, the company said this month.
At $1 billion, NXP would be the biggest announced offering this year. Earlier this month, Bain Capital LLC’s Sensata Technologies Holding NV completed the largest U.S. IPO of 2010, selling $569 million of shares at the low end of its expected price range.
NXP’s owners aren’t planning to also run a prospective auction for the company, said the people with knowledge of the matter, in part because Philips intends to keep its stake of about 20 percent. That would complicate a sale to any firm competing with the Dutch lighting company.
NXP, with 29,000 employees, makes computer chips for customers such as Nokia Oyj, Continental AG and Robert Bosch GmbH, according to its Web site. The Eindhoven, Netherlands- based firm’s revenue dropped to $3.8 billion in 2009 from $5.4 billion the previous year.
Dollar Heads for Biggest Quarterly Gain Versus Euro Since 2008
March 27 (Bloomberg) -- The dollar rose, poised for the biggest quarterly gain versus the euro since 2008, as European leaders’ struggle to forge a plan to bail out Greece pushed investors toward the perceived safety of the greenback.
The yen fell against all 16 of its most-traded counterparts this week as Japanese consumer prices dropped for a 12th month, increasing the chances the nation’s central bank will lag behind its peers in raising interest rates. The U.S. economy added jobs in March, a report is forecast to show next week.
“The dollar is still the safety currency,” said Jonathan Xiong, a senior portfolio manager and director at Mellon Capital Management Corp. in San Francisco, where he helps oversee $18 billion. “The European news that is coming out is unclear, clouded and uncertain. When investors are uncertain, what happens is they buy dollars.”
The dollar appreciated 0.9 percent to $1.3410 versus the euro, from $1.3530 a week earlier. It was headed for a gain of 6.8 percent for the quarter, the largest since it advanced 11.8 percent in the three months ended in September 2008.
The yen dropped 2.1 percent, the most since Dec. 4, to 92.52 per dollar, from 90.54 yen on March 19. It was set for a decline of 3.8 percent this month, the most since December. The euro rose 1.3 percent to 124.06 yen, from 122.51 last week.
IMF on Standby
The European currency strengthened yesterday after leaders of the 16 nations that use the euro put the International Monetary Fund on standby to aid debt-stricken Greece, seeking to snuff out a threat to the currency’s stability. They endorsed a plan that calls for a mix of IMF and bilateral loans at market interest rates, while voicing confidence Greece won’t need outside help to cut its budget deficit, Europe’s largest.
European Central Bank President Jean-Claude Trichet told reporters in Brussels late on March 25 he was “extraordinarily happy that the governments of the euro area found out a workable solution.”
Earlier, the euro fell to a 10-month low versus the greenback after Trichet said an IMF role in funding a rescue for Greece would be “very, very bad.” He has expressed concern that turning to the Washington-based IMF would show Europe can’t address its problems.
The number of wagers by hedge funds and other large speculators on a decline in the euro versus the dollar compared with those on a gain -- so-called net shorts -- reached a record 74,917 contracts on March 23, according to Commodity Futures Trading Commission data last week. The amount was 46,341 on March 16.
Australia, Canada
The Australian and Canadian dollars fell versus the greenback for the first week this month amid speculation gains versus the U.S. dollar and the euro couldn’t be sustained.
Australia’s currency dropped 1.2 percent to 90.41 U.S. cents, from 91.54 cents on March 19. It fell 0.4 percent to A$1.4832 per euro, from A$1.4780 a week earlier.
“We’re seeing people get out of positions,” said Lauren Rosborough, a senior currency analyst at Westpac Banking Corp. in London. “The news from euro-zone officials has people looking to go long the euro against the Australian dollar.” A long position is a wager a currency will appreciate.
The loonie, as Canada’s currency is nicknamed, dropped 0.9 percent to C$1.0266 per U.S. dollar, while remaining near the strongest level in 20 months versus the greenback.
The U.S. currency rose against the yen before a report next week that’s expected to show the U.S. gained jobs in March, increasing the likelihood the Federal Reserve will raise interest rates before the Bank of Japan.
U.S. Employment
U.S. payrolls added 190,000 jobs in March, according to the median forecast of 62 economists surveyed by Bloomberg News before the Labor Department releases the data April 2. The economy lost 36,000 jobs in February.
Japan’s consumer prices excluding fresh food slid 1.2 percent from a year earlier, after dropping a 1.3 percent in each of the preceding two months, the nation’s statistics bureau said yesterday in Tokyo. The data intensifies pressure on the central bank to eradicate the deflation that’s hampering the economic recovery.
Mexico’s peso was the only major currency that gained against the dollar this week, as an economic recovery in the U.S. fueled demand for the Latin American nation’s exports.
The peso gained 0.7 percent to 12.4962 per U.S. dollar, from 12.5854 on March 19. It has strengthened during six of the past seven weeks against the dollar.
The Mexican currency gained 4.8 percent against the dollar this year, the best performance among the 16 major currencies tracked by Bloomberg.
Yuan forwards strengthened yesterday after a central-bank adviser said China may resume a “managed float” of the currency, bolstering optimism the government will allow appreciation.
Twelve-month non-deliverable forwards rose as much as 0.2 percent to 6.6675 per dollar, according to data compiled by Bloomberg. The contracts reflect bets the currency will gain 2.3 percent from the spot rate of 6.8270.
Greenspan Calls Treasury Yields ‘Canary in the Mine’
March 26 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.
Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”
“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
The yield on 10-year Treasury notes was 3.85 percent at 3:08 p.m. in New York, down three basis points from late yesterday and up from 3.69 percent at the end of last week.
U.S. interest-rate swap spreads declined to the lowest levels on record this week, reflecting investor concerns about the ability of nations to finance rising fiscal deficits.
The rate to exchange floating- for fixed-interest payments for 10 years fell below the comparable-maturity Treasury yield for the first time on March 23. The swap spread reached as low as negative 10.19 basis points yesterday before reaching negative 7.63 basis points.
Record Deficit
The U.S. budget deficit reached a record $1.4 trillion for the fiscal year that ended Sept. 30 amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the $787 billion economic stimulus package.
“I don’t like American politics and what’s happening,” Greenspan said.
Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”
Greenspan said in an interview last year that a consumption tax was a likely response to a widening budget deficit. That may not be sufficient when the gap is caused by a failure to cut spending, he said today.
“I’m not convinced by any means that we can succeed in stabilizing this long-term outlook strictly from a value-added tax,” Greenspan said.
2001 Tax Cut
Greenspan in 2001 supported the first round of tax cuts under President George W. Bush. At the time, the federal government operated with a surplus, and Greenspan told Congress he didn’t think the cuts would lead to a deficit.
He told the Senate Budget Committee on Jan. 25, 2001, that “having a tax cut in place may, in fact, do noticeable good.” The next year he said it would be unwise to unwind the tax cut. As deficits returned, he became an opponent of further tax cuts, telling Congress in 2003 that “fiscal stimulus is premature.”
In today’s interview, the former Fed chairman said the U.S. economic recovery has been driven “to a very large extent” by a resurgence of stock prices. The Standard & Poor’s 500 Index has jumped 73 percent since its low on March 9, 2009. The index was little changed at 1,165.29 at 3:08 p.m. in New York.
“You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”
A continued rally in share prices could help sustain the expansion, Greenspan said. Still, the unemployment rate could remain “not terribly far from where it is” at 9.7 percent as people re-enter the labor force to take advantage of job openings in a growing economy.
Company Earnings
The U.S. economy expanded at a 5.6 percent annual rate in the fourth quarter of 2009, and corporate profits climbed, figures from the Commerce Department showed today in Washington. Company earnings increased 8 percent, capping the biggest year- over-year gain in a quarter century.
On the Chinese economy, Greenspan said there are “significant bubbles” whose consequences will be hard to predict because of a lack of data.
“There are significant bubbles in Shanghai and along the coastal provinces, but there’s some of that going back into the hinterlands as well,” Greenspan said. “Remember that the bursting of the bubble by itself is not a big catastrophe. We had a dot-com bubble, it burst, and the economy barely moved.”
Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”
“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
The yield on 10-year Treasury notes was 3.85 percent at 3:08 p.m. in New York, down three basis points from late yesterday and up from 3.69 percent at the end of last week.
U.S. interest-rate swap spreads declined to the lowest levels on record this week, reflecting investor concerns about the ability of nations to finance rising fiscal deficits.
The rate to exchange floating- for fixed-interest payments for 10 years fell below the comparable-maturity Treasury yield for the first time on March 23. The swap spread reached as low as negative 10.19 basis points yesterday before reaching negative 7.63 basis points.
Record Deficit
The U.S. budget deficit reached a record $1.4 trillion for the fiscal year that ended Sept. 30 amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the $787 billion economic stimulus package.
“I don’t like American politics and what’s happening,” Greenspan said.
Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”
Greenspan said in an interview last year that a consumption tax was a likely response to a widening budget deficit. That may not be sufficient when the gap is caused by a failure to cut spending, he said today.
“I’m not convinced by any means that we can succeed in stabilizing this long-term outlook strictly from a value-added tax,” Greenspan said.
2001 Tax Cut
Greenspan in 2001 supported the first round of tax cuts under President George W. Bush. At the time, the federal government operated with a surplus, and Greenspan told Congress he didn’t think the cuts would lead to a deficit.
He told the Senate Budget Committee on Jan. 25, 2001, that “having a tax cut in place may, in fact, do noticeable good.” The next year he said it would be unwise to unwind the tax cut. As deficits returned, he became an opponent of further tax cuts, telling Congress in 2003 that “fiscal stimulus is premature.”
In today’s interview, the former Fed chairman said the U.S. economic recovery has been driven “to a very large extent” by a resurgence of stock prices. The Standard & Poor’s 500 Index has jumped 73 percent since its low on March 9, 2009. The index was little changed at 1,165.29 at 3:08 p.m. in New York.
“You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”
A continued rally in share prices could help sustain the expansion, Greenspan said. Still, the unemployment rate could remain “not terribly far from where it is” at 9.7 percent as people re-enter the labor force to take advantage of job openings in a growing economy.
Company Earnings
The U.S. economy expanded at a 5.6 percent annual rate in the fourth quarter of 2009, and corporate profits climbed, figures from the Commerce Department showed today in Washington. Company earnings increased 8 percent, capping the biggest year- over-year gain in a quarter century.
On the Chinese economy, Greenspan said there are “significant bubbles” whose consequences will be hard to predict because of a lack of data.
“There are significant bubbles in Shanghai and along the coastal provinces, but there’s some of that going back into the hinterlands as well,” Greenspan said. “Remember that the bursting of the bubble by itself is not a big catastrophe. We had a dot-com bubble, it burst, and the economy barely moved.”
U.S. Stocks Trim Advance, Treasuries Gain on Korea Concern
March 26 (Bloomberg) -- U.S. stocks trimmed gains and Treasuries rose as concern that tensions between North and South Korea were escalating triggered a flight from risky assets. Gold futures rallied 1 percent, the most in a week.
The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,166.59 at 4:19 p.m. in New York after gaining as much as 0.7 percent earlier. The iShares MSCI South Korea Index Fund, a U.S. exchange traded fund tracking stocks in that nation, erased a 1.4 percent gain and slid 0.6 percent as a South Korean naval vessel sank near the border of North Korea. Trading of puts, which give investors the right to sell the fund, surged to a record. Futures on South Korea’s Kospi 200 Index expiring in June lost 0.6 percent.
“This is really all about that variable we call the geopolitical; it’s about Korea,” said Peter Kenny, a managing director in institutional sales at Knight Equity Markets LP in Jersey City, New Jersey. “It’s taken some of the euphoria out of the market.”
The earlier rally in U.S. equities came as analyst upgrades and takeover speculation boosted financial and retail companies and concern eased over a possible Greece default. RadioShack Corp. jumped 8.5 percent on a New York Post report that the electronics chain is considering a sale of the company. Apple Inc., Progressive Corp., Urban Outfitters Inc. and SLM Corp. advanced after analysts either raised price targets or lifted their ratings on the shares.
The Dollar Index, which tracks the currency against six major trading partners, slipped 0.6 percent to 81.602.
Korea Concern
The iShares MSCI South Korea Index Fund fell 0.6 percent to $48.74 in New York. Trading of put options that give the right to sell the ETF surged to a record of more than 55,000 contracts. The most-active contracts were April $45 puts, which jumped 40 percent to 35 cents.
The South Korean naval vessel sank off Baengnyeong island in the Yellow Sea, near the border with North Korea, an official in the office of President Lee Myung Bak said. The cause was unclear, he said. About 50 crew members were still being searched for, with 58 rescued, said the official, who declined to be identified in accord with government policy. President Lee convened a meeting of security officials to discuss the incident, said the official, giving no further details.
Greece Aid
The early rally in stocks also came as European leaders backed a proposal late yesterday for a mix of International Monetary Fund and bilateral loans for Greece, while saying the nation probably won’t need help to cut the region’s biggest budget deficit. The U.S. economy grew at a 5.6 percent annual rate last quarter, the government said, and the Reuters/University of Michigan final consumer sentiment gauge for March topped forecasts as the pace of job cuts slowed.
“The transition from an economy that’s been driven by monetary and fiscal stimulus back to more of a traditional, consumer and business-driven growth may provide some opportunities,” said Greg Woodard, portfolio strategist at Manning & Napier in Fairport, New York, which manages $28 billion. “But it’s probably to provide some more volatility as we move through 2010.”
Treasuries rose for the first time in four days, sending yields down, as lower-than-average demand at this week’s record- tying $118 billion note auctions pushed yields to levels that encourage buying.
The two-year yield dropped 4 basis points, or 0.04 percentage point, to 1.05 percent. Yields on 10-year notes decreased 3 basis points to 3.86 percent after rising yesterday to 3.92 percent, the highest level since June 11.
Treasury Demand
Demand waned at this week’s auctions of two-, five- and seven-year notes as signs of improvement in the economy boosted appetite for higher-yielding assets. At the seven-year sale yesterday, investors bid for 2.61 times the amount of debt on offer, the least in 10 months.
President Barack Obama has increased U.S. marketable debt to a record $7.4 trillion as he borrows to sustain the U.S, economic expansion.
Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates. Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”
“I’m very much concerned about the fiscal situation,” said Greenspan. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
Euro Gains
The euro strengthened 1 percent to $1.3410 against the dollar and the Athens Stock Exchange’s ASE Index climbed 4.1 percent, the most since Feb. 9. The yield on the two-year Greek note tumbled 20 basis points to 4.46 percent.
“Investors see the agreement as a backstop, and it is helping sentiment towards the euro,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London, of the Greek accord reached in Brussels. “However, this is a rather uninspired recovery and it’s difficult to say that this is an unequivocal vote of confidence.”
The MSCI World Index of 23 developed nations’ stocks increased 0.2 percent.
European stocks fell, with the Stoxx Europe 600 Index losing 0.5 percent to trim a fourth straight weekly gain, on concern mounting government debt may derail the economic recovery even after the European Union agreed a Greek aid plan.
‘No Choice’ for Europe
Unipol Gruppo Finanziario SpA sank 7.7 percent in Milan, the most in a year, after Italy’s third-largest insurer announced a share sale and posted a full-year loss. Veolia Environnement SA, the world’s largest water company, slipped 1.1 percent in Paris after JPMorgan Chase & Co. advised selling the stock.
“Europe has no choice but to solve the Greece situation,” said Bruce McCain, chief investment strategist at Cleveland- based Key Private Bank, which manages $25 billion. “If you have confidence solving the debt crisis, the euro will rise against the dollar. However, the buyers of stocks over there will be discouraged to buy because of the weakness of their economies.”
The MSCI Asia Pacific Index increased 1 percent, its biggest advance in more than a week. The Kospi closed 0.6 percent higher before the South Korean ship sank. Japan’s Nikkei 225 Stock Average rose to the highest level since October 2008 and the Shanghai Composite Index rallied 1.3 percent.
Emerging Markets
China helped lead the MSCI Emerging Markets Index 0.4 percent higher, its first gain in three days. Brazil’s Bovespa index climbed 0.4 percent. Russia’s Micex Index increased 0.6 percent after the central bank cut its main refinancing rate for the 12th time in less than a year, lowering it a quarter point to 8.25 percent.
Nickel for delivery in three months rose 3.4 percent to $23,600 a metric ton on the London Metal Exchange to lead industrial metals higher. Copper, lead and tin also advanced.
Gold for June delivery added 1 percent to $1,105.40 an ounce on speculation demand will increase amid escalating debt concerns and the Korea incident.
Crude oil fell for a third day, retreating 0.7 percent to $80 a barrel in New York after climbing as much as 1.2 percent earlier.
The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,166.59 at 4:19 p.m. in New York after gaining as much as 0.7 percent earlier. The iShares MSCI South Korea Index Fund, a U.S. exchange traded fund tracking stocks in that nation, erased a 1.4 percent gain and slid 0.6 percent as a South Korean naval vessel sank near the border of North Korea. Trading of puts, which give investors the right to sell the fund, surged to a record. Futures on South Korea’s Kospi 200 Index expiring in June lost 0.6 percent.
“This is really all about that variable we call the geopolitical; it’s about Korea,” said Peter Kenny, a managing director in institutional sales at Knight Equity Markets LP in Jersey City, New Jersey. “It’s taken some of the euphoria out of the market.”
The earlier rally in U.S. equities came as analyst upgrades and takeover speculation boosted financial and retail companies and concern eased over a possible Greece default. RadioShack Corp. jumped 8.5 percent on a New York Post report that the electronics chain is considering a sale of the company. Apple Inc., Progressive Corp., Urban Outfitters Inc. and SLM Corp. advanced after analysts either raised price targets or lifted their ratings on the shares.
The Dollar Index, which tracks the currency against six major trading partners, slipped 0.6 percent to 81.602.
Korea Concern
The iShares MSCI South Korea Index Fund fell 0.6 percent to $48.74 in New York. Trading of put options that give the right to sell the ETF surged to a record of more than 55,000 contracts. The most-active contracts were April $45 puts, which jumped 40 percent to 35 cents.
The South Korean naval vessel sank off Baengnyeong island in the Yellow Sea, near the border with North Korea, an official in the office of President Lee Myung Bak said. The cause was unclear, he said. About 50 crew members were still being searched for, with 58 rescued, said the official, who declined to be identified in accord with government policy. President Lee convened a meeting of security officials to discuss the incident, said the official, giving no further details.
Greece Aid
The early rally in stocks also came as European leaders backed a proposal late yesterday for a mix of International Monetary Fund and bilateral loans for Greece, while saying the nation probably won’t need help to cut the region’s biggest budget deficit. The U.S. economy grew at a 5.6 percent annual rate last quarter, the government said, and the Reuters/University of Michigan final consumer sentiment gauge for March topped forecasts as the pace of job cuts slowed.
“The transition from an economy that’s been driven by monetary and fiscal stimulus back to more of a traditional, consumer and business-driven growth may provide some opportunities,” said Greg Woodard, portfolio strategist at Manning & Napier in Fairport, New York, which manages $28 billion. “But it’s probably to provide some more volatility as we move through 2010.”
Treasuries rose for the first time in four days, sending yields down, as lower-than-average demand at this week’s record- tying $118 billion note auctions pushed yields to levels that encourage buying.
The two-year yield dropped 4 basis points, or 0.04 percentage point, to 1.05 percent. Yields on 10-year notes decreased 3 basis points to 3.86 percent after rising yesterday to 3.92 percent, the highest level since June 11.
Treasury Demand
Demand waned at this week’s auctions of two-, five- and seven-year notes as signs of improvement in the economy boosted appetite for higher-yielding assets. At the seven-year sale yesterday, investors bid for 2.61 times the amount of debt on offer, the least in 10 months.
President Barack Obama has increased U.S. marketable debt to a record $7.4 trillion as he borrows to sustain the U.S, economic expansion.
Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates. Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”
“I’m very much concerned about the fiscal situation,” said Greenspan. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
Euro Gains
The euro strengthened 1 percent to $1.3410 against the dollar and the Athens Stock Exchange’s ASE Index climbed 4.1 percent, the most since Feb. 9. The yield on the two-year Greek note tumbled 20 basis points to 4.46 percent.
“Investors see the agreement as a backstop, and it is helping sentiment towards the euro,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London, of the Greek accord reached in Brussels. “However, this is a rather uninspired recovery and it’s difficult to say that this is an unequivocal vote of confidence.”
The MSCI World Index of 23 developed nations’ stocks increased 0.2 percent.
European stocks fell, with the Stoxx Europe 600 Index losing 0.5 percent to trim a fourth straight weekly gain, on concern mounting government debt may derail the economic recovery even after the European Union agreed a Greek aid plan.
‘No Choice’ for Europe
Unipol Gruppo Finanziario SpA sank 7.7 percent in Milan, the most in a year, after Italy’s third-largest insurer announced a share sale and posted a full-year loss. Veolia Environnement SA, the world’s largest water company, slipped 1.1 percent in Paris after JPMorgan Chase & Co. advised selling the stock.
“Europe has no choice but to solve the Greece situation,” said Bruce McCain, chief investment strategist at Cleveland- based Key Private Bank, which manages $25 billion. “If you have confidence solving the debt crisis, the euro will rise against the dollar. However, the buyers of stocks over there will be discouraged to buy because of the weakness of their economies.”
The MSCI Asia Pacific Index increased 1 percent, its biggest advance in more than a week. The Kospi closed 0.6 percent higher before the South Korean ship sank. Japan’s Nikkei 225 Stock Average rose to the highest level since October 2008 and the Shanghai Composite Index rallied 1.3 percent.
Emerging Markets
China helped lead the MSCI Emerging Markets Index 0.4 percent higher, its first gain in three days. Brazil’s Bovespa index climbed 0.4 percent. Russia’s Micex Index increased 0.6 percent after the central bank cut its main refinancing rate for the 12th time in less than a year, lowering it a quarter point to 8.25 percent.
Nickel for delivery in three months rose 3.4 percent to $23,600 a metric ton on the London Metal Exchange to lead industrial metals higher. Copper, lead and tin also advanced.
Gold for June delivery added 1 percent to $1,105.40 an ounce on speculation demand will increase amid escalating debt concerns and the Korea incident.
Crude oil fell for a third day, retreating 0.7 percent to $80 a barrel in New York after climbing as much as 1.2 percent earlier.
Tuesday, March 23, 2010
Take this job and tolerate it.....
NEW YORK (CNNMoney.com)
One of the key signs of trouble for the current labor market can be summed up by two words that are rarely spoken today: I quit.
With employers still trimming rather than adding jobs and a record number of unemployed looking for work, job holders are hanging onto their current positions, even if it means being unhappy.
The "quits rate," or frequency of people leaving jobs, is close to the lowest point since 2000, when the Labor Department began tracking the data. And workers' willingness to quit without having another job lined up is well below the historic norms going back to the 1960s, according to a separate government reading.
Recent surveys show many workers would like to find a new job once the labor market improves, but most are just too scared to make the jump yet.
An American Express survey found 54% of the general population willing to make significant concessions in the name of job security, including accepting pay cuts or even demotion.
Employment consultant Towers Watson found 86% of workers value job security and stability, topping the number of people who listed improved pay or career advancement as important to them. And while 43% of workers believe they have to leave their current employer in order to advance their career, only 12% of workers say they are looking to leave their current jobs.
"They're saying they're staying put," said Laury Sejen, a global practice leader at Towers Watson. She said she was surprised by how dug in workers have become in their current jobs.
"When you look at it from a lot of different angles, it's a mindset shift."
Stuck in a dead-end job....
One worker who feels trapped in the job is a product manager for a consortium of travel agencies, who would only talk if her name was not used in this story. She said her stomach churns every day because she dislikes her job and her boss so much. But the state of the job market and worries about job security have kept her from even looking for a new job, especially since her husband was laid off last year.
"I hear so many people are out of work, I feel lucky that I have a job with insurance," she said. "I don't want to update my résumé and send it out and have it get back to my boss."
Another unhappy worker in the accounting department with a Midwest manufacturer says he's limited by the fact that his wife also works, making it difficult to relocate in the current job market.
"The job I'm in is a lot of number crunching that I'm not interested in doing anymore, but my wife likes what she's doing," said the worker who also asked that his name not be used. "If we were to move and she stopped working, it would require us to downsize a great deal."
Both workers quoted said that in a better job market they might be more willing to try to start their own business, but they're nervous about doing so in the current environment.
Economic headwinds....
The lack of mobility from job to job is a problem for more than just those unhappy workers. Economists say it can keep wages down and hinder economic recovery.
Changing jobs is an important method workers use to improve their income, giving them more dollars that they can then pump into the economy. Even the threat of leaving a job is often enough to increase pay.
"When you have low unemployment, people are much more free to leave their jobs and search for jobs with higher wages, and employers will have to pay a premium to find or retain the best workers," said Heidi Shierholz, labor economist with the Economic Policy Institute, a liberal think tank.
It makes sense that people are nervous about changing jobs in the current labor market, said Robert Brusca of FAO Economics.
"Even if you're unhappy in a job, it's the devil you know. You don't know for sure how they'll treat you in a new job, if they'll give you a fair shake," he said.
Don't ask for a state job...
Brusca said the latest jobs bill passed by Congress won't help get job mobility moving again because it gives a tax credit only for hiring the long-term unemployed.
But the economy would benefit as much from an employer offering a job to someone already working as it does from the hiring of someone without a job, because such a hire is likely to open up another position in the economy. He said the law is an example of the difficulty that Congress has reviving the moribund labor market.
Experts say the bad housing market is another factor keeping people from switching jobs, since people won't be willing to relocate for a better position if they have to take a large loss on the sale of their home.
And the unwillingness of workers to leave an established job to try to start a new business also slows economic growth.
The Labor Department estimates that more than a million fewer jobs were created than normal during the recession because of the low rate of new business start ups. While much of that could be due to the credit crunch and the overall economic downturn, some new businesses were undoubtedly lost because current employees are unwilling to take a chance to start something new.
"Until the economy gets better, many people won't be willing to take chances. And we need them taking chances," Brusca said.
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