Welcome to Finance World

Japan and Australia outlined competing visions for an East Asian trade bloc during a 16- nation summit in Thailand, offering plans that differ on what role the U.S. will play.

Australian Prime Minister Kevin Rudd discussed his idea for an “Asia-Pacific Community” that would include the U.S. and India. Japan’s Prime Minister Yukio Hatoyama, who took power last month, suggested an “East Asian Community” whose membership has yet to be determined, foreign ministry spokesman Kazuo Kodama said yesterday.

“Both Japan and Australia proposed bigger communities, which is a test for us,” Thai Prime Minister Abhisit Vejjajiva said yesterday in a weekly interview on a channel operated by state-controlled MCOT Pcl. The Association of Southeast Asian Nations “must be firmly integrated when we enter a bigger community.”

The proposals, which included few specifics, underscore different views within the region on U.S. power and economic dominance. The model of relying on Western demand for local goods and services “will no longer serve us as we move into the future,” said Abhisit, the meeting’s host.

“Japan wants to stay a major player and keep China from dominating,” said Carlyle A. Thayer, a politics professor at the University of New South Wales in Canberra. “Australia is worried about American staying power in the region.”

Asean countries account for about half of the world’s population and a quarter of global gross domestic product.

‘Closely Discuss’

Japan will “closely discuss and coordinate” with the U.S., Kodama said yesterday without elaborating. China is “positive and open” to the establishment of an “East Asian community,” Assistant Foreign Minister Hu Zhengyue said two days ago.

The U.S. signed a friendship accord with Asean in July to bolster ties with an area that contains sea lanes vital to world trade, as well as coal, oil and other commodities. The treaty is a prerequisite for joining the East Asia Summit, which consists of the 10-member Asean, China, Japan, South Korea, India, Australia and New Zealand, which also took place yesterday in Thailand.

Border Disputes

In a bilateral meeting on the sidelines of the summit, Indian Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao vowed to improve relations and work on “issues” such as border disputes. The two countries need to build “better understanding and trust” to keep relations “robust and strong,” Singh said, according to a statement from India’s Ministry of External Affairs.

Asean also set up its first human rights commission at the weekend’s meeting, one without any authorization to discuss country-specific violations. Human rights groups have faulted Asean for its reluctance to criticize members such as Myanmar that are accused of silencing dissent.

Myanmar authorities may consider easing their stance on the detention of opposition leader Aung San Suu Kyi if she continues to have a “good attitude,” Kodama told reporters, citing comments by Myanmar Prime Minister Thein Sein.

Rice Reserves

China, Japan, South Korea and Asean said they will expedite the development of permanent emergency rice reserves to ensure food security in times of crisis and disasters, according to a joint statement. China pledged 300,000 tons of rice.

Australia and New Zealand’s free-trade agreement with a group of Southeast Asian nations will take effect next year, Australia said yesterday. The deal, originally signed in February at an earlier Asean meeting, is designed to eliminate or lower tariffs on products such as coffee, dairy, minerals, cars and vegetables in the next 12 years.

Southeast Asian countries are “on track” to eliminate tariffs on most goods traded within the region by the beginning of 2010, Asean said in a statement yesterday. The group aims to form a free-trade area by Jan. 1 that would remove tariffs on more than 87 percent of imports, part of its efforts to create an economic zone modeled after the EU, without a common currency, by 2015.

Regional Groups

The Japanese and Australian proposals would build on existing regional groupings. Those include the 10-member Asean, the 21-member Asia-Pacific Economic Cooperation bloc set to meet next month in Singapore and the 27-member Asean Regional Forum that U.S. Secretary of State Hillary Clinton attended in July.

Rudd’s Asia-Pacific Community would include the U.S., Japan, China, India, Indonesia and “the other states of our region,” he said in a speech last year. Its purpose would be to cooperate on economic, political and security matters and dispel notions that a conflict in Asia may be inevitable, he said at the time.

Hatoyama, who came to office Sept. 16, said in a speech at the United Nations a week later that he would strive to create an East Asian community similar to the European Union. The goal was seen as potentially excluding the U.S. after he published an opinion article in the New York Times in August arguing that “the era of U.S.-led globalism is coming to an end.”

Besides Thailand, which holds Asean’s rotating chairmanship, the group includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore and Vietnam. A wider East Asian free trade area may emerge before a new regional community is formed, Abhisit said yesterday.

Source

Tech stocks rallied on Wednesday after bellwether Intel Corp reported quarterly earnings and a revenue forecast that blew past expectations, buoying investor hopes of a recovery.

Investors have been scrutinizing the battered tech sector for signs of strength after the economic crisis depressed demand and severely crimped corporate spending.

Advanced Micro Devices Inc and Nvidia Corp should see a direct impact from Intel’s strong report, and there could be secondary impact on companies like Intersil Corp, said Oppenheimer & Co analyst Rick Schafer.

“It sets the tone. It sets the pace for semiconductor companies, particularly those with PC exposure.”

“Valuations for chip stocks look attractive, particularly when you consider we believe there is a positive bias, or an upward bias to earnings,” he said.

Intel’s shares rose more than 2 percent on Wednesday after analysts raised their price targets for the stock following the strong quarterly earnings report and revenue forecast on Tuesday. The shares are trading at roughly 31 times forward earnings, compared with a semiconductor industry figure of 17 times forward earnings.

Chief rival AMD is not currently profitable. Tech companies Google Inc and International Business Machines Corp are respectively trading at 24 times forward earnings and 13 times forward earnings. All three companies are due to report on Thursday.

Despite Intel’s strong results, some analysts were cautious. Robert W. Baird and Co analyst Tristan Gerra reiterated his neutral rating on the company.

“We expect gross margin to peak in this December quarter, and historically, the stock peaks when gross margins peaks,” he said.

Gerra said in a note that Intel’s business is still highly sensitive to consumer demand and the company’s push into smartphones and set-top boxes is “unlikely to materially impact revenue growth in 2010-2011.”

UBS raised its price target for Intel shares to $27 from $24 after the report while Lazard Capital increased its price target to $26 from $24.

“Intel is benefiting from strong demand for retail notebooks and Nehalem servers. With better control of costs and prices, we see a structural improvement in Intel’s margin profile,” Needham & Co analyst Edwin Mok said in a research note in which he announced a price target increase to $28.

Computer maker Dell Inc saw its shares rise more than 2 percent after Intel forecast fourth-quarter revenue of $10.1 billion, well above Wall Street expectations of $9.5 billion. Microsoft Corp shares were up 1.5 percent.

In 2010, Mok said, technology investors could look forward to a boost in computer sales after Microsoft releases its Windows 7 computer operating system on October 22.

“Beyond the near-term, we believe Windows 7 will drive a much-needed corporate refresh in 2010, leading to further revenue growth and substantially higher earnings,” Mok said.

FBR Capital Markets analyst Craig Berger said Intel’s fourth-quarter revenue guidance “is back to levels achieved … before the credit driven financial meltdown.” 

Read more

While optimism among small U.S. businesses perked up slightly in September, owners saw little to celebrate as they planned to cut inventories and trim their workforce, a survey released on Tuesday showed.

The National Federation of Independent Business said its small business index for last month rose 0.2 point to 88.8 and was 7.8 points higher than the survey’s second-lowest reading reached in March.

“The good news is the index didn’t decline,” said William Dunkelberg, chief economist for the group. “The bad news is that improvements were far less than what we hoped for.

“The job generating machine is still in reverse,” said Dunkelberg. “Sales are not picking up, so survival requires continuous attention to costs, and labor costs loom large.”

More firms plan more inventory reductions than plan to invest, and more owners plan to trim their workforce than plan to increase employment, NFIB said.

Credit markets are expected to remain difficult for those wanting to borrow, but with inventory investment and capital spending plans near historic lows, it is clear that loan demand — not the supply of credit — is weak, the trade group said no fax pay day loans.

There is not a lot of optimism about the economy, which is one reason why hiring and spending plans remain depressed, Dunkelberg said.

Only 7 percent think the current period is a good time to expand, the group said.

“Although third-quarter real GDP growth will likely be over 3 percent, the surge hasn’t shown up on Main Street as yet,” Dunkelberg said.

Of the small business owners polled, 32 percent said their biggest problem was a dearth of customers.

(Reporting by Nancy Waitz; Editing by Kenneth Barry)

Read more

Investment bank Lazard Ltd said on Sunday that Chairman and Chief Executive Bruce Wasserstein, a legendary dealmaker, had been hospitalized for an irregular heartbeat.

Wasserstein’s condition is serious, but he is stable and recovering, Lazard said, adding that it will not be providing updates at this time.

Wasserstein, a rainmaker since the 1970s, has most recently been involved in the looming takeover battle between Kraft Foods Inc and Cadbury PLC.

The Wall Street veteran achieved fame as an adviser to buyout house KKR on its unprecedented acquisition of RJR Nabisco in 1989, which was recorded for posterity in the book, “Barbarians at the Gate,” by Bryan Burrough and John Helyar no faxing payday loan. Until a few years ago, the RJR takeover was the largest leveraged buyout in history.

(Reporting by Paritosh Bansal; Editing by Jan Paschal)

Read more

A deal between Comcast Corp and General Electric Co for NBC Universal would seem a storybook match — one wants in to the media business and the other may be well-served to get out.

Comcast shareholders see it another way, sending its shares down 7.2 percent on Thursday as sources familiar with the matter said the top U.S. cable service provider was in talks to buy a majority stake in NBC Universal from GE.

While a deal would allow Comcast to acquire the cable networks it has coveted — Bravo, USA and CNBC, among others — shareholders worry it would saddle the company with more than it needs. Specifically, the underperforming NBC broadcast TV network. NBC Universal also owns a studio and theme parks.

“Investors have long pressed Comcast for an aggressive return of cash to shareholders,” Bernstein Research’s Craig Moffett said in a note. “An acquisition of a major content studio, even if consummated at an attractive price, is most decidedly not what Comcast investors had in mind.”

GE, which has been pressured by investors to offload its 80 percent stake in NBC Universal, is considering a host of proposals for NBC Universal as partner Vivendi SA explores whether to sell its 20 percent stake.

At the moment, the most likely scenario is a deal in which Comcast would buy 51 percent of NBC Universal, leaving GE with 49 percent, according to the sources.

The sides still have plenty of details to work out and an agreement is far from certain, said the sources, who described a complex framework to discussions that are still in the earliest stages.

They said the plan is for GE to buy Vivendi’s stake, and put the borrowings that fund that deal on NBC Universal’s balance sheet. Other debt would also be added to what would essentially become a new, stand-alone company. But how that company would be valued remains to be seen.

One source said it would be worth $23 billion to $27 billion — so Comcast would contribute $4 billion to $6 billion in cash and $7 billion worth of assets, like the “E” Channel and the Golf Channel, in exchange for majority control.

Another source said the new company would be valued more highly, and Comcast’s cash payment would be closer to $6 billion to $7 billion.

Over time, Comcast could increase its ownership stake, according to CNBC, which first reported the news.

For GE, whose shares ended 2.7 percent lower on Thursday, selling NBC Universal would allow it to concentrate on the better-performing heavy industrial businesses. It may also be the best choice facing GE Chief Executive Jeff Immelt.

“If you take Jeff Immelt’s commentary seriously, where he thinks the economy is in for a slow recovery, then the industrial side of the business needs every dollar it can keep,” said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors.

LIMITED CHOICES?

Vivendi has the right to exercise its sell option in NBC Universal each fall until 2016, but is thought likely to do so this year to fund businesses that it finds more essential. 

Read more

U.S. holiday sales in 2009 will likely be almost flat with the anemic showing of a year ago, a new survey predicted, following in a line of cautious early forecasts for the period.

Overall sales in the holiday shopping season will likely rise only 0.03 percent this year to over $90 billion, according to a survey by data and media firm Nielsen Co.

On the basis of sales by the number of items sold, sales would be flat to down 0.11 percent in the period, the survey showed.

Holiday sales, usually measured in the November-December shopping period, can ring up anywhere between 25 and 40 percent of annual sales for retailers. Last year’s holiday sales season was the worst in nearly 40 years by some measures.

Early forecasts for the 2009 holiday shopping season call for sales to be anywhere from up 2 percent to down 1 percent.

Nielsen surveyed more than 22,000 U.S. households in early September for the survey, which has a margin or error of plus or minus 2 percent.

(Reporting by Aarthi Sivaraman, editing by Gerald E. McCormick)

Read more

China Investment Corp, the $200 billion sovereign fund, is set to pour a total of $2 billion into three U.S. distressed asset-focused funds, including one managed by Goldman Sachs, sources said on Tuesday.

CIC plans to invest around $600-$700 million each in three distressed asset investment funds, another managed by U.S. investment firm Oaktree Capital, said the sources briefed on CIC’s plan.

The name of the third distressed asset fund was unknown but the sources noted that all three funds to be invested by CIC would focus on U.S. distressed assets ranging from real estate to infrastructure.

Officials at CIC, Goldman and Oaktree all declined to comment. The sources declined to be identified as the fund-raising process was confidential.

(Reporting by George Chen; Additional reporting by Michael Flaherty, Editing by Jacqueline Wong)

Read more

A congressman accused Bank of America Corp of meeting his requests for information with volumes of irrelevant documents and has set a Monday deadline for more information, according to a letter obtained by Reuters.

The September 18 letter to Bank of America Chief Executive Ken Lewis from U.S. House Oversight and Government Reform Committee Chairman Edolphus Towns outlines what the committee considers inadequate disclosure as it investigates possible wrong-doing in the Merrill Lynch merger.

In his letter, Towns said the bank has produced documents that are “clearly irrelevant” to an August 6 request by the committee for all records from September 1, 2008 through January 16, 2009.

A company spokesman said Bank of America is working closely with the committee on the matter, but did not elaborate further.

The letter said that instead of providing documents relevant to the investigation, Bank of America has produced “hundreds of pages of unrelated, extraneous information” including: emails from employees to Ken Lewis about his “performance on 60 Minutes,” emails to employees about company discounts at retailers and an invitation to attend an East Asian investment conference, written in Chinese.

Towns also wrote that while Bank of America’s executives’ personal information, and information relevant to the investigation, was redacted from documents; the bank did not redact sensitive customer information included in the request, like credit card numbers and account numbers insurance quotes.

The committee has requested information relevant to the investigation be disclosed, and the bank must waive attorney-client privilege to do so.

Towns and the House committee are investigating the details surrounding Bank of America’s purchase of Merrill Lynch, including the disclosure of pre-merger losses at the investment bank, what funding commitments the federal government made prior to the deal and what legal basis the bank may have had for backing out of the deal.

Bank of America has until noon EDT on Monday to comply with the information request.

A spokeswoman for Towns said “the deadline stands.”

The Charlotte, North Carolina-based bank’s stock was down 2 percent in late morning trading to $17.27.

(Reporting by Joe Rauch and Rachelle Younglai; Editing by Tim Dobbyn)

Read more

SINGAPORE — The global economic crisis may have damped the appetite for most high-end goods, but one small daily luxury —gourmet tea — has been posting surprisingly strong sales, prompting some brands to consider expanding around the world.

With names such as Silver Moon, Emperor’s White Garden, Gout Russe Douchka and Sakura, Sakura, the teas reflect a wide range of exotic flavors, attracting an almost religious following among tea lovers.

While the rarest teas, such as yellow teas, can cost $2,120 for 2 instant payday loan.2 pounds, gourmet teas cost 30 percent more than standard teas on average, making them an affordable luxury for many.

"There is definitely no crisis when it comes down to gourmet tea; our sales have been increasing every year by 15 to 25 percent ever since we started in 1987," said Francois-Xavier Delmas, founder and chief executive of Le Palais des Thes in Paris.

Source

WASHINGTON — President Barack Obama’s administration released new fuel economy standards Tuesday in hopes of reducing greenhouse gas emissions.

The fuel economy standards, unveiled by Transportation Secretary Ray LaHood and EPA Administrator Lisa P. Jackson, would hold domestic automakers to a 35.5 miles-per-gallon standard by 2016.

The new goal would harmonize U.S. fuel economy standards after years of differences between California’s ambitious requirements and more modest national goals.

Tuesday’s proposed regulations are a result of Obama’s May agreement with automakers, states and the environmental community to tighten fuel efficiency and emissions standards, ending years of litigation over regulations. This plan goes even further than a 2007 law that set a nonbinding goal of 35 mpg by 2020.

Democrats and environmentalists applauded the administration action. But conservatives criticized the changes because of the extra costs that might be placed on consumers.

Administrators estimated earlier this year that the cost of the new requirements to automakers would be $1,300 per vehicle. But the National Highway Traffic and Safety Commission and EPA predict that the new standards will save drivers $3,000 in fuel costs during the lifetime of a model year 2016 vehicle absolutely free credit report. They will also conserve 1.8 billion barrels of oil and cut greenhouse gas emissions by 950 million metric tons.

Tuesday’s announcement indicated a federal embrace of fuel economy standards first established by California but rejected by the EPA in 2007 during the Bush administration. After Obama’s administration negotiated some changes in the requirements with the states, California’s standards in effect became a federal program.

The plan "is an important step toward harmonizing federal regulations and development of a single national standard that is reasonable and predictable," said Sen. Carl Levin, D-Mich.

But Sen. James Inhofe, R-Okla., the top Republican on the Senate Energy & Natural Resources Committee, said the new regulations "will exact a heavy price on the American people for no climate benefit." The Obama plan "will not enhance America’s energy security," Inhofe contended, "and, in fact, will make new cars more expensive and less safe."

Source